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The importance of reciprocal spillover effects for the valuation of bestseller brands: introducing and testing a contingency model

  • Original Empirical Research
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Abstract

The valuation of extension rights is critical for entertainment brands such as bestseller books. Building on brand extension research, we argue that accounting for the reciprocal spillover effect (i.e., the influence of an extension product on a parent brand) is important for determining the value of extension rights. We develop a contingency model of the reciprocal spillover effect for category extensions of entertainment products that are characterized by short life cycles and satiation effects. In the discussion of moderating factors, we pay particular attention to the new concept of backward integration, which accounts for the reaction of a parent to the introduction of an extension. Using data from all 446 literature adaptations produced for the big screen and theatrically released in North American theaters between 1998 and 2006, we provide evidence that extension success and marketing support impact the sales of the parent book and for several postulated moderating effects, including those of backward integration. Through simulation analyses, we demonstrate how considering the reciprocal effect in the managerial decision-making process can help entertainment managers to avoid biased estimations of category extension rights.

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Notes

  1. In addition to the moderators reported in this section, some authors have also studied consumer characteristics and category similarity. As neither are available to and/or relevant for managers in the context of this research, we refrain from including them in our review.

  2. The resulting regression equation was lnEXT_SUC = 1.126 + 2.616 × lnEXT_MKT with R2 = .759. All coefficients were significant at p < .01.

  3. We also tested for potential moderating effects of the book series variable, which were also non-significant. As an additional robustness check, we ran the analysis without adaptations based on a book series; results again remained robust.

  4. We thank an anonymous reviewer for suggesting this post-hoc analysis.

  5. We tested whether the inclusion of advertising spending in our study explains the non-significance of the main effect of pre-extension parent brand success (advertising was not included in Joshi and Mao (2012)). When performing a regression that included opening screens as the sole measure of marketing support, we found the same pattern reported by Joshi and Mao (2012), with the main effect of pre-extension parent brand success being significant (b = .048, p < .05).

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Acknowledgments

The authors would like to thank Anthony DeBarros from USA Today for generously providing a substantial part of the data analyzed in this research. We would also like to thank the anonymous reviewers, the participants of the 2011 UCLA/Bruce Mallen Scholars and Practitioners Workshop in Motion Pictures Industry Studies and the research seminar at the Cass Business School as well as Björn Bohnenkamp, Franziska Völckner, and Henrik Sattler for their constructive comments.

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Authors and Affiliations

  1. Marketing Center Muenster, University of Muenster, Am Stadtgraben 13-15, 48143, Muenster, Germany

    Ann-Kristin Knapp & Thorsten Hennig-Thurau

  2. Cass Business School, City University London, London, United Kingdom

    Thorsten Hennig-Thurau

  3. Graduate School Media and Communication, University of Hamburg, Hamburg, Germany

    Juliane Mathys

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  1. Ann-Kristin Knapp
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  2. Thorsten Hennig-Thurau
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  3. Juliane Mathys
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Correspondence to Thorsten Hennig-Thurau.

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Knapp, AK., Hennig-Thurau, T. & Mathys, J. The importance of reciprocal spillover effects for the valuation of bestseller brands: introducing and testing a contingency model. J. of the Acad. Mark. Sci. 42, 205–221 (2014). https://doi.org/10.1007/s11747-013-0350-9

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  • DOI: https://doi.org/10.1007/s11747-013-0350-9

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