Generic brands : a curse or a blessing?

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Generic brands

A curse or a blessing?

Freek Vincken 5893836

MSc. in Business Administration – Marketing Track 09-03-2015

Supervisor: Drs. J. Labadie Second reader: Drs. R.E.W. Pruppers

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Statement of originality

This document is written by Student Freek Vincken who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Acknowledgements

I would like to thank the following people for their help during the writing of this thesis. Jorge Labadie for his supervision, feedback and our inspirational brainstorm sessions. Roger Pruppers for his critical view on the statistical part of the study.

I would also like to thank my parents and my girlfriend Nina for their unconditional support and motivating words during this process.

And of course, thanks to all the respondents who filled out the surveys which allowed me to carry out this research.

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Abstract

Nowadays, it is widely accepted that a brand is one of the most valuable intangible assets in the creation of a firm’s success. Customer-based brand equity is acknowledged as a useful model by which a brand’s value can be estimated from the perspective of the individual consumer. A type of brand that has received little attention in marketing related literature is the generic brand. Due to the generic usage of the brand name, these brands were expected to be perceived differently by consumers in terms of the brand’s associations and awareness. Furthermore, it can be expected that generic brands acquired a special position in their competitive frame of reference. The main purpose of the study was to investigate if and how generic brands are perceived differently compared to regular non-generic brands in the same category. This research opens, thereby, the unexplored field of generic brands by combining key marketing theories about brand associations, brand awareness and brand positioning with the characteristics of a generic brand.

In order to test the hypotheses, the study uses a quantitative research approach in combination with a free association method. Four questionnaires and one additional survey were conducted for data collection. In total, 156 respondents completed the surveys. The analyses of the data showed that in most cases generic brands had a higher awareness than non-generic brands and were perceived as more prototypical of the product category. Furthermore, the overlap of associations with the category was higher for highly dominant generic brands compared to medium dominant brands, while minimal differences were found for uniqueness of associations. Dominance level of the generic brand and attribute differences between brands within the category appeared to moderate the above described effects. The study concludes with several implications, limitations and directions for future research.

Keywords: Generic brand, customer-based brand equity, brand associations, brand

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5.3 Overlap of associations ... 30 5.4 Uniqueness of associations ... 30 5.5. Conceptual model ... 33 6. Research methodology ... 34 6.1 Stimuli development ... 34 6.2 Results pre-test ... 36 6.3 Research design ... 38 6.4 Measures ... 38 6.4.1 Independent variables... 39 6.4.2 Dependent variables ... 39 6.4.3 Control variables ... 41 6.5 Procedure ... 41 7. Results ... 43 7.1 Participants ... 43 7.2 Control variables ... 44

7.3 Research design additional survey ... 46

7.4 Results additional survey ... 47

7.4.1 Genericness... 47 7.4.2 Dominance ... 49 7.4.3 Attribute differences ... 52 7.5 Hypotheses testing ... 54 7.6 Additional analyses... 69 8. Discussion ... 74

8.1 Brand awareness and prototypicality ... 74

8.1.1 Brand awareness ... 74

8.1.2 Prototypicality ... 75

8.2 Overlap and uniqueness of associations ... 76

8.2.1 Overlap of associations ... 77

8.2.2 Uniqueness of associations ... 78

8.2.3 Favorability of associations ... 80

8.3 Conclusion of the discussion ... 81

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9.1 Summary ... 83

9.2 Theoretical implications ... 84

9.3 Managerial implications ... 86

9.4 Limitations and directions for further research ... 88

List of references ... 91 Appendices ... 96 Appendix A... 96 Appendix B ... 104 Appendix C ... 106 Appendix D ... 109 Appendix E ... 121

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1. Introduction

1.1 Brand associations

Today, it’s widely accepted that a brand is one of the most valuable intangible assets in the creation of a firm’s success. Brands identify the source of a product and differentiate the product from those of competitors (Kotler and Keller, 2012). Consumers’ purchase decisions are heavily affected by their perceptions of a brand since it enables them to valuate branded products differently than comparable products without a brand. Therefore, creating a strong brand that will satisfy consumers’ needs should be an essential part of a firm’s marketing strategy. However, the creation of a strong and valuable brand is a task that should be treated carefully by marketers since the real valuation of a brand is actually constructed in the mind of the consumer.

From a costumer-based approach, it can be said that the power of a brand lies in what consumers know about the brand and what they have seen, read, learned, thought and felt about the brand (Kotler and Keller, 2012). In other words, what they associate with the brand. Brand associations can be based on several elements of a product including attributes, benefits and attitudes and are constructed together as a network of links in the consumer’s mind. Consequently, these associations held in memory can be different for each individual consumer and will be processed differently. This complex structure of associations stored in memory will, in turn, influence how brand image is constructed and thus how consumers perceive the brand. To gain competitive advantage, strong brands should create associations which are evaluated by its consumers as favorable, unique and strong (Keller, 1993). This requires an appropriate positioning of the brand leading to an unique selling proposition that will differentiate the brand from its competitors and give consumers the reason why they should buy that particular brand (Kotler and Keller, 2012).

1.2 Generic trademark

Thus, creating a strong brand that will differentiate the brand from its competitors by delivering favorable, strong and unique associations in the consumers mind is essential in gaining competitive advantage. However, in some cases a brand name becomes so powerful and familiar that consumers may start to view the brand name as a synonym for the product it represents, even though there are other brands that represent the same product. A brand

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- 2 - name that enters into everyday language to describe a product or entire product category is called a generic trademark (Low and Blois, 2002). At first sight, a generic trademark seems the result of a very successful marketing campaign because the brand has become that strong that it eliminated competitor’s brands in the consumers’ mind. It is no coincidence that a generic trademark is often a consequence of a long period of market dominance or even monopoly.

However, although a generic trademark seems the result of a successful and almost completed branding process, the generic usage of a brand name is not without hazards. The associations consumers hold in memory about the brand, which should be favorable, strong and unique will lose their former meaning since they refer to a product or entire product category instead of the individual brand. Furthermore, it could be questioned if these generic brands still have a unique selling proposition when consumers see the brand as prototypical of a product category.

There are several examples of strong brands once started as individual names which are now used to describe an entire product category including Pampers (dipers), Jacuzzi (hot tub), Lego, Spa (sparkling water), TomTom (navigation), Post-it, Frisbee (flying disc), Jeep (sport utility vehicle), Aspirine (pain killer) and many more. Again, it could be said that these are all examples of brands which perfectly executed the marketing of their brand and outperformed the competitor brands in the same market. Consequently, this would mean that they positioned their brand in the best way leading to associations in the consumers mind that convinced them the brand has superior differential advantages translated in strong brand equity.

In some cases, a brand becomes a generic trademark due to the pioneering role it played in the development of a market, which means that consumers view a brand automatically as a synonym for the product name since serious competitors don’t exist or are not known (e.g. Lego and Jacuzzi). By contrast, in some markets generic trademarks may have several serious competitors while their name is still used to identify the product category. For example, Spa faces serious competition from brands as Sourcy and Chaudfontaine whereas Jeep knows competitors like Landrover, Infinity and Dodge. The question is how this kind of generic trademarks can still be different, providing a unique selling proposition and thereby stand out from the product category as most valuable brand compared to non-generic competitor brands in the same market. Since generic trademarks

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- 3 - are considered as prototypical of a product category, are the associations consumers have with the product category the same as they have with the generic brand? And to what extend are the type of associations different than the ones they have with other non-generic brands in the product category?

1.3 Problem definition 1.3.1 Problem statement

Former academic literature has developed theories and frameworks which provide the required elements a brand needs to gain strong costumer-based brand equity. From a firm’s perspective, a brand needs to be positioned in such a way that it results in a unique selling proposition containing the necessary Points-of-Difference and Points-of-Parity that will differentiate the brand from competitors to create superior value. How a brand is perceived by consumers depends on the type of brand associations that are stored in their memory. The uniqueness, strength and favorability of these associations determines how consumers respond to the brand. An associative network memory model describes how these associations are constructed and processed in the mind of the consumer and how this is related to their perception of a brand.

A type of brand that needs special attention is the generic brand. These brands are considered as prototypical of a product category and do not function anymore as a distinctive product identifier but instead, represent the meaning of an entire product category. Therefore, it could be expected that traditional claims about brand positioning and brand associations which fit regular brands, will work differently for brands that became generic.

The aim of this study is to identify to what extend the characteristics of associations with a generic brand differ from regular non-generic brands and if these generic brands are still able to create an unique selling proposition in the consumers’ mind. Furthermore, what is the influence of the generic usage of a band name on its awareness and the way consumers see the brand as an representation of a product category. Therefore, I would like to propose the following research question:

How do generic brands differentiate from the competition and what are the differentiating and distinctive attributes of the generic brand?

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- 4 - 1.3.2 Subquestions

 What is an associative network memory model?  What are the characteristics of brand associations?

 What is the influence of brand associations on consumers brand evaluations?  What is brand positioning?

 What are Points-of-Parity and Points-of-Difference?  What is a generic trademark

1.3.3 Delimitations of the study

The aim of this study is to identify the type of associations consumers have with generic trademarks and how these associations differ from regular non-generic brands. Generic trademarks will thus be analyzed from a marketing perspective and specifically, a consumer behavior perspective. Although the wide spectrum of legal issues concerning generic trademarks is an important aspect, this will be left aside since is does not contribute to the aim of this study.

An interesting research question related to the scope of this research is the influence of consumer characteristics on type of brand associations concerning different kind of brands like for instance a generic trademark. However, this study is mainly conducted to isolate and analyze how brands are positioned and how brand associations related to generic trademarks are constructed in the consumers’ mind. Therefore, the moderating effect of demographic consumer characteristics will be left aside since this will shift the focus to another part of the consumer behavior field and it won’t answer the specific research question.

Furthermore, while it could be an interesting continuation of this study, the characteristics of brand position strategies will not be analyzed. In this research, theories about brand positioning are mainly used to understand the way generic trademarks are positioned differently than non-generic brands in the same market and what the consequence of this positioning could be for the brand associations consumers have in memory. The main goal is to get a better understanding of consumer perceptions of generic trademarks. The purpose of this study is not to find out the best possible positioning strategies generic brand names should use. However, a few recommendations concerning this topic will be given in the conclusion.

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1.4.1 Theoretical contributions

Brand positioning and brand associations have been widely researched topics in the scientific community. Theories and frameworks have been developed to analyze their influence on the power of brands and to elaborate on the essential elements brands need in order to create strong brand equity. Brand positioning is considered as a central element in the creation of an unique selling proposition which should lead to a differentiated brand with superior competitive advantage. Research on brand associations focused on the different types and characteristics of associations. Furthermore, by following the principles of an associative network memory model, it can be explained how brand associations are constructed in the consumers’ mind and how they eventually lead to different consumer responses.

By analyzing the type of associations consumers hold in memory about a generic brand name and how this is related to the positioning of the generic brand, this study will provide new contributions to traditional frameworks. Furthermore, the study is conducted to analyze how characteristics of a brand, in this case a generic brand name, influence the associations consumer have in memory and thereby their perception of the brand. Therefore, it will be tested whether existing claims can be retained in case of a special type of brand, the generic trademark.

1.4.2 Managerial contributions

As noted earlier, a distinctive positioning of a brand is an essential part of a firm’s marketing strategy. It should result in a unique selling proposition with the appropriate associations stored in the consumers’ mind. Former research has provided the elements which marketing managers should take in consideration to create a differentiated brand with strong equity. However, in case of a generic trademark, it could be questioned if these traditional claims still hold. The fact that a brand becomes a generic term in consumers’ common language should mean that the brand has distinguished itself from competing brands successfully and brand equity should be extreme strong. However, being a generic trademark should also mean that the brand loses its differential value since the brand name will be used as an identifier of an entire product category. To remain a differential brand with competitive

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- 6 - advantage based on the brand name, marketers should be aware of the way that consumers form their perceptions of a generic trademark based on associations. The results of this study provide managers the insights they need to position their generic trademark in such a way that their unique selling proposition will be guaranteed and that consumers will identify the generic trademark as differential brand with unique advantages.

1.5 Research outline

The thesis is structured as follows. Chapter 1 introduces the topic, research question and contributions of the study. Chapter 2 will discuss former research about brands associations including the topics customer-based brand equity, associative network memory model and the characteristics of brand associations. Chapter 3 continues with a discussion of the literature about brand positioning including essential elements as frame of reference, Points-of-Parity and Points-of-difference. Chapter 4 explains what a generic trademark is and what the implications are for brand associations related to a generic trademark. In chapter 5 several hypotheses are developed followed by chapter 6 in which the methodology of the research is explained. Chapter 7 covers the data analyses and hypotheses testing. In chapter 8 the results of the data analyses will be discussed. The thesis concludes with a short conclusion including the implications, the limitations of this study and recommendations for further research.

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2. Brands as an associative network

2.1 Customer-based brand equity

Today the marketing of the brand is acknowledged as one of the most valuable aspects of a firm’s success. However, the direct results of these marketing activities are not as clear as they are for other financial investments a firm makes. Therefore, marketers need to justify investments made on marketing activities to show the importance of these activities. One solution is focusing on financial measures such as sales and profit but these measures can only be used for past results and are short-term focused (Christodolidous and De Chernatony, 2010). A second solution, which will be the focus of this literature review, are intangible marketing assets. These assets provide a better and deeper understanding of marketing performance, combining both short-term and long-term performance (Amber, 2003).

The most important asset that has a central position in analyzing the impact of marketing is brand equity (Amber, 2003). ‘The initial interest in brand equity was from the standpoint of brand valuation’ (Krishnan, 1996, p. 391). It can measure financial effects to estimate the value of a brand but it can also be used for a more strategy-based motivation to improve marketing productivity (Keller, 1993). Aaker defined brand equity as follows: ‘a set of assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers’ (1991). Many studies have been describing brand equity which has led to a wide range of conceptualizations of the concept (Christodolidous, 2010). Costumer-based brand equity is a conceptualization of brand equity from the perspective of the individual consumer. Looking at this concept from a consumer perspective facilitates best the development of more effective marketing strategies and tactics (Keller, 1993). Keller defined customer-based brand equity as ‘the differential effect of brand knowledge on consumer response to the marketing of the brand’ (1993, p. 1). Three components in this definition are explained in detail by Keller (1993) to provide a better understanding of the concept. First differential

effect, which is described by Keller as ‘comparing consumer response to the marketing of a

brand with the response to the same marketing of an unnamed version of the product’ (1993, p. 8). The second concept consumer response to marketing is defined as ‘consumer perceptions, preferences and behavior arising from marketing mix activity’ (Keller,1993, p.8).

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- 8 - The third concept, which can be considered as the most critical antecedent of customer-based brand equity, is brand knowledge. Brand knowledge refers to the knowledge consumers have in memory about a particular brand and can be divided into brand awareness (recognition and recall) and brand image (a set of associations) (Keller, 1993). The influence of these two components on consumer decision making is constructed following the principles of an associative network memory model. Customer-based brand equity will be positive if a consumer is familiar with the brand (brand awareness) and holds some favorable, strong and unique associations in memory about the brand (brand image) (Keller, 1993). Brand image can be seen as perceptions constructed by the brand associations held in consumer memory. Or as Keller puts it in other words: ‘a brand is said to have positive (negative) customer-based brand equity if consumers react more (less) favorably to the product, price, promotion, or distribution of the brand than they do to the same marketing mix element when it is attributed to a fictitiously named or unnamed version of the product or service’ (1993, p. 2).

Understanding the structure of consumers’ brand knowledge is thus essential to estimate the value of a marketing program and the brand itself. The following model shows Keller’s conceptualization of brand knowledge including the separate dimensions and characteristics of associations.

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- 9 - Christodolidous and De Chernatony provided a somewhat more comprehensive definition of customer-based brand equity by combining Keller’s cognitive psychology perspective and research from the information economics stream: ‘a set of perceptions, attitudes, knowledge, and behaviors on the part of consumers that results in increased utility and allows a brand to earn greater volume or greater margins than it could without the brand name’(2010, p. 9). However, since this study is focused on brand associations and their influence on consumer response specifically, Keller’s framework and definition will form the basis for the rest of the research.

2.2 Associative network memory model

What becomes clear from the previous section is that customer-based brand equity is heavily affected by consumers’ brand knowledge. In turn, brand knowledge is structured by consumer brand associations which have a significant impact on consumer decision making and their perceptions about a brand. It is ,therefore, important to understand how these associations are structured in the mind of the consumer, how these associations create value for the brand and how they influence each other.

The most widely accepted approach for studying brand associations is a associative network memory model (Keller, 1993). According to this model, knowledge about a brand is stored in consumers’ memory as an associative network. Conversely, ‘memory is thus composed of knowledge that is organized as a network of connections’ (Krishnan, 1996, p. 391). The concept of associative network has been developed in cognitive psychology but can be adapted to the understanding of consumer behavior (Henderson et al, 1998).

The basic idea is that in a associative network memory model, memory is seen as a set of nodes and links (Keller, 1993). A node is a piece of stored information which can represent information about a brand, a product or an attribute (Krishnan, 1996). Consumers have different nodes in memory with different pieces of stored information. Links between any of these nodes represent an association in the consumers mind (Krishnan, 1996). However, specific brand knowledge is ‘conceptualized as consisting of a brand node in memory to which a variety of associations are linked’(Keller, 1993, p. 3). Thus, associations can represent links between nodes with any kind of information, but brand associations specifically are represented by a brand node and the associations linked to this brand node. What distinguishes a brand node or brand knowledge are the awareness of the brand and

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- 10 - the favorability, strength and uniqueness of the brand associations in consumer memory (Keller, 1993). These are the relevant dimensions that will affect consumer response towards the brand. These dimensions are in turn affected by other antecedents which will be described in detail in the next paragraph. Henderson et al argue that the links between nodes form associations which together form a knowledge structure or a network of ideas. According to them, these nodes include a firm name, a product brand name, a generic product category, features of the products and people and occasions (Henderson et al, 1998).

The following figure is an example of an associative network including the brand name Nike and nodes with stored information associated with the brand Nike and other nodes associated with these nodes. Some associations represent attributes and benefits (e.g. durability) whereas other associations are based on consumers’ former experience with the brand.

Fig. 2 Associative network (Krishnan 1996)

Collins and Loftus introduced the concept of spreading activation which explains how these nodes and associations work in the consumer’s mind (Henderson et al). If a consumer gets in contact with a brand, that person is reminded of a stimulus (the brand name) which will activate the node corresponding to that stimulus. Subsequently, the activation will spread from the stimulus node to other related nodes with stored information and thus activating the related associations (Henderson et al, 1998). The degree of spreading depends upon the

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- 11 - distance between the stimulus node and the other nodes. The distance between nodes and easiness of memory retrieval is determined by the characteristics of associations including ‘favorability, strength, and uniqueness’ (Keller, 1993) and ‘number, valence, uniqueness and origin of associations’(Krishnan, 1996) which are described in the next paragraph.

2.3 Types of brand associations

As noted earlier, favorability, strength and uniqueness of brand associations are the dimensions that can distinguish brand knowledge which plays a major role in determining differential consumer response (Chen, 2001). In turn, these dimensions are key antecedents of consumer-based brand equity. But before explaining these dimensions in more detail, it’s important to describe the different types of brand associations consumers may have in memory.

Basically, Keller classifies brand associations into three major categories: attributes, benefits and attitudes (see fig. 1). All these categories show the kind of associations consumers could have with different aspects of a product or brand. Attributes are the descriptive features that characterize a brand, i.e. what a consumer thinks the brand or product is and what is involved with its purchase or consumption (Keller, 1993). Attributes can be divided into product-related attributes and non-product-related attributes (e.g. price information and packaging). Benefits are considered as the personal values consumers attach to the brand or product (Keller, 1993). In others words, what consumers think a brand or product can do form them personally. These benefits can be classified into three categories including functional-, experiential- and symbolic benefits. A distinction between these three sort of benefits is made on basis of the underlying motivations to the which they refer (Keller 1993 refer to Park, Jaworski, and Maclnnis 1986). The third type of association mentioned by Keller are brand attitudes. Brand attitudes refer to ‘the consumers overall evaluations of a brand’ (Keller 1993 refer to Wilkie 1986) and can be considered as the basis for consumer behavior.

These different type of associations can be classified according to their level of abstraction. Level of abstraction means how much information is summarized or subsumed in the association (Keller, 1993). Abstract associations are considered to contain more embedded meaning which consequently means that these associations are more accessible and remain longer in consumers memory. The associations referring to the individual

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- 12 - functions of a product (benefits) represent a higher level of abstraction than those referring to the attributes (Del Rio 2001 refer to Chattopadhyay and Alba,1988). Furthermore, brand attitudes are considered to be abstract as well (Keller, 1993). So it could be argued that associations representing benefits and brand attitudes are stronger and play a more significant role in determining consumer response than the ones that represent attributes.

2.4 Characteristics of brand associations

The influence of the different associations described above, depends on their favorability, strength and uniqueness. Favorability refers to how favorable associations are evaluated by consumers (Keller, 1993). Favorable evaluations occur when consumers form a positive brand attitude on the basis of believing that a brand has relevant benefits and attributes that will satisfy their most important needs. It is therefore important to be aware of the fact that focusing solely on the amount of associations does not reflect the consumers attitude towards a brand because many of these associations can be negative (Krishnan, 1996). Associations can also be characterized by the strength of connection to the brand node (Keller, 1993). The strength of connection between a brand node and its associations depends on the interaction between how information about that particular brand enters consumer memory and how this information is stored in that memory. Furthermore, the strength of associations is determined by both how much a consumer thinks about the information (quantity of processing) and in what way a consumer thinks about this information (quality of processing) (Keller, 1993). When a consumer actively thinks about the information and the significance of this information, the associations constructed in memory will be stronger. This strength will subsequently increase the accessibility of information and the chance that spreading activation will occur. Krishnan claims that a large number of associations about one brand increases brand equity for that brand (1996). A larger amount of associations make it easier to access the particular brand node from memory because then there are different paths to reach this brand node (Krishnan, 1996). However, a large number of associations could make consumers memory structure more complex as well, leading to lowered memory for that brand as a consequence. But according to Krishnan (1996), this will only be the case for new and relative unknown brands since mature brands normally established higher levels of brand awareness.

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- 13 - response and the likelihood that strong consumer-based brand equity will occur. Brand associations can be considered as unique if they are not shared with competing brands (Keller, 1993). It is therefore highly important that a brand is positioned as having a unique selling proposition. This will differentiate the brand from competitors and provides consumers the reason why they should buy products from this particular brand (Keller, 1993). Uniqueness of associations becomes clear for consumers by comparing these associations, explicitly or implicitly, with a competitive point of reference (e.g. competitors and substitute products). This, in turn, will imply a sort superiority over other competing brands (Keller, 1993).

Besides unique associations, a brand should have some shared associations with competitors as well because it will help them to create category membership (Keller 1993 refer to Macinnis and Nakamoto 1991). The added value for the brand here can be found in the fact that it will map the competition and it will classify the brand as a member of a particular product category (Krishnan, 1996). Furthermore, some associations including certain attributes and benefits can be considered as prototypical and essential to all members in a product category (Keller, 1993). A brand that contains these essential attributes and benefits, but is seen as the best representative of these shared associations, will gain a competitive advantage compared to the competition in the same and related product categories.

2.5 Classification of brand associations

As said, brand image is constructed by the set of associations consumers hold in memory about a brand. Brand image refers to how a brand is represented in the consumers’ mind, which has a major influence on consumers response towards the brand. In order to understand the type of brand associations that build a brand image, several academics have proposed models to classify and structure these brand associations. Timmerman (2002) has combined these different models of brand image into one framework which is called ‘The inventory of Brand Representation attributes’ (IBRA). In his IBRA model, Timmerman classifies the different elements of brand image as a type of association a consumer might have with a brand (2002). Furthermore, he conceptualizes types of associations as attributes to which an association refers. According to the IBRA, three main groups of attributes can be distinguished: product-related attributes, brand-related attributes and consumer-related

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- 14 - attributes. These general types of attributes are further divided into ten main attribute groups as shown in figure 3 (Timmerman, 2002). These groups together contain 57 different brand attributes on which consumers’ brand associations can be based. It is highly important, from a brand’s perspective, to make a distinction between all the possible associations that consumers can have with a brand since ‘not all these associations are equally relevant for all brands’ (Franzen and Moriarty, 2008, p. 265). In order to create an effective marketing strategy, it is important to find out what associations consumers have with a brand and which of these associations plays the key role in the evaluation process of consumers (Franzen and Moriarty, 2008).

Since brands are in the first place indicators of products, product-related attributes refer to the knowledge on products that is stored in consumers’ memory. The product-related associations can be based on two classes of knowledge: knowledge on the characteristics of the product and knowledge stemming from former usage of the product.

Brand-related attributes are the associations derived from for example the brand name, the

company behind the brand and its place in the product category compared to the competition and the personification of the brand. Consumer-related attributes are those associations which are formed and influenced on individual consumer level and are based on attitude, purchase behavior and the consumer’s personal reference.

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- 15 - Based on his conceptualization of brand equity, Keller created a framework to structure the associations consumers have with a brand and to measure their response to that brand which he called the customer-based brand equity (CBBE) model (Keller, 2001). According to this model, Keller argues that the creation of strong brand equity involves a series of steps, where each step is essential in order to achieve the next step successfully (Keller, 2001). The CBBE model consist of four steps. The first step is identification in which an association should be created in the consumers’ mind with a specific product class that should lead to brand salience and awareness (Keller, 2001). Second, brand meaning has to be established. This involves the creation of brand image which, in turn, is constructed by tangible and intangible brand associations (Keller, 2001). The third step is to elicit the right customer responses to the brand identity and brand meaning. These responses can be based on customers’ feelings or customers’ judgments (Keller, 2001). In the final step, these responses have to be converted in order to create an intense and loyal relationship between the brand and its customers (Keller, 2001).

Together these four steps form the CBBE pyramid. The pyramid is composed of six brand-building blocks which are all essential to create strong brand equity. Therefore, firms should include all these blocks in the right order during the brand building process. The four steps and the six brand-building blocks are illustrated in the following figure.

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3. Brand positioning

3.1 Unique selling proposition

The previous chapter showed the importance of strong costumer-based brand equity and how this equity is constructed by a complex structure of brand associations and awareness. A firm’s marketing strategy should thus be focused on creating and delivering the right brand associations in the consumers’ mind that will differentiate the brand form its competitors. Especially today, where firms have to compete in a fragmented and overcrowded market, it is highly important to create sufficient differential advantages over the competition (Fuchs and Diamantopoulos, 2010 refer to Clancy and Trout, 2002). The central aspect of a firm’s marketing strategy that can deliver these differential advantages is the concept of brand positioning. Brand positioning can be defined as ‘ the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market’ (Kotler and Keller, 2012, p. 276). Furthermore, Keller claims that ‘the essence of brand positioning is that the brand has a sustainable competitive advantage or “unique selling proposition” that gives consumers a compelling reason for buying that particular brand’ (Keller 1993, p. 6 refer to Aaker 1982; Ries and Trout 1979; Wind 1982).

The purpose of brand positioning is to locate the brand in the mind of the consumer to gain maximum benefits for the firm (Keller, 2009). Furthermore, an appropriate positioning of the brand is crucial for the creation of a successful customer-focused value proposition (Fuchs and Diamantopoulos, 2010; Kotler and Keller, 2012). In other words, it gives consumers the reason why they should buy a product from one particular brand instead of a competitors brand. Some research takes it a step further and argues that brand positioning is meant to shape the preference of the target market which will lead to high consumer loyalty and costumer-based brand equity (Fuchs and Diamantopoulos, 2010 refer to Kalra and Goodstein, 1998; Keller, 2003; Schiffman and Kanuk,2007). Others claim that a right positioning of the brand should, by creating a differential value proposition, answer the specific needs of a particular customer segment because these costumers will be more exactly satisfied (Fuchs and Diamantopoulos, 2010 refer to Keller, 1993; Wind, Day, 1984).

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- 17 - 3.2 Dimensions of brand positioning

Brand positioning should be the basis for the overall marketing strategy (Kotler and Keller, 2012) because it is central to the perceptions and choices of consumers. However, whereas the importance of brand positioning is evident, the concept itself isn’t as straightforward as is seems. Fuchs and Diamantopoulos draw a distinction between three types of positioning to explore the nature of brand positioning including intended, actual and perceived positioning (2010). Intended positioning refers to how a company wants to have the brand perceived by the target consumers (Fuchs and Diamantopoulos, 2010). It is mostly driven by a firm’s strategy that is focused on differentiation, serving the most profitable customer segment or finding the position that will fit to the customer needs in the best possible way. Thus, intended positioning reflects the brand associations a firm intends to create in the mind of the consumers, whereas actual positioning reflects the information about the positioning that is actually presented to the target market (Fuchs and Diamantopoulos, 2010). In other words, what information and how it is communicated by marketers to the consumer market. The difference between intended and actual positioning lies in the message a firm wants to spread about the brand leading to the formation of a brand image. Based on the information that has been spread during the actual positioning and on previous experiences, consumers form their own perceptions of the brand and store these perceptions in their mind which is called perceived positioning (Fuchs and Diamantopoulos, 2010). This process of brand perception is seen as an complex interaction between beliefs, feelings and impressions consumer have about a brand compared to other brands (Fuchs and Diamantopoulos, 2010 refer to Ellson, 2004; Ries and Trout, 1986). Therefore, the results of perceived positioning can be different for any individual consumer based on their personal goals, objectives, values and usage context (Fuchs and Diamantopoulos, 2010). For a proper and effective positioning of the brand, marketers need to take in consideration all the three dimensions described above. They need to select the right and differential positioning strategy (intended positioning) which is perceived as being relevant and important by consumers (perceived positioning) and make sure the right information is communicated to the consumers (actual positioning) (Fuchs and Diamantopoulos, 2010). In case of selecting the wrong components in one of these dimensions, brands run the risk of

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- 18 - harming the way the brand is perceived by its consumers which could lead to diminishing sales (Fuchs and Diamantopoulos, 2010).

3.3 Frame of reference

According to Keller, ‘positioning requires similarities and differences between brands be defined and communicated’ (2009, p. 7). Therefore, he states that there are four components which are key to superior competitive positioning: a competitive frame of reference, points of difference, points of parity and a brand mantra. The next few sections will outline the first three components since these are essential for the understanding of this study.

The competitive frame of reference can be seen as the starting point of a good brand positioning because it ‘dictates the types of associations that will function as points of parity and points of difference’ (Keller, Sternthal, and Tybout, 2002, p. 4). Furthermore, the frame of reference defines the competition in terms of competing brands, the target market and the nature of competition (Keller, 2009). it signals the goal consumers can expect to achieve by using the brand (Keller, Sternthal, and Tybout, 2002). It is not only a frame in terms of a narrowly defined market or product category, but it should also work as a frame of reference in the consumers mind because it signals the goal consumers can expect to achieve by using the brand (Keller, Sternthal, and Tybout, 2002). So it maps the competition for the brand and it gives consumers the opportunity to compare the brand with other products with which they are familiar.

Brands can have multiple frames of reference and these can change over time. For instance, a newly launched product often takes existing competing products as frame of reference so that consumers know what to expect from the product and what goal it serves whereas matured brands might shift their focus to factors outside the product category in their search for potential growth (Kotler and Keller, 2012). Determining an appropriate competitive frame of reference depends on both the understanding of consumer behavior and the considerations sets consumers go trough in making brand choices (Keller, 2009).

3.4 Points-of-Difference

According to Keller, Points-of-Difference are the attributes and benefits consumers strongly associate with a certain brand and which are believed to be unique and could not be found

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- 19 - to the same extent with a competitive brand (2009). The Points-of-Difference are those associations that distinguish a brand from others in the same frame of reference. It is essential that the associations based on these attributes and benefits are considered as favorable, strong and unique (Keller, 2009).

Keller mentions three criteria that determine if a brand association is able to function as a Point-of-Difference (2009). First, desirable to the consumer, that is a brand association should be seen as personal relevant, credible and believable to the consumer. Second, a firm must be able to actually feasibly and profitably create and maintain the brand association in the mind of the consumer which is called deliverable by the company. The third criteria is that a brand must be differentiating from competitors. By this Keller means that a brand association must be seen by consumers as distinctive and superior compared to relevant competitors.

Three types differences between brands can be distinguished including: brand performance associations, brand imagery associations, and consumer insight associations (Keller, Sternthal, and Tybout, 2002). These differences have their own kinds of association sets leading to Points-of-Difference. Brand performance associations refer to ‘the ways in which a product or service attempts to meet customers’ functional needs’, whereas brand

imagery associations are being used when consumers make ‘choices based on experience’

(Keller, Sternthal, and Tybout, 2002, p. 5). Consumer insight associations are the least attractive in creating strong Points-of-Difference because these type of associations are easily copied by competitors and will become in turn Points-of-Parity. Therefore, focusing on brand benefits or imagery associations will result in a greater positioning of the brand (Keller, Sternthal, and Tybout, 2002).

3.5 Points-of-Parity

Besides associations that represent a difference, brands should also contain attribute and benefit associations that are not per se unique to the brand. These associations could in fact be shared with competing brands (Kotler and Keller, 2012). Focusing on your Points-of-Parity is important because it clarifies that consumers can perceive the product as legitimate and credible in the frame of reference (Keller, Sternthal, and Tybout, 2002). These associations reflect the features that are shared in the product category and it could, therefore, establish category membership (Keller, 1993).

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- 20 - Associations reflecting Points-of-Parity come in two forms, namely category and competitive. Category-of-Parity are ‘associations that consumers view as essential to a legitimate and credible offering within a certain product category’ (Kotler and Keller, 2012, p. 280). These associations represent features that consumers assume as being necessary for a brand in a particular product category. Competitive Points-of-Parity are ‘associations designed to negate competitors’ Points-of-Difference’ (Keller, 2009, p. 9). Brands can eliminate a competitor’s Point-of-Difference by adopting the differential features of that particular competitor’s product and make it a Point-of-Parity (Keller, Sternthal, and Tybout, 2002). Furthermore, it can ‘ negate a perceived vulnerability of the brand as a result of its own Points-of-Difference’ (Kotler and Keller, 2012, p. 281). That is, consumers might think that when a brand is good at one specific thing (Point-of-Difference), it might be not that good at another specific thing (compared to competitors). This can be eliminated by broaden the scope and thus introducing extra Points-of-Parity.

3.6 Differentiation versus Distinctiveness

‘The essence of brand positioning is that the brand has a sustainable competitive advantage or “unique selling proposition” that gives consumers a compelling reason for buying that particular brand’ (Keller 1993, p. 6 refer to Aaker 1982; Ries and Trout 1979; Wind 1982). Furthermore, firms should create unique associations in the consumers’ mind. That is, consumers associate an attribute with only one brand, which is argued to have a major impact on brand equity. Brand positioning should thus be focused on delivering the right Points-of-Difference in order to differentiate a brand from its competitors and to gain a sustainable competitive advantage (Keller, 2009). Sharp (2010) questions the widely accepted claim that differentiation is the key component of a brand’s marketing strategy to make sure that consumers prefer a brand over one other. According to Sharp, differentiation exists but the degree of meaningful differentiation between rival brands is not as strong as is often suggested (2010). It has even been suggested that awareness and salience nowadays play a greater role in consumer purchase behavior and thus how brands should compete with each other (Sharp refer to Ehrenberg, Barnard and Scriven, 1997). Instead of focusing on differentiation brands should focus their marketing strategy on building distinctive qualities and assets that will create the necessary brand awareness and salience. A distinctive quality or element is anything that shows people what brand belongs to

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- 21 - a product (Sharp, 2010). These elements should make it possible for consumers to notice, recognize and recall the brand. Examples of distinctive elements could include colors, logos, taglines, symbols and advertising styles (Sharp, 2010). These elements and qualities should be able to build and restructure consumer memory and make it easier for consumers to locate the brand. In other words, ‘distinctive assets are not what motivate consumers to buy brands, it’s how they know where the brand is and what brand they bought’ (Sharp, 2010, p. 133). The strength of an element as an distinctive asset is determined by two criteria, namely its uniqueness and prevalence (Sharp, 2010).

Based on his thoughts about distinctiveness, Sharp claims that brands compete in terms of physical and mental availability. That is, ‘brands that are easier to buy, for more people in more occasions, get bought more often’ (Sharp, 2010, p. 180). Mental availability is the propensity for a brand to be noticed or thought of in buying situations(Sharp, 2010). This depends heavily on its salience and awareness but is structured by the set of associations in consumer memory that will determine the brand’s share of mind. Physical availability means ‘making a brand as easy to notice and buy as possible, for as many consumers as possible, across as wide a range of potential buying situations as possible’(Sharp, 2010).

Thus according to Sharp, the key element of any branding process should be, making a brand and its distinctive assets as available as possible, both in the consumers’ mind and the physical competitive environment. Which is quite a different approach than Kotler and Keller’s idea of meaningful differentiation and serving different customer segments.

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4. Generic brand

Since the importance of a strong and powerful brand name has been acknowledged by most firms, a trademark is nowadays a key asset of many marketing activities in the brand building process. A trademark can be defined as ‘a word, letter, symbol, design or any combination of these which is used by a seller to identify and distinguish his brand from those provided by others’(Rozek, 1982, p 236). It signals to consumers the existents of a brand and it assures them that the product meets certain quality standards. Furthermore, a trademark embodies the seller’s reputation whereas consumers may use a trademark as a substitute for search or as a mechanism to gather information about a brand or product category (Rozek, 1982). Usually trademarks are legally protected and can be considered as intellectual property, belonging to the holder of the trademark (Cohen, 1986). Most research on trademarks embodies the legal spectrum of trademarks including trademark law, protection, registration, licensing and other legal issues. However, the legal side of trademarks will be left aside for the purpose of this study. Trademarks will be analyzed from a marketing perspective, considering a trademark as a key asset of strong brands.

Despite of the fact that trademarks have been legally protected for many years, a brand name or trademark can evolve over time into generic usage (Rozek, 1982). It then becomes a generic trademark which means that it ‘becomes the common descriptive name for an entire product class rather than the mark for a specific brand within that product class’ (Rozek , 1982, p. 236). In other words, consumers may start to view a trademark as a synonym for the product category it operates in. In that case, a trademark doesn’t function anymore as a distinctive product identifier but reflects the meaning of an entire product category. Low and Blois refer to generic brands as ‘they enter into everyday language and are used to describe a product or a process without necessarily being associated with the brand owner’ (2002, p. 387).

A large number of associations that consumers may have about a generic brand will be shared with the associations about standard product features which makes the brand prototypical for that particular product category (Krishnan, 1996). If the brand name becomes too common and the firm is not able to legally protect the name, cancellation of the trademark’s legal protection could occur, which means that ‘the owner loses the legal right to its exclusive use’ (Rozek, 1982, p. 237). The trademark could then be used in general

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- 23 - to describe a certain product category without referring officially to the brand that originally owned the name. In order to avoid confusion, the rest of this research will use the term generic brand to describe this phenomenon instead of the term generic trademark. Especially since the term brand embodies a more comprehensive concept that fits better the goal of this study than the term trademark.

It’s difficult to declare the exact reasons why some brand names become a generic term. However, some market situations are expected to increase the possibility for particular brands to become the general name for a product category. For instance, it is often suggested that a generic brand is that brand name, which was the first to establish positive brand associations and thus a positive brand identity during the rise of the product market (Low and Blois, 2002). In this case, the brand could be considered as a pioneering brand and could have gained, due to its pioneer brand advantage (Alpert and Kamins, 1994), the largest market share in the relevant market (Urban et al, 1986). Having the largest market share means that a brand is considered as the absolute market leader in the relevant product category (Kotler and Keller, 2012). This could imply that a brand acquired significant market dominance. After a long period of market dominance or even monopoly, consumers may start to see the brand and the corresponding product category as identical (Rozek, 1982). This could eventually lead to the use of the brand name as a generic term.

4.1 Advertising spillover effect

Rozek (1982) described the concept of advertisement spillover effect in relation to generic brand name usage which explains clearly the benefits and disadvantages for a brand that became generic. At first sight, it leads to higher brand awareness for the generic brand holder. Other brands in the product category use the generic brand name when they refer to the product category just like consumers will use the generic brand name to refer to the product. Although the generic brand will not be used as a specific brand name, advertisements for the product and the product category (thus by using the generic trademark as product identifier) by other brands will have a spillover effect to the brand that is represented by the generic brand, eventually leading to increased awareness (Rozek, 1982).

On the other hand, the generic usage of a brand name may lead to trademark erosion. That is, a brand name loses its primary meaning as a individual brand and in turn

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- 24 - becomes the identifier for a product or product category. This implies that other brands in that particular product category will benefit from the spillover effect since the marketing of the generic brand name is in fact advertisement for the entire product category (Rozek, 1982). Advertising by the brand with the generic brand name increases the probability that consumers will select a product from the category which is represented by the generic brand name since these are identical from a consumers perspective (Rozek, 1982). Another dangerous disadvantage of becoming a generic term is that these brands will lose their carefully build brand equity because the set of associations related to the brand will lose its primary meaning (Low and Blois, 2002). And as Low and Blois argue: ‘a brand without equity is not a brand (2002, p. 388).

4.2 Mind share and generic brand associations

Besides certain market situations, the emergence of generic brands could also be found in the consumers mind. Mind share is a concept that could explain, from a consumer perspective, why brands may become generic. Mind share refers to the extend a brand has a ‘share’ in the consumer’s mind, just like brands have market share. Madden claims that a consumers’ short-term memory has limited capacity and that an individual consumer is able ‘to retain only a limited number of thoughts at any one time’ (1991). Furthermore, when thinking of a product category, consumers can think of only a limited number of brands. Brands which are not able to gain and maintain a significant mind share will disappear from the consumers mind (Madden, 1991). Thus, strong brands should be able to become the first brand that appears in the consumers’ mind and gain the largest, if not the whole share of that mind. However, being the first and maybe only brand consumer could think of, when thinking of a certain product category, may eventually lead to the fact that consumer will see that brand as synonym for that product category (Madden, 1991).

Closely related to the concept of mind share is the model of brands as associative network and its key component brand knowledge. As described in chapter 2, associations need to be unique, strong and favorable to accomplish strong customer-based brand equity (Keller, 1993). However, brands should also contain shared associations with competitors to establish category membership and provide standard information about the product. But as the number of shared associations increases, a brand could become prototypical of the product category, which means that the brand increasingly becomes associated with

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- 25 - standard product features (Krishnan, 1996). Being prototypical of a product category means that consumers see the brand as the best example of the category (Nedungadi and Hutchinson, 1985). Consequently, prototypical brands are easier to recall in the consumers’ mind and, as noted earlier, brand awareness will increase (Nedungadi and Hutchinson, 1985). However, the generic use of a prototypical brand name could also be harmful for the brand if consumers do not receive new information about the brand and instead rely on the prototypical associations (Krishnan, 1996). In turn, consumer response towards the brand will not differ from their response to an unbranded product in the same category, with the result that the generic brand will lose its differential competitive advantage (Keller, 1993).

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- 26 -

5. Hypotheses

The previous chapters showed that consumer perceptions of a brand are constructed by the knowledge consumers have in memory about that particular brand. Brand knowledge can be divided into brand awareness (recognition and recall) and brand image (a set of associations) (Keller, 1993). Thus, in order to influence consumer decision making in a positive manner, a brand should first be familiar to the consumer (awareness) and subsequently it should evoke favorable, strong and unique associations in the consumer’s mind (image) (Keller, 1993). The purpose of brand positioning is to influence brand knowledge in such a way that it, ideally, leads to a unique selling proposition (Kotler and Keller, 2012). That is, a superior competitive advantage that gives consumers the reason why they should buy a particular brand or product (Keller 1993). A proper positioning of the brand should deliver this superior competitive advantage by creating the Points-of-Parity and Points-of-Difference that will define and differentiate the brand within its competitive frame of reference and on which the associations can be based (Keller, Sternthal, and Tybout, 2002).

The generic image of a brand implies that generic brands are stored differently in the consumer’s mind. It is expected that when consumers perceive a brand name as the generic term to describe an entire product category, it will influence the brand’s familiarity and in turn the type of associations consumers hold in memory about the generic brand. Furthermore, it is expected that dominance level of the generic brand and attribute differences between brands will moderate this effect of genericness. The following hypotheses will describe the origin and structure of these expected effects.

5.1 Brand awareness

Brand awareness can be divided into recall and recognition. Furthermore, ‘awareness relates to the likelihood that a brand name will come to mind and the ease with which it does’(Keller, 1993, p. 3). The emergence of a brand name as an generic term implies that the brand should be familiar to the consumer and that it, therefore, will be easy to recall the brand. This is partially due to the expected prototypical image of generic brands. Namely, being prototypical of a product category means that consumers see the brand as the best example of the category (Nedungadi and Hutchinson, 1985). This would consequently mean that these brands are easier to recall in the consumers’ mind (Nedungadi and Hutchinson,

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- 27 - 1985). Since recall is one of the two key components of brand awareness, it can be expected that generic brands will have acknowledged great brand awareness in the consumers’ mind. Furthermore, due to fact that other non-generic brands in the same category will use the generic brand to refer to the product or category, their marketing activities will have a spillover effect to the brand that is represented by the generic brand, eventually leading to increased awareness (Rozek, 1982).

Sharp (2010), argues that today brand awareness and salience are more important than meaningful differentiation in the way brands compete with each other. Physical and mental availability are considered to have a major influence on brand awareness and salience (Sharp, 2010). The fact that a brand name has become the generic term of an entire product category would consequently mean that these generic brands will have a greater share of mind in consumer memory. Therefore, it can be expected that generic brands will have a greater mental availability compared to non-generic brands with the result of increased brand awareness.

 H1a: Brand awareness of a generic brand will be higher compared to non-generic

competitors in the same product category.

Thus type of brand, in this case generic or non-generic, is expected to influence brand awareness. However, brand characteristics is not they only driver of consumer perceptions since the brand is also a representation of a product (Kim and Chan‐Olmsted, 2005). Therefore, product-related attributes need to be distinguished from brand-related characteristics. Product-related attributes are ‘the ingredients necessary for performing the product or service function sought by consumers’(Kim and Chan‐Olmsted, 2005, p. 151 refer to Keller, 1998). Attributes are the descriptive features that characterize a brand or product (Keller, 1993) and refer to a product’s physical composition (Kim and Chan‐Olmsted, 2005). Mantel and Kardes argue that comparing attributes between brands is one possible technique for consumers to determine brand preference (1999). Furthermore, they claim that comparisons based on specific attributes influences the recall process in the consumer’s mind and the direction of the comparison (Mantel and Kardes, 1999).

In this study a distinction is made between generic brands that operate in a category with high attribute differences between brands and generic brands that operate in a category with low attribute differences between brands. A generic brand that operates in a