Preliminary results of cross-category purchasing of extensions
Brand extensions are a popular way to increase the breadth of the product portfolio. Little research, however, has looked at whether purchasing a brand in one category affects a consumer’s propensity to purchase the same brand in another category. This preliminary study uses Duplication of Purchase (DoP) analysis and panel data to measure the level of customer sharing between brands in multiple categories. Our findings show that, across a 52- week period, purchasing a brand in one category increases the propensity to purchase the same brand in a second category by 63% more than the propensity to purchase a different brand in the second category. These findings provide support to a previous study by Mundt (2011) which found between categories, a brand shared customers 60% higher with its extension than with another brand in the second category. This research is significant as it verifies the validity of these findings.
Keywords: brand extensions, cross-category purchasing, consumer behaviour
CitationGrasby, A., Sharp, B., Dawes, J., Driesener, C. and Corsi, A.M. (2017). "Preliminary results of cross-category purchasing of extensions." ANZMAC: 1-4.
There is no doubt that the practice of brand extension is very popular with some reports suggesting as many as 70 percent of new products are launched with existing brand names on them. This popularity appears to stem from the rather enthusiastic attention that the practice of brand extension is getting in academic journals and trade publications. Brand extension has been hailed as the way to: achieve growth in a cost controlled world; capitalize on brand assets; redefine the nature/direction of a firm's business; gain economies of scale in advertising; introduce new products without advertising; assist a new product's success through endowing it with the goodwill which allows it to more easily gain trial and distribution.
To be fair, these accolades are often tempered with the warning not to "stretch" the brand image too far, that is, attempt to use a brand name on an incongruous extension, e.g. Exxon popcorn, Sara Lee dog food, Reebok computers. However, the warning, while in itself very serious, unfortunately also gives a clear impression that it is quite easy to manage brand extension, all it takes is common sense and a little brand image research.
CitationSharp, Byron (1993), “Managing Brand Extension,” Journal of Consumer Marketing, 10 (3), 11-17.
Manager’s Knowledge of Marketing Principles: The Case of New Product Development
Do marketing managers have well-established marketing principles to guide decision making? We addressed this question by examining 15 principles of new product development obtained from an expert panel of Australian senior marketing practitioners. Of these 15, three turned out to be tautologies, six had at least some empirical support, and six were partly or fully contradicted by empirical studies. In examining the literature for evidence, we were also able to identify five well established ‘empirical generalisations’ about new product development. These results indicate that while principles of new product development do exist, there are fewer of them than we might have thought, and Australian practitioners appear unable to distinguish between good and bad principles.
CitationCierpicki, S, Wright, M, and Sharp, B (2000) “Managers’ Knowledge of Marketing Principles: The Case of New Product Development”, Journal of Empirical Generalisations in Marketing Science, Vol 5, No.3
