Consumer Response to Line Extensions: Trial and Cannibalisation Effects
Cannibalisation and trial are both potential consequences of line extension strategies with, normally, the former to be controlled and the latter encouraged. Both stem from the familiarity of the parent brand, the main driver of line extension strategy. For a brand manager, considering the launch of a new line, these two effects create tensions; how can trial be maximised whilst parental share loss is minimised? We examine these two effects in different line extensions in the UK and Germany to understand how trial and cannibalisation interact to affect the success of a line extension. Our empirical research analyses the purchase patterns of buyers of a new line, before and after the launch of the extension, and compares these with the level of cannibalisation. Our aim is to understand the dynamics of consumer response to the new line. The household panel data analysis of fmcg purchases shows that line extension buyers are disproportionate purchasers of the parent brand, both before and after the launch. However these measures of cross-purchase correlate only weakly with the level of cannibalisation (rho = .42 before, .43 after). Whilst a line extension clearly encourages purchase of the new line by purchasers of the existing parent, this leads to additional portfolio purchasing as often as substitution. This provides some proof of the efficacy of line extension strategies in expanding brand sales.