This research analyzes how consumer experience with a parent brand affects trial and repurchase probabilities for a line extension. We develop and test the “uncertainty hypothesis” which is based on the premise that consumers use experience with the parent brand to infer the quality of the extension. Experience with the parent-brand increases consumers' expectation that the extension quality is high. Therefore, consumers with more parent-brand experience will be more likely to try the extension. However, they will be less likely to repurchase the extension because of the selection bias.
We test the hypothesis with scanner panel data from three product categories. The results are consistent with our hypothesis. We also discuss the implications of our results on how to design market programs for new line extensions.