Brand Extensions: Does Buying a Brand in One Category Increase Propensity to Buy It in Another?

5 Pages Posted: 14 Jun 2019

See all articles by Alicia Grasby

Alicia Grasby

University of South Australia - Ehrenberg Bass Institute of Marketing Science

Armando Maria Corsi

University of South Australia - School of Marketing

John Dawes

University of South Australia - Ehrenberg-Bass Institute

Carl Driesener

University of South Australia

Byron Sharp

University of South Australia - Ehrenberg Bass Institute of Marketing Science

Date Written: June 4, 2019

Abstract

It is a common belief that users of a brand in one category are more likely to purchase brand extensions than non-users of the brand. This study examines whether extensions actually do facilitate purchase of the brand in a second category.

We analyze one year of household purchasing data for approximately 60,000 US households to understand the level of cross-category purchasing brand extensions achieve. We investigate 98 extensions across 30 CPG category pairings.

This study finds:

• Purchasing a brand in one category makes a consumer, on average, 2.4 times as likely to purchase the same brand in a second category compared to a consumer who purchased a different brand in the original category.

• Extensions in complementary categories achieve the highest levels of cross-category sharing.

• Extensions in categories which are substitutable, or have high, moderate or low levels of similarity to the original product category all achieve cross-category purchasing higher than what is expected for two unrelated brands.

The overall finding provides empirical support for the theory of brand equity, specifically that usage & familiarity with a brand name in one category facilitates purchase of that brand in other categories.

Keywords: brand loyalty, cross-category loyalty, brand purchasing, brand extensions

JEL Classification: M31

Suggested Citation

Grasby, Alicia and Corsi, Armando and Dawes, John and Driesener, Carl and Sharp, Byron, Brand Extensions: Does Buying a Brand in One Category Increase Propensity to Buy It in Another? (June 4, 2019). Available at SSRN: https://ssrn.com/abstract=3398695 or http://dx.doi.org/10.2139/ssrn.3398695

Alicia Grasby

University of South Australia - Ehrenberg Bass Institute of Marketing Science ( email )

GPO Box 2471
Adelaide, 5001
Australia

Armando Corsi

University of South Australia - School of Marketing ( email )

Australia

John Dawes (Contact Author)

University of South Australia - Ehrenberg-Bass Institute ( email )

GPO Box 2471
Adelaide, 5001
Australia

HOME PAGE: http://www.johndawes.info

Carl Driesener

University of South Australia ( email )

37-44 North Terrace, City West Campus
Adelaide, South Australia 5001
Australia

Byron Sharp

University of South Australia - Ehrenberg Bass Institute of Marketing Science ( email )

GPO Box 2471
Adelaide, 5001
Australia

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