– The purpose of this paper is to investigate how brand equity levels influence the evaluation of continuous vs discontinuous innovation of new products and the moderating effects of consumer's product category knowledge (PCK).
– A 2×2 between‐subjects experiment that varied innovation type (continuous/discontinuous) and brand equity level (high/low) was conducted in order to test study hypotheses.
– Study results offer new understanding of how brand equity and PCK influence subject's evaluation of discontinuous vs continuous innovation and provides valuable managerial insights into the potential value of such strategies.
– Being innovative is critical to companies' success. Yet, almost half of the new products introduced in the USA are either cancelled or fail to meet targeted financial returns. Within this reality, it is not surprising that research into consumer response to new product innovation has grown over the last decade. This paper extends the current literature by explicating the interaction effects of two sources of knowledge on influencing consumer evaluation of innovation, that is, PCK as well as brand‐specific knowledge as reflected by brand equity level.