This research replicates recent findings showing that the perceptual impact of price on brand extension evaluations is greater for dissimilar than similar extensions. This research extends prior findings by generalizing the effect to a new product category, a convenience grocery food, and by showing that more price-related thoughts and price-quality inferences occurred in the processing of dissimilar than similar extensions. This research also considers perceived quality variance among the brands within a product category as a moderator of the price effect. Results of this research, which are based on a laboratory experiment using student subjects, suggest that manufacturer s attempting to leverage brand equity by introducing extensions somewhat dissimilar from the original brand should consider that consumers may be more likely to make price-quality inferences.
Consequently, a manufacturer introducing a dissimilar extension should use caution if a low price is employed as consumers might infer that the new extension represents a low quality offering, rather than being good value.
Taylor, V (2002), "Price Effects on Brand Extension Quality Evaluations", Journal of Empirical Generalisations in Marketing Science, Vol. 7, No. 1