"Managers often extend brands to different quality levels. Adding lower priced variants is a particularly popular option for fighting the growing number of retailer brands. Such a move may increase sales, but it also risks diluting brand image.
This study examines such line extensions by testing middle-quality brands that offer higher or lower quality line extensions. According to the results, the adverse effects of brands’ lower quality versions seem to be overestimated. Higher quality line extensions improved overall brand perception and evaluation far more than lower quality extensions damaged them. This asymmetry prevailed in multiple product classes and for various dimensions of brand evaluation such as brand attitude, brand expertise or brand innovation.
In general, consumers seem to prefer broader product lines. Even if lower quality extensions reduced brand prestige, there was hardly any effect in the overall evaluation. The negative quality association was tempered by increased perceived brand innovation and positive variety effects.
However, lower quality extensions are not harmless in every case. Managers are well advised to consider all branding options and to analyze possible effects, not only on the brand but also on the individual product.
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