Corporate endorsement strategies : the influence onfeedback spillover effects.

“What we really need is a mind‐set shift that will make

us relevant to today’s consumers, a mind‐set shift from

‘telling and selling’ to building relationships.”

Jim Stengel

Former global marketing

officer of Procter and Gamble

SARAH PIETERSE

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OLOPHON

Personal information

Student:

Sarah Pieterse

Student number:

5909376

Email 1:

sarah.pieterse@student.uva.nl

Email 2:

sarah.pieterse@gmail.com

Date final thesis:

11‐03‐2014

University information

University:

University of Amsterdam

Faculty:

Economics and Business

Department:

Business Studies

Track:

Marketing

Address:

Valckenierstraat 65‐67

1018 XE Amsterdam

The Netherlands

1st supervisor:

K. Venetis

Email:

k.venetis@uva.nl

2nd supervisor:

unknown

Email:

unknown

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REFACE

“Unilever, which owns brands including Flora, Persil and Marmite, plans to

feature its logo in consumer advertising for the first time, in a bid to leverage

the value of its corporate reputation. However, the inclusion of the logo could

also dilute advertising messages and increased the risk of harm across the

portfolio if issues arose on one product.”

Gemma Charles, Marketing Magazine

This research encompasses the quote above and searches beyond the regular scope to analyse the conditions for which positive and negative product attitudes can spill over to the corporate brand behind the product. Corporate portfolio strategies, association valence and spillover theories are just a small number of aspects this Master thesis has discussed. The thesis is written for the University of Amsterdam, faculty of Economics and Business and specifically for the Master of Business Studies Marketing track. The research was conducted during the last six months.

The choice for this subject, corporate endorsement strategies, is linked to my sincere interest in Fast Moving Consumer Good companies and the way they market their brands. During my Bachelors I have done a nine‐month internship at Nestlé and this raised my attention for the marketing activities that alike corporations are performing. So when I was searching for a subject for my thesis, I was struck by the new marketing techniques of Unilever, which had just started to integrate its corporate logo in all of their product advertisements. I started wondering how many people would be unfamiliar with the corporations behind a product and became fascinated by the different consequences of integrating a corporate logo into a product ad. Hereafter the idea was born to research the extent of spillover between a product and a corporation and how this new corporate endorsement strategy could influence this. Of course, a graduation research is never executed alone. Support from all sides was found, for which I am very thankful. The first person I would like to thank is my thesis supervisor, Karin Venetis. The way in which she supported my research and stood up with all my questions during the first research period was very helpful and I appreciate that greatly. I would also like to thank my family and friends for helping me during the writing process of this thesis and providing me with the motivation and determination to reach the point I am at the moment.

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Looking back, I found writing a Master thesis a very satisfactory experience. All I have learned in the past five years and especially in the last year has come together in this thesis. All that rests now is graduation and I am looking forward to that with proud! Sarah Pieterse

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ABLE OF CONTENTS

i. Colophon ... i

ii. Preface ... ii

iii. List of tables and figures ... vi

iv. Abstract ... viii

1. Introduction ... 1

1.1. Spillover effects ... 2

1.2. Research gap and research question ... 3

1.3. Contributions ... 4

1.4. Outline of this research ... 5

2. Corporate branding ... 7

2.1. Brand portfolio strategies ... 8

2.2. Brand hierarchy ... 9

2.3. Towards a corporate endorsement strategy ... 10

3. Brand Associations ... 13

3.1. Consumer brand evaluation ... 13

3.2. Positive and negative brand associations ... 17

4. Feedback spillover effects ... 19

4.1 Feedback effects in brand extensions ... 19

4.2. Feedback effects to corporate brands ... 22

4.3. Valence in feedback effects ... 24

5. Hypotheses development ... 26

5.1. Motivation for corporate endorsement ... 26

5.2. Feedback spillover effect ... 27

5.3. The influence of corporate endorsement strategies ... 29

5.4. Theoretical framework ... 31

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6. Methodology ... 32

6.1. Pre‐testing ... 32

6.2. Experimental design ... 38

6.3. Measurement ... 40

7. Results ... 44

7.1. Data preparation ... 44

7.2. Manipulation check ... 46

7.3. Hypotheses testing ... 54

7.4. Additional analyses ... 62

7.5. Overview of the hypotheses ... 64

8. Discussion ... 65

8.1. Motivation for corporate endorsement... 65

8.2. The positive and negative feedback spillover effects ... 67

8.3. Influence of corporate endorsement strategies ... 69

8.4. Theoretical implications ... 70

8.5. Managerial implications ... 72

9. Conclusion ... 75

9.1. Limitations and suggestions for future research ... 77

References ... 79

Appendix A. Results SPSS pre‐test 1 ... 88

Appendix B. Results SPSS pre‐test 2 ... 89

Appendix C. Results main study ‐ hypotheses ... 91

Appendix D: Main survey ... 98

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IST OF TABLES AND FIGURES

Figures Figure 1. Keller's brand knowledge model 14 Figure 2. Type of product category 35 Figure 3. Variance for Mars inc. and Pepsico 35 Figure 4. Endorsement evaluation 50 Figure 5. Positive and negative spillover 57 Figure 6. Spillover effects per endorsement strategy 58 Tables Table 1. Mean scores of familiarity of corporate brands 34 Table 2. Mean scores of corporate brand attitude 34 Table 3. Mean scores of corporate brand image 34 Table 4. One‐sample t‐test of valence of the scenario 37 Table 5. One‐sample t‐test of the believability of the scenario 38 Table 6. Sample distribution among experimental groups 44 Table 7. Reliability scores of scales with number of items 45 Table 8. Corporate familiarity and attitude 47 Table 9. One‐way Anova of perceived fit 47 Table 10. One‐way Anova of positivity of the newspaper article 48 Table 11. One‐way Anova of positivity of the product attitude 48 Table 12. One‐way Anova of reality of the newspaper article 49 Table 13. One‐way Anova of diagnosticity of the newspaper article 49

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Table 14. Variance analysis of the endorsement evaluation 49 Table 15. Recall per condition 52 Table 16. Variance analysis of the corporate attitude 52 Table 17. Regression analyses 53 Table 18. Experimental conditions 53 Table 19. Descriptives of the hypotheses 54 Table 20. Attitude towards the brands 55 Table 21. Difference in variance 55 Table 22. Positive and Negative spillover effects 56 Table 23. Effect of Endorsement on the spillover effects 59 Table 24. Difference in positive spillover effect for two endorsements 60 Table 25. Difference in negative spillover effect for two endorsements 60 Table 26. Difference in corporate attitude and positive spillover effect 61 Table 27. Difference in corporate attitude and negative spillover effect 62 Table 28. One‐way Anova of purchase intention of the product 63 Table 29. One‐way Anova purchase intention other products 63

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BSTRACT

Since 2009 FMCG corporations have started to integrate their corporate logo into their stand‐ alone product advertisements. By doing so, not only associations regarding the corporate brand can be transferred to the products, also the associations regarding the products can now spillover to the corporate brand. The latter is called feedback spillover effect, which is the focus of this study. This new phenomenon of linking the corporation to its separate individual brands is done by means of corporate endorsement strategies. Two main types of endorsement strategies are presented, namely the dual branding strategy whereby the corporate name and the product name are placed next to each other on the product packaging. And the logo visibility strategy, which is a relatively new strategy in which the logo or name of the corporation is placed on the upper or lower left or right hand corner of a product advertisement. The main objective of this research is then to investigate to what extent positive and negative individual brand associations can spillover to the corporate brand and how this effect is influenced by the two different endorsement strategies mentioned before. An experimental design, using a hypothetical product in the confectionery category (chocolate bar) and an existing, moderately familiar FMCG corporation (Mars In.) is developed. Two newspaper articles determined the valence of the individual brand and a product advertisement including one of the two endorsement strategies provided a way for the product associations to spillover to the corporate brand. Results show that only negative individual brand associations spillover to the corporate brand, unlike the positive associations that were not found to be significant. Furthermore, the positive and negative spillover effects were not more enhanced by the dual branding strategy than by the logo visibility strategy, meaning that neither type of endorsements is superior to enable more spillover. Results, however, did indicate that under the condition of negative spillover and dual branding the spillover effect was significant. Managerial implications and opportunities for future research are discussed and limitations noted.

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NTRODUCTION

At the start of 2009, Unilever started with featuring its corporate logo in consumer advertisements. The rationale behind this corporate branding strategy was to create a corporate ‘halo’ effect across the company’s portfolio. People that buy one product from the company appear to have more positive feelings towards and are more likely to buy other products if they are made aware of the link between the corporate brand and its products, as augmented by a Unilever spokesman (“Unilever ’s Dilemma: What about the logo? ‐ Economic Times,” n.d.). More recently other large Fast Moving Consumer Goods (FMCG) companies have started to expose their corporate logo in product advertising, for example Nestlé, FrieslandCampina, Reckitt Benckiser, and Procter and Gamble (P&G) who’s main focus has become to communicate to consumers as one company, not just as individual brands, in an attempt to build awareness and trust. Through an increased corporate brand visibility, companies try to influence consumer decision‐making by reducing perceived risk (Dowling, 1993). However, even though consumers have come to appreciate corporate transparency, expressing the corporate logo in product advertisements can also increase a FMCG’s risk as one of its brands or product categories can pollute the entire portfolio when involved in bad publicity or when there is a poor fit with the corporate brand image (Milberg, Park, & McCarthy, 1997).

The difficulty lies in the fact that corporate brands and individual product brands have very different types of associations and values that can be conveyed. By integrating a corporate brand with an individual brand the risk of discrepancy between the different brand images emerges. Leitch and Richardson (2003) state that by having a multiproduct company, multiple brand identities are formed, which can lead to confusion in the positioning and a dilution of image of the corporate brand identity. Because FMCG companies have many different brands in their portfolio, with each brand having different associations related to them, the overall corporate image might not be clear to the consumers. To illustrate, in the eyes of the consumer a connection might not be clearly made between the corporate brand Kraft foods and its stand‐ alone products. In this case, ‘Philadelphia’ or ‘ OREO’ might be seen as the main drivers of the brand, instead of Kraft foods. So when a consumer wants to buy chocolate biscuits and has to choose amongst many different biscuits brands, he or she is not only initially confused but also tries to categorize the biscuits by brand association or image given by their knowledge and previous experiences (Czeller, 2003). When the consumer choses OREO biscuits and then becomes aware that Kraft Foods is the company behind it, all of these associations towards

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chocolate biscuits in general will become part of the corporation, creating a very diffuse and incoherent corporate brand image. Moreover, when positive or negative information becomes known about OREO, it will not affect Kraft foods when the consumer is not aware of the link between the two. But when they do become linked, all the associations of OREO, being positively anchored or negatively, are free to transfer to the corporate brand Kraft foods.

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PILLOVER EFFECTS

Despite the differences in association, companies have a variety of goals when integrating their corporate brand in their product advertising. The most important are to increase the awareness of the products belonging to the same umbrella corporation (Aaker, 1991) and to differentiate the unique organizational value proposition (Uggla, 2006). It is noticeable that much of the research to date has focussed on how the corporate image is transferred to the products of the company (Brown & Dacin, 1997), while less attention is given to the reversed effect. Despite this lack of research, some authors have conceptualized the concept of image transfer from product to corporate level. Keller (1993) for example states that brand knowledge alters when a brand becomes linked to another brand or entity. Consequently, the corporate brand knowledge should change when it becomes linked to another brand in the company’s portfolio, because the brand knowledge of the other brand is of influence on the corporate brand. Furthermore, Pina, Dall’Olmo Riley and Lomax (2013) reason in their study that image transfer of a lower levelled brand to a higher levelled brand is possible. They find that by integrating family brand associations (e.g. Colgate) into the evaluation of a new extension (e.g. Colgate extra whitening toothpaste), the attitude towards the extension and subsequent feedback effects are formed (José M. Pina et al., 2013). This indicates that whenever the corporate brand (e.g. Colgate‐ Palmolive)1 _{and an individual brand (Colgate extra whitening toothpaste) are integrated into} one product advertisement, the feelings and attitudes toward the product can also influence the feelings and attitudes towards the corporate brand, either in a positive or negative way.

Throughout this research the phenomenon of associations of lower levelled individual brands influencing associations of higher levelled corporate brands refers to feedback spillover. Spillover among brands, products, organizations and alliances has been a topic of interest for recent research. The advantage of spillover effects is mainly described in the literature on spillover that occurs between brand extensions and brand (Balachander & Ghose, 2003; Lei, Dawar, & Lemmink, 2008; Simonin & Ruth, 2013). Several scholars have argued that feedback effects of the product extension on the family brand are equally important as the forward effect

1 _{This article addresses the following brand hierarchy: corporate brands (e.g. Unilever), family brands (e.g.}

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of the family brand on the extension (Chen & Chen , 2000; Loken & John, 1993; Sheinin, 2000). Moreover, Thorbjørnsen (2005) argues that product feedback effects should sometimes be given more weight than the isolated effect of the brand itself. This is because negative feedback effects can be damaging to the family brand image. The most important disadvantage of product extensions is that they can dilute the associations that make up the (corporate) brand image (D. A. Aaker, 2004).

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ESEARCH GAP AND RESEARCH QUESTION

The above‐mentioned examples indicate that previous literature has not yet focussed on the spillover of an individual brand to a corporate brand. Instead it has concentrated on the spillover at a hierarchy level lower, namely between extensions and family brands. The reason why the feedback spillover has not yet been researched might be due to the fact that FMCG companies only recently have started to actively link their stand‐alone products to their corporate brand. In other words, because until recently FMCG’s were purposely separating their products from their corporate brand, consumers were unaware that a stand‐alone product belonged to a certain corporate brand. Consequently, a link between the two did not exist which is why spillover could not take place between a product and the corporate brand. But now that spillover is taking place between the two brands, FMCG companies should be aware of the consequences of association spillover. As the impact of spillover is not always positive, it can be dangerous for FMCG companies to link their corporate brand to the stand‐alone products. It is important to look closely at the factors that play a role in feedback spillover effects in the FMCG industry. In sum, important gaps in the literature exist concerning the positive and negative feedback spillover in a FMCG industry. There is not only a lack of research on the effects that individual brand associations have on the corporate brand but also on the mechanisms that enable these associations to spillover. Therefore, this research aims to fill in these gaps by exploring the feedback spillover effects of positive and negative associations and how these are influenced by means of two corporate endorsement strategies. This can be recapitulated in the following research question:

“To what extent do the positive and negative feedback spillover effects of the individual brand associations on the corporate brand associations differ for different types of corporate endorsement strategies?”

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SUB QUESTIONS

In order to provide an answer to the research question, it is important to get a good understanding of the underlying theory about corporate branding, associations and feedback spillover in general. Therefore this study starts of with a literature research that will explore a set of sub questions to analyse the problem statement. 1. How are corporate ‐and individual brands related due to portfolio strategies? 2. What types of corporate endorsement strategies are there and what makes them beneficial for FMCG’s to use them? 3. What kind of individual and corporate brand associations are there and how are they different from each other in terms of type?

4. What is a feedback spillover effect and under what conditions is this effect most likely to occur?

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ONTRIBUTIONS

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HEORETICAL CONTRIBUTION

This study offers a new perspective on the little number of existing researches available on feedback spillover effects in a FMCG industry. Although recent studies have focussed on spillover effects in different fields such as brand alliances (Leitch & Richardson, 2003; Radighieri, John Mariadoss, Grégoire, & Johnson, 2013; Simonin & Ruth, 2013) brand extensions (Gürhan‐Canli & Maheswaran, 1998; Martínez Salinas & Pina Pérez, 2009; Park, McCarthy, & Milberg, 1993; Jose M. Pina, Iversen, & Martinez, 2010), brand portfolio’s (Lei et al., 2008) and organizational reputation (Abratt & Kleyn, 2012; Saunders & Guoqun, 1997), no research has investigated the spillover effects on a higher level in the brand hierarchy of a corporation. This study therefore provides more insight on the extent to which associations of an individual brand will spillover to a corporate brand once the two become linked via the use of an endorsement strategy. Furthermore, those studies that did investigate spillover in the FMCG industry only concentrated on the spillover from he corporate brand to the stand‐alone products. However, none of these studies took into account that once the consumers know that a certain product belongs to a corporation, associations can also spillover to the corporate brand. In this study, the feedback spillover effect explores the initial‐attitude towards the corporate brand and the post‐ attitude towards the corporate brand, in order to check for any changes among these constructs. This change is a consequence of a change in the valence of the individual brands and will give more insight into the effects of positive and negative associations regarding a product. Lastly,

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the condition under which a feedback spillover effect occurs will be examined by providing a richer understanding of the use of endorsement strategies. With a new strategy in use since 2009 it is interesting to compare this strategy with an existing one and how the two might differ in their effectiveness. In doing so, the literature will gain a better understanding of the conditions that apply for FMCG’s that can either benefit or dilute their corporate brand.

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ANAGERIAL CONTRIBUTION

From a managerial perspective, the results of this empirical study will provide a deeper understanding of the possible effects that occur when something negative or positive happens to one of the individual brands. It explains how negative (positive) associations regarding a product will have a negative (positive) effect on the corporation as a whole and how different endorsement strategies might strengthen this effect. By showing which type of association (positive or negative) has a greater influence on the corporate brand, this study can show managers whether integrating the corporate brand with their stand‐alone brands is wise or not. As every product will sooner or later get in touch with positive or negative information and subsequent positive or negative product associations, managers will at least be aware of the consequences for their corporate brand. Also, by showing the difference in impact of the two endorsement strategies that corporations can use to link their corporate brand to their individual brands, managers might find a way to minimize the spillover of negative associations or maximize the spillover of positive associations.

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UTLINE OF THIS RESEARCH

This study will start with a thorough analysis of the existing literature. Chapter two provides an overview of the different brand portfolio strategies, which explain the two different corporate endorsement strategies that are of importance for this research. Furthermore are the brand hierarchy levels presented that are used in this study. The next chapter elaborates on the difference between individual and corporate brand associations and what the impact is of positive and negative brand associations. The last chapter of the literature review describes the foundation of feedback spillover effects that is embedded in the categorization and associative network theory. More importantly, this chapter also explains the extent to which positive and negative associations can have a different effect on the corporate brand. Based on the literature review the hypotheses are proposed in chapter five, which is followed by the methodology in which the research design, sample and procedure, pre‐tests, manipulations and measurements are presented. After interpreting the results and additional findings, this study ends with a discussion and explains the managerial and theoretical implications. A final summary will

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ORPORATE BRANDING

In this study the definition of Einwiller and Will (2002, p. 101) is used to translate the essence of what corporate branding embodies: “a systematically planned and implemented process of creating and maintaining favourable images and consequently a favourable reputation of the company as a whole by sending signals to all stakeholders by managing behaviour, communication and symbolism”. In other words, this definition proposes that a strong corporate brand can have a significant impact on creating positive consumer perceptions of existing products and new product extensions (Balachander & Ghose, 2003; Brown & Dacin, 1997; Erdem & Sun, 2002; Swaminathan, Fox, & Reddy, 2001). Aaker (1991) and Keller (1993) argue that advertising a corporate brand can increase a consumers’ awareness of products that share the same umbrella company as well as strengthen the individual product brand images. Moreover, corporate branding strategies can also help in differentiating from other companies. As Hatch & Schultz (2003) reasoned: in order to differentiate, companies have to position their entire corporation instead of just their stand‐alone products. This highlights the importance that focussing on the stand‐alone products “will be a recipe for confusion and inefficiency” (D. a Aaker & Joachimsthaler, 2000, p. 105). In other words, corporations need to think beyond their multiple individual product brands and move towards a more centralized branding strategy in which the corporation as a whole plays a significant role. The individual brands should not be perceived as being stand‐alone anymore, but instead should be integrated with their corporate brand. Consumers are interested in knowing more about the corporations behind the products and their ethical policies, as is confirmed by Balmer (1995). The consumers are becoming more willing to pay a little more for a clear conscience and by creating an emotional bond to the corporate brand it can be the way to differentiate from competitors.

In sum, this study focuses on the different corporate endorsement strategies within the FMCG industry. For the sake of this study, this chapter will provide a clear description of what is exactly meant with corporate branding and how endorsement strategies are formed. First, the realization of a corporate portfolio strategy is described. This needs to be established in order to effectively lay down the concept of corporate endorsement strategies. Furthermore, the change in portfolio strategy and the most important endorsement strategies are presented.

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RAND PORTFOLIO STRATEGIES

In order to understand the concept of corporate endorsement strategies, it is necessary to understand the concept and type of portfolio strategies a corporation can apply. The portfolio of a company determines the different branding strategies in which each company can position all their individual brands in relation to the corporate brand. Aaker (2004, p. 13) defines a brand portfolio strategy as “a strategy that specifies the structure of the brand portfolio as well as the scope, roles and interrelationships of the portfolio brands. The goals are to create synergy, clarity, leverage brand assets and to create and maintain relevant, differentiated, energized brands”. The importance of having a good portfolio strategy according to Aaker (2004) is that it can help individual brands in having a clear role in their market positioning and it allows a company to react flexible to external market conditions due to the resources assigned to the brands. The extent to which corporate brands and individual brands are positioned in relation to each other varies in a continuum. On the one end of this continuum the corporate brand and all the other brands are strongly related. In this case, the name of the corporate brand is used along with the other brands, which makes it clear that all these brands belong to the corporate brand. This part of the continuum is called the monolithic structure (Laforet & Saunders, 1994), branded house (D. a Aaker & Joachimsthaler, 2000) or holistic corporate branded (L. Muzellec & Lambkin, 2009a). Previous studies concluded that in this end of the continuum the corporate brand plays a large role in the individual brand because the corporate brand is the main driver and is visually the same on every product. On the other end of the continuum there is no relatedness between the corporate brand and the other brands. The brands are perceived as stand‐alone and do not share any associations with the corporate brand. This type of portfolio strategy has mainly been named as a branded structure (Laforet & Saunders, 1994) or house of brands (D. a Aaker & Joachimsthaler, 2000). In this strategy it is possible that each brand differs visually from and has a different identity than the other brands in the portfolio. The corporate brand is still the owner of all the separate brands, but this connection is not communicated to the consumers. Therefore the individual stand‐alone brands are more important and well known than the corporate brands, as is often seen in the FMCG industry.

An important aspect in determining the value of a portfolio strategy is explained by Aaker and Joachimsthaler (2000) and mentions the driver role of a brand. The driver role shows the value proposition of the brand that makes the purchase decision (D. A. Aaker, 1996), or differently said, it shows which part of the total brand drives a consumer’s purchase decision. For example, when you would ask consumers owning a Renault Clio what kind of car they have and they answer that they have a Renault, then the Renault brand is the main driver. When consumers state they own a Clio, then the Clio brand would be the main driver (D. A. Aaker, 2004). The

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literature shows that there are many different combinations possible in the portfolio continuum, in which the relationship between the corporate brand and the individual brand varies significantly. The next paragraph will formulate the different hierarchies that can be generated out of the continuum and can add value to the portfolio strategy.

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RAND HIERARCHY

According to Keller (1999) a branding strategy for a company reflects the number and nature of common and distinctive brand elements applied to different products sold by that company. It involves the decision of which brand elements (brand names, logos, symbols, characters, slogans and so forth) will be applied to which products. Next to the driver role described above, also the brand hierarchy can add value to the different portfolio strategies because it allows a clear distinction between brand elements and the role the different brands play in a consumer’s mind (D. a Aaker & Joachimsthaler, 2000). The brand hierarchy is a useful means to graphically portray a firm’s branding strategy as it is based on the “realisation that a product can be branded in different ways depending on how many new and existing brand elements are used and how they are combined for any one product” (Keller, 1999, p. 320). In his article Keller (1999) distinguishes five levels of hierarchy, namely the corporate brand, the family brand, the individual brand, the modifier and the product descriptor. In explaining these different concepts it is best to clarify them with an example. For instance, when a consumer goes to a supermarket he or she is confronted with a lot of different brands. In case the consumer buys ‘Chicken Tonight’ (s)he is not only confronted with Chicken Tonight but also with Knorr and Unilever. Unilever is the corporate brand of this product that can be found on the backside of the package of Chicken Tonight. In this case, the family brand is Knorr. A family brand is often used instead of a corporate brand, because numerous products with little product similarity are linked to the corporate brand. This makes is difficult to effectively link all the products to each other, serving as an umbrella brand (Keller, 1999). Family brands thus have the power to evoke a specific set of associations across a group of related products (Keller, 1999). The next level of hierarchy is the individual brand, in this case Chicken Tonight. Keller (1999) states that individual brands are limited to basically one product category but with multiple product types offered such as different models, package sizes and flavours. Individual brands also have a wide range of different types of attributes, benefits and attitude associations linked to the brand, which create an advantage for the associated marketing activities because they can be customized to the needs of a specific target group. The second to last hierarchy level described by Keller (1999) is the modifier level, which in the example would be Chicken Tonight Ajam Bali. A brand modifier shows how one type of variation in the brand is related to others in the same brand family and it helps to make products more understandable and relevant to consumers as it signals differences

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in quality, attributes and functions. Lastly there is the product descriptor level, which gives information about the product by telling the consumer what it is and what it does. At the label of the Chicken Tonight Ajam Bali jar its states for example that it is a stir‐fry sauce for chicken. Although having a well‐defined brand hierarchy can add significant value to the corporate portfolio strategy, companies can and sometimes must change their strategy in terms of hierarchy and portfolio strategy. Due to the changing and increasingly global market, companies have to rethink whether their current branding strategy is matching their business model. In the next paragraph this rebranding process will be discussed as it forms the basic assumption for this research as to why corporate endorsement strategies have become so popular in the FMCG industry.

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OWARDS A CORPORATE ENDORSEMENT STRATEGY

The section above shows that many variations are possible in choosing a portfolio strategy, as there are many different driver roles for each of the hierarchy levels. The strategy of integrating a higher‐levelled brand with a lower levelled brand (for example, integrating a corporate brand such as Colgate‐Palmolive with a family brand like Colgate) can be called endorsement strategies. Laforet & Saunders (1994) identified the endorsement strategy as a strategy whereby the corporate name acts as an endorser behind the individual brand, such as Nestlé with Nescafe. So, between the two ends in the above‐described continuum it is possible that the brands can be endorsed by other (corporate) brands, but the extent to which the brands are endorsed differs in the literature.

The first endorsement strategy that will be investigated in this research is called the dual branding endorsement, which is a strategy that has been recognized by Laforet and Saunders (1994). They argue that products are mixed brands that carry out two or even more brand names, which is what they called dual branding. The product is combined with the corporate name or another brand name of the firm, such as Nestlé Blue Riband (Laforet & Saunders, 2007). Some FMCG’s such as Nestlé have used this strategy for a long time, which might explain why Nestlé’s corporate FMCG brand is familiar for many of its consumers. They combine their product names with the corporate brand name on almost every packaging, such as Nestlé KitKat. Aaker and Joachimsthaler (2000) assert that endorsed branding is also possible as an in‐ between spectrum in the portfolio continuum. They distinguish token endorsement, shadow endorsement and sub branding as different strategies in which the corporate brand is to some degree related to the brands. This means that, on the one hand the corporate brand could be the main driver of the brand, meaning that the connection between the individual brand and the corporate brand is high in the eyes of the consumer. On the other hand, the individual brand

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could be the main driver in which the corporate brand is disconnected from the brand in the consumer’s eyes. A great amount of FMCG’s is using the latter driver role. The family brands and sometimes even the individual brands are the main drivers in the eyes of the consumer, resulting in low associations with the corporate brand. The corporate brand is, if at all, in this case signalling to the consumer that the product is not as closely related to its other products that share that name, leading to less transfer of corporate brand associations (Keller, 2009). However, recently this focus on the individual or family brand as the main driver has started to shift as the corporate brand is actively promoted in the advertisements of the individual brand. This is manner of showing the corporate logo or name in product advertisements is called logo visibility, which is the second endorsement strategy this research will focus on. Companies like Unilever and Proctor and Gamble, where the corporate name gets or used to get little to no visibility and where they brand every product separately, can also use corporate branding strategies in order to carry out their values and create a corporate identity. As is stated in the definition of corporate branding used in this article, signals have to be sent out in order to influence and maintain favourable images. According to Dowling (1993) one of these signals are the corporate logos and names used by an organization to help consumers in recognizing an organization. These signals facilitate a corporate identity that is necessary to create emotional attachment and recall stored images of the organization in consumer’s minds. This development is what can be seen in the FMCG industry today; the corporate brand logo is included in all of the individual brand marketing activities, which leads to a more prominent corporate brand. According to Keller (2009, p. 300), whenever a corporate brand becomes more prominent, feedback effects are “probably more likely to be evident”.

These changes in corporate branding are described by Muzellec and Lambkin (2009). In their research on dynamic (re)branding, two contradictory strategic approaches can be identified: the integration strategy and the separation strategy. Regarding the integration strategy, the authors state that the corporation with all its businesses and products should be brought together under a single corporate name or master brand. The purpose of integration is to achieve image alignment between the corporate and individual brands and to ultimately become a branded house in the portfolio continuum discussed in paragraph 2.1. Opposite of this strategy is the separation strategy, in which the corporation tries to create different images for different stakeholders by separating the corporate brand from its subsidiary brands and products. It can be remarked that ever since the 1990s an increasing amount of corporations are moving towards a more integrated strategy. In addition, Muzellec and Lambkin (2009) propose three different ways in which corporations can get their products involved in showing their corporate identity. The first is by using a “trade name” in which the stand‐alone brands are the main point

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of contact between the corporation and the consumer. The corporate brand mainly serves as a trade name, which is fairly unknown to the consumers and it does nothing more than symbolizing the corporate brand by being a logo on a product packaging. This is also called dual branding by Laforet and Saunders (2007) and is extensively used as a strategy in the endorsement literature, hence why this endorsement strategy is used in this research. The second way of integrating the corporate identity is the “business brand”. In this case the corporate branding may serve primarily as an identity towards all stakeholders other than the consumers. It simply means having a strong name with several associations for different types of stakeholders. Finally, the “holistic corporate brand” means having a fully developed corporate brand, with one coherent identity that is carried out to all stakeholders and target audiences.

I

N SUMMARY

Previous theoretical research gave the following insights. First, corporations can choose different portfolio strategies in their business model. An endorsement strategy is used when neither the corporate brand nor the individual brand conveys the main driver role, but both brands are more or less combined in the eyes of the consumer. In this research, the corporate endorsement strategy ‘dual branding’ is seen as one of the endorsement strategies that link the corporate brand level and the individual brand level. Furthermore was it indicated that a relatively new form of endorsement has emerged and will therefore be studied in this research. In this strategy the logo of a FMCG is implemented in the individual product advertising by which it endorses the individual product, also called “logo visibility”. Once the corporate brand and the individual brand are linked, associations can spillover from one brand hierarchy level to the other. The next chapter will elaborate on the different associations regarding the corporate brands and the individual brands.

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3.

B

RAND

A

SSOCIATIONS

Linking the corporate brand to the individual brand via endorsement strategies can have both positive and negative consequences for the corporate brand. The key is to know what the associations are, how consumers evaluate them and whether or not they can be aligned with the image that consumers hold about the company. Therefore the following paragraphs will first look into how consumers evaluate brands, explaining the different types of associations that consumers can have with products and corporations. Subsequently, this article will elaborate on the impact of positive and negative brand associations.

3.1.

C

ONSUMER BRAND EVALUATION

Keller (1993) argues that the consumer‐based brand equity can explain most of the perceptions and subsequently stored images consumers have in their mind about brands. Brand equity as the incremental value of a product caused by the brand name, originates from what consumers learn, feel, hear and see about a specific brand due to the chosen marketing mix of a company (Keller, 1993). The brand equity can lead to different responses for different brands because consumers shape different brand knowledge for every brand. The memory of a consumer exists out of nodes and links of various associations that are related to a brand. These nodes store information that are linked to other nodes in the brain. The level of processing and involvement determines not only how fast consumers store information in their memory but also the strength of the association between the nodes. Activation of one node can spread to other linked nodes and can reach a threshold level when the information in this node is activated and recalled. This process of spreading activation determines the extent to which information is retrieved from the memory and can influence the consumer’s buying behaviour (Anderson, 1983; Keller, 1993; Keller, 2009). The underlying theory is the associative network theory and will be further discussed in chapter four as it forms an important part of the foundation for spillover effects.

B

RAND ASSOCIATIONS

The brand knowledge consumers have consists of the brand awareness (recognition and recall) and the brand images (see figure 1). Keller (1993, p. 3) defines a brand image as the “perceptions about a brand as reflected by the brand associations held in a consumer’s memory”. Brand image creation is important because it helps in establishing a brand’s position in the market and protects it from competition so it can enhance its market performance.

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SARAH PIETERSE Figure 2. Keller's brand knowledge model (1993, p. 7) Chen (2001) also highlights the importance of brand images and its underlying associations by stating that they can help to process and retrieve information, generate a reason to buy, create positive attitudes and feelings and provide a basis for extensions. Accordingly, the brand image is made up out of the associations consumers have with a brand. Similarly, Aaker (1991) stated that the underlying value of a brand name is often the set of associations, or its meaning to people. He defines associations as anything linked in memory to a brand. Keller (1993, p. 3) extends this definition by asserting that brand associations are the informational nodes linked to the brand node in memory and contain the meaning of the brand for consumers. All in all, consumers use brand associations to help process, organize and retrieve information in memory and to support them in making purchase decisions (Aaker, 1991). The dimensions of favourability, strength and uniqueness of these associations are the distinguishing factors that determine the differential response of consumers who buy one brand instead of another. These factors are needed to build a strong brand image, because the creation of positive associations results in a positive brand image that in turn enhances brand equity (Aaker, 1991).

Academics have developed several categories to cluster different types of associations. The foundation of these scales is developed by Aaker (1991), which embodies eleven categories:

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product attributes; intangibles; customer benefits; relative price; use/application; user/customer; celebrity/person; lifestyle/personality; product class; competitors; and country/geographic area. Due to the length of Aaker’s scale, several authors have summarized the eleven types of association. Biel (1992) states that brand images (corporate, product and user images) can be divided into two types of association. One of these entails the perception of utilitarian and functional attributes, the other relates to emotional attributes. Farquhar and Herr (1993) distinguish the types of brand associations into product category, usage situation, product attribute and customer benefits. Another way of dividing brand associations is by focussing on the brand‐added values on associations that deal with their level of abstraction (Keller, 1993). First of all Keller (1993) identifies attributes, which are the descriptive features that characterize a product or service, what consumers think a product or service is and what the purchase or consumption entails. Attributes can be distinguished into product‐related attributes and into non‐product‐related attributes. The second category Keller (1993) identifies is benefits, which encompasses what a consumer thinks the product or service can do for them. Also, this category can be further divided into sub‐categories: functional benefits, experiential benefits and symbolic benefits. Finally, the third category of association type is the attitude, which is a consumer’s overall evaluation of a brand. In line with this Keller (1993) argues that a brand image has to be positive in order to exceed the expectation of a customer. Finally, in his research on developing a measurement scale to measure customer‐based brand equity, Chen (1996) distinguishes the following five associations types: perceived quality, functional features, symbolic association, emotional association and innovation. Chen (2001) later summarizes the previous literature and comes up with a final categorization of two overarching types of brand associations: functional attributes and non‐functional attributes.

C

ORPORATE ASSOCIATIONS

Because the previous studies mainly focussed on brand images and the underlying association on product level, Chen (2011) makes a further distinction between product associations and organizational associations, in which the latter embodies corporate ability and corporate social responsibility. Just as product associations underlie the individual brand image (Keller, 1993), corporate associations make up the corporate brand image (Brown & Dacin, 1997). Dowling (1986) asserted that the evaluations, feelings and attitudes towards an organization make up the corporate image of a company. Muzellec & Lambkin (2007, p. 322) state that the overall definition of a corporate brand image can be defined as “the overall impression formed as a result of a variety of formal and informal signals emanating from the company”. More specifically, Dacin and Brown (2002), describe corporate associations as any type of beliefs, moods, emotions and evaluations held by individuals about an organization. Therefore, in this

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study, corporate associations can be seen as all the information about a company that a person holds in his/her memory. Corporate associations are an important factor in determining the outcomes of an organizations (Chang & Rizal, 2011). For example, the corporate associations can enhance the company’s reputation and influence the purchase intention of customers. Moreover, the cognitive associations consumers have about a company can be a strategic asset as well as a source of sustainable competitive advantage (Brown & Dacin, 1997; Dowling, 1993). Nevertheless, even though the basic principles of product and corporate associations are similar, the scope of the corporate associations differs largely from product associations (Chen, 2001). Whereas corporate associations represent the entire company, product associations concentrate mainly on specific product or services. Brown and Dacin (1997) also emphasize this difference as they assert that because the corporation and its products have to be seen as separate identities, separate associations should therefore be taken into account when creating the corporate brand image.

Corporate associations can be distinguished into three different categorical main streams (Berens, Riel, & Bruggen, 2005), namely associations based on social expectations, associations based on corporate personality traits and associations based on trust. This can be translated into three main types of corporate associations that can influence product evaluations (Chang & Rizal, 2011). The first main type of corporate association is Corporate Ability (CA) referring to all the associations related to a company’s expertise of producing and delivering its outputs (Brown & Dacin, 1997). The associations linked to CA are innovativeness, quality and product attributes (Aaker, 1996; Berens et. al, 2005; Biel, 1992; Brown & Dacin, 1997; Chen, 1996; Keller & Aaker, 1998). The second main type of corporate associations can be described as the associations reflecting the organization’s status and activities with respect to its perceived societal obligations, also called the Corporate Social Responsibility associations (CSR) (Brown & Dacin, 1997). The behavioural responses of consumers on issues concerning social obligations, community orientation and programs concerning the environment and society, form the basis of CSR associations (Aaker, 1996; Biel, 1992; Brown & Dacin, 1997; Keller & Aaker, 1998; Madrigal, 2000). The last major association regarding corporations is the Corporate Credibility association (CC). It embodies certain characteristics, such as a company’s overall expertise, believability, trustworthiness and likeability that will help consumers in determining whether they find a claim made by a company credible or not. The believe that a firm can design and deliver satisfactory products enhances the expert status of a company (Aaker, 2004; Gurhan‐Canli & Batra, 2004).

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3.2.

P

OSITIVE AND NEGATIVE BRAND ASSOCIATIONS

The previous section identified the different types of associations existing within the individual and corporate brand. Although it is important to know the types of associations consumers can have with products and corporations and that the associations of the two brand hierarchy levels are different, it is more important to ensure that these associations are favourable, unique and strong as that are the key ingredients for creating a strong brand image. Once the associations meet these requirements, consumers gain more loyalty towards the brand, which in turn strengthens their competitive position. According to Keller (1993) a brand can have strong and favourable associations, but these associations can very well be turned into unfavourable associations. This is also described by Haveman and Labadie (2003) who argue that certain ‘problem brands’ can emerge when the positive associations of the brand turn into negative associations, or when the brand lacks important associations. Moreover, it is possible that individual brands elicit strong and favourable associations, but are not seen as unique compared to competitor brands (Keller, 1993). Otherwise, it is also possible that a brand is neither unique nor favourable but can trigger strong associations. In other words, when a company fails to deliver favourable brand associations, a negative attitude towards the brand occurs. Consequently, this change to negative associations is due when a brand lacks associations, when they are perceived as negative or when the corporation is confronted with negative stimuli of the external environment of the brand. Taking the above insights into account, it can be argued that a change in association can have a serious impact on other brand images in the portfolio. In the literature on brand extension, it is argued that damage caused by a brand extension is not necessarily a consequence of extension failure (Chen & Chen, 2000) or negative information (Rohini Ahluwalia & Gürhan‐Canli, 2000), but a family brand can also be damaged by the extension even if the extension is a success in the market. It is also possible that an individual brand can dilute consumers’ beliefs about the brand, as the product can elicit a range of new associations that differs from the original family brand beliefs and blur the brand’s meaning to consumers (Loken & John, 1993; Martínez Salinas & Pina Pérez, 2009). This negative effect can influence general brand associations (Martínez Salinas & Pina Pérez, 2009) and the beliefs in specific attributes (Keller & Aaker, 1998; Loken & John, 1993). Contrarily, the associations developed by the extension can also have a positive effect as they may be consistent with the current image of a brand and therefore cause a reinforcement of the brand (Keller & Aaker, 1998). Now that it is clear what the impact of positive and negative associations are on other brands in the portfolio, it is still the question to what extent these positive and negative associations spill over to the corporate brand. The next chapter will elaborate on the existing literature of feedback spillover effects of associations between

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different brand‐hierarchy levels. The last part will look deeper into the spillover effects of positive and negative associations.

I

N SUMMARY

Previous research explains that consumers form different types of associations for individual brands than for corporate brands. Although some clusters of associations are similar for both brands, it is more important for corporations to keep these associations positive. In order for a corporation to have a strong brand image and reputation, the associations must be favourable, strong and unique. Literature on extension products show that negative associations regarding the extension can lead to a dilution of the family brand (Loken & John, 1993). This means that individual brands that have weak, dubious or negative associations can have a negative impact on the corporate brand. Strong, consistent and unique individual brand associations can lead to a positive association regarding the corporate brand. The next chapter will dive further into the mechanism of feedback spillover effect.

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4.

F

EEDBACK SPILLOVER EFFECTS

The previous chapter explained the concept of individual and corporate brand associations and the impact that positive or negative individual brand associations can have on other brand in a portfolio. The associations of one brand can be transferred to another brand, which is called brand leveraging. In this research brand leveraging is described as the brand knowledge that is being borrowed or transferred to another brand (Keller, 2003). For the purpose of this study it is relevant to look at previous literature on feedback spillover effects in brand extensions. The main idea behind brand extensions is that brand imagery is transferred between a family brand and a new extension through reciprocal transfer of associations and emotions (Czellar, 2003; Keller, 1993; Pina, Iversen, & Martinez, 2010). Reciprocal transfer literature is based on the thought that family brands evoke certain associations and emotions, which are transferred to a (new) extension. The change in extension associations and emotion caused by the family brand has in turn an effect on the association and emotions of the family brand (Balachander & Ghose, 2003; Czellar, 2003; Jose M. Pina et al., 2010; Jose M. Pina, Martinez, Chernatony, & Drury, 2006). There are two directions of spillover effects discussed in the literature, namely the forward effect and the backward or feedback effect (Balachander & Ghose, 2003). The forward effect refers to the transfer of beliefs and/or affect from the family brand to the extension, and this effect has been substantially investigated (Jose M. Pina et al., 2010). The backward effect, on the other hand, refers to the transfer of beliefs and/or affect from the brand extension to the family and has received far less attention. Although the extension can be seen as similar to an individual brand in this study, the family brand in the extension literature is not comparable with a corporate brand focussed on in this research, as is explained in chapter two of this study. In fact, the corporate brand is one hierarchy level upwards from a family brand and the individual brand is not a newly introduced product per see, as is mostly the case in the extension literature. Nevertheless, the literature on the extension‐to‐family brand relationship can provide a well‐suited foundation for this study.

4.1

F

EEDBACK EFFECTS IN BRAND EXTENSIONS

In evaluating the extension product Czellar (2003) describes three scenarios. When an extension is newly launched, consumers will always evaluate it on the premise of their attitude toward the family brand and the category the extension is in. But when a consumer does not know the family brand and the products belonging to that family brand at all, the scenario rises in which the consumer will evaluate the extension solely on the basis of the experience with the extension

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category. For example, when Dove introduces a new type of body lotion but the consumer is not aware that Dove is the family brand, the consumer will evaluate the new type of lotion with other products in the body lotion category and will thus not evaluate it on the basis of the attitude towards Dove. Conversely, when the extension product category is new to the consumer, the attitude towards the extension will be formed on the basis of her attitude towards the family brand. But, whenever the consumer has knowledge on both the family brand and the extension category, a third scenario emerges, namely that of the perception of fit between the family brand and the extension category. This means that brand image variation depends on the reciprocal transfer effects between the (new) product associations and the extended brand beliefs (Martínez Salinas & Pina Pérez, 2009). In this study, several models and theories help in understanding and explaining the feedback spillover effects. The models assign a specific role to perceived similarity or fit, which will be discussed below.

C

ATEGORIZATION THEORY

The concept of perceived fit is an important variable in the feedback spillover literature (D. A. Aaker & Keller, 1990) and it measures a consumer’s perception of the suitability of the extension’s associations in an existing portfolio (Jose M. Pina et al., 2006). The first underlying concept explaining the process of fit between extension products and the family brand is the categorisation theory (Czeller, 2005). In this theory it is explained that brands and product categories are conceptualised as cognitive categories in the memory of a consumer. The theory implies that evaluations of new stimuli are a function of the overall attitude towards the category to which it belongs (Fiske & Pavelchak, 1986). When a consumer evaluates an object, this evaluation influences other related objects through the similarities the objects have. For instance, the category ‘fast food’ includes subcategories like Macdonalds, Burger King, KFC, etc. Here, the subcategories form a network of sharing associations all because of the overall category of ‘fast food’. An advantage of categorizing is that it is easy to process and retrieve from memory. This retrieval of a specific category item is most likely when the object of evaluation is specific for a category and is therefore more easily placed in a particular (existing) category. Contrarily, the networks of associations that are formed are very difficult to change. It is clear that the categorization theory gives a major role to the similarity of the product category, meaning that an attitude of an individual brand could be transferred under the condition of similarity as long as they belong to the same category

In general there are two different types of fit that can be distinguished in the literature. The first is product category fit, which refers to the perceived similarity between the extension category and the existing product categories of the family brand. Czeller (2003) gives as an example that whenever Marlboro is launching a ball‐pen, the fit will lie in the shared product attributes

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between cigarettes and ball‐pens. The second type of fit, and the most important type considered in this study, is based on a brand level. In this case there is a fit when the specific image of the brand and the extension product are similar. For instance, the match between a Marlboro’s rough, Western brand image as opposed to the image the consumer hold about the ball‐pen category (Czeller, 2003). Whenever a consumer perceives a high level of fit, either based on fit in category or fit in image, (s)he is able to reinforce the associations existing in their memory. On the other hand, when the perception of fit is low, it obliges the consumer to create new associations and it will confuse current associations (Loken & John, 1993). This is also argued by Jose M. Pina et al. (2010) in their research on reciprocal spillover effect. They state that perceived fit is the major driver of extension attitude formation and feedback effects, because the stronger perceived fit between two entities is, the better the extension attitude will be since it then becomes possible to transfer more favourable associations from the family brand to the extension. Moreover they argue that variations in extension attitudes (either favourable or unfavourable) will drive the subsequent accommodation of new associations within the family brand image (Czellar, 2003; Lei et al., 2008; Jose M. Pina et al., 2010).

A

SSOCIATIVE NETWORK THEORY

Another important model in the feedback spillover literature is the associative network theory. According to this theory, the consumer’s mind contains a network of concepts (nodes) interconnected by linkages or associations (Anderson, 1983; Morrin, 1999). It can be seen as the memory of the consumers and explains how pieces of information are structured, stored and connected to each other. The associations between a node and an association element are strengthened when they are simultaneously activated by external cues, such as new information, personal experience or external stimulations like advertising (Anderson, 1983). When a consumer is reminded of a stimuli, a node is activated and its associated element spreads to the related nodes in the network via pre‐existing links between the nodes. This is called spreading activation and depends on the strength between links. When consumers associate a brand to a new product, they will re‐adapt their cognitive structure either to accommodate or assimilate the new associations (Park et al., 1993). This is dependent on the degree of fit between the extended category and the pre‐existing associations of a consumer. Assimilation will occur when there is a high level of perceived fit and the brand scheme will remain unchanged. On the contrary, when the extended category differs substantially from the initial scheme, this will lead to an accommodation of the new associations by changing the cognitive scheme (Park et al., 1993). The weight that consumers attach to the information depends on the accessibility. For instance, in highly accessible conditions, any extension category might dilute or improve the cognitive structure depending on the negativity or positivity of the information. On the other