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Brand extension as a major competitive advantage Yudashkin A. (Russian Federation) Расширение бренда как основного конкурентного преимущества Юдашкин А. В. (Российская Федерация)
Yudashkin A. (Russian Federation) Brand extension as a major competitive advantage / Юдашкин А. В. (Российская Федерация) Расширение бренда как основного конкурентного преимущества Юдашкин Андрей Валентинович / Yudashkin Andrey - студент, кафедра мировой экономики и международного бизнеса, факультет финансового экономического института, Тюменский государственный университет, г. Тюмень
Аннотация: при правильном применении стратегия расширения бренда формирует существенное конкурентное преимущество. Статья раскрывает основные характеристики, влияющие на то, как потребитель воспримет расширение того или иного бренда. Особое внимание уделяется качествам компании и родительского бренда, необходимым для успешного расширения.
Abstract: with the correct application of the strategy of brand extension creates a significant competitive advantage. The article reveals the main characteristics that affect how consumers will perceive the expansion of a particular brand. Special attention is paid to the qualities of the company and the parent brand, necessary for the successful expansion.
Ключевые слова: бренд; расширение бренда; расширение рынков сбыта. Keywords: brand, brand extension, expanding markets.
Strong brands play a critical role when company is planning a long-term successful presence in different markets. For this reason, a popular way to launch new products on the market is the brand extension - the use of names, some of the visual attributes and, therefore, the existing brand equity when entering a market with a new product. You can find examples of when a company runs all its expansion under a single brand. Such strategy adheres to a well-known brand Virgin, presented in the various sectors (mobile communication, recording studios, airlines, etc.) with a single brand. There is a slightly different strategy in company Inditex, which created separate independent brands for each line of clothes (Zara, Bershka, Zara Home, Massimo Dutti, etc.).
In what borders can be brand extended - is the main question for marketers. The starting point in this case is the concept of orientation of the brand. It suggests an approach in which all processes of the organization are focused around the creation, development and protection of brand identity in constant interaction with the target audience for the formation of long-term competitive advantage in the form of the brand. However, customer needs at a particular time does not necessarily coincide with those components, which enhance the brand as a strategic resource. Thus, in some cases, market orientation can conflict with long-term development strategy for the brand. Ideally, the company should focus on the market and the brand at the same time [1]. Thus, there is no need to raise the question of whether to extend the brand or not, company needs to decide where, when and how to implement the expansion. The most important thing is to determine the boundaries of the brand. However, this is not a trivial task. As an example, a line of suits under the brand Levi's was not accepted by the market. Meanwhile, Gillette brand successfully expanded in to the market of after shaving skincare. It turns out that even if the product category, in which brand trying to expand, intuitively corresponds to the category of the parent brand, the confirmation by the consumers may be low. However, company Marks & Spencer, engaged in cloth trade, tried to provide financial services under its own brand. Despite the fact that the extension was made in a completely different category, consumers thanks to the trust, formed to the parent brand, met it positively.
Thus, the only way to obtain long-term profitability - to form a strong brand. This is the opinion which renowned expert in the field of marketing and branding Philip Kotler has. He believes that in addition to the rational part of the brand it creates an emotional connection with consumers [3].
Given the potential benefits and risks to the brand associated with the extension, company needs to understand how consumers will evaluate the expansion and which sides of brand extension will be evaluated. This issue has been widely discussed by contemporary researchers.
In general, studies on brand extension, carried out in order to get answers on two basic questions.
1. What factors have influence on the customer's assessment and how these factors work?
2. How the extension of the brand influences consumer attitudes to the parent brand?
Various factors have been studied to answer these questions, which can be divided into several groups. First, the characteristics associated with extension directly.
1. Perceived compliance. The level of consistency between the parent brand and the extension understood as the main success factor of expansion for a long time. D. Aaker and Keller K. identified three types of compliance between the parent brand and the extension and found that the degree of compliance (transferability) has the strongest influence on the perception of the brand extension. J. Smith and Andrews [2] subsequently identified transferability as consumer confidence (the company's ability to produce products that meet specific customer needs) and found that the relationship between compliance and assessment of expansion is enhanced by the
confidence of buyers. Most studies confirm the fact that there is a positive relationship between compliance and assessment of expansion [1, 2, 4]. For example, J., And J. Singh. Scriven [2] stated that the perceived compliance can influence the perception of expansion in two ways. First, it affects the spectrum in which consumers can carry associations with the parent brand to extended one. Second, consumers may draw certain conclusions about the extension. A striking example of the effect of transferability of attributes is a negative evaluation of brand extension, acting in the category of toothpaste and other tools for oral care, in the category of chewing gum. Respondents negatively perceived possible similarities taste of toothpaste and chewing gum.
2. Technology. This parameter refers to the correlation in the manufacturing processes between brand and its expansion [5]. It has been found that consumers perceive extension better if parent brand is at a higher technical level. However, D. Aaker and Keller K. [4] found that consumers can assess the expansion of the negative, if they regard this extension trite and too easy to produce. Thus, there is a certain optimum level of technological differences between the parent brand and the extension. For this reason, in one study respondents rejecting the portable music players from Intel, because they appreciate the innovative technology and the player is considered as a simple and banal product.
Characteristics of the parent brand
1. Brand strength. In most studies, brand strength is determined by the associations related to the brand (for example, the perceived quality of the parent brand). Previous studies have focused primarily on the conditions of the circumstances in which these parameters can affect the perception of consumers about expansion. D. Aaker and Keller K. [4] concluded that the perceived compliance is a prerequisite; they found that consumers value expansion with low corresponding positive only if the quality of the parent brand is assessed as high. D. Aaker and Keller K. [4] claim that consumers better evaluate the extension when the association of the brand better meet the expansion. It is important to note that they can carry negative consequences for expansion. Some researchers have found that brand name may limit the range of possible extensions. For example, the associations connected with the name Betty Crocker could be perceived as negative by using the name for selling fashionable clothes.
2. Brand width. Most works related to the expansion of the brand examine how the width of the brand interacts with the perceived satisfaction. D. Riley and John. Singh [1] found that the width of the brand depends on the similarity of previous extensions: the more common previous expansions had, the smaller the width of the brand. They also found that the large width improves the perception of brand extensions with lower compliance. For example, H. Mao and S. Krishnan [3] established the three dimensions of the characteristics of the brand:
the number of different categories that are associated with the brand;
variations in the quality of brand product categories;
similarity in categories in which brand present.
Empirical data showed that the number of products has a positive effect on consumers' brand extension evaluation; variations in the quality negatively affect the assessment of expansion, and the corresponding category positive affects the assessment. As an example, a line of suits under the brand Levi's, which was not accepted by the market. This is due to the fact that the brand Levi's - the strongest player on the market of denim clothing, and all the attributes of a brand built on this basis. Levi's now pursues a strategy of gradual expansion of the brand and, perhaps, so they will be able to successfully enter into other segments of the apparel market.
Company characteristics
1. The size of the company. The impact of firm size on the perception of extension can vary depending on cultural differences. For example, John. Khan and M. Schmitt [6] found that Americans attach great importance to compliance than the size of the firm, and Hong Kong residents regard the size of the firm as an important factor in extensions with low compliance. However, company size does not matter for extensions with high compliance.
2. The credibility of the company. The credibility of the company is increasing as long as it is consistently successful at expansion launches [5].
Consumer characteristics
1. Product knowledge. Product knowledge is a consumer awareness about the parent brand. It affects the perception of the brand extension. Buyers professionally versed in any product, more likely than regular buyers, transfer characteristics of the parent brand to expanded one, if a match is based on in-depth factors (computer manufacturers begin to produce video cameras). Second, on the contrary, carry the quality of the parent brand to expanded, if a match is based on superficial factors (manufacturers of cameras begin to produce movies). V. Lomax and M. Wright [2] claim that consumers, who are familiar with the specific association of the parent brand, are more likely to appreciate the positive expansion. As mentioned above, the company Marks & Spencer, engaged in trade in clothes, began providing financial services under its own brand. Despite the fact that the extension was made in a completely different category, consumers due to the strong trust, formed to the parent brand, perceived it positively. Among the examples of unsuccessful experience is LEGO, which tried to enter the segment of computer games.
LEGO brand is so firmly entrenched in its core categories that it is virtually impossible to expand. The situation is similar with the brand Coca Cola, which is the least elastic brand.
2. Individual and cultural differences. Culture, mood and age can influence the perception of consumers about expansion. As already mentioned above, J. Khan and M. Schmitt [6] identified influence of the perception of the size of the company on extension in the United States and Hong Kong. H. Mao and S. Krishnan [3] found that mood may enhance the perception of brand extension. They determined that the name of the extension has stronger effect on the children's perception of the expansion than the degree of compliance.
Marketing Strategies
1. Positioning. It has been found that different methods of positioning influence the perception of the extension. For example, D. Aaker and Keller K. [4] investigated two strategies for positioning and found that the perception of extension does not change when the consumer is signaled by the parent brand. At the same time, improves the perception of expansion when consumers are given a detailed description of the expansion attributes. For example, the perception of the brand extension Vidal Sassoon in the perfume category before the use additional signals were negative, because in customer's view, the brand did not meet the new product category. However, after a detailed description of the product, many respondents changed their minds. The importance of the positioning the expansion also showed by S. Kalafatis, N. Remizov, D. and J. Riley. Singh in their research [1]. They proved that for extensions with low compliance the best strategy is sub branding in which advanced product is named in accordance with the parent brand.
2. The order of the expansion. The effect of the order of the extension was studied by N. Davar and F. Anderson [6]. They found that the gradual expansion can reduce the effect of low compliance. They are advised to expand the brand of the most relevant products to the lowest appropriate. As a result, this will lead to a greater likelihood of purchase. The example is the already mentioned successful brand extension by Gillette, which has consistently expanded its line of razors to personal hygiene (shaving, deodorant, a line of products for women).
3. Advertisement. K. Keller [4] investigated the way in which the increase in contacts with target audience affects the perception of extension with a low degree of user satisfaction. He found that consumers, who have seen the advertising message five times, better evaluate expansion than those consumers who have seen the advertising message once.
4. Pricing. B. Taylor and A. Bryden [2] studied how price can affect the perception of extension on two levels of compliance. Thus, the high price enhances the perceived quality extensions with low compliance, and a negative impact on the value of the perceived value and the intention to make a purchase for the extensions with a high level of compliance. An important conclusion from this study is that the price may be used as a way to promote for extensions with low compliance.
Thus, a large database of empirical data dedicated to the evaluation of brand extension consumers was accumulated.
Every company needs to approach the issue of brand extension seriously, because expanding greatly affects consumer behavior by transforming customer's relationship with the parent or the parent product brands. The company's management must give clear answers to the following questions before the extension starts.
Will the parent brand improve consumers' attitude to brand extension?
Will the expansion improve the attitude of consumers to the parent brand (will not spoil it)?
Is there any compelling reason to run the extension (the business benefits that can be obtained through the expansion, and the risks associated with the expansion), or the best option would be to create own brand for a new product offering?
The results listed above will help to find the answers to all these questions and if the company's management believes that the expansion of the brand will be well received by potential customers, it should be implemented.
Литература
Kalafatis S., Remizova N., Riley D. and Singh J.(2012), «The Differential Impact of Brand Equity on B2B Co-branding», Journal of Business and Industrial Marketing, Vol. 27, Issue 8, p 623-63.
Singh J., Scriven J., Clemente M., Lomax W. and Wright M. (2012), «New Brand Extensions: Patterns of Success and Failure», Journal of Advertising Research, Vol. 52, No. 2, p 234-242.
Mao H. and Krishnan S. (2006). «Effects of Prototype and Exemplar Fit on Brand Extension Evaluations: A Two-Process Contingency Model», Journal of Consumer Research, 33 (1), 41-49.
Котлер Ф., Пферч В. Бренд-менеджмент в B2B-сфере. М.: Вершина, 2007.
The best and worst brand extensions 2013 [Электронный источник]. Режим доступа: http://www.adweek.com/news/advertising-branding/vote-now-best-and-worst-brand-extensions-2013-154313/ (дата обращения: 8.09.2014 г.).
Brand Extension Research (by Dr. E. N. Tauber). [Электронный источник]. Режим доступа: www.brandextension.org (дата обращения: 4.09.2014 г.).
