The Ownership Effect in Consumer Responses to Brand Line Stretches

Abstract

In this article, the authors examine how ownership status moderates the effects of stretch direction (up or down), brand image (prestige or nonprestige), and branding strategy (subbrand name or direct) on consumer responses to price-based line stretches. An “ownership effect” is proposed whereby owners have more favorable responses than nonowners to the brand's extensions. The ownership effect occurs for upward and downward stretches of non-prestige brands and for upward stretches of prestige brands. For downward stretches of prestige brands, however, the ownership effect does not occur because of owners’ desire to maintain brand exclusivity. In this situation, a sub-branding strategy protects owners’ parent brand attitudes from dilution. A field study and two lab studies confirm the hypotheses.