Brand effect is one of the crucial sources of innovation performance. Prior research, however, has paid little attention to how innovative activities from companies can be transformed into brand effect. Through the analysis of consumer responses to innovation activities, this paper finds that categorization cognition processing driven by the brand prototype dominates the cognitive converting process from innovation perception to brand preference formation and is a general way to develop brand effect. In particular, consumers perceive three types of activities from companies, including firm technology innovation, product innovation and marketing strategy innovation, and directly impact brand preference by constructing brand prototype which represents the holistic knowledge at brand level. Meanwhile they indirectly affect brand preference through their influences on the construction of brand sophistication as specific attribute-specific knowledge, embodying the main power of generating brand effect. These results provide an analytical framework for the psychological processing mechanism underlying the transformation from firm innovative activities to brand effect, and a new theoretical explanation for the sources of innovation performance. In addition, these results have implications for firms to maintain innovation success to maximize brand effect through management innovation perception, the cultivation of innovation soft capability, the enhancement of innovation performance, and so on.