Summary

The aim of this paper is to investigate which portfolio extension option: either a cheaper subbrand or a private label endorsed by the national brand is better from the consumer perspective. Two hypothetical product concepts from a leading beer brand were tested among Dutch consumers. The findings show that consumers are equally likely to try the options and form a positive or negative opinion about the manufacturer after the extension. However, when looking at the ability for a brand to cover a price conscious segment and therefore increase penetration, the cheaper national sub-brand performs better. Given that the manufacturer will be not restricted in distribution of such a brand, our findings are in favour of a cheaper sub-brand rather than an endorsed private label.