Brand imprisonment : identifying conditions under which a ‘strong’ brand becomes inhibited, making it restrained in its’ potential to extend

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Brand Imprisonment

Identifying conditions under which a ‘strong’ brand becomes

inhibited, making it restrained in its’ potential to extend

Master Thesis

University of Amsterdam

Faculty of Economics & Business (FEB)

MSc Business Administration – Marketing Track Author: Manon de Koning

Student number: 10625798

Date of submission: 31 March 2015 Version: Final version

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Statement of Originality

This document is written by Student, Manon de Koning, 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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Preface

Amsterdam, 2 February 2015

As part of my final stage of the MSc Business Administration at the University of Amsterdam, I have written this Master thesis with a topic related to my chosen track, marketing. Since the start of this Master, consumer behavior and brand management have taken my interest, which made my choice to do research in this field easy.

I was privileged with the supervision of Jorge Labadie, who guided me through the whole thesis process. He was willing to help, share his knowledge and put a lot of enthusiasm into the whole project. Roger Pruppers has also been very helpful in the design and analytical part of my research. I would like to take this opportunity to thank them both for the assistance and guidance that they have provided me with.

Also, I have enjoyed the support of close friends and family while writing this thesis, for which I am very grateful. My parents deserve a special note of thanks for supporting and motivating me to obtain this Master degree. Now I have reached the end of my journey as a student, I feel a sense of accomplishment and satisfaction and look forward to my future career.

Kind regards,

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Abstract

Building strong brands, with strong, favorable and unique associations, has become a marketing priority for many organizations. However, this study investigates how under certain conditions, strong brands become inhibited in their current context. It was expected that product category, usage situation or user image associations can imprison brands, so that either the line or category extension would be evaluated negatively. An empirical study used a questionnaire to derive free associations from 195 respondents regarding six brands and twelve hypothetical brand extensions. Support was found for negative consumer evaluations towards category extensions of brands that are imprisoned in their product category and brands that are imprisoned in their usage situation and negative consumer evaluations towards line extensions of brands that are imprisoned in their user image. Negative evaluations are developed due to a lack of favorability, relevance and believability of the associations, as well as a perceived misfit between the brand and the extension. An important theoretical contribution of this study is that creating strong brands is not always beneficial. Moreover, marketers and brand managers should be aware that imprisoned brands have limited potential to extend, which should be considered in deciding to bring a new product on the market.

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List of Figures and Tables

List of figures

Figure 5.1: Conceptual Model 29

Figure 7.1: Differences in familiarity prison brands versus non-prison brands 52

Figure 7.2: Differences in attitude prison brands versus non-prison brands 54

Figure 7.3: Differences in strength of associations with prison brands versus non-prison brands 56

Figure 7.4: Differences in favorability of associations with prison brands versus non-prison brands 58

Figure 7.5: Differences in uniqueness of associations with prison brands versus non-prison brands 60

Figure 7.6: Differences in perceived fit prison brands versus non-prison brands 62

Figure 7.7: Attitudes towards extension prison vs. non-prison brands 69

Figure 7.8: Attitudes towards different type of prison brand extensions 74

Figure 7.9: Attitudes towards prison brand line vs. category extension 77

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List of Tables

Table 6.1: Conditions of the main study 30

Table 6.2: Stimuli tested in semi-structured interviews 35

Table 6.3: Strong brands recalled by focus group 37

Table 6.4: Brands & extensions tested by focus group 38

Table 6.5: Possible stimuli prison brands 40

Table 7.1: Differences in familiarity between prison brands and between non-prison brands 51

Table 7.2: Differences in attitude between prison brands and between non-prison brands 53

Table 7.3: Differences in strength of associations between prison brands and non-prison brands 55

Table 7.4: Differences in favorability of associations between prison brands and non-prison brands 57

Table 7.5: Differences in uniqueness of associations between prison brands and non-prison brands 59

Table 7.6: Differences in perceived fit between prison brands and non-prison brands 61

Table 7.7: Overview conditions, brands and extensions 63

Table 7.8: Associations with the prison brands 64

Table 7.9: Associations with the prison brands’ line extensions 64

Table 7.10: Associations with the prison brands’ category extensions 64

Table 7.11: Expected success of brands & extensions 67

Table 7.12: Attitude towards brands & extensions 67

Table 7.13: Purchase intention of brands & extensions 67

Table 7.14: Favorability associations extensions 71

Table 7.15: Uniqueness associations extensions 71

Table 7.16: Mean differences expected success of extensions of prison brands 73

Table 7.17: Mean differences attitude towards extensions of prison brands 73

Table 7.18: Mean differences purchase intention of extensions of prison brands 73

Table 7.19: Repeated-Measures ANOVA Attitude towards extension 76

Table 7.20: Relevance associations extensions 79

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1. Introduction

1.1 Prison brands

1.1.1. General Introduction

Why would we accept diapers of Zwitsal, but would not buy body lotion of Pampers? Would toothless elderly people want to be seen with Olvarit, a specialist in baby nutrition? The same counts for the brand Biotex, a prewashing detergent, which we did not allow to clean our regular laundry. And why do we assume that perfume of Zippo, a famous lighter brand, will smell like lighter fluid? Building strong brands has become a marketing priority for many organizations, as they presume that this yields several marketing advantages, like more favorable attribute and benefit perceptions, paying greater attention to communications and more favorable consumer responses to extensions (Hoeffler & Keller, 2003). Several authors have argued that strong brands are those with a strong brand equity (Aaker, 1996; Keller, 1993). A brand has a positive customer-based brand equity when consumers respond more favorably to an element of the marketing mix for that brand than they would respond to the same element of an fictitiously named or unnamed version of the product (Keller, 1993). Often the goal of branding is to distinguish or differentiate a product within its category (Kay, 2006). However Keller et al. (2002) suggest that besides points of differences, points of parity need to be met if consumers are to perceive a product as a legitimate player within its frame of reference. In all of the mentioned examples the brand might be distinctive in one situation, for one target group, for one benefit or a combination of those, but the distinctiveness of that point restrains the extension potential of the brand. For example, Pampers is distinctive in ‘diapers’, but being a diaper brand might restrain the brand from producing other baby

products due to associations related to ‘defecation’. A brand could also be restrained, because it does not have points of parity in the context of the extension. Biotex for instance is a

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2 ‘prewashing detergent’ brand, but being specialist in prewash might let consumers think that the brand is not able to create a washing detergent which is strong enough to clean our regular laundry. Why are these brands limited in their potential to introduce products for different segments or in different kind of categories? Are these in general strong brands in prison?

1.1.2. Specific Introduction

Associations are created through simultaneously observing two elements and the strength of these associations are determined by the laws of contiguity, frequency, similarity and recency (Franzen & Bouwman, 1999). Brands are present in the mind of consumers as associative networks (Franzen & Bouwman, 1999). Brand image can be defined as perceptions about a brand as reflected by the cluster of associations that consumers connect to the brand name in memory (Del Rio et al., 2001). Keller (1993) describes that brand image is dependent on the favorability, strength and uniqueness of different types of brand associations. In building a strong brand, a firm can also go too far. Lei et al. (2008) already touched upon negative consequences of strong associations towards a certain brand. Particularly, they state in their article that negative spillover between brands can occur, when linkages between brands within a brand portfolio are created. The magnitude of spillover is a function of both the strength of brand associations and their directionality. The directional strength of associations is influenced by the number and salience of associations linked to each brand. This indicates that strong brand associations are not always in favor of a brand. ‘Old’, ingrained associations of an element with other elements can have a negative influence on the development of new connections and the strength these new connections will adopt. The strength of previously learned associations can make it extremely hard to create new ones, which we call

‘associative inhibition’ (Franzen & Bouwman, 1999). This associative inhibition is the cause of what Haveman & Labadie (2003) call ‘prison brands’. A brand becomes a prison brand when it ‘has become one’ with a particular product, communication concept or specific target

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3 group, so that the brand has become extremely inflexible. Many firms are looking for growth, but the financial risk of entering new markets has become alarming. Therefore firms are using established brand names to facilitate entering new markets. This can be done either by a line extension, where a new market segment in its product class is targeted or by a category extension, where a completely different product class is entered (Aaker & Keller, 1990). Prison brands, however, are very hard to reposition and brand extensions often fail (Haveman & Labadie, 2003). Because of that these brands lack potential to grow. Samsonite for example has created such a strong suitcase brand that their attempts to expand to fashion failed. The strong associations of being a suitcase brand inhibited it from being considered a fashion brand. Why is it then that fashion brand Burberry has successfully extended outside their product category and are selling suitcases under the Burberry brand name? On top of that, Tauber (1993) shows that consumers expect Duracell to be able to make flash lights, but that the company would not know how to make electronic gadgets like Sony. Why would a brand with a particular type of associations be able to extend to a certain category, but not to another?

1.2 Problem Definition

1.2.1. Problem Statement

Causes of failed brand extensions have been studied in past literature. Examples of

determinants of consumer responses towards brand extensions are quality perceptions and perception of fit between the parent brand and extension (Aaker & Keller, 1990), parent brand reputation (Gronhaug et al., 1981) value of the brand (Reddy et al., 1994) price premium of the brand (Taylor et al., 1998) and the breadth of existing brand extensions (Dacin & Smith, 1994). As discussed, the problem of prison brands and extending is that the associations with the brand became inhibited. The carefully-built brand associations in the minds of consumers became too strong. However, we still do not know when a strong brand becomes imprisoned

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4 by associations. Neither do we know how strong the associations need to be to become a prison brand. This leads to the following main research question:

Under which conditions does a strong brand becomes inhibited, making it restrained in its’ potential to extend?

1.2.2. Sub-questions

To be able to answer the main research question, first it is necessary to analyze the difference between associations of strong brands and prison brands to be able to find out when a strong brand becomes a prison brand. Next, the differences in associations towards line versus category extensions will be analyzed. Lastly, it is essential to understand what the causes of brand imprisonment are for the different types of prison brands identified by Haveman & Labadie (2003). Therefore the following sub-questions have been created:

 How do associations of strong brands differ from that of prison brands?

 Which associations do consumers have of prison brands distinctive in one particular product category?

 Which associations do consumers have of prison brands distinctive in one particular usage situation?

 Which associations do consumers have of prison brands distinctive in one particular user image?

 How do associations towards line extensions differ from that of category extensions of prison brands?

1.2.3. Delimitations of the Study

Haveman & Labadie (2003) describe 12 types of problem brands, of which one of them are prison brands. This thesis will limit itself to studying just that specific category of problem brands. Specifically, it will look for causes of becoming a prison brand. Therefore the focus of

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5 this thesis will be on brands which became one with a particular product category, usage situation or user image, so that it became extremely inflexible (Haveman & Labadie, 2003). Because of that the brands which will be studied in this thesis are very strong brands, with such strong, favorable and unique associations that the consumer is not able to link new associations to the brand. Consequently, this thesis will not focus on brands with negative brand associations, a lack of brand associations or weak brand associations.

1.3. Contribution

On the one hand, this study will update and add to existing academic theory regarding brand strategies and on the other hand this study will provide a contribution to (brand) managers.

1.3.1. Theoretical contribution

Current scientific literature on brand associations has focused on creating strong brand associations (Keller, 1993; Aaker, 1996; Chen, 2001). However as discussed previously there is a boundary in creating strong brand associations. Extremely strong, ingrained associations can restrain the creation of new associations (Haveman & Labadie, 2003; Franzen &

Bouwman, 1999). These negative influences of strong brand associations are not widely acknowledged in the literature. In general, not much scientific literature on prison brands is written. Haveman & Labadie (2003) describe several strategies to solve the issue of problem brands, but causes of brands becoming imprisoned are lacking in the current theory. As a result studying antecedent of brand imprisonment as well as the reasons of failure of brand extensions of prison brands is scientifically important.

1.3.2. Managerial contribution

This thesis is relevant in managing brand image. Firms that are interested in extending their brand to other product categories should be aware of the possibility to create brand

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6 inflexible associations is therefore essential to brand managers. This thesis will contribute to gaining a better understanding of brands through the eyes of consumers by considering brand associations outside their direct context. Ultimately a more thorough understanding of brand imprisonment is required so that brand managers are better able to avoid this happening to their brand in the future.

1.4. Structure

The first part of this study will consist of an extensive literature study in which former research on brand extensions and brand associations will be discussed in detail. Having described the most relevant and important theory related to prison brands, the hypotheses for the empirical part of this research will be developed. The subsequent part of this research contains a description of the chosen method. The results and a discussion of the results will be provided in the final part of this study. Finally, the conclusion, implications of the research and directions for future research will be presented.

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2. Brand as associative networks

First of all, in this chapter it will be analyzed how consumers create brand associations and how these associations are linked to each other. Followed by an explanation of how customer-based brand equity is created, as well as what role points of parity and points of difference play in creating strong brands.

2.1. Consumer Brand Associations

Consumer brand associations are those perceptions, preferences and choices in memory linked to a brand (Aaker, 1991). Brand associations are vital components of brand equity, brand image and brand knowledge (Keller, 1993; Farquhar, 1989; Schmitt et al., 1993). Understanding consumer perceptions and associations is an important first step to

understanding brand preferences and choices (Henderson et al., 1998). Brand associations can vary from physical product attributes to perceptions of people, places and occasions that are evoked in relation to the brand. Brand associations create value for the focal product in several ways (Aaker, 1991). Associations help consumers process and retrieve information (Tybout et al., 1981), and hopefully they brought to mind positive affect, as well as cognitive considerations of benefits that provide a specific reason to buy (Hendersen et al., 1998).

2.1.1. Types of associations

Brand associations take different forms. One way to distinguish among brand associations is by their level of abstraction (Alba & Hutchinson, 1987; Johnson, 1984) that is, by how much information is summarized in the association. The three major categories in increasing scope are attributes, benefits and attitudes (Keller, 1993). Attributes are descriptive features that characterize a product or service and can be divided in product related and non-product related attributes (Reynolds & Gutman, 1984). They are related to general characteristics of a category (Franzen & Bouwman, 1999). Benefits are the personal value consumers attach to

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8 the product or service attributes and include functional, experiental and symbolic benefits (Reynolds & Gutman, 1984). They result of unique product characteristics and include meanings which a company attached to a brand by use of advertisement. Brand attitudes are defined as consumers overall’ evaluations of a brand (Wilkie, 1986). Those are the decisive associations which are easy accessible parts of the associative network , which are activated automatically when a consumer needs to make a product choice in the supermarket (Franzen & Bouwman, 1999). Associations of brands can also be grouped based on their strength (Franzen & Bouwman, 1999). Primary associations are immediately activated when we think of a brand and form the core of the associative network, which has a large influence on the interpretation of attitude development towards a brand. Secondary associations come to mind after continuing thinking of associations. Weaker, context dependent associations are

activated only with help of certain external stimuli. Also induced associations, which were not connected to the brand in consumers’ minds, can arise as a consequence of for instance a question in market research (Franzen & Bouwman, 1999).

2.1.2. Dual structure of associations

Associations have a direction. There are connections from a brand to for example a meaning, but also from a meaning to a brand. This is called the dual structure of an associative network. Both associations could be present, but the strengths can differ (Farquhar & Herr, 1993). The choice behavior of consumers starts often with a product demand, after which from the product or user situation the connection to brands is activated (Collins & Loftus, 1975). Therefore the association coffee  Nespresso is much more important than the connection Nespresso  coffee in a consumers’ brand choice. In the stage of brand activation the associations from the associated to the brand play the most important role (Holden & Lutz, 1992). Lei et al. (2008) also state that associations to the brand have the most important influence on our brand choice. With purchases bought preceded by an extensive external

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9 search process and processing of information, the association from the brand to the

characteristics could play an essential role. The meaning of the reputation of the brand itself is only relative. It is all about with what the brand is connected in our minds. Brands with a strong product-brand association usually have a bigger chance to be bought, than brands with a weak product-brand association. The latter rely more on other marketing factors. The association between a brand and the desired product features and between a brand and user situations play an important role in the intake of a brand in the consideration set (Franzen & Bouwman, 1999). A segment for which the choice of a washing detergent is dependent on the aspect ‘clean’, the association clean  Omo has a great influence on the brand choice. The associations from a brand to the associated play a greater role in the evaluation phase. For example, consumers then consider whether the symbolic meaning of a brand is linked to their personal value system and how the price-quality relationship is compared to other brands in the consideration set (Franzen & Bouwman, 1999).

2.2. Associative network

Several cognitive psychologists studying associative networks describe that the basic structures of associative networks are comprised of concept nodes and prepositional links (Collins & Loftus, 1975; Ellis & Hunt, 1992; Gentner & Stevens, 1983). The nodes are units of information such as brands, attributes, advertisements and the links contain the relational tie between the concepts and vary in strength (Henderson et al., 2002). The network of interconnected nodes activate each other in relevant contexts (Anderson & Bower, 1973). Keller (2003) explains that most encounters with a brand are multimodal, that is they activate different senses and thus different parts of the brain. Therefore nodes that lie in different brain areas must be connected to each other in order to form a comprehensive memory and allow for brand recognition and recall. These interconnections of informational nodes can be strengthened and altered through learning effects (Reijmersdal et al., 2007). Stronger links

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10 between individual nodes increase the likelihood of the spread of activation between them (Keller, 2009). In other words, the brain is like an associative network. The knowledge about brands is stored in a similar way, as an associative network, in the memory of the consumer (Franzen & Bouwman, 1999). They describe that each component represents a psychological brand response and the core is formed by the brand name, which is connected to

distinguishing marks such as color, logo and design. Other components of a brand which lead to psychological responses are for instance brand reputation, brand positioning and brand behavior tendency. All single brand components are related to each other and form one associative network which represents the brand in a consumers’ mind. To illustrate, a relationship between brand behavior tendency and brand attitude was found (Ehrenberg, 1974; Westendorp, 1996). The brand which is bought most frequently by a consumer, is usually the brand to which the consumer has the most positive brand attitude. It was also shown that brand user experiences lead to the creation and strengthening of both functional and symbolic associations, which suggests a relationship between brand meaning and brand usage (Ehrenberg, 1974; Franzen, 1992). Castleberry & Ehrenberg (1990) showed that the percentage of category users who hold a certain belief about a brand, is strongly related to the user frequency of that brand. Users of a brand create a much richer associative network around the brand than non-users. Selective perception namely has the effect that users perceive more of the brands they use themselves and they process these messages more thoroughly. Aaker (1996) shows an example of a cognitive structure of McDonald’s. Nodes include the firm name (McDonald’s), a product brand name (Big Mac), a generic product category (burgers), features of the product (e.g. quality, service) , and people and occasions (family, social involvement). The links make various associations by connecting nodes together to form a network of ideas or a knowledge structure. A node becomes a potential source of activation for other nodes either when external information is being encoded or

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11 when internal information is retrieved from long-term memory (Keller, 1993). That is, when the brand name comes to mind through an internal or external cue, some part of the overall network of brand associations is activated to form a mental image of the brand (Teichert & Schöntag, 2010). Collins and Loftus (1975) developed a network model using the concept of spreading activation: when a person is reminded of a stimulus (e.g. McDonald’s), activation of the node corresponding to that stimulus occurs. Activation then spreads to other nodes from the stimulus node, with the degree of spreading dependent on the distance from the stimulus node. Consumer associative networks will often contain more than one brand, yielding information about competition and market structure (Peter & Olson, 1993). The strength with which a brand is represented in the minds of consumers and the prominence of a brand compared to other brands, is the result of all encounters of a consumer with a brand during his life. The most intense confrontations are created while using the brand, but

confrontation with other stimuli such as ads have influence on the brand reputation and other brand components (Franzen & Bouwman, 1999).

2.3. Customer-Based Brand Equity

Understanding consumer knowledge structures is essential, as it can create the differential response that makes up customer-based brand equity (Keller et al., 2008). Customer-based brand equity is defined in terms of the differential effect that brand knowledge has on the consumers response to the marketing of the brand, where equity is created or destroyed when customers respond more or less favorably to a specific element of the marketing mix of the brand, than they would do to the same element when it is attributed to a fictitious or unnamed version of the product or service (Keller, 1993). Brand knowledge can be defined in terms of two components, brand awareness and brand image. Brand awareness refers to the ability of the consumer to recognize a brand already stored in their associative network based on a cue given to them. Besides that, it also refers to the ability of consumers to recall a brand when

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12 given a cue in the form of product category, specific needs or a probing cue (Keller, 1993). Applying this theory to prison brands, which have high brand recall in their own context, but possibly low brand recall in another category then this might provide evidence for

imprisonment of the brand based on the inability to extend towards another category, as consumers do not associate the prison brand with the desired category. As such brand awareness can affect consumer decision making by influencing how easily varying

information can become attached to the brand in the associative network (Keller, 1993; 2003). Brand image refers to the network of associations linked to the brand that consumers hold in memory (Keller, 1993) and is the well-recognized representative of knowledge structures (Esch et al., 2006). Keller (1993) examined individual brand associations, which are regarded as the informational nodes in consumer memory that are linked to the brand and that hold the brand meaning as interpreted by the consumer. Keller (1998) states that the influence of brand associations on the decision process of consumers is determined by the strength, favorability, and the uniqueness of the association. The strength of an association is dependent on the personal relevance of the information and the consistency with which this information is presented over time (Keller, 2003). Favorable brand associations are created when consumers believe the brand has attributes and benefits that satisfy their needs and wants such that positive overall brand attitude is formed (Keller, 1993). Favorable associations for a brand are those associations that are desirable to consumers and are successfully delivered by the

product and conveyed by the supporting marketing program for the brand. Desirability depends on three factors: 1) how relevant consumers find the brand association, 2) how distinctive consumers find the brand association and 3) how believable consumers find the brand association (Keller, 2003). Brand associations may or may not be shared with other competing brands and therefore the uniqueness of an association is dependent on POP’s and POD’s. It is important to associate unique, meaningful POD’s to the brand to provide a

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13 competitive advantage and ‘reason why’ consumers should buy it. 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 (Aaker & Shansby, 1982; Trout & Ries, 1979). On the other hand, some brand associations are seen as roughly equal in favorability with competing brand associations, so that they function as POP’s in consumers’ mind to counteract potential POD’s for competitors. These associations are designed to provide ‘no reason why not’ for consumer to choose the brand (Keller, 2003). Not only do POP's establish category membership but they can also undo competitor's POD's by turning them into POP's (Keller, 2003). Overall, POP's provide a reason for the brand to be considered in the first place, whilst POD's provide rational and emotional brand-related reasons for purchasing that specific brand (Keller, 2003). Additionally, according to the means-end chain, the product should relate to the personal values of consumers as well, and provide consumer-based reasons for purchasing that specific brand (Walker & Olson, 1991). Companies that present a cohesive, distinctive, and relevant brand identity can create a preference in the marketplace, add value to their products and services, and may command a price premium (Schmitt and Simonson, 1997). A final step in building strong brands is creating brand resonance (Keller, 2002), by transferring brand response to create loyal relationships between customers and the brand.

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3. Brand extensions

In this literature chapter we continue by looking at how the POD’s of a strong brand can be leveraged by extending the customer-based brand equity towards an extension. On top of that, the benefits and risk of extending will be discussed, as well as how the consumer will

evaluate the brand extension.

3.1. Brand development

A company has four options when it comes to brand development strategies, which can be split up in using new or existing brand names. New brand names can be introduced either in the same product categories, called ‘multibrands’, or in new product categories, called ‘new brands’ (Armstrong & Kotler, 2007). However, to reduce risks of entering new markets, organizations are more often making use of existing brand names to smooth the progress of introducing a new product. A so called ‘extension’ leverages the brand equity of a successful brand to enter a new market. In other words, if a brand has a particularly strong and favorable heritage, the manager may consider leveraging those positive associations by introducing a brand extension (Henderson et al., 2002). Two types of extensions can be identified: ‘line extensions’ and ‘category extensions’. Line extensions involve using current brand names to enter a new market segment in the existing product category (Aaker & Keller, 1990). In other words, line extensions occur when a firm introduces additional items in a given product category under the same brand name, such as new flavors, forms, colors, ingredients or package size. Coca Cola introduced several line extensions including zero-calorie coke like Diet Coke and different flavors like Cherry Coke. Brand or category extensions entail existing brand names extended to an entirely new product category (Aaker & Keller, 1990). So a category extensions involves the use of a successful brand name to launch new or modified products in a new category. Kimberly-Clark extended its market-leading Huggies brand from disposable diapers to a full line of toiletries for toddlers from shampoos and lotions to

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15 disposable washcloths. Kim et al. (2001) identify two different forms of brand extensions: ‘horizontal’ and ‘vertical’. A horizontal brand extension involves the application of an existing brand name to a new product introduction, either in a similar product class or in a product category completely new to the firm. For example Ivory soap introduced brand extensions such as Ivory detergent or Ivory dishwashing liquid. A vertical extension involves introducing a similar brand in the same product category, but usually at a different price or quality point (Sullivan, 1990). This is common in the automobile market.

3.2. Benefits & risks of extensions

3.2.1. Benefits

Line extensions can be a low-cost, low-risk way to introduce new products and meet the consumer desire for variety, use excess capacity or to command more shelf space from resellers (Armstrong & Kotler, 2007). A category extension gives a new product immediate name recognition, faster acceptance and the transference of benefits associated with a familiar brand. It, for instance, provides a signal to the consumer about some of the qualities or

characteristics of that new product (Erdem & Swait, 1998). Moreover, category extensions eliminate the high costs of establishing a new brand and often reduce the costs of gaining distribution (Farquhar, 1989). It also saves the high advertising costs usually required to build a new brand name (Armstrong & Kotler, 2007).

3.2.2 Risks

An overextended brand name might lose its specific meaning or can cause consumer confusion. Another risk of line extensions is that sales of an extension may come at the expense of other items in the line (Armstrong & Kotler, 2007). A risk of category extensions is that brand equity can be diluted. Brand dilution is the extent to which capitalizing on brand associations may harm the original brand (Loken & John, 1993). First of all, product failure

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16 can injure the reputation of the parent brand (Farquhar, 1989). If the extensions fails, it may harm consumer attitudes toward the other products carrying the same brand name. In this way they decrease or harm the equity, which has been built up within the company name or core brand name (Simon & Sullivan, 1993). Risk comes not only from a new product failure, but also from the success of a category extension. Success carries the risk that the entire brand franchise can be diluted. Negative associations can flow from the new item back to the parent brand. Also, brand confusion can result from a successful extension that develops an image somewhat different from that of the parent brand (Farquhar, 1989). Ries and Trout (1986) describe many of the dangers of overextending a brand name and generally advise against category extensions. Further risks could be that the brand name may not be appropriate to a particular new product even if it is well made and satisfying (Armstrong & Kotler, 2007). Would you for example consider buying Texaco milk? Therefore companies that are tempted to transfer a brand name must research how well the brand’s associations fit the new product.

3.3. Consumer evaluations of brand extensions

Keller & Aaker (1992) discussed how consumers use their knowledge in evaluating a brand extension. They state that extension evaluations will depend on the salience or accessibility of the core brand associations in the extension context, how relevant consumers perceive this information to be to their extension evaluations and how favorable inferred association are in the extension context. On top of that past studies have found a positive relationship between product feature similarity and consumers’ evaluations, purchase intentions, and sales of brand extensions. Aaker & Keller (1990) showed that attitudes towards extensions were higher if the perceived fit between the original and extension product classes were high, but the perceived difficulty of making the extension is also positively related to the acceptance of the extension. Farquhar (1989) also explains perceptual fit, the consumer must perceive the new item to be consistent with the parent brand, to be an important factor in consumers’ acceptance of

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17 extensions. For example, the Harley Davidson motorcycle brand on white wine coolers was not a big success for Scooter Juice. Park et al. (1991) stated that besides product feature similarity, brand concept consistency is important in consumer evaluations of extensions. Most favorable evaluations were recorded when both product feature similarity and brand concept consistency were high. Aaker & Keller (1990) also show that high quality perceptions toward the original brand are associated with more favorable attitudes toward the extension, where Farquhar (1989) describes that the extension must be of comparable or superior quality compared to other products in the category to be successful. Specifically, he states that

competitive leverage should be in place to be able to get positive consumer evaluations. Besides that, the benefit offered by the parent brand must be desired by consumers of products in the new category (Farquhar, 1989). Keller (2002) also found that non-dominant parent brands (such as Gleem) may benefit more from extension activity than dominant parent brands (such as Crest) in terms of brand name accessibility. The results suggest further that non-dominant parent brands may benefit more by introducing high fit extensions (e.g., breath mints rather than soft drinks for a toothpaste parent brand) to enhance brand awareness. Dominant parent brands, in contrast, would appear to have more flexibility in this regard, because extension fit did not moderate parent brand memory association strength for these brands. Boush & Loken (1991) explain that consumers’ evaluation of an extension depends among other things on the brand breadth, the variability among product types represented by a brand name. A narrow brand has an advantage over a broader brand in offering a product in the same category, but a broader brand has an advantage over a narrow brand in offering a moderate different extension. An inappropriate brand extensions could create damaging associations, which may be very difficult for a company to overcome (Ries & Trout, 1986; Aaker, 1990).

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3.3.1. Brand concept

Previous research has suggested that brand concept may be an important variable to consider in brand extension research (Park et al, 1986; 1991). Brand concept refers to the image that consumers hold regarding a particular core brand, which can be either function-oriented or prestige-oriented. A function-oriented brand concept emphasizes aspects of the brand like reliability and durability which are associated with product performance. A prestige-oriented brand concept is associated with images related to luxury and status (Park et al., 1986). For both function-oriented and prestige-oriented brand names, the most favorable reactions occur when brand extensions are made with high brand concept consistency and high product feature similarity. When a brand's concept is consistent with those of its extension products, the prestige brand seems to have greater extendibility to products with low feature similarity than the functional brand does (Park et al., 1991). Bhat & Rheddy (1998) however describe that it is possible for consumer to view a brand both in symbolic and functional terms. Consumers for example buy Nike products, because they are associated with sporting heroes like Michael Jordan, but they also want comfort and performance. Kim et al. (2001) examined the impact of product concept (prestige versus function brand) on consumer evaluation of the core brand and the brand extension. They found that the introduction of any vertical

extension, either a step-up or step-down extension, has a negative effect on consumer evaluations of the core brand. Increasing the perceived distance between the core brand and the step-down brand extension as well as the step-up brand extension, has a positive influence on the core brand. On top of that, increased distancing benefits the step-up brand extension evaluation, but step-down brand extensions are evaluated less favorably. Also, prestige-oriented core brands are harmed more than function-prestige-oriented core brands when examining consumer evaluations on step-down extensions.

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4. Association flexibility

In the final literature chapter of this thesis we will discuss what happens when a brand is unable to extend and therefore unable to leverage its POD. What exactly goes wrong and how does that work?

4.1. Associative inhibition

The association from a product or product characteristic to a brand can be so strong that the brand actually monopolizes the association, we call this a ‘master-brand’ (Franzen &

Bouwman, 1999). In other words, such a brand comes into our minds immediately when we think of a certain product. For example when we think of a coke brand name, we think Coca-Cola, when we think of beer brand name we think Heineken (Franzen & Bouwman, 1999). Strong brands are characterized by the direct access to the brand name in the minds of consumers. Relevant cues, such as product category, characteristics and user situation are directly connected to the brand name. These kind of brands quick come to the minds of consumers when they think of for example ‘white teeth’ or ‘clean laundry’. Several laws were formulated which influence the association strength (Franzen & Bouwman, 1999). The law of contiguity: elements which are noticed at the same time (simultaneously) and space (adjacent) will be connected. The second law is the law of repetition or frequency: when elements are often observed together, they will be associated with each other. The third law is the law of similarity: stimuli which are comparable will be associated with each other. The forth law is the law of recency: the latest formed association are memorized the easiest. The associations of strong brands can also become ingrained. Ingrained associations can have a negative influence on the creation of new associations and the strength which they will adopt. The strength of earlier learned associations can make it extremely hard to create new ones, which is called associative inhibition (Franzen & Bouwman, 1999). As mentioned earlier, market

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20 leaders are supposed to have strong, favorable and unique associations which help keep them retain their position as market leaders (Franzen & Bouwman, 1999). However, for some brands these strong, favorable and unique associations, imprison them to a particular category, which is problematic in case a brand wants to extend into new categories. Bremer (2010) suggests that brands looking to expand into new categories should incorporate a fourth criterion into their associations, namely flexibility. In this case flexibility refers to the ability of brands to incorporate new brand associations without causing interference effects (Bremer, 2010). In other words this means that some prison brands have strong, favorable and unique associations that lead to inflexible associations, because they are unable to establish new associations due to the strength and uniqueness of their associations that are causing associative inhibition (Franzen & Bouwman, 1999). This is likely to lead to unsuccessful addition of new brand associations, until the existing brand associations have weakened significantly (Franzen & Bouwman, 1999). Tauber (1993) also describes three limitations that can restrict brand associations: 1) some brands have associations tied closely to a product or product class that the consumer rejects the name on anything else; 2) some brands express associations related to a narrow or special expertise from the company that manufactures them, which precludes the brand from having credibility in other areas; 3) some brands own attribute and benefit associations that are tied to the parent brand.

4.2. Brand concepts

Brands are bought because they possess characteristics which are experienced as relevant by a group of consumers. The characteristics can be either functional (people buy Omo, because they want clean laundry), symbolic (people buy a BMW because they want to impress their environment) or emotional (people search for comfort with a box of Merci-chocolate). Brands can meet different functions with different words. They are created from the nature of the

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21 characteristics which consumers associate with the brand. Firms should take the function a brand has for a consumer as the starting point (Franzen & Bouwman, 1999).

4.2.1. Types of brand concept

Symbolic products are based on values which are created in a process of interaction between members of a culture of which (mass)communication is a part. Consumers see how brands are demonstrated, how consumers react to it and derive certain symbolic meanings of that.

Examples are brand personality (human personality characteristics which are ascribed to a brand), user image (social-economic characteristics and personality characteristics of the stereotype of users of a brand), brand emotions (the association of brands with specific emotions or more holistic affects either positive or negative) and brand values (the

associations of a brand with abstract meanings) (Franzen & Bouwman, 1999). Consumers use the symbolic function of a brand for several reasons: the expressive, the social-adaptive and the impressive function. In other words people use a brand to show others which values they find important, brands are used as symbols by consumers to confirm they fulfill the

requirements a culture demands and consumer use brand to create feelings of satisfaction and confidence which are created out of using a certain brand (Han et al., 2010). Functional brands are those brands which have the ability to accomplish instrumental, utilitarian and physical functions. They are results of concrete, tangible characteristics of a product as ‘instrument’ to for example prevent potential problems, to solve current problems, resolve conflict or restructure a frustrating situation (Fennell, 1978). Examples are: washing detergents, medication, insurances, kitchen appliances etcetera.

4.3. Flexibility of symbolic vs functional brands

Baek et al. (2010) suggest that both brand credibility and brand prestige positively influence brand purchase intention through perceived quality, information costs saved, and perceived risk under different product categories representing the high and low self-expressive nature.

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22 When consumers are facing buying choices of functional brands that do not involve much risk and the price is low, familiarity is sufficient for their action. When risk and price levels

increase, consumers seek a safe purchase choice regarding functional brands through confidence and dependability, while in the case of symbolic brands consumers have to trust the brand in order to make a purchase choice (Elliott & Yannopoulou, 2007). Trust is more easily build with a symbolic brand and therefore it is likely that a consumer is more motivated to accept brand extensions of symbolic brands. Perceived quality influences functional brands more than symbolic brands as symbolic brand attitudes assume quality (Lye et al., 2001). Therefore it is likely that functional core brands have difficulty in extending to a symbolic brand, because consumers are insecure about the quality of the product, whereas symbolic core brands extending to symbolic brand extension already have an advantage with that. However, functional brands experience less dilution than symbolic brands, implying less risk and greater expandability (Lye et al., 2001). When a brand concept remains consistent when making an extension, the prestige brand has greater extendibility to products with low feature similarity than the functional brand (Park et al., 1991). This indicates that consumers have greater flexibility in associations about product features of brand extensions of symbolic brands, when the core brand was also a symbolic brand. On the other hand, prestige-oriented core brands are harmed more than function-oriented core brands when examining consumer evaluations on step-down extensions (Kim et al., 2001). This indicates that function-oriented core brand have a larger chance of successfully making a step-down extension, which means that consumers have more flexible associations in this case. The results of a study by Monga & John (2010) indicate that functional brands can be elastic if consumers adopt a more holistic thinking style. For symbolic brands, holistic and analytic thinkers respond equally favorably. On top of that, it was shown that brand architecture is an effective way to increase the elasticity of functional brands for analytic thinkers. This also shows that consumers,

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23 holistic and analytical thinkers, have a more flexible attitude when it comes to symbolic brands than towards functional brands. Holistic thinkers, however, are able to be more flexible towards functional brands. For functional brands price and quality seem the most important characteristics in making a brand choice. Nevertheless, marketers do not

necessarily have to position a brand as a prestige brand with its associations of expensiveness and exclusivity to strike the symbolic needs of consumers. In some instances, a marketing mix that shows how the brand can be used to express a consumer’s personality or have some distinct meaning to a consumer would perhaps be a cheaper, easier and more effective strategy than one that tries to position the brand on prestige and exclusivity (Bhat & Reddy, 1998).

4.3.1. Dimensionality of an associative network

Associative networks can be unidimensional, when one thinks of only one product or user situation and a limited amount of characteristics (Franzen & Bouwman, 1999). An example of that is Pampers. On the other hand Philips is a complex multidimensional brand. Consumers can usually name a large amount of products which they associate with that brand. Once the complexity of the associative network increases, the individual associations become less accessible. Complex brands therefore function worse than ‘simple’ brands as information source, because simple brands have fewer but well accessible associations (Franzen & Bouwman, 1999). Looking at functional versus symbolic brands, it is likely that functional brands are usually unidimensional, specialized in one product category or usage situation. Symbolic brands often produce a larger portfolio of product and can therefore be considered multidimensional. The dimensionality of the associative network is therefore expected to influence the flexibility of the associations, such that brands with multidimensional associative networks have less difficulty in extending than brands with unidimensional associative networks.

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5. Hypotheses

In order to answer the main research question and sub-questions, several hypotheses are developed, based on the literature review in the previous three chapters. In order to investigate in which cases the associations of a strong brand become inhibited, different hypotheses will be tested. In other words, different situations will indicate when consumer evaluations of brand extensions become negative. Since literature already showed that the success of a brand extension depends mainly on the attitude towards the parent brand and the degree of fit, this research will not be another investigation of the importance of these factors. Rather, brand extensions of different brands with ingrained associations will be compared with extensions of “successful” brands. Prior to this comparison, brand associations of different types of brands are measured and will be assessed on their strength, favorability and uniqueness in the context of the extension. On top of that, it will be analyzed whether extension type (line versus category extension) has a moderating role on the effect of different consumer associations on the consumer evaluation of the brands’ extensions. As explained, within its normal category a prison brand will have strong, favorable and unique associations, but when this brand extends this can result in extremely unfavorable or irrelevant associations.

5.1. Strength, favorability and uniqueness of associations

To be able to build CBBE, brand associations should be strong, favorable and unique. Prison brands can be defined as brands with strong, favorable and unique associations, which when extending have a negative consumer evaluation of that extension. In their own context the brand has managed to create relevance and to communicate the information consistently, the brand is believable and able to deliver the information and the brand has managed to create POP’s and POD’s. Yet, these associations are restricted to that particular product category, usage situation or user image and become negative or irrelevant outside of their current positioning, in the context of the extension. Three different kind of prison brands are

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25 identified and analyzed in this research: product category imprisoned brands, usage situation imprisoned brands and user image imprisoned brands. A brand which is considered unique possesses a unique selling proposition that give consumers a compelling reason for buying that particular brand (Aaker & Keller 1990; Trout & Ries, 1979). To be able to create a POD in different product categories, usage situations and user images the associations of a brand should be flexible, which is not the case with prison brands. A prison brand can also lack POP's in another product category, usage situation or user image. A reason for this may be that the correct values are not being activated, so it would appear that brands in this condition fail either at having the correct attributes, or at showing the correct consequences of these attributes. Due to the fact that brand is not correctly linked to the consumer, the brand is not considered by consumers (Gutman, 1982; Walker & Olson, 1991) and thus no purchase decisions regarding the brand will be made. All this leads to the expectation that in the context of the extensions either the strength, favorability or uniqueness of the associations towards the core brand is eliminated or has changed direction.

H1: Consumer evaluations of strong brands decrease when either the strength, favorability or uniqueness of the associations is eliminated in the context of the extension.

5.2. Type of brand associations in extension evaluation

Broniarczyk & Alba (1994) found that brand-specific associations dominated brand affect and product category similarity in brand extension judgment. It was also found that brand-specific associations moderated the role of product category similarity on brand extension judgment, such that a brand extension was more preferred in a dissimilar category that valued its associations than in a similar category that did not value its associations. MacInnis & Nakamoto (1990) define brand-specific associations as an attribute or benefit that

differentiates a brand from competing brands. As explained three types of associations are expected to lead to imprisonment of a brand. According to the model of Keller (1993),

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26 associations related to the usage situation and user image are considered non-product related attribute associations. To get a deeper understanding of which particular associations will lead to negative consumer judgment of an extension, in this study the brand-specific associations of Broniarczyk & Alba (1994) are further divided, so that the different type of expected prison brand associations are tested. The theory suggests that the level of abstraction of an

association affects how flexible the association is (Park, et al., 1991). In their study they found that a more abstract symbolic brand has greater potential to extend towards unrelated categories than a more concrete and functional brand (Park, et al., 1991). Therefore in this line of thought it is considered that brands positioned on more concrete concepts are more likely to being inflexible and logically this leads to the idea that brands positioned on product category, usage situation or user image associations are significantly more inflexible than brands positioned on other associations such as benefit associations.

H2a: Brand extensions of non-prison brands are evaluated less negative than brand extensions of prison brands.

Besides that, in line with the study of Broniarczyk & Alba (1994) it is expected that brands associated with attribute associations, are more likely to lead to imprisonment than product category associations. Keller (2003) also describes that in many categories, non-product related attributes, such as user image and usage situation, more easily create unique associations. On top of that, Bhat & Reddy (2001) find that image fit between the parent brand and the extension has a greater impact on the evaluation than product category fit. Usage situation and user image associations are both part of the brand image (Keller, 1993), which leads to the expectation that brands with associations related to the user image or usage situation versus product category associations will lead to a lower consumer evaluation of the extension.

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H2b: Brand extensions of brands imprisoned by their product category are evaluated less negative than brand extensions of brands imprisoned by their usage situation or brands imprisoned by their user image.

5.3. Moderating role extension type

First of all, if a brand has inflexible associations, then consumers are less willing to accept new associations caused by an extension. In general, a category extension requires more new associations than a line extension, as one needs to create associations related to a new

category. In past literature was found that the lower the fit between the parent brand and brand extension, the lower the attitude towards the extension (Aaker & Keller, 1990). Farquhar (1989) also indicates that consumers must perceive the new item to be consistent with the parent brand. Therefore they conclude that overall line extensions are more easily accepted by consumers than category extensions. In this research it is expected that there is a mediating effect of extension type on the relationship between type of associations and consumer evaluation of the extension, so that line extensions are not always evaluated more favorable than category extensions, depending on the type of association by which the brand is

imprisoned. Boush & Loken (1991) explain that consumer evaluations of extensions depends on brand breadth, the variability among product types represented by a brand name. They found that a narrow brand, such as a prison brand, has an advantage over a broader brand in offering a product in the same category, but a broader brand has an advantage over a narrow brand in offering a moderate different extension. Strong, favorable and unique associations that distinguish a brand from others in the same frame of reference create POD's (Kotler & Keller, 2006). In essence, POD's allow for brands to differentiate themselves in a specific category, and the creation and maintenance of the right POD's can lead brands to becoming very successful. On the other hand, a common cause of unfavorable associations outside of a prison brands’ current category is due to a lack of fit between the product category of the

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28 brand and the product category of the extension. Thus the lower the fit, the lower the attitude towards the extension (Aaker & Keller, 1990). Tauber (1993) explains that a narrow expertise usually means that a brand ha low credibility outside of its specialized category. As a result, it can be said that the more brands specialize in subcategories, the more chance there is that they have less fit outside of their current category. Therefore it is expected that brands which are very successful in a particular product category, will be able to extend within the category and therefore line extensions of brands with product category associations would be evaluated positively by consumers, while they lack POD’s and maybe even POP’s when extending to another category. The same is expected for brands with associations related to the usage situation, because they have such specific associations related to a certain attribute of the brand. As Park et al. (1991) show, symbolic brands, which are mainly based on benefit associations have greater extendibility to products with low feature similarity than functional brands, which mainly have brand attribute associations. The POD in the current usage

situation is expected to last in the same category, but is expected to lack relevance outside of the category. Brands that elicit a strong user image in a category may fall victim to their user imagery being considered negative when considered outside of the main context (Keller, 1993). A possible explanation for that is that brands that have most prominent association towards the user image, may lead to misidentification of other users which the brand wants to reach with a potential extension. In other words, this new target group does not want to be associated with the current user image. Therefore a brand with most prominent associations related to the user image is expected to have difficulties making line extensions with the same product attracting another type of user. Conversely, because of the strong user image of the brand, consumers which can relate to this image are committed to the brand and willing to try products in other categories.

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H3: The higher consumer evaluations of line extensions versus category extensions is conversed for user image imprisoned brands opposed to product category and usage situation imprisoned brands.

The hypotheses are graphically illustrated in the conceptual model shown in figure 5.1.

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6. Methodology

This chapter will describe the methodology used to test the hypotheses and answer the research question. The chapter includes the research design, stimuli requirements and development, measurement of variables, manipulation checks, sample description, data collection and concludes shortly with how the data will be analyzed in chapter seven.

6.1. Research Design

Table 6.1: Conditions of the main study

This research uses a 2 (type of brand: prison brand and non-prison brand) x 2 (extension type: line extension and category extension) x 3 (type of imprisoning association: product category-, usage situation- and user image associations) mixed research design. Type of brand is a within-subject design factor and extension type and type of imprisoning association are between-subject factors. An experiment is required to test a manipulated variable on

consumer evaluation. In order to ensure internal validity, each respondent will be randomly assigned to one of the six conditions.

Three prison brands are used with each brand having two extensions, one line extension and one category extension. Respondents are grouped so as to evaluate one parent brand and either a fictitious line or category extension of that brand. On top of that in each condition a

Condition Brand Product category Association Type of association Line extension Category extension

1 Andrélon Hair care products Hair care Product category Hairmousse extra shine 1 Dove Body care products Total body care Other Sunblock

2 Andrélon Hair care products Hair care Product category Bodylotion 2 Dove Body care products Total body care Other Hairmousse 3 Pampers Diapers Diapers / Defecation Usage situation Diaper extra soft

3 Zwitsal Baby care products Baby care Other Cream for irritated skin

4 Pampers Diapers Diapers / Defecation Usage situation Baby bodylotion 4 Zwitsal Baby care products Baby care Other Diapers 5 Olvarit Baby nutrition Baby nutrition User image Elderly nutrition

5 Unox Nutrition Nutrition Other Aubergine-Courgettesoup

6 Olvarit Baby nutrition Baby nutrition User image Childrens' apple juice 6 Unox Nutrition Nutrition Other Elderly nutrition

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31 brand eliciting other associations, such as benefit or attitude associations, will be added with either a line or category extension. This is done so the consumer evaluation of non-prison brands can be measured and compared to the consumer evaluation of prison brands, a within-subjects design. Moreover, the between-within-subjects design allows for comparison amongst the different type of prison brands and their extensions (Saunders et al., 2007).

Because the basis of this study is the associations that consumers hold in their minds about brands, the free association method is used to obtain these associations from the respondents in the form of a questionnaire (Timmerman, 2001). Using this method motivates respondents to come up with any association when thinking of that brand, while given only one cue, namely the brand name (Timmerman, 2001). The strength of using free association is that respondents are allowed to show both positive and negative associations (Krishnan, 1996; Timmerman, 2001). The weakness of the method is that free associations usually brings forth conscious associations and therefore respondents are not always able to come up with relevant associations (Haveman & Labadie, 2003; Timmerman, 2001). However, unconscious

associations might also play a role in the imprisonment of a brand, but requires more probing to reveal (Franzen & Bouwman, 1999). Yet, due to time constraints this study limits itself to only using free associations to elicit brand associations.

The questionnaire will be the same for each condition, except for the stimuli which are modified. To increase the generalisability of the study, questionnaires are used, because they have the advantage of gathering data from a large sample faster, easier and more practically (Saunders, et al., 2007; Timmerman, 2001). Besides that, by using a questionnaire data can be collected in a consistent and structured way, which increases the reliability (Saunders, et al, 2007). However, as the subjects will not be physically present during the completion of the questionnaire, respondent error cannot be completely guaranteed. Please refer to Appendix 1 for an example of the questionnaire of condition 1.

Brand imprisonment : identifying conditions under which a ‘strong’ brand becomes inhibited, making it restrained in its’ potential to extend