Spillover effects of competitive rivalry on brand extensions

Spillover effects seem to be pervasive in consumers’ decision-making. Yet, research examining spillover effects of competing brands’ associations is scarce, particularly in the context of brand extensions. In this research, we examine the extent to which associations of rival brands are transferred from the parent category to an extension category and how it influences extension evaluations. In two studies, we demonstrate a spillover effect of rivalry associations such that the success (failure) of a prior extension by a rival brand leads to a more (less) favourable brand extension evaluation, this effect being present in a high (vs. low) fit category. In addition, we show that this effect is moderated by relative brand strength of the rival brand. A stronger spillover effect is observed when the extension of a market leader brand is introduced following a prior successful extension by a challenger brand.