The Impact of Brand Extension Success Drivers on Brand Extension Price Premiums

International Journal of Research in Marketing (IJRM), Vol. 27, No. 4, pp. 319-328, 2010

Posted: 24 Jan 2014 Last revised: 6 Jan 2015

See all articles by Henrik Sattler

Henrik Sattler

University of Hamburg

Franziska Völckner

University of Cologne - Faculty of Management, Economics and Social Sciences

Claudia Riediger

University of Technology Sydney (UTS)

Christian M. Ringle

Hamburg University of Technology (TUHH)

Date Written: 2010

Abstract

Research into brand extensions has mainly focused on consumers’ extension evaluations without considering an important financial implication: the ability of the extension product to charge a price premium. This study analyzes (1) the extent to which consumers are willing to pay a price premium for the extension product and (2) the impact of potential success drivers on consumers’ attitudes toward the extension and the extension price premium. The results show, for example, that perceived advertising support positively influences consumers’ attitudes toward the extension, but it does not directly affect the magnitude of the brand extension price premium. Furthermore, this study reveals monetary effects associated with these success drivers (i.e., parent brand quality, perceived fit, marketing support for the brand extension, and consumer experience with the extension category), which offer important information regarding how to allocate resources to various success drivers. For example, brand investments that increase perceptions of parent brand quality by one unit (seven-point scale) tend to enhance the brand extension price premium of typical fast moving consumer goods (average price of €2.04 in the study sample) by €2.08, all else being equal.

JEL Classification: A00

Suggested Citation

Sattler, Henrik and Völckner, Franziska and Riediger, Claudia and Ringle, Christian M., The Impact of Brand Extension Success Drivers on Brand Extension Price Premiums (2010). International Journal of Research in Marketing (IJRM), Vol. 27, No. 4, pp. 319-328, 2010 , Available at SSRN: https://ssrn.com/abstract=2383852

Henrik Sattler (Contact Author)

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Franziska Völckner

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Richard-Strauss-Str. 2
Cologne, D-50923
Germany

Claudia Riediger

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Christian M. Ringle

Hamburg University of Technology (TUHH) ( email )

Am Schwarzenberg-Campus 4
Hamburg, 21073
Germany

HOME PAGE: http://www.tuhh.de/hrmo

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