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.
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- Modeling the Effect of Brand Proliferation on Category Expansion and Cannibalization