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Umbrella brand price premiums: effects of compatibility, similarity, and portfolio size

Xin Liu (Department of International Business and Marketing, California State Polytechnic University, Pomona, California, USA)
Michael Y. Hu (Marketing Department, Kent State University, Kent, Ohio, USA)

Journal of Product & Brand Management

ISSN: 1061-0421

Article publication date: 1 March 2011

2603

Abstract

Purpose

The study aims to examine the characteristics of product portfolio on the price premium of an umbrella brand. Specifically, the study seeks to explore three aspects of a product portfolio: the presence of attribute compatibility, similarity, and portfolio size.

Design/methodology/approach

A total of 232 subjects participated in the 2 (with/without compatibility)×2 (product sets: high similarity/low similarity)×3 (portfolio size: small, medium and large). Results support the hypothesis about the three factors.

Findings

Experimental results show that subjects on average are willing to pay a 9.45 percent price premium for the brand with the attribute‐compatible portfolio. The effect of attribute‐compatibility is more obvious for a similar than a dissimilar portfolio. In addition, larger portfolios dilute the price premium.

Originality/value

The study first addresses the factor of attribute compatibility among a product portfolio. A product portfolio with attribute compatibility has features linking products together. For example, the “direct‐print” feature among Canon products allows its cameras to print directly on Canon printers. The study finds that such a feature increases a brand price premium by 9.45 percent.

Keywords

Citation

Liu, X. and Hu, M.Y. (2011), "Umbrella brand price premiums: effects of compatibility, similarity, and portfolio size", Journal of Product & Brand Management, Vol. 20 No. 1, pp. 58-64. https://doi.org/10.1108/10610421111108021

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

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