Consumer Reactions to Brand Extensions in a Competitive Context: Does Fit Still Matter

Research indicates that reactions to brand extensions are influenced by the fit between the parent brand and the extension product category. The normative nature of this effect is limited because assessments of brand extensions are typ-ically obtained in the absence of competition. The boundaries of prior research are investigated by testing whether the fit-extension relationship generalizes to scenarios that include relatively more or less familiar competitor brands. Support is found for this relationship in noncompetitive scenarios but is diminished by competitors ’ relative brand familiarity. Perceived risk mediates the effects of fit in noncompetitive settings and competitor brand familiarity in competitive settings. Brand extensions appear to be the cornerstone of manyfirms ’ growth strategies, as they have become the most common form of new product introduction in the past 2 decades (Loken and John 1993; Zhang and Sood 2002). Endowing a new product with a well-known brand name is cost efficient and reduces consumer risk by providing a sense of security and trust through leveraging positive association