P300 and categorization in brand extension

Brand extension is the behavior of applying an established brand to enter new product categories. Its success depends on the perception of attribute similarity between the original brand and the extension product. In this study, 16 participants were required to decide the suitability of extending the brand in stimulus 1 to the product category in stimulus 2 during a S1–S2 paradigm. S1 consists of 15 well-known beverage brands. S2 consists of products in two categories: beverage and non-beverage. P300 – an important component of ERP – was elicited in all probes. The P300 amplitude was larger and distributed over almost all parietal and occipital regions when S2 is a beverage product. The P300 amplitude, however, was smaller and presented predominantly over the right regions when S2 is a non-beverage product. We speculate that the participants’ decision process is a categorization process: they tried to classify the product in S2 into brand category in S1. In this process, the brand name in prime evoked the memory of specific products, and the neurons in corresponding cortex areas were activated. The higher similarity and coherence between the brand name in prime and the product name in probe produced an overlap of the similar stimuli in prime and probe, which resulted in larger P300. Otherwise, there is no overlap, resulting in smaller P300. Hence, the P300 may potentially be used in marketing research as an endogenous neural indicator of measuring consumers’ attitude towards an intended brand extension.