Reciprocal Spillover Effects: A Strategic Benefit of Brand Extensions

A commonly advanced rationale for the proliferation of brand extensions is companies ' motivation to leverage the equity in established brands, thereby developing profitable products relatively easily. A more interesting strategic argument for brand extensions that has been advanced is that extensions would favorably affect the image of the parent brand and thereby influence its choice. In this research, the authors investigate the existence of such reci-procal spillover effects emanating from the advertising of a brand extension. The authors use scanner panel data and study spillover effects of advertising on brand choice. They develop implications for brand and product line management. I n recent years, there has been a plethora of line and brandextensions. Between 1977 and 1984, 40 % of the 120 to175 new brands introduced each year in supermarkets were extensions (Aaker 1990). One commonly advanced rationale for this proliferation of extensions is companies' motivation to leverage the equity in established brands and develop profitable products relatively easily (Morein 1975). A second motivation for extensions is to affect the image of the umbrella brand favorably, which thereby influences sales in other categories. Aaker (1996) offers several exam