Modeling the Effect of Brand Proliferation on Category Expansion and Cannibalization

An important phenomenon in the marketing of frequently purchased consumer products is brand proliferation. While developing, introducing, and marketing new brands or sub-brands within a product category costs money, how far can they influence the market for the product category as a whole? This question is especially important in a mature market in which there are already many brands and the perceived differences between a new brand and existing brands may be small. When a company already has one or more brands in the product category, a new brand introduction by the same company may also result in cannibalization of its existing brands. This paper contributes to the literature by developing a conceptual model and deriving some theoretical results on the effects of brand proliferation on category expansion and cannibalization.