Category characteristics' effects on brand extension attitudes: A research note Leif Egil Hem a, ⁎ ,1 , Nina Marianne Iversen b,1 , Lars Erling Olsen c,1 a Norwegian School of Economics, NHH, Helleveien 30, 5030 Bergen, Norway b Norwegian School of Business, BI, 0442 Oslo, Norway c Oslo School of Management, P.O. Box 1195 Sentrum, 0107 Oslo, Norway abstract article info Article history: Received January 2013 Received in revised form August 2013 Accepted September 2013 Available online 22 October 2013 Keywords: Brand extensions Extension category characteristics Attitudes Consumer behavior Prior studies on attitudes towards brand extensions focus mainly on the effects of the perceived fit between the brand extension and the extension category. This exploratory paper contributes by describing two studies of how the following four extension category characteristics affect consumers' attitudes towards brand extensions: (1) the awareness set size; (2) the perceived similarity among existing brands; (3) the perceived category familiarity; and (4) overall category attitudes. Results from two studies suggest that consumers evaluate brand extensions more favorably when the awareness set size is small or when their attitude towards the extension category is favorable. Consequently, brand managers must analyze the extension category carefully when developing brand extensions. © 2013 Elsevier Inc. All rights reserved. 1. Introduction In brand extension decisions, brand managers consider three important questions: (1) Does the parent brand fit in the extension category? (2) How do consumers' perceptions of the brand extension affect their perceptions of the parent brand? (3) What characterizes the extension category? This paper focuses on the third question. Sony Ericsson's recent move into watches can illustrate this issue. The fit between the brand extension and the extension category might be excellent, but the crowded nature of the global watch market will most likely influence negatively the prospects of Sony Ericsson watches. Surprisingly, previous research gives little attention to this topic. Thus, the contribution of the current paper is to empirically investigate how different characteristics of the extension category, awareness set size, perceived similarity among existing brands in the extension category, consumers' familiarity with the extension category and overall extension category evaluation, influence the evaluation of a new brand extension. To our knowledge, this is the first paper that includes all these variables in the same exploratory model, and thus investigates the relative effects of these characteristics. Results from an exploratory study, using a quasi- experimental field-survey design on real consumers, show that these characteristics are important for brand evaluations. Furthermore, in Study 2, a classroom experiment further validates one of the important variables from Study 1: consumers' attitudes toward the extension category. This research offers important practical importance to marketers. First, its results provide insight into how four characteristics of the extension category can influence consumers' acceptance of a new brand extension and help guide managers' decisions of which category characteristics that are most important for brand extension success. Second, the current research offers guidelines into how marketers should analyze potential new extension categories to increase the likelihood of brand extension success. 2. Theory and hypotheses Product categories can be characterized in several ways. Previous studies investigate such things as the following: awareness set size and the role of dominant brands in the extension category (Lehmann & Pan, 1994); the number of competitors in the extension category (Smith & Park, 1992); brand quality levels in the extension category (Jun, Mazumdar, & Raj, 1999); the potential for a differentiated brand positioning in the extension category (Sheinin, 1998); variation in offerings across category members (Kardes & Allen, 1991); type of products offered (Smith & Park, 1992); and consumer expertise (Nam & Sternthal, 2008). The list of potential category characteristics is indeed very long. The current research combines four of these important variables: awareness set size, perceived similarity among existing brands in the extension category, consumers' familiarity with the extension category and overall extension category evaluations. In addition, the paper includes two well-established variables in brand extension research, brand strength and perceived fit, to test the relative effects of these extension category characteristics on consumers' brand extension attitudes. In the next section, we elaborate on these variables and state our hypotheses. Journal of Business Research 67 (2014) 1589–1594 ⁎ Corresponding author. E-mail addresses: leif.hem@nhh.no (L.E. Hem), nina.iversen@nhh.no (N.M. Iversen), lars.olsen@mh.no (L.E. Olsen). 1 The authors, listed alphabetically, contributed equally to this article. 0148-2963/$ – see front matter © 2013 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.jbusres.2013.10.002 Contents lists available at ScienceDirect Journal of Business Research