Ad spending on brand extensions: Does similarity matter?

Abstract

This research explores the effects of information about ad spending on brand extension evaluations over different levels of similarity. Brand extension similarity is proposed as a moderator of the effects of perceived ad spending on the perceived quality of brand extensions and on purchase intentions. Results of a field study show that positive ad spending inference effects were more likely to occur for similar than dissimilar extensions. Additionally, though, results show that respondents were more likely to question the veracity of high ad spending levels for a dissimilar extension than a similar extension, possibly resulting in lower product evaluations. Consequently, results of this research are probably most useful to manufacturers attempting to leverage brand equity by introducing brand extensions which are supported at introduction with large ad spending.