priceperceptionsinbrandextensions.docVIP

Price Perceptions in Brand Extensions: Formation and Impact on Brand Extension Evaluation Sung Youl Jun Associate Professor of Marketing Sogang University Seoul, Korea Deborah J. MacInnis Professor of Marketing University of Southern California Los Angeles, CA C. Whan Park Joseph A. DeBell Professor of Marketing University of Southern California. Price Perceptions in Brand Extensions: Formation and Impact on Brand Extension Evaluation ABSTRACT The current research identifies and examines the effect of several price-related variables on consumers’ judgments of brand extensions. We expect and find that consumers’ price expectations of a brand extension are affected by (1) the price of the parent brand (i.e., a brand-specific price factor). (2) The relative price of the parent category in relation to the extension category (i.e., a category-specific price factor) also affects consumers’ price expectations of the brand extension’s price, and moderates the effect of the parent brand price. In addition, the impact of the price of the parent brand and relative price of the parent category on brand extension evaluations is moderated by (3) the distribution or heterogeneity of prices in the extension category. Finally, we find that (4) the impact of consumers’ expectation of the brand extension’s price is stronger when they are confronted with the actual price of the extension than when they are not. Keywords: Brand extensions Brand attitudes Product expectations Pricing Reference Price Price heterogeneity Price Perceptions in Brand Extensions: Formation and Impact on Brand Extension Evaluation The managerial significance of brand extension strategies has been proposed conceptually (Park, Jaworski and MacInnis 1986) and demonstrated empirically (Aaker and Keller 1990; Keller and Aaker 1992; Bottomley and Doyle 1996; Sunde and Brodie 1993), with consistent findings supporting the cost-efficienc