An important decision brand managers have to make when positioning their products in a retail setting is to whether price new line extensions at parity or let products vary in the price/quality spectrum. Despite the growing interest in vertical line extension issues, there has been little research investigating how product-line length affects extension favorability. Therefore, this paper investigates the framing effect that a product line price structure has on consumer judgments of vertical extensions and, in particular, of upscale extensions. A basic proposition of this research is that the parent brand price range affects the perceived or psychological distance between extension and parent brand, influencing extension favorability ratings. In two experiments, it is shown that positioning an upscale extension in the context of a wide product-line will lead to higher consistency perceptions between the parent brand and a new upscale extension than an equivalent upscale extension positioned in the context of a narrow parent brand product-line.
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