Perceived fit and deal framing: the moderating effect of perceived fit on sales promotions in line and brand extensions
| Date | 18 August 2014 |
| DOI | https://doi.org/10.1108/JPBM-12-2013-0463 |
| Published date | 18 August 2014 |
| Pages | 295-303 |
| Author | Feng Shen |
| Subject Matter | Marketing,Product management,Brand management/equity |
Perceived fit and deal framing: the
moderating effect of perceived fit on sales
promotions in line and brand extensions
Feng Shen
Department of Marketing, Saint Joseph’s University, Philadelphia, Pennsylvania, USA
Abstract
Purpose – The purpose of this study is to examine how perceived fit between a line/brand extension and its parent brand moderates the evaluation
of two economically identical promotions, i.e. buy one get one free (BOGOF) and 50 per cent off. A travel-sized painkiller is the product in this study.
Design/methodology/approach – A 2 (perceived fit: high or low) ⫻2 (promotion type: BOGOF or 50 per cent off) between-subjects design is used
in this study. Participants, who are college students, are randomly assigned to the four experimental conditions.
Findings – The results indicate that parent brand attitude is more closely associated with line-extension attitude than with brand-extension attitude,
line extension leads to lower perceived performance risk and higher stockpiling tendency than brand extension and BOGOF is preferred over 50 per
cent off for line extension but 50 per cent off is preferred over BOGOF for brand extension.
Research limitations/implications – For a low-price, non-conspicuous and stock-up product category such as painkillers, marketers should
consider using BOGOF to promote a line extension and 50 per cent off to promote a brand extension. It is important to explore in future research
as to how the findings can be applied to other product categories, other promotion types, other packages and non-student consumers.
Originality/value – This study is the first that examines how perceived fit of a line/brand extension moderates the evaluation of economically
identical promotions. It integrates the literature of line/brand extension, perceived performance risk and prospect theory to advance the research
on sales promotions for new products.
Keywords Sales promotion, Prospect theory, Line/brand extension, Perceived fit, Performance risk
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this issue.
Introduction
While the variety of sales promotions is truly staggering, most
of them can be categorized as monetary or nonmonetary
(Lowe, 2010). A monetary promotion usually provides
consumers with a price discount, for example, 50 per cent off,
and a nonmonetary promotion typically provides consumers
with an extra free product, for example, buy one get one free
(hereinafter, referred to as “BOGOF”) (Bloomsbury Business
Library – Business and Management Dictionary, 2007, p. 1,215;
Lowe, 2010). While the two types of promotions can be
economically identical, it remains an intriguing question as to
which one is more preferred. Some research suggests that the
preference is contingent on the stock-up nature or
perishability of a product category (Sinha and Smith, 2000)
and further moderated by the performance risk of a new
product (Lowe, 2010). There is evidence that the
nonmonetary BOGOF promotion is preferred for
low-perishable product categories, whereas the monetary 50
per cent-off promotion is preferred for high-perishable
product categories (Sinha and Smith, 2000). There is also
evidence that the BOGOF promotion is preferred for new
products in low-perishable categories, such as painkillers, if
the new products are of low performance risk, whereas the 50
per cent-off promotion is preferred if the new products are of
high performance risk (Lowe, 2010).
Compared to the Sinha and Smith study (2000), the
Lowe study (2010) investigated the effects of sales
promotions at brand level rather than at product category
level and provided significant implications regarding
managing promotions for newly introduced products. It
should be noted that marketing a new product itself is full
of risk, and roughly one out of two newly introduced
products fails within five years (Taylor and Bearden, 2003).
Previous research further indicates that nearly 95 per cent
of newly introduced products are either line extensions,
through which a new variant is added to the same category,
or brand extensions, through which an established brand is
leveraged to enter a different category (Dens and De
Pelsmacker, 2010). A new painkiller under the Tylenol
brand, for example, is a line extension, but a new painkiller
under the Colgate brand, which is best known for oral
hygiene products, is a brand extension. While this line
extension vs brand extension dichotomy is highly important
for new product marketing, it was missing in the Lowe
study (2010) and has not been adequately investigated in
the sales promotions literature. It is also worthwhile to
point out that fictitious brands were used in the Lowe study
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
23/4/5 (2014) 295–303
© Emerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-12-2013-0463]
295
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