Reciprocal Spillover Effects: A Strategic Benefit of Brand Extensions

Abstract

A commonly advanced rationale for the proliferation of brand extensions is companies' motivation to leverage the equity in established brands, thereby developing profitable products relatively easily. A more interesting strategic argument for brand extensions that has been advanced is that extensions would favorably affect the image of the parent brand and thereby influence its choice. In this research, the authors investigate the existence of such reciprocal spillover effects emanating from the advertising of a brand extension. The authors use scanner panel data and study spillover effects of advertising on brand choice. They develop implications for brand and product line management.

The Effect of Monetary Policies on the Relationship between Advertising and Mutual Fund Flows

“…Barber et al (2005) show that funds with higher advertising expenditures on 12B-1 fees garner more new money. 2 Aaker and Keller (1990) and Balachander and Ghose (2003) find that a firm's advertising for one of its products not only can increase sales of the advertised product, but also increase sales of other existing products in the same brand. 3 Kontonikas et al (2013) find pronounced effects from "cut interest rates" for S&P 500 index returns in two ways.…”

Brand and line extensions: an empirical study from the new age luxury industry

“…These studies have generated important insights into a number of areas of the process of consumers' attitudes towards and evaluations of brand extensions, e.g., brand and category-level fit (Boush et al, 1987;Broniarczyk and Alba, 1994;Bhat and Reddy, 2001;Park et al, 1991;Lau and Phau, 2007;Milberg et al, 2013), the effect of prior knowledge of the extension category or the brand (Boush and Loken, 1991;Bottomley and Holden, 2001), forward and reciprocal spillover effects between parent and extension (Jacobson and Lane, 1997;Balachander and Ghose, 2003), consumer motivation and expertise (Broniarczyk and Alba, 1994), advertising and marketing strategy (Balanchander and Ghose, 2003;Dens and De Pelsmacker, 2010) and purchase intention (Lane, 2000;Bhat and Reddy, 2001). As pointed out by Czellar (2003), the vast majority of existing research focuses thus on consumer characteristics, predominantly rooted in cognitive psychology (e.g., Aaker and Keller, 1990;Park et al, 1991;Broniarczyk and Alba, 1994;Bhat and Reddy, 2001;Monga and John, 2010), and pays little attention to other factors such as consumer heterogeneity, competitor and distributor activity.…”

Linking reputations through umbrella branding

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