Existing research on categorical ambiguity has mostly examined how consumers assimilate new products into familiar product categories. Extending these findings, this research investigates whether and under what circumstances consumers either create new mental categories for hybrid products or integrate them into existing categories. Specifically, we propose that this effect is influenced by the degree of product ambiguity and the availability of a new category label. We find that as ambiguity increases, the probability of new category creation augments, but product evaluation deteriorates. However, we also find that a new category label can reduce the effects of ambiguity and can improve product evaluation. Thus, the results fill the existing gap in research on the cognitive integration of hybrid products and shed light on how managers may position these products successfull
