Consumer Evaluations of Brand Extensions: The Role Played by the Presence or Absence of a Category Competitor

James L. Oakley, Purdue University, USA
Adam Duhachek, Indiana University, USA
Subramanian Balachander , Purdue University, USA
S. Sriram, University of Connecticut, USA

Overview

In early 2000, Clorox, a well-known brand for household bleach, introduced the first product in the household cleaning wipes category in the U.S. market, a category which has since attracted competition from brands such as Mr. Clean and Lysol. Though Clorox continues to enjoy success as the pioneer, these later entrants have made significant inroads into this category. One possible explanation is that the Lysol and Mr. Clean brands offer a better fit with the new cleaning wipes category than Clorox. However, Clorox’s earlier entry likely changed the dynamics of how consumers evaluated the later entering brand extensions given its early success. These observations lead to the key questions of this research: Does the order of entry of brands have a significant effect on how a brand extension is evaluated? If so, what psychological process is responsible for driving these effects?

Previous brand extension research has shown that greater perceived fit between parent and extended brand results in higher evaluations for the brand extension. However, existing research has focused on a static view, not a dynamic context when brand extensions enter a category sequentially. We hypothesize that order of entry impacts the saliency of the fit between parent brand and the brand extension which will create differences in evaluation of brand extensions entering the market either as a first entrant or a follower entrant. This dynamic view is more representative of how extensions are evaluated, whereby new category entrants enter the market sequentially, reflecting a context-dependent model of brand extension evaluation based on the presence or absence of comparison brands. An interesting result of our framework is that brands may actually benefit from the existence of competitors (i.e., entering as a follower rather than being the first extension to market).

We develop a framework of brand extension evaluation based on the presence or absence of a comparison point within the brand extension category. We hypothesize that for brands that enter the market first, i.e., the category pioneer, consumer evaluations will be driven by parent brand quality thoughts, given that the parent brand is the closest means of a comparison for the new category. In the case of a high quality parent brand, we would expect that consumers’ thoughts would reflect their beliefs that the parent brand was of high quality, while neglecting information inconsistent with the hypothesis (e.g., category fit in the case of lower fit extensions). We would therefore predict that pioneer evaluation is driven by parent brand quality thoughts. Under follower conditions, though, consumers make evaluations by comparing the brands within the category against each other. The existence of a salient competitor means that evaluation will be driven by the favorability of a focal extension vis-à-vis the extant brands.

Significance of the Findings

We conceptualize a model where new brands enter the market dynamically, driving consumers to engage in differential processing as a function of pioneer and follower evaluation scenarios. We predict that consumers rely on singular evaluative processing in pioneer contexts and comparative evaluation in follower contexts, producing unique effects based on the presence or absence of comparison brands.

Experimental results from three unique contexts support our proposed theoretical framework. There are no differences in the evaluations of the high and low fit brands when they are the pioneer, indicating that the pioneering extensions of high quality parent brands are evaluated in light of the quality of the parent brand introducing the extension. However, a significant fit effect is observed within follower conditions, supporting the theory that comparison perceptions drive evaluation in the follower condition. Looking at the follower versus pioneer evaluations, the lower fit brand was evaluated significantly lower when entering as a follower than as a pioneer. The results also show that the higher fit brand is evaluated more positively as a follower entrant than as the pioneer.

Implications for Marketers

The implications of our findings are that low fit brands are best served to enter the market as a pioneer – if the low fit brand is a later entrant, consumer evaluation of their brand extension is impacted negatively. High fit brands, on the other hand, should not be deterred by the presence of a lower fit pioneer as the presence of a comparison brand of lower fit improves the evaluation of their extension relative to the singular evaluation context when entering as a pioneer. Experimental results indicate that follower brands can actually benefit from comparison with pioneering brands that have a relatively lower fit with the extension category.

Original Article

Oakley, James L., Adam Duhachek, Subramanian Balachander, & S. Sriram (2008), “Order of Entry and the Moderating Role of Comparison Brands in Brand Extension Evaluation,” Journal of Consumer Research, 34, forthcoming.