Do line extensions influence parent brand equity? An investigation of supermarket packaged goods

Purpose – The purpose of this empirical paper is to determine the effects of line extension introductions on parent brand equity. Design/methodology/approach – The paper uses a cross‐sectional sample of 318 supermarket brands. A system of equations is proposed and estimated using seemingly unrelated regression. Findings – Brands benefit from line extension introductions, but only high equity brands benefit from innovation. Low equity brands benefit from the solo advertising of their new line extensions. Practical implications – The results suggest that there are two routes for improving brand equity; high equity brands can introduce innovative products, while low equity parent brands may improve brand equity by supporting new line extensions with solo advertising. Originality/value – The paper is important in identifying the effects of new product introduction and innovation on brand equity.