How loyalty extends across product categories

Abstract

Fifty years ago, Gerald Goodhardt's analysis of audience duplication across television programs led to the discovery of the Duplication of Viewing law. This law was then extended to describe and predict customer sharing within product categories: the Duplication of Purchase Law. Many replications and extensions documented the lawlike status of this generalisation, providing important insight into how brands compete and the composition of consumers' repertoires. In this article we build on that seminal research, using Duplication of Purchase as an analytical method to measure loyalty across categories, or, in other words, the purchasing of brand extensions.Brand extensions are commonly cited as a way to capitalise on brand equity, and when asked, respondents often report high intentions to purchase brand extensions.However, the actual cross category buying of brand extensions has not been systematically examined. In this research we analyse panel data to understand whether purchasing a brand in one category does in fact increase the likelihood of a brand being bought in a second category. The study finds that a consumer who purchases from two categories is on average 2.4 times more likely to purchase a brand extension in the second category if they had purchased the same brand in the other category. This effect is larger for brands spanning similar, or complementary categories. Therefore, for many brand extensions the cross-category loyalty effect is much more modest.

Practices of brand extensions and how consumers respond to FMCG giants’ greening attempts

“…Thus, the aim of line extensions is to adapt the existing product to specific consumer needs or the needs of different consumer groups and therefore to promise the highest possible market coverage (Tauber 1981). Category extensions, on the other hand, leverage the entrance of new categories, which will involve a bigger step by introducing a whole new item compared to line extensions and will pay off in achieving market expansion with new products into new segments (Grasby et al 2021). Aaker and Keller (1990) provided a framework for consumers' evaluation of brand extensions that is based on the quality of the parent brand, the fit between the parent brand and the extension, and the similarity of the extension to the parent brand.…”

“…This green marketing strategy intends to offer new business opportunities in terms of extending product ranges and in particular, a differentiation from similar but non-green alternatives. Specifically, green line extensions, i.e., a dairy yogurt brand introduces a dairy-free variant (Grasby et al 2021), typically substitute for or complement the existing product by adding a green alternative. Prior research thereby included the competitive landscape, i.e., whether the extension category incumbents are already established or not (Pontes and Pontes 2021).…”

“…Consumers use a variety of methods to reduce risks such as the selection of well-known brands, brand loyalty, endorsement of others, or certification and labeling as a cue (Aaker and Keller 1992;Grasby et al 2021;Liang and Fu 2021;Suki 2013). In the case of green products, ecolabels are reported as having an important influence on consumers' perception and evaluations of products (Alamsyah et al 2020;Canavari and Coderoni 2019).…”

“…Successful brands have established strong relationships with consumers, thus allowing for increased brand loyalty and, consequently, promising a more positive perception of potential brand extensions (Ma and Kaplanidou 2021). It is expected that an existing loyalty encourages cross-purchasing within and beyond categories (Grasby et al 2021). Correspondingly, research on corporate service brands has provided empirical evidence for an indirect impact of customer-perceived ethicality on customer loyalty (Markovic et al 2015).…”

“…This may explain the empirical evidence provided by Chen et al (2020), who noted that brands' greenwashing activities have a negative effect on consumers' green brand loyalty. However, research on the effects of brand loyalty on consumer acceptance of brand extensions is scarce (Grasby et al 2021;Liang and Fu 2021).…”