Purpose — The purpose of this research is to examine how consumers form beliefs and evaluate derivatives (e.g. handheld computers) and branded derivatives (e.g. Palm handheld computers). The aim is to study how consumers combine two categories (e.g. ?handheld products? and ?computers?) to form beliefs, how the similarity between the categories influences beliefs, how the addition of a brand changes beliefs, and how the presence of brand associations impacts on evaluations.
Design/methodology/approach — Three laboratory experiments to test hypotheses were conducted.
Findings — Results of the studies show the modifier (e.g. ?handheld? in handheld computer) dominates derivative beliefs, but the nature of its dominance changes with category similarity. Brand effects are surprisingly limited in belief formation due to modifier dominance. Brand beliefs only transfer to branded derivatives when the brand fits with the modifier category. The presence of brand associations induces more positive evaluations of branded derivatives when the brand fits with the modifier category and, under certain circumstances, when it fits with the header-category.
Research implications/limitations — The presence of multiple concepts (e.g. Palm handheld computer) is common in line and brand extensions, yet little research has examined such complex products. Their comprehension can be better predicted by utilizing conceptual combination theory.
Practical implications — Managers can better determine what kinds of line and brand extensions are best suited for their brands.
Originality/value — The originality and value lay in utilizing the conceptual combination approach to more deeply understand which extensions are best suited for which brands. This helps fill a gap in the literature on consumer perception of multiple-concept extensions.