Downward line extension is a valuable growth strategy that enables multiple products and services to meet diverse customer needs. However, downward extended products launched by high-status brands may be challenged by horizontal extended products launched by relatively low-status brands when these two types of products target similar consumers. This study aims to examine the impact of product type (horizontal extended versus downward extended) on consumers’ purchase intentions, the underlying mechanism and the moderating role of power distance belief.
Four scenario-based experiments were conducted to probe the research questions.
Consumers develop lower purchase intentions for downward (versus horizontal) extended products due to the reduction of perceived fit and self-congruity (Study 1). Beyond that, power distance belief moderates the impact of product type on consumers’ purchase intentions, as a low power distance belief reduces the negative effect of downward line extension (Studies 2a, 2b and 2c). Perceived fit and self-congruity mediate the interaction effect between product type and power distance belief on consumers’ purchase intentions (Study 2c).
This study provides marketing practitioners with guidance on implementing the strategy of downward line extension.
This study serves as a preliminary effort to compare consumers’ responses between downward and horizontal extended products, which deepens the understanding of downward line extension. It also contributes to the body of knowledge about line extension and power distance belief by demonstrating the moderating role of power distance belief in a line extension context.
