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  • Writer's pictureLina Altenburg

Are Product Line Extensions Always Good for the Brand?

Updated: Apr 30, 2023

Written by Lina Altenburg, Ph.D candidate at KU Leuven (Belgium)


Product line extensions are not always beneficial for a brand. In fact, they can make consumers more uncertain about the quality of a brand and hence reduce brand choices. So when are product line extensions a good idea for a brand?

innovation

In the IJRM article “The dark side of innovation: How new SKUs affect brand choice in the presence of consumer uncertainty and learning” (Volume 39, Issue 4, December 2022) the three authors Bernadette van Ewijk (Assistant Professor at the University of Amsterdam Business School, the Netherlands), Els Gijsbrechts (Full Professor of Marketing at Tilburg University, the Netherlands) and Jan-Benedict Steenkamp (C. Knox Massey Distinguished Professor of Marketing at the University of North Carolina’s Kenan-Flagler Business School, United States of America) investigate the phenomenon of product line extensions.


They possess a unique dataset consisting of 1) a detailed scanner-panel dataset including the history of products a consumer purchased and received as a gift, 2) details on the brand’s new product introductions including the novel features and time of introduction, and 3) brand’s advertising data. The authors use this data to shed light on the impact of new product variant additions (e.g., products with new flavors or additional micronutrients added to an existing brand line) on a brand’s overall perceived quality, quality uncertainty, and subsequent brand choice. They show that while product line extensions tend to lift a brand’s overall perceived quality level, it also fosters uncertainty about a brand, which can lead to a reduced brand choice. This is what they term “the dark side of innovations”. Hence, brand managers need to carefully assess the impact of product line extensions before implementing them. In my interview with her, Bernadette talks about the research setting, challenging assumptions of Bayesian learning models and her experience with publishing at IJRM.


A global marketing phenomenon in an emerging market

As Bernadette points out, many academic studies are set in developed, western markets, such as the US or Europe, and insights into consumer responses to marketing in other regions of the world are very scarce. Yet, these markets are becoming increasingly important, with many international companies already selling in those markets. However, since consumer behavior can be very different in these markets, insights from the existing literature might not be applicable. Hence, there is a need for academics to focus on those emerging markets and help companies to better address the large share of customers from these countries. Bernadette and her co-authors try to start filling this gap by investigating product line extensions in China.

Does brand quality truly stay constant over time?

How can the impact of a line extension on a brand’s overall perceived quality, quality uncertainty, and subsequent brand choice be measured? The authors chose to use a Bayesian learning model to estimate the impact of new product variant introductions. Learning models assume that consumers learn about a brand’s quality through consumption and the more they consume a brand, the less uncertain they become and the closer they get to the actual/true quality of a brand.


Simplified process that underlies Bayesian learning models


However, one of the main assumptions of learning models is that the true quality of a brand stays constant. As Bernadette points out, brands often introduce new product variants, which may affect the quality of the brand as a whole. This is why Els Gijsbrechts, the second author of this paper, suggested adopting the learning models to allow for the brand quality to change as a result of new product introductions. This adoption, to allow for adaptive brand quality, is now a key methodological contribution that the paper makes.

Are product line extensions always good for the brand?

The results of the analysis indicate that not all product line innovations are equally beneficial for a brand. Next to expanding the brand’s product line, the authors show that line extensions can have a lasting impact on a brand’s average perceived quality. However, there is some heterogeneity between different types of brands. To the surprise of the authors, they could not find an impact on the average brand quality of non-sensory innovations. In the potato chips category, a non-sensory innovation could be a product without artificial colors, whereas a sensory innovation could be a new flavor. This suggests that adding product attributes that are difficult for consumers to sense do not impact a brand's average perceived quality. Bernadette speculates that this could be due to consumers' impression that they have little gain from these non-sensory improvements in terms of product performance and that these improvements are marketing tricks to regain or maintain attention to the brand.


“Maybe [consumers] only see [non-sensory] line extensions as a sort of marketing trick.”

-Bernadette van Ewijk


Furthermore, product line extensions increase consumers’ uncertainty about a brand’s quality, a phenomenon that the authors' term “the dark side of innovations”. Even though this uncertainty diminishes with more consumption occasions it is an important insight for brand managers that consider implementing product line extensions. This dark side of innovation can be especially concerning for brands that do not manage to increase the overall perceived quality through product line extension.


Submitting a paper to IJRM

I learned during the interview that the authors decided to submit the paper to IJRM for publication after already having successfully published a paper on online display advertising and having a second paper on brands’ price responses under review at IJRM. Bernadette points out that the previous positive review experience was one of the major reasons for also choosing IJRM for this paper.

“It was still a very tough review […] and it was a lot of work but the reviewer comments made a lot of sense. And that really helped! […] We really believed that [solving] all the reviewer issues would make our paper better.”

-Bernadette van Ewijk


The major adjustment suggested by the reviewers was to differentiate between sensory (e.g., new flavors) and non-sensory (e.g., additional micronutrients) product innovations. This required collecting additional data and adjusting the model, but it provided additional insights that can help managers make better product innovation decisions.


Finally, after implementing the reviewers’ comments and resubmitting the paper, Bernadette heard the great news that the paper was accepted while on maternity leave. Her second daughter was 1 month old at that time.


Read the paper

Interested in reading all the details about the dark side of innovation? Read the full paper here.

Want to cite the paper?

Van Ewijk, Bernadette J., Els Gijsbrechts, and Jan-Benedict E.M. Steenkamp (2022), “The dark side of innovation: How new SKUs affect brand choice in the presence of consumer uncertainty and learning”, International Journal of Research in Marketing, 39(4), 967-987.

 

Meet Bernadette van Ewijk

 

Bernadette van Ewijk is an Assistant Professor at the University of Amsterdam Business School, the Netherlands. She obtained her PhD in 2018 from Tilburg University in the Netherlands. In contrast to her research, Bernadette likes to stick to the brands she already knows and prefers to purchase established products rather than constantly keep up with new product innovations. She is a great fan of doing her groceries online, which especially promotes the purchase of previously bought products. However, she sees this as an advantage to her research. As she explains, not being involved in the aspects she studies can be an advantage, as she does not always relate her analysis to herself. Hence, it helps to maintain a neutral, outsider perspective.


What drives you to do the research/work you do?

I think it is really my curiosity and eagerness to learn new things. […] And I think our job is a lot of fun!


If you were not an academic, what would you be?

The funny thing is that I never thought about this. I can only say that I am always jealous of medical doctors. […] I think - I mean our job is of course pretty grateful, especially when I look at my teaching. I am really teaching students things that they can use in their future lives; and I do help brand managers. It is in that sense grateful – but for medical doctors it’s really about life and death, you really do a good thing for society.


 

This article was written by

Lina Altenburg

Ph.D. candidate at the KU Leuven (Belgium)




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