Trial, repeat purchase and spillover effects of cobranded extensions

Purpose – This study aims to examine the factors that drive consumers' trial and repeat purchases of cobranded extensions, and the amount of spillover effects on host and ingredient brands. Design/methodology/approach – The analysis uses a comprehensive consumer transaction dataset that includes the actual introduction of four cobranded extensions. The authors develop a conceptual framework and three empirical models to explain how consumers' prior experience with the parent brands affect their trial and repeat purchase behaviors, and how their experiences with the cobranded extensions further affect parent brand purchases. Findings – The results from the study indicate that repeat purchases are higher for consumers with more joint purchase incidences in both host and ingredient categories when they have complementary features. In contrast to existing research on single‐brand based extensions, it is found that host brand loyalty has a positive effect on both trial and repeat purchases when the host brand is not a market‐leader. Due to the introduction of the cobranded extension, host brand experiences a negative spillover whereas ingredient brand experiences a positive spillover. Practical implications – The results from the study suggest that while initial targeting for the cobranded extension should be focused on consumers who are loyal to both host and ingredient brands, later targeting should be focused on consumers who are loyal to only the host brand. Originality/value – The study contributes to the existing literature on cobranded extensions by using actual purchase data to analyze the adoption of cobranded extensions.