‘Mind your own family
business’
How family-owned brands as associative
networks reside in the customer mind
Name: Romy Kruijning
Student number: 10628363
University of Amsterdam - Amsterdam Business School
Master Thesis: MSc Business Administration – Marketing
Supervisor: Dr. Roger Pruppers
Date: 22-06-2018
Statement of Originality
This document is written by Student Romy Kruijning, who declares
to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document are
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.
Abstract
Family-owned companies make up the majority of companies, however of most family companies we are not aware of this family ownership. The question arises if we should. This research studies the customer perception of the family company, which is composed of associations. Although there are typical family-owned companies associations found in previous research it is not clear how important the family in a company is for customers. To clarify there is an explorative approach taken and the free associations technique is used. Five main research questions were formulated. These question the origin of the family-owned companies associations: the family and companies associations, the composition of the family-owned companies associations and if these family-owned companies associations are evoked by actual family-owned brands. Additional sub research questions analyse the strength, direction and uniqueness that make up the positioning potential. Further the functional or symbolic nature of the associations is explored. Findings show that family associations are dominant and positive in the family-owned companies. However company associations were also positive. In comparing previous found family-owned companies associations, that are evaluative, with the associations of this research there were substantial differences. The positive Homely and History association categories and negative Conflict association were new. The associative networks of family-owned brands showed that the family aspect was more in the background but could play a substantial role in the positioning.Table of contents
Chapter 1 - Introduction……….1
1.1 Family Brand………...1 1.1.1 The customer perception…………..………...………..1 1.1.2 Family company associations………..2 1.2 Problem definition……….2 1.2.1 Problem statement……….2 1.2.2 Sub questions………...3 1.2.3 Delimitations………..3 1.3 Contributions………4 1.3.1 Theoretical contribution……….4 1.3.2 Managerial contribution……….4 1.4 Structure/ outline………..5Chapter 2 – Family-owned companies………..…6
2.1 The Family company defined………..6 2.2 Differences with non-family companies………...7 2.2.1. Competitive advantage………...8 2.3 Family brand promotion………...………...8 2.3.1. Advantages and motives………9 2.3.2. The brand identity……….9 2.2.3. Ways to promote………..10
2.3 Family company associations………...8 2.3.1. B2B and B2C………..9 2.3.2. Family associations………...9
Chapter 3 – Brand associations………11
3.1 Brand associations ………11 3.2.1. Types of associations………..………...11 3.2.2. Strength, favourability and uniqueness………..12 3.2 Brand equity……….…...13 3.3 The Associative network………...14 3.4 Brand positioning………..15 3.4.1 Frame of reference………15 3.4.2. Points-of-Parity and Points-of-Difference……….16 3.5 Contextual associations……….17Chapter 4 – Conceptual model………..18
4.1 The family brand identity………18 4.2 The customer perspective………...………...….18 4.3 Family associations………...………...19 4.4 Company associations………21 4.5 Family-owned company associations………...23 4.6 The links with family and company associations………..27 4.7 Family brand associations………...29
Chapter 5 – Methodology……….32
5.1 Stimuli development………...32 5.1.1. Pre-test………33 5.1.2. Changes………...34 5.2 Survey design………...34
5.2.1. Sample………35 5.2.2. Procedure and measures………35 5.2.3. Survey……….36 5.2.4. Free association categories………...37
Chapter 6 – Results……….39
6.1 Research question 1 – Family………..39 6.1.1. Categorization………..39 6.1.2. Strength………39 6.1.3. Direction………..41 6.2 Research question 2 – Company………43 6.2.1. Categorization………..43 6.2.2. Strength………43 6.2.3. Direction………..44 6.3 Research question 3 – Family-owned company………...46 6.3.1. Categorization………..46 6.3.2. Strength………....46 6.3.3. Direction………..48 6.3.4. Functional or symbolic………49 6.4 Research question 4 – Family or company origin………51 6.4.1. Family links………53 6.4.2. Company links………..54 6.5 Family brands………56 6.5.1. Control variables………56 6.5.1.1. Familiarity………...56 6.5.1.2. Awareness………..58 6.5.1.3. Likability………..59 6.5.2. Number of associations………..59 6.6 Research question five – Family brands………...61 6.6.1. Heineken categorization………61 6.6.2. Bavaria categorization………62 6.6.3 C&A categorization……….63 6.6.4. Westland categorization………64 6.6.5. Sub question 5a- family related………65 6.6.6. Sub question 5b – positioning………66 6.6.7. Total direction brands………70
Chapter 7 – Discussion………71
7.1. Composition of the Family-owned concept………..71 7.2 The origin of the Family-owned concept……….72 7.2.1. Links………..72 7.2.2. The family and company concepts……….73 7.3 The associative network of family-owned brands………..………..74 7.4 Positioning potential of the family brands……….76 7.5 Theoretical implications………..……….77 7.6 Practical implications……….78Chapter 8 – Conclusion………...80
8.1 Summary………..80 8.2 Limitations……….80 8.3 Future research………81
References………84
Appendix A – Pre-test survey………88
Appendix B – Survey………..91
Appendix C – Figures………….………98
Appendix D – Categorization………..102
Appendix E – Results………...106
Chapter 1 - Introduction
1.1 Family brandBavaria, the Dutch brewery, recently changed the brand name to ‘Swinkels Family Brewers’ (Dutch news, 2018). Bavaria is a worldwide known brand and decided to change the name of the brand to the family name. Besides the fact that this name change is due to the overarching effect; Bavaria is only one of the many beers the company brews, the brand states they wanted to go back to the name where they are from (Van Egmond, 2018). The board of the brand exists solely of members of the seventh family generation and celebrates the 300th anniversary next year (Van Egmond, 2018). The brand communication includes this family aspect with slogans as ‘Family brewers since 1719’ and ‘Welcome to the family’ (Bavaria, 2016). Family-owned companies are the main type of company as they account for 70 per cent of global GDP annually (KPMG, 2015), make up 60 per cent of all companies in Europe (Commission, 2009) and 70 per cent of Dutch companies (CBS, 2017). Family companies make up the majority and are sustainable, since they include some of the world’s oldest companies (O’Hara & Mandel, 2002). Up to the present day, these companies are thriving. Bavaria communicates the family aspect very actively. Yet, from most of the family-owned companies, we do not even know that they are family-owned. Should family-owned companies embed the family into their brand? 1.1.1 The customer perception In the family business research field the focus began with finding evidence for the superior performance of family companies. Most research supports the superior performance of companies with family ownership (Anderson & Reeb, 2016; Chu, 2009). The family brand identity contributes to performance through a customer-centric orientation (Craig, Dibrell, & Davis, 2008). Subsequent research focussed on the explanation for this superiority through brand management. Sources are better customer perception and evaluation of family companies (Binz, Hair, Pieper, & Baldauf, 2013; Orth & Green, 2009). Although there is some discussion as there are some
negative effects that play a role as well, the advantages of family ownership are dominant and unique to successful family companies and remain focus in research (Sageder, Duller, & Mitter, 2015). Altogether, customers perceive family companies as brands with specific characteristics and thus specific associations next to the non-family related associations. How important these family-related associations are and what role they play in the customer perspective is not clear. 1.1.2 Family-owned company associations Several researches accentuated the need for a better understanding of the associations, attributes and impressions of customers with regard to specifically family-owned companies (Craig et al., 2008; Gallucci, Santulli, & Calabrò, 2015; Orth & Green, 2009; Krappe, Goutas, & von Schlippe, 2011). In other words, the perception of the customer with regard to family-owned companies needs more understanding (Binz Astrachan & Botero, 2017). Previous research has found several associations that customers have with family companies (Sageder, Mitter, & Feldbauer‐Durstmüller, 2018). However, the effect of the family image on customer perception (Sageder et al., 2018) and the characteristics of the associative network are not yet established. Beck (2016) formulates a future research question about the strength of the family firm cue in relationship to all other brand cues: “How is the informational cue FFS (Family Firm Status) linked to other brand cues and what are the potential interdependencies?” This study seeks understanding of the importance and strength of the family factor in the family company. Moreover, understanding in the addition of family associations to the company and the interplay with other associations of that company. Orth and Green (2009) compared customer evaluations between family and non-family companies but this research was limited to local small sized grocery stores. In branding, there has been research on the Points-of-Difference (PoD) and the Points-of-Parity (PoP) (K. L. Keller, 2001). It would be interesting to see what associations differentiate larger family brands from non-family brands and which they have in common. 1.2 Problem definition 1.2.1. Problem statement While research (Sageder et al., 2018) already addressed customer associations with family company nobody has yet looked at where those originate and what the
composition and characteristics are of the family-owned company associative network. Further, there is no proof in existing research that these family-owned companies associations are evoked by larger family brands. Additionally, the positioning potential of these associations for family companies needs to be studied. As family companies are the main type of company and brand managers started to wonder if they should embed their family ownership in the positioning, there is a necessity for research deeper into the customer perception. The research questions in the next section will be used to find a deeper understanding. 1.2.2. Research questions In order to answer the research question there were five main research questions formulated that should be answered: - RQ1: What are the characteristics of the associative network of the family concept? - RQ2: What are the characteristics of the associative network of the company concept? - RQ3: What are the characteristics of the associative network of the Family-owned company concept? - RQ4: How are the Family and Company associations linked to the Family-owned company concept? - RQ5: What are the characteristics of the associative network of actual family brands? 1.2.3. Delimitations This research will study the branding of family-owned companies. More specific, it will look at customer associations with the family in a company and the positioning potential. The positioning potential inquires the strength, favourability and uniqueness of the associations (Keller, 1993). It will be different from other family business research about the customer perspective and associations with family-owned companies as that this research is not about the evaluation of these companies. It is about the first things that come up in someone’s mind about a concept or company, not about how they evaluate the concept or company. However, it could be possible that evaluations come up as associations. Further, this research is not about the promotion or communication of the family status; it is not about the presentation. It will answer the question if family brands should communicate the family and what they could communicate but now how. Looking at the
definition of the family-owned company, this research will go further than consider family ownership solely in management. A company with family ownership also holds the vision and behaviour of the family (Chua, Chrisman, & Sharma, 1999). 1.3 Contributions 1.3.1. Theoretical contributions As explained in the gap, existing literature on family companies in branding is not complete in understanding the customer perception. This study contributes to the theory by increased understanding of what family ownership means to the customer. The family-owned company will be conceptualized and examined by looking at the concept as an associative network in the customer mind. Hereby the characteristics; the strength, direction and uniqueness are of importance. Further, the functional and symbolic nature will be decided. From the direction and uniqueness, the positioning potential can be established. The family-owned companies associations will be compared to the associations of previous research. Most likely associations will differ since it is not about the evaluation of the company. In addition the origin of the family-owned company concept will be studied. Hereby the role of the family associations next to the companies associations is determined. The associative networks of actual, larger family-owned brands will show if the family-owned company associations are still evident. Lastly, this research will contribute to branding research in general, as the types of associations will be examined. Through the free association technique, there will be association categories created and tested. 1.3.2. Managerial contributions This study contributes practically by helping brand managers with decision making on their positioning. Family company managers need a clearer image of what the family means to the customer. It can well be that the family-owned companies differ from non-family companies but the customer might not see it this way. They need to know for who, what target group and when family communication works. If this is clear, family companies can leverage their family advantages. This research explores which family associations could mean an advantage and should be communicated. It contributes both to an understanding of the family-owned company in the customer mind and the characteristics of the associative network. For the positioning, the role of
the family associations next to the non-family associations will be determined. Hereby the positioning literature distinguishes Points of Parity (PoP) and Points of Difference (PoD). 1.4 Structure/ outline This paper is structured as follows. With the second chapter, the literature review will begin. This chapter is a dive into the family-owned company and the existing research on family-owned companies and branding in these ‘special’ companies. The chapter starts with the family-owned company definition since there is an on-going discussion of when a company is identified as a family company and it seems critical to conclude on this. The second paragraph is about how family and non-family companies differ, a comparison. The third paragraph is about the following competitive advantage that can be gained by family-owned companies. The fourth is discusses the promotion of the family status, what motivates family companies to promote family and in what ways can they do this? With chapter three the literature review continues with Brand associations, the types of associations, the composition of the associative network, brand equity and the brand positioning. Chapter four is the conceptual model or how the study is structured. Chapter five is the methodology or how the research was conducted. Chapter six will be a presentation of the results, followed by chapter seven; the discussion of the results and theoretical and practical implications. The conclusion in chapter eight holds the limitations and directions for future research. This research will be carried out by means of surveys with the free association technique.
Chapter 2 – Family-owned companies
In Chapter 1 the great presence and success of family-owned companies has been discussed. Following, chapter two will be in more depth about family-owned companies, their advantage and the customer perception of family companies. 2.1 The Family-owned company defined The European Commission has stated official requirements that give companies the right to call themselves a family company. The requirements come down to the family having the majority of decision-making rights, the formal involvement in the governance or decision-making rights in share capital (European Commission, 2007). There is no shared definition of family company in existing academic literature since a lot about the concept is still unclear (Chrisman, Chua, & Sharma, 2005; Sageder et al., 2018). Chrisman et al. (2005) call out for a common definition for all researchers on the subject. Sageder et al. (2018) found that the majority of research takes a definition approach regarding the family ownership and control, with family ownership of at least 50 per cent and active involvement of family members. This method for consideration of the family company status is called the ‘components-of-involvement approach’ (Chrisman et al., 2005). Nonetheless using solely family involvement to make a company a family company is criticized (Chrisman et al., 2005). Family involvement might be the easiest to observe in the ownership and control, yet missing is the vision and the behaviour of the family company (Chua et al., 1999). Corresponding with this is the premise of Klein, Astrachan and Smyrnios (2005) that the essence of family companies should also be part of the definition, which constitutes the essence approach. Further, there is the F-PEC scale that combines both approaches; involvement and essence into the assessment of the family influence on a continuous scale (Klein et al., 2005). I follow the definition as stated by Chua et al. (1999, p.25); “a company governed and/or managed with the intention to shape and pursue the vision of the company held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families” (cited by Chrisman et al., 2005). Clarity about the family company definition is important in order to compare family and non-family companies in behaviours, perceptions and outcomes (Chrisman et al., 2005).2.2 Differences with non-family companies From research, it appears that family companies differ in a variety of aspects like goals, size and financial structure (Chrisman et al., 2005). Sharma (2004), who gives an overview of existing literature on the family company, summarizes that family companies can differ in entrepreneurial activities, performance and perception of environmental opportunities and threats. The performance of family companies is superior according to research as mentioned in chapter 1 of this study. Anderson and Reeb (2003) find a significantly better performance of family companies in S&P 500 companies. (Chu, 2009) found that family ownership relates positively and significantly to the performance of small and medium-sized enterprises. The findings show that family involvement influences return on sales (ROS) positively. Chrisman et al. (2005) conclude from past research that this performance indeed is superior but there is a need for more research to see if this holds for smaller companies. How did some family companies become superior in their performance? Dyer (2006) found from previous research that family companies are influencing performance through family goals, relationships, resources and assets. Additionally Sirmon and Hitt (2003) stress resources that are unique to the family company comparing to non-family companies; human capital, social capital, survivability capital, patient capital and governance structure according to. Human capital is not only the employees of the company, who are often family members, but also the knowledge, skills and capabilities of these employees (Sirmon & Hitt, 2003). They are often extra invested and committed to the company, as they are part of the family as well (Sirmon & Hitt, 2003). Because of the identification with the family name, the culture of the company as a whole typically motivates to set the focus more on serving the customers with quality products and services (Cooper, Upton, & Seaman, 2005). Likewise, family-owned companies have responsible relationships with the stakeholders of the company (Sageder et al., 2018). This is where the social capital comes in. It becomes clear that family companies are making long-term focused considerations. According to Angela Merkel (Schwass & Glemser, 2016), they take responsibility for their employees, the region and future generations. The family-owned companies are often involved in social activities and communities (source). Several researchers agree that family companies are more socially responsible. Family-owned companies compared to non-family companies seem to behave similarly when it comes to positive social initiatives (Dyer & Whetten, 2006). However when it comes to
avoiding social concerns family companies are better accomplished (Dyer & Whetten, 2006). Family companies perform better environmentally and treat employees better by avoiding job cuts (Sageder et al., 2018). This may be due to the family involvement in the reputation of the company (Dyer & Whetten, 2006). When communicating the family ownership, the family is consequently affected as well (Beck, 2016). This becomes evident when interviewing family members of family-owned companies. They believe that the origin and heritage create trust and that the family behind the company is more than a profit-focused manager (Binz Astrachan & Botero, 2017). A family company typically has a history of how the company started, how the family helped and the company grew. How the sons (or daughters) took over and how they are still a successful company nowadays. The family, history and traditions add uniqueness to the company (Binz Astrachan & Botero, 2017). This long history also adds trust if it was a history of good products, service and behaviour (Sageder et al., 2018). These differences affect the customer perception in a positive way, hence the customer perception on family companies differs too from the perception of non-family companies and I will elaborate on this in chapter 5 about family company associations. 2.3. Competitive advantage Habbershon and Williams (1999) add a dimension in the understanding of the concept of the family-owned company with the identification of “familiness” of a firm, which is the bundle of unique resources, result of the systems interaction between the family, its individual members and the company. It becomes clear through the existing research that the family status can be leveraged as a competitive advantage or a unique source of differentiation (Binz Astrachan & Botero, 2017). Following the resource-based view, this means that a resource, in this case family ownership, is valuable, rare, inimitable and non-substitutable (Barney, 1991; Beck, 2016). The family brand is valuable because it increases performance through customer orientation and social responsibility (Binz Astrachan & Botero, 2017). Rare since competitors are non-family companies or do not promote the family status (Binz Astrachan & Botero, 2017). The families’ unique history and characteristics are difficult to imitate and lastly, there is none replacing resource with the same differentiation effect (Binz Astrachan & Botero, 2017). Merely family involvement is said to be unique, inseparable, synergistic and hard to duplicate (Nordqvist, 2005 as cited by Gallucci et al., 2015).
2.4 Family brand promotion 2.4.1. Advantage and motives As discussed in the paragraph before family companies seem to perform better and this becomes even more evident when looking at family companies that promote their family status. Most family company researchers agree with the fact that promoting the company as a family company is advantageous. Craig et al. (2008) found that promoting family-ownership has a positive indirect effect, via a customer-centric orientation in customer buying behaviours on performance. Gallucci et al. (2015) add to their finding of increased ROS with solely family involvement that the combination of family involvement and communication of the family as a corporate brand results in higher rates of sales growth. If family companies express their family status themselves the effect of positive perceptions of them being customer-oriented and employee friendly is even stronger (Sageder et al., 2015). Additionally, promoting the status of the family-owned company or just the family reputation increases consumers’ preference for the products and services offered (Binz et al., 2013). Although it became evident that certainly not all family companies promote their family status (Botero, Thomas, Graves, & Fediuk, 2013), family companies that do have different motives for this. Binz Astrachan and Botero (2017) split these motives firstly in internal motives regarding identification and commitment with the firm and taking pride in the family’s achievements and heritage of the company. Secondly in external motivations, when the company promotes the family because it is a source of differentiation and benefits the reputation (Binz Astrachan & Botero, 2017). 2.4.2. Ways to promote Family firms can communicate their family identity in different ways. For example in the company name, on packages, in advertisements, presentations or websites they can include or refer to the family name, family members, the number of generations, family traditions, anecdotes or photographs of the family (Blombäck, 2009). Sageder et al. (2018) summarize the various channels; websites, mission statements and marketing materials. On family company websites there are three online branding strategies that can be discovered; family preservation with the family as the central point of the identity, family enrichment is products and services as the center and family subordination focuses on just the company (Micelotta & Raynard, 2011).
In this chapter about family-owned companies, it became clear that they do things differently from other non-family companies. Now the question remains if this different way of doing company changes the perception of customers. In other words, do customers see the family-owned company as different?
Chapter 3 – Brand associations
The previous chapter examined family companies and the customer perception of family-owned companies. This chapter will discuss the fundamentals of branding, specifically associations and brand positioning. These theoretical fundamentals can be used for the positioning of family companies.
3.1 Brand associations Simply put brand associations are the things or words that a person first thinks of when hearing, reading, saying or seeing the brand. It can be anything but includes; the brand name, product brand names, the product category, features of the product, people and occasions (Henderson, Iacobucci, & Calder, 1998). Take for example the brand Apple, when someone has to do with this brand there are a variety of things that that person will think of the person knows the brand there are always the obvious associations like product categories; electronics, laptops, phones, or the products they sell; iPhone and MacBook or people; Steve Jobs, or places; the Apple store. Further, there are less obvious associations, such as associations that the specific person has because of experiences for example places; work or school and events like the release of the new iPhone or the birthday when they got their new MacBook. 3.1.1. Types of associations Keller (1993) distinguishes different types of associations. Firstly, attributes are the descriptive features of the product or service, this can be product related attributes or non-product related (Keller, 1993). For Apple product related attributes can be the design; the colour grey for MacBook or the home button for iPhone. Non-related attributes can be the white box packaging, the price of over $1000 for a MacBook (Apple), students or young professionals using the products or Steve Jobs. Secondly, benefits are the things that the product or service does for the customer. There are functional, experiential, and symbolic benefits (Keller, 1993). For Apple, this can be ease of use, good-looking design or prestige. Park, Jaworski and Maclnnis (1986) made this division before when they conceptualized functional needs, symbolic needs and experiential needs in their brand concept management (BCM) concept. Functional needs as the solutions for customer problems, symbolic as the fulfillers of the internal needs; self-enhancement, role position, group membership and ego-identification and
experiential needs as sensory pleasure, variety and cognitive stimulation (Park et al., 1986). They propose that a brand should have a general concept or an overall meaning; one of the three needs. Bhat and Reddy (1998) call functional utilitarian motivations and symbolic expressive motivations. They question the distinctiveness of the two brand concepts and conclude that it is possible to have both meanings (Bhat & Reddy, 1998). Lastly, brand attitudes are customer’s brand evaluations (Keller, 1993). Cheng-Hsui Chen (2001) divides brand associations in product and organizational associations. Hereby the product associations are composed of functional attribute associations and non-functional attribute associations; symbolic, emotional, value and user/usage situation (Cheng-Hsui Chen, 2001). Organizational associations include the corporate ability and corporate social responsibility (CSR) associations (Cheng-Hsui Chen, 2001). Required for the activation of associations is that the person is familiar with the brand; have they even ever heard of it and how familiar are they with the brand? This is the brand awareness (Keller, 1993). 3.1.2. Strength, favourability and uniqueness Associations can be different in their strength, favourability and uniqueness (Keller, 1993). The strength of the associations is the intensity of the link between the association and the brand node (Till, Baack, & Waterman, 2011). A strong association is accessible and easily recalled. The strength can be increased by exposure to the marketing message (Henderson et al., 1998). Favourability is the customer evaluation of the association, so the customer perception of it being positive or negative (Till et al., 2011). A positive evaluation would be the customer perceiving the associations as satisfying their needs and wants (Keller, 1993). Favourability is related to the importance of the association because customers usually do not actively evaluate associations that they find unimportant (Keller, 1993) and it may depend on the situation or context (Day, Shocker, & Srivastava, 1979 as cited by Keller, 1993). Logically a brand aims to get positive evaluations of customers to make them think of the brand and associations as favourable. Conformingly Botero and Blombäck (2010) state that all associations together give a company an image or reputation and that this ‘reputational resource’ should underline the positive associations (Botero & Blombäck, 2010). Unique brand associations are not or as little as possible shared the by other competing brands (Keller, 1993). Till et al. (2011) define association uniqueness as the distinctiveness and difference of the brand feature in the product category in the eyes of the customer. The
brand probably has some shared associations since most brands have competitors and these shared associations can determine the frame of reference. They add two other brand association features; the number of associations for a brand and the relevance (Till et al., 2011). Hereby a relevant association is one that customers view as valuable, important and purchase decision driving (Till et al., 2011). French and Smith (2013) stress the structure as well, interpreted as the direct or indirect connection with the brand. 3.2 Brand equity Keller (1993) started explaining the concept of brand associations in depth. Associations should be seen as informational nodes that are linked to the brand node and which compose the memory of a brand in the customer’s mind. This is called the brand image, which is defined by Keller (1993) as the “perceptions about a brand as reflected by the brand associations held in memory”. Brand image together with brand awareness makes up brand knowledge. Brand knowledge is conceptualized as brand equity, which is the main goal of branding and is the customer reaction to the marketing mix (Keller, 1993). A company can gain, among other advantages, price premiums, higher margins, efficiency and effectiveness of marketing programs, higher demand and customer satisfaction (Till et al., 2011). Brand equity can be created by brand resonance, the upper layer of Keller’s pyramid (see figure 1). Brand resonance means brand attachment or the intensity and activity of the relationship between the customer and the brand and is reached by the layers under it. Looking at the pyramid a brand can reach this resonance by beginning with brand salience, which is the brand awareness. It exists of the recall and recognition of a brand. From brand salience brands can take a left route through performance and judgment, this can be seen as a rational and tangible route, it is about products and function. Conversely, a brand can take a right route through imagery and feelings, this route can be seen as a more emotional and intangible route and it is about the social or psychological needs of the customer (Keller, 2016). A combination of left and right is also possible.
Figure 1. 3.3 The associative network A customer has a variety of associations with a brand in the mind, they are linked and make up the associative network (Keller, 1993). If one of the associations is activated it can spread through the links to other associations that will be activated, this is the structure of the customers’ memory (French & Smith, 2013). Mapping these associations can be helpful in understanding and managing the brand and give a view of the brand and show how the brand is differentiated (Till et al., 2011). How to construct these brand association maps is elaborated in several articles. The data election of individual maps can be done qualitative research like free association research. These maps are made up of the circles and lines with the brand in the middle circle. The strength holds the amount that a person thinks of the association or the intensity of associations and is a strong or weak connection to the node (Till et al., 2011). It can be shown graphically by the thickness of the line or link, the number of links or a numerical indicator (Henderson et al., 1998; Till et al., 2011). Till et al. (2011) display the favourability with the colours green, yellow and red, the uniqueness with the distance between the association and brand node and the relevance with the size of the circle. French and Smith (2013) add the importance of a brand that can be shown by the position of the associations on the map. Close or direct associations are most descriptive and the essence of the brand (French & Smith, 2013). They distinguish first or directly
linked, second and third order associations (French & Smith, 2013). In order to generalize these maps of individual customers, the associations can be quantified. 3.4 Brand positioning Besides the design of the company’s offering, there is also a need for the design of the image in the mind of the target audience (Keller, 2015). For a company to decide what associations they want to be associated with, how they want to be placed in the customers’ mind, is the brand positioning (Keller, 1993). Keller (1993) underlines that these associations differ in importance and should be held favourably, strongly and be unique to a brand in order to achieve superiority over other brands. The brand should have sustainable competitive advantages and these can be promoted in different ways (Keller, 1993). The brand can communicate associations that they want to be associated with heavily to make them the essence of the brand and associations that are less important less. A brand can check customer associations with their positioning, do customer have the excepted and desired associations and do they hold them as strong as intended (Till et al., 2011)? For the positioning, it is of importance that the brand identifies the similarities and differences, but first it should be clarified with whom to compare (Keller, 2015). 3.4.1. Frame of reference For a new brand but also to sustain an existing brand, managers should establish the competitor frame of reference that they are in (Aaker, 1996). This is where brand positioning begins; identifying the frame and communicating it to customers (Keller, Sternthal, & Tybout, 2002). From this frame, customers know what they can gain by using the brand (Keller et al., 2002). It is the identification of the market and competing brands and can either be a product category or a customer need (Venetis, 2017). Keller (2015) too states that competing products that could serve as substitutes to the brands’ product is the way to define the frame. Consistently revising the original frame is needed whereas sometimes expansion of the frame is necessary (Keller et al, 2002). This frame by itself already has a lot of associations attached to it. For instance, the product category of fast food will come with associations like cheap, fries, good taste and unhealthiness (Keller et al., 2002). Associations can create value by helping brand recall, differentiation of the brand, giving a reason to buy and creation of positive attitudes or feelings (Cheng-Hsui Chen,
2001). Connecting this to the family company, family ownership could create value for the family company in those ways. 3.4.2. Points-of-Parity and Points-of-Difference The strong, favourable and unique associations as discussed before are the Points-of-Difference (PoDs) (Keller, 2017). These PoDs are benefits that set the brand apart and differentiate it from competitors (Keller, Sternthal, & Tybout, 2002). However, in order to leverage these PoDs the brand needs a basis of Points-of-Parity. PoPs are the minimum requirements in the market in order for the brand to be of interest to competitors and customers (Keller et al., 2002). When the frame of reference is clear the competition should be checked on what is required to compete against them; the PoPs in the frame of reference. The brand should break even within these areas and so these associations are presumably not unique to the brand (Keller, 2015). PoPs come in different forms according to (Keller, 2015). Category PoPs are the associations viewed by the customer as the fundamentals of a certain credible offering, competitive PoPs are to neutralize competitors PoDs and correlational PoPs are negatively correlated associations, such as price and quality; if something is cheap people assume the quality is bad (Keller, 2015). Once the PoPs are secured, there is the need for differentiation or the PoDs to set the brand apart. The PoDs can also be divided into types (Keller et al., 2002). The brand performance type holds associations that meet customers’ functional needs, user imagery type associations are about who uses the brand typically and finally consumer insight associations are the solution to customers’ problems or goals (Keller et al., 2002). PoDs are required to be desirable which means customers should perceive it as relevant and believable. They should also be deliverable, hence feasible, profitable and defensible (Keller et al., 2002). Brands should constantly consider the frame of reference, PoPs and PoDs. PoDs can easily become PoPs over time in fast-changing categories as competitors attack them (Keller et al., 2002). The idea of differentiation has always been a central idea in branding, nevertheless, there has been some discussion on the actual importance of differentiation to the customer. Romaniuk, Sharp, & Ehrenberg (2007) conclude for example that customers do not even perceive the brands they buy as absolutely differentiated. They propose positioning on distinctive qualities, focus on brand awareness (Romaniuk et al., 2007).
Family companies most likely have PoPs with non-family companies that would be the requirements of the market and the product or service. However besides the PoDs that the family company differentiates with on the product or service there can also be several PoDs following from the family status. An undiscovered question here would be what PoDs can the family status bring the family company? 3.5 Contextual associations Until now I have discussed brand associations, the origin of brand associations is the human associative memory (HAM) theory (J. R. Anderson & Bower, 1973). This theory is based on associations with concepts, not necessarily brand connected. People have associations and associative networks with essentially all concepts in their memory. The brand, product or service can be branded but for instance also places, ideas, people and websites. Besides the brand associations, customers can have associations with the context of a brand. The products or services that brands sell can evoke specific associations. Park, Milberg, and Lawson (1991) take into account the product categories and the product category concepts of brands. For example, product category associations like fast food, fashion or electronics associations have specific associations like fries, shoes or laptops. Specific associations with certain product categories can also be found when looking at the brand personality dimensions (Maehle, Otnes, & Supphellen, 2011). The brand personality dimensions of Aaker (1997) are seen as typical for certain product categories. The personality dimensions are sincerity, excitement, competence, sophistication and ruggedness (J. L. Aaker, 1997). For example, the category technical appliances are associated with competence and the corresponding associations and good causes are associated with sincerity (Maehle et al., 2011).
Chapter 4 – Conceptual model
4.1 The family brand identity How the company views itself and wants to be seen is important before looking at the customer perspective (Beck, 2016). Brand management is namely about the difference between the brand’s identity and the customers’ perception of it (Beck, 2016). Botero et al. (2013) applied the multiple identity model (Balmer & Greyser, 2002) on the family company identity from which a distinction between family identities and questions follows. The actual identity is answering the question of “are we a family company?”, the conceived identity answers “how do others view the company?”, the desired identity question is “do leaders want this firm to be a family company?”, the ideal identity is “is it good to be a family company given the position of the organization in the market?” and lastly the communicated identity is “does this communicate that they are a family company?” (Botero et al., 2013). The family identity can exist of the traditions, beliefs and self-perceptions (Sageder et al., 2018). Gallucci et al. (2015) add that the family identity involves the family history, values and identity.4.2 The customer perspective This study seeks understanding in the associations customers have with the family ownership in a company. To accomplish this, the associations of customers will be studied on strength, favourability, typicality for family-owned companies and uniqueness for specific brands. This is an explorative study and it will not be possible to formulate hypotheses since there are no direct expectations that can be extracted from existing research. Associations from previous research that can be expected to come up with family-owned companies might differ in free association research. This research can contribute to the understanding of the strength, favourability, uniqueness, functional or symbolic classification and family or company origin of the associations. This chapter will discuss the logic and structure of this research by means of research questions. The family-owned companies concept is composed of both family and companies. To find out what the family-owned companies associations are and where they originate from, it makes sense to look firstly at the family that owns the company and how customers see such a family. Yet not only the family in the company influences the perspective but also what customers think of when they think of the concept or institute of family. What kind of thoughts and feelings could come up if customers think of their
own idea of family? Then what influence does family have on the family brand image? Secondly what associations remain then about the concept or institute of companies aspect in the family-owned company? It is important to make this distinction in order to see how important the family part and then the company part is in these associations. How the family and company associations flow into the family-owned company associations and perspective. We know from past literature that family is very important for people and we know when people think of companies, then which of these associations with those concepts flow into the family-owned companies perspective? 4.3 Family associations Krappe et al. (2011) take one step back from family-owned companies to the concept family. In German context, the family means structural consistency, economic certainty and emotional support. On the other hand, the concept can be seen as limiting, old-fashioned and inflexible (Krappe et al., 2011). Solely the concept of family can mean different things for people (Weigel, 2008) and is definitely different from the concept family in family companies. For example, the associations of heritage, old-fashioned, socially responsible and customer-centric are probably not the first things that come up when thinking of the family term. These associations are more fitted in a company context. Rather associations like love, kids, care, support and the home are more relevant (Weigel, 2008). Anyhow, these associations of both concepts do relate a lot (Krappe et al., 2011). The family has received a lot of research and there has been a development of the definition starting with structural definitions about family members, like children, parents, sisters and brothers (Weigel, 2008). Then functional definitions are about the social functions and tasks like keeping the household, socializing the children, support and roles (Weigel, 2008). Lastly, transactional definitions are about the family identity and views the family as a group of intimates who have a sense of home and group identity and who share a history and future (Weigel, 2008). One task definition is “at least one adult and one or more other persons who perform certain tasks of family life such as socialization, nurturance, development and financial and emotional support” (Segrin & Flora, 2011, p.6). It is argued that the family should be seen as a social construct and the perception of the relationships between family members. In this study, we are interested in the customer associations with the concept of family to see which of these associations flow into the family-owned company
associations. Therefore we need to determine the associations participants have with the family and how they make up the associative network: RQ1: What are the characteristics of the associative network of the family concept? To collect data on these associations the free association research technique will be used. From the list of associations that this technique generates, similar associations are merged and classified into categories. From here the following research question can be formulated: RQ1a: What types of associations does the family concept evoke and how can they be classified into categories? Besides the structure and relationships of family, which is the dry definition, affective factors like care, love and nurture come up when thinking of the concept. A previous study on assigned attributes to family showed that associations like love, trust, care, support, respect, forever, togetherness and acceptance are typical family associations and are seen as central (Weigel, 2008). It is expected that these associations come up the most often because that is what family means for people. It is what they expect of family and also what they experienced or would like to experience. Typically family is seen as the basis, the home, the place of love and the people on which you can rely. In the same study participants indicated that history, household and blood relation are less central to people (Weigel, 2008). These kinds of associations would be more in the background because those associations are not on an emotional level, a particular view on family is emotional connectedness (Weigel, 2008). Another study concluded that young adults view the family as both traditional (biological and legal) and social relationships and these perspectives coexist together (Holtzman, 2008). To determine which of the family association categories are most important to customers the following research question: RQ1b: Which of these family association categories are dominant? Definite positive, warm feelings and associations but also negative associations like arguments and complications can arise with the word family. The goal is to rub the
positive associations off on a family company. Scholars claim that people tend to idealize the family and associate it with unconditional love and support even if this does not fit real-life experiences (Turner & West, 2006). Expected is that family associations are mostly positive on average due to the warm and loving feelings. The direction of the family associations is of importance for family-owned companies. If family associations are positive it is of interest for the family companies to rub these positive associations on to the company and brand. The direction or how negative or positive the association categories are perceived as will be tested with the next sub question: RQ1b: What is the direction of these family association categories? 4.4 Company associations Associations with family-owned companies are expected to be not only about the family but also about the company. Companies have been around for a very long time and the concept of companies evokes specific associations. Company associations could come close to the brand associations discussed in chapter 3. It is expected that mostly the organizational associations come up with the company concept although not specific for a brand but for companies in general. In research, these associations are also called corporate associations which is defined as “all the information a person holds about a company” (Brown & Dacin., 1997). As mentioned in chapter 3 of this research there are 2 types; corporate ability (CA) associations are about the expertise in producing and delivering products or services while corporate social responsibility (CSR) associations are about the character of the company and social initiatives (Brown & Dacin, 1997). Another definition of corporate associations in research is; “the description of cognitions, affects, evaluations, summary evaluations, patterns of associations with respect to a particular company” (Brown, 1998). Brown (1998) distinguishes more dimensions of corporate associations; corporate abilities and success, interaction with exchange partners, interaction with employees, social responsibility and contributions, marketing considerations and product considerations. Another categorization of corporate associations is into commercial expertise associations (CEA) and corporate social responsibility (CSR) associations (Pérez, del Mar García de los Salmones, & Rodríguez del Bosque, 2013). Although these definitions and categorizations are useful and the effects on consumer behaviour have been studied not much is known about the associations with companies in general. These associations could be thought of in
general and those general corporate associations are expected to come up with the company concept. The corporate ability is associations about the products and services and the quality a company provides with the goal to make money. The dimensions of Brown (1998) can be generalized as associations concerning relationships, employees, social responsibility and Marketing. Again, the free association technique will be used here. The similar associations will be structured into association categories. RQ2: What are the characteristics of the associative network of the company concept? RQ2a: Which types of associations does the company concept evoke and how can they be classified into categories? It is expected that the most dominant associations are about the company selling products or services to customers and making profit since this is originally the primary goal of a company (Carroll, 1991). The subjects in research on business are divergent concerning how to maximize performance or profit, stakeholder value, customer satisfaction, ownership and control, strategy, entrepreneurship, innovation and about the different departments of the company such as finance, accounting and marketing (Journal of Business Research). Then since it is the customers’ view and associations, it is expected that these types of associations are the strongest. For example, a customer could see the company as a place where they buy their products or the place they work. With the subsequent research question can be indicated how important the categories are for customers: RQ2b: Which of these company association categories are dominant? Companies can be seen as big, greedy corporations with a profit focus. This view originates in the growing power and selfishness of companies resulting in corruptions and scandals (Coleman, 2005). At the same time, there has been a trend in the before mentioned CSR. CSR is very positive; it can be the contribution of resources to the community or the improvement of the quality of life (Carroll, 1991). Again from a customer perspective, if they are content with the products or services they buy, which can bring them value and solve their problems, this can evoke positive associations.
Further, if companies are being seen as a place of work and thus the source of their income this is positive. Finally, the workplace can also be a place where people can be positive in terms of knowledge sharing, skill building and working together with colleagues in teams. Although these are a considerable amount of positive associations that are expected to be associated with companies, the average direction is expected to be more negative. This overall negativity can be deducted from the fact that typically customers distrust companies (Edelman, 2018) and see them as selfish and profit focussed. Also comparing to family associations, company associations are expected to be considerably more negative. The direction of the company associations is of importance to the family-owned companies to see with which company associations they want to be associated with. Naturally, the family company wants solely positive associations to flow into the family brand. With the following research question it is measured by how positive or negative the company association categories are perceived as: RQ2b: What is the direction of these company association categories? 4.5 Family-owned company associations Brand management combines the communication and the resulting associations, making up the customer’s perception (Beck, 2016). So what is already known about how customers perceive family-owned companies? Previous research (see table 1) shows that family companies are seen as, among other things, trustworthy, socially responsible, having strong local ties, customer focussed, stable, hardworking and committed and quality-oriented (Sageder et al., 2018). Trustworthiness of family-owned companies is found in most research; Beck and Kenning (2015) find that a family image in retail companies has a direct positive effect on perceived trustworthiness. Further, when comparing with non-family companies, family companies are perceived as more trustworthy (Carrigan & Buckley, 2008; Orth & Green, 2009). Carrigan and Buckley (2008) state that the family name communicates trust. This trust because of the family, comes back often, the family and family name is built and protected, this is why customers can trust the products (Dyer, 2006). Orth and Green find this superior trust in the grocery store context (2009). In the yearly Edelman trust barometer report, it shows that people trust family companies more than other companies and that they are willing to pay more for products and services offered by
family companies (Edelman, 2017). Craig et al. (2008) stress the importance of a customer focus because they found that the family brand would only positively affect purchase behaviours of customers if the family firm has a customer-centric orientation. This customer orientation of family-owned companies is found in several studies involving a quick response to customer requests, an obsession with the quality and delivering outstanding customer service (Orth & Green, 2009). It is claimed that family companies understand the importance of good customer service better and that they see it as crucial for success (Orth & Green, 2009). The closeness of the bond between a family-owned company and customers has shown in research on customer perceptions (Carrigan & Buckley, 2008). Relational qualities are often associated with family companies and include trustworthiness, supporting good causes, having good employees or caring about others (Binz et al., 2013).
Table 1. Family company associations (Sageder et al., 2018) Additionally customers attribute integrity, honesty and reliability to the way that family companies are run and in the offerings of the companies (Carrigan & Buckley, 2008). Krappe et al. (2011) even go as far as saying that family company are perceived as the most fair, social and sustainable company types. The long-term vision and tradition that is common for family companies gives them a perception of persistence, consistency and stability (Sageder et al., 2018). Typically family companies are described as small, locally active companies with strong local ties (Sageder et al., 2018). The size of a company affects the perception as small companies are seen as resistant to change (Krappe et al., 2011). Nevertheless there are also negative associations connected to family companies simultaneously. Krappe et al. (2011) confirmed expected perceptions of family company
being inflexible, hierarchical, old-fashioned and hesitant. Looking at grocery stores these are limited selection and worse price-quality ratio (Carrigan & Buckley, 2008; Orth & Green, 2009). Although UK and Irish customers were paying a premium customers they were actually willing to pay that price for special, personal treatment, yet some customers found the relational bond sometimes becoming invasive (Carrigan & Buckley, 2008). RQ3: What are the characteristics of the associative network of family-owned company concept? Although previous research has identified typical family-owned companies associations, these associations are readily presented to participants in research. By free association research and the next research question participants can come up with their own words on family-owned companies. The associations that are similar can be classified into the categories: RQ3a: What types of associations does the family-owned company concept evoke and how can they be classified into categories? Although the list of associations in table 1 is interesting, it is not complete. In order to get a comprehensive list and also find how important they are for family companies this research will study where these associations come from, what they are composed of and how important they are. The strongest associations can be extracted from the amount of times they were mentioned in family-owned company research. Table 1 shows that trustworthiness, socially responsible and strong local ties are most mentioned (Sageder et al., 2018). Most important associations for customers will be about how the family companies differ from non-family companies. It is expected that important associations will be about the warm and caring side of the family. RQ3a: Which of those family-owned company association categories are dominant?
The average direction of the associations with family companies is expected to be positive, as the majority of associations found in previous research are positive (Sageder et al., 2018). The family company is seen as a responsible, corporate citizen with quality products and outstanding service. The negative associations found are about the view that family companies can be old-fashioned and inflexible. This view seems to be more on the background and can in some cases even be a good thing if it is seen as retro, vintage, authentic or nostalgic (Veenstra & Kuipers, 2013). Also the preference of family companies over non-family companies indicates positivity. It is of importance for family companies to understand which family characteristics are desirable and which are not. The following research question was formulated: RQ3b: What is the direction of the family-owned company association categories? Solely the ownership by the family is typical to the family company. The family brings a history, story, traditions and values with it unique to the company. When comparing non-and family-owned companies the evaluation for family companies is more favourable so it seems that the family company associations are generally typical for family companies. For example customers evaluate grocery stores that are family owned better on service, employees benevolence and problem-solving orientation plus on trust and satisfaction (Orth & Green, 2009). Okoroafo and Koh (2009) concluded that for family companies the customer service, communication and delivery affected purchase intention significantly. Furthermore family-owned companies are seen as smaller and having higher prices. It is expected that most of the common family associations are typical for family-owned companies. It will be interesting to see which associations participants view as typical family-owned companies associations and which they perceive as being shared by non-family companies. If there appear to be associations that are not, this would mean that customers associate companies associations with family-owned companies as well. RQ3c: How typical are these association categories for family-owned companies? Family associations are expected to be more about feelings and emotions or the right route of the resonance model. While company associations are expected to be more about performance or the left route or product related aspects of the resonance
model (Keller, 2016, see Appendix A). However it has been argued that the (CSR) associations mentioned before are located on the right side of the period (source). The left route can also be defined as functional associations while the right route can be defined as symbolic associations. Via the family feelings of history, home, warmth and passion it is expected that most family-owned company associations that origin in the family associations are located on the right side of the pyramid and are thus of a symbolic nature. The functional or symbolic classification is of importance to demonstrate which route family-owned companies can take to achieve resonance. Accordingly the last sub research question was formed: RQ3c: How functional or symbolic are these family-owned company association categories? 4.6 The links with family and company associations Until now I have looked at the associations of the separate concepts of family, companies and family-owned companies. But how these associations make up the family-owned companies associations remains unclear. Interest lays in how important family ownership is and how much influence it has on customer perceptions on the company. The role of the family associations or the amount of family-owned company associations of family associations origin are of interest. In regard of previous research on family-owned companies and the associations in table 1. (Sageder et al., 2018) it is expected that family associations about warmth, care and trust come back for the family-owned company associations in the welcoming and personal relationships with customers. Also the values and loyalty are expected to flow into the integrity and social responsibility of family-owned companies. Negative family associations like arguments could be found in the family company as conflict. The next research question will look at which family association categories that were found in RQ1 came back in the family-owned company association categories of RQ3. From here research question 4a: RQ4a: What is the link between family association categories and family-owned company association categories? Then the role of company association categories in the family-owned company association categories are of interest as well. Besides the fact that a family owns the
company it is still about selling, making profit and performance. Previous research on family-owned companies where the focus is more on the company instead of the family is about performance, strategy, survival, reputation and management (Zahra & Sharma, 2004). However, these company topics are typically close related with the family component of the company. For instance with the topic of performance, the question is if the performance with family ownership is better than non-family owned companies’ performance. Likewise, reputation research seeks answers to the question if family ownership means superior reputation. Since the company-originated associations of family-owned companies are always in connection with the family it is expected that these company associations will not flow into family-owned company associations as much and will thus have a lesser role. Also looking at the customer perspective it is expected that company associations always come after the family ownership. The following research question will connect the company association categories of RQ2 with the family-owned company associations of RQ3 and see which and how many company associations flow through. Hence the following research question: RQ4b: What is the link between company association categories and family-owned company association categories? From the research questions above we can make a flow diagram shown in figure 2.
Figure 2. 4.7 Family brand associations Looking at specific family brands, the associations that brands evoke are discussed in chapter 3. Summarizing they can be about the attributes of the product; the design or non-product attributes like the price, packaging or user. They can be about the functional or symbolic benefits or about evaluations of the brand. Besides the contextual company associations customers will have specific family associations with a company if the customer knows the company is family owned. For example trustworthiness or better service (Sageder et al., 2018). RQ5: What are the characteristics of the associative network of family brands? RQ5a: What types of associations do family brands evoke, how can they be classified into categories and which are family related? Examining the four brands it is expected that the most familiar brand with the least amount of communication or emphasis of the family will evoke mostly associations about the products, use of the products, the size, marketing, organization and reputation of the brand. For the less familiar brands that have more communication about the family it is expected that the associations will be about the history, traditions, trustworthiness, old fashion, stability or typical family-owned company associations. Here the role of the family related associations in the family-owned brands is studied. It is expected that the family related association categories will be of a symbolic nature or the right route to resonance, while the company association categories will be of a functional nature or the left route to resonance. The following research question is formulated: RQ5b: How dominant are the family related association categories? And are the association categories of a functional or symbolic nature? Naturally these associations can be seen as positive or negative depending on how customers evaluate the brand and the products or services. It is expected that most of these family-owned company associations are positive and it is expected that most of these family associations are unique to the company. Positive and unique associations will be points of differences in the positioning of the brand (Keller et al., 2002). Expected
is that for brands where the family is not important or in the communication, the brands would have PoDs on other categories like quality or price. For brands were family is important and communicated it is expected that the PoDs are in family related categories since previous research claims that the family gives a competitive advantage. It is of significance to determine which of the most dominant categories are PoDs and which of those are family related, thus the following research question was formulated: RQ5c: What role do these family brand association categories have in the positioning of the brand? These research questions make up the structure of this study, displayed in figure 3.
Figure 3.
