How to name new products?
An experimental study about the effect of brand name strategies,
brand names and new products on consumer evaluation
How to name new products?
An experimental study about the effect of brand name strategies,
brand names and new products on consumer evaluation
Date: 29th of September, 2008
Author: Marijke van Moll
Student number: 1644386
Address: Romano 11, 8084 EA,‘t Harde
Mobile number: 0031-(0)644770854
E-mail: marijkevanmoll@gmail.com
University: Rijksuniversiteit Groningen
Department: Business Administration
Specialization: Marketing Management
Qualification: Master Thesis
First supervisor: dr. K.J. Alsem
Second supervisor: dr. M.A. Tuk
External supervisor: dhr. M.L. Dijkstra Taurel
Organization: Globrands naming & strategy, Amsterdam
Management summary
Today, brands play a prominent role in society, because they have a great influence on consumer buyer decision making. In this perspective, when an existing company decides to grow its business by introducing new products it is extremely important that it creates a strong brand. A strong brand can be created by introducing a new product with an effective brand name and brand name strategy.
For example, the existing Dutch brand Bolletje, which is well-known of its cookies, aims to introduce a new product: cookies with chocolate and strawberries. This new product obtains the suggestive brand name Yummy. In addition, it must receive a brand name strategy: Yummy
by Bolletje, Bolletje Yummy, Bolletje Cookie, just Yummy or maybe YumBol. However, it is
unknown which combination of brand name strategy and brand name will be most effective for new products introduced by an existing brand. Hence, the following problem statement is formulated: What is the effect of brand name strategies, brand names and new products of an
existing brand on consumer evaluation? Moreover, brand name strategy is proposed as an
important moderator in determining consumer evaluation of a new brand.
Extensive literature research revealed important characteristics of the independent variables new products, brand name strategy and brand names. First, the fit (similarity) of the new product with the parent brand is an important characteristic for consumers to evaluate new products. A company has the option to introduce a high fit new product or a low fit new product on the market. Second, the degree of driver role of the parent brand is an essential characteristic of brand name strategies. It is possible that the new product receives a new brand name strategy, an endorsed brand name strategy, a linked brand name strategy or a sub-brand name strategy. The first strategy represents a low driver role of the parent sub-brand and the last a very high driver role of the parent brand. Third, the level of meaningfulness of a name is an important characteristic of brand names. A new product can receive a descriptive, suggestive, arbitrary or coined brand name. The first brand name type is highly meaningful and the last very non-meaningful.
a low fit with the parent brand, it can be expected that people judge the new brand as atypical of the parent brand category. Subsequently, they might evaluate the new brand more positive when it is introduced with a brand name strategy with no or a minor driver role for the parent brand.
This study made use of an experimental research design, which consisted of 64 experimental conditions. Two existing parent brands have been used G-Star Raw (product brand) and T-Mobile (service brand), because of their expected high awareness level among students. Every condition consisted of a combination of a level of parent brand, a level of fit, a level of brand name strategy and a level of brand name. For example, a service brand plus a high fit product plus an endorsed brand name strategy plus a suggestive name (Quicknow by T-Mobile for the new product of T-Mobile ´search engine on your mobile telephone’).
The data has been collected from 730 students in a laboratory setting at a major university in the North of the Netherlands (Rijksuniversiteit Groningen). Each group received a questionnaire with 4 experimental conditions, because it saved time to ask more conditions per subject. They were asked to evaluate each experimental condition on overall liking, perceived quality and user-buying intention (9-point Likert scale). In total every condition has been evaluated around 45 times and 2920 observations have been collected.
The main recommendation for managers is to give low fit new brands with the parent brand, a
suggestive or arbitrary brand name if positive consumer evaluations are the branding
objective. Especially, when there is consumer awareness that the parent brand is introducing a new brand which is dissimilar with the parent brand category, applying a linked brand name
strategy or a new brand name strategy will result in more positive consumer evaluations of a
Preface
This thesis has been written to accomplish my Master of Business Administration, with the specialization Marketing Management at the Rijksuniversiteit Groningen. At the same time it represents the end of six study years.
The first semester of the master marketing, I followed the course Brand Management & Communication. During the programme, I have discovered my interest and passion for branding. I have really enjoyed the combination of strategic and creative thinking and the freedom to express this in the assignments. The study Business Administration is very broad and I did not know what I particularly liked about the study and were I could focus on. However, today I know that I would like to specialize myself in branding. It is probably not surprising at all: this thesis is about branding.
I have learned a lot about myself during the process of writing this thesis. It was not always easy totally depending on your own ideas and not exactly knowing scientific boundaries. Currently, I am acquainted with much more knowledge about statistics I could ever dream of.
First, I would like to thank my first supervisor Karel Jan Alsem for providing me with advice during the development of my thesis. In addition, I would like to show gratitude to my second supervisor, Mirjam Tuk, who provided me with additional information.
Globrands naming & strategy has given me the opportunity to follow an internship at their company. I would like to thank Mike Dijkstra Taurel for the possibility of staying 2.5 months longer than planned before and his support. Furthermore, special thanks to the other employees Manon, Tim, Madeline, Krista, Geert, Camiel and Liza, who created a very pleasant atmosphere and their faith in me as part-time office manager.
Finally, I like to express special thanks to my parents who have supported me mentally and financially during my study time. In addition, I would like to thank my boyfriend Mathijs for being very patience and helpful during exam periods and especially during graduation time.
Marijke van Moll
Table of content
Chapter 1 Introduction ... 9
1.1 Research topic ... 9
1.2 Problem statement ... 12
1.3 Structure thesis ... 13
Chapter 2 Literature research ... 14
2.1 Brand extensions ... 14
2.1.1 Difference between product and brand ... 14
2.1.2 Advantages and disadvantages of brand extensions ... 15
2.1.3 Perceived fit of brand extensions ... 16
2.1.4 Relationship between perceived fit and brand extension evaluation ... 18
2.2 Brand name strategies ... 20
2.2.1 Types of brand name strategies ... 20
2.2.2 Difference between brand name strategies for products and services... 24
2.2.3 Effects of brand name strategies on consumer evaluation ... 25
2.3 Brand names ... 27
2.3.1 Importance of brand names ... 27
2.3.2 Roles of brand names ... 28
2.3.3 Types of brand names ... 30
2.3.4 Dimensions for categorizing brand name types ... 31
2.3.5 Meaningfulness of brand names... 33
2.4 Effectiveness new brand... 36
2.4.1 Brand equity ... 36
2.4.2 Consumer evaluation... 37
2.5 Evaluation literature ... 38
2.5.1 Most important cue for new product evaluation ... 38
2.5.2 Brand name strategy categorization ... 39
2.5.3 Brand name categorization... 41
2.5.4 Measuring effectiveness ... 44
Chapter 3 Hypotheses and conceptual model... 45
3.1 Hypotheses ... 45
3.2 Conceptual model... 48
Chapter 4 Research methodology ... 49
4.1 Research method ... 49
4.2 Experimental design ... 49
4.3 Stimulus material... 50
4.3.1 Stage 1 pre-testing: identifying two existing parent brands ... 50
4.3.2 Stage 2 pre-testing: identifying four new products differing in their level of fit .... 51
4.3.3 Stage 3 pre-testing: brand names ... 53
4.4 Measurement, scaling and questionnaire ... 55
4.5 Sampling and data collection ... 56
Chapter 5 Analysis and results ... 60
5.1 Representativeness ... 60
5.2 Reliability ... 60
5.3 Manipulation check fit ... 61
5.4 Comparing means independent variables... 62
5.4.1 Mean scores parent brand... 63
5.4.2 Mean scores fit ... 63
5.4.3 Mean scores brand name strategy ... 64
5.4.4 Mean scores brand name ... 65
5.4.5 Evaluation mean scores ... 66
5.5 Testing hypotheses ... 66
5.5.1 Evaluation high versus low fit new brands ... 67
5.5.2 Evaluation brand names ... 67
5.5.3 Evaluation brand name strategy ... 69
5.5.4 Moderator brand name strategy... 70
5.5.5 Additional findings... 71
5.5.6 Assumptions ANOVA... 72
5.6 Discussion ... 73
Chapter 6 Conclusions, implications and future research ... 77
6.1 Conclusions ... 77
6.2 Managerial implications ... 78
6.3 Limitations and directions for future research ... 79
Exhibit 1 Brand name strategy models ... 87
Exhibit 2 Additional brand name types ... 91
Exhibit 3 Questionnaire appropriateness brand names (Dutch version)... 94
Exhibit 4 Output pre-test 2... 99
Exhibit 5 Output pre-test 3... 100
Exhibit 6 Measurement and scaling ... 102
Exhibit 7 Example questionnaire (English version)... 104
Exhibit 8 Output reliability check ... 108
Exhibit 9 Output manipulation check ... 109
Exhibit 10 Output parent brand evaluation ... 112
Exhibit 11 Output product fit evaluation... 113
Exhibit 12 Output brand name strategy evaluation ... 115
Exhibit 13 Output brand name evaluation ... 118
Exhibit 14 Output customized factorial three way ANOVA... 121
Exhibit 15 Output Independent-Samples T-test brand names ... 125
Chapter 1 Introduction
In this chapter, first the research topic will be discussed. Subsequently, the objective, problem statement, research questions and thesis unique contribution and relevance for scientific research will be outlined. Finally, an overview of the structure of the thesis is provided.
This thesis has been written by order of the company Globrands naming & strategy. Globrands is a consultancy company specialized in the creation of brand names and brand name systems (Globrands, 2008).
1.1 Research topic
These days, brands play a prominent role in society, because they have a great influence on consumer buyer decision making. The lives of consumers are very busy and complicated and therefore, it is crucially important for organizations to create strong brands which make it easier for consumers to make a decision, reduce risks and set the right expectations (Keller, 2003). Basically everything can be branded; physical goods, services, retailers and distributors, people, organizations and geographic locations. Brands seem very important for consumers; however it is not always easy to manage them for marketers, because of several issues they are confronted with.
First, consumers are more demanding and it is difficult for organizations to meet their expectations. Second, many new brands are created and a brand name may now be identified with a number of different products with varying degrees of similarity. Third, for several reasons marketers receive a lower advertising budget and therefore start to use more non-traditional media, such as internet and in-store advertising. Fourth, there is increased competition in the marketplace. Fifth, it is also more costly to introduce a new product or to maintain an existing product besides the increased competition. Finally, marketers are hold more accountable for their actions and as a result they are challenged with the situation in which they have to make decisions with short-term benefits which are quite costly in the long run.
For example, the existing Dutch brand Bolletje, which is well-known of its cookies, aims to introduce a new product: cookies with chocolate and strawberries. This new product obtains the brand name Yummy. In addition, it is important which brand name strategy should be used. The new product can be named: Yummy by Bolletje, Bolletje Yummy, Bolletje Cookie, just Yummy or maybe YumBol.
Hence, when marketers or naming agencies have to create a brand name for a new product of an existing brand, they also have to decide on which brand name strategy to apply for introducing the new product. However, little attention has been devoted to the effectiveness of different brand name strategies in combination with different brand names for new products of an existing brand. For example, is it more effective for the new product cookies
with chocolate and strawberries, which is a new product very similar to the current product
offering of Bolletje, to introduce it with the following brand name and strategies combinations: Sirai by Bolletje or Bolletje Yummy or just Cookie? It is important that a brand name strategy and brand name is chosen for the new product, which will be evaluated positive by consumers. Positive consumer evaluation aids to building brand equity which will lead to strong brands (Keller, 2003).
Companies can grow their firms by marketing new products or new businesses. Hence, these new products can be very similar (Bolletje introduces chocolate cookies with strawberries) to the product offering of the company or more dissimilar (Bolletje introduces toilet paper). In the past decade, a popular strategy has been to introduce new products using an established brand name. Many firms introduce their new products together with an existing brand (or parent brand) to obtain growth; this is referred to as brand extension (e.g. Bolletje Yummy, Yummy by Bolletje or Bolletje Cookie). Many of these brand extensions have involved product categories that fit (similarity) with the parent brand. However, more and more companies introduce products which do not fit with the existing brand. For example Starbucks (coffee) expanded into ice-cream or Harley Davidson (motor cycles) into pencils.
Furthermore, if a company chooses to launch a new product into its existing or new market, it should decide on with which brand name strategy to initiate the new product. The brand
strategy or brand architecture for a firm tells marketers which brand names, logos, symbols
A firm can choose from the following four main brand name strategies: a completely new brand, a new brand is introduced by the parent brand (e.g. Courtyard by Marriott), a new brand is used adjacent to the name of an existing brand (e.g. Marriott Courtyard) or the brand of the parent brand is used (Marriott Hotels) (Joachimsthaler & Aaker, 2000).
In the branding literature there is hardly any research which compared more than two brand name strategies and their effect on consumer evaluation. Often the second and fourth options are compared with each other and which of these two diminish negative effects of the new product to the parent brand (Park, McCarthy & Milberg, 1993 and Milberg, Park, & McCarthy, 1997).
Additionally, a new brand name should be created for the new product. The brand name is one of the brand elements which can build brand equity. In many cases, a consumer is first confronted with the brand name before other elements such as logo or packaging. Therefore, the brand name can be considered as a very important element of identification of the brand (Alsem, 2007; Keller, 2003 and Aaker, 1996). Furthermore, ‘a carefully created and chosen brand name can bring inherent and immediate value to the brand´ (Kohli & Suri, 2000, p. 112). A well-developed brand name can save time for capturing market space and decrease the marketing communication needed and subsequently save money for the company. Often a firm has to consider the use of a meaningful brand name or a non-meaningful brand name. Consumers evaluate a meaningful brand name more positively than a non-meaningful brand name (Kohli & Suri, 2000; Lerman & Carbarino, 2002 and Kohli, Harich & Leuthesser, 2005).
This research will further build on the exploratory research of Bhat, Kelley & O’Donnell (1998). They focussed on four different brand name strategies together and the effect on consumer evaluations to the new brands. They measured consumer’s attitude towards the different brand name strategies and the brand image fit, because they argued that the degree of fit could be an important factor in consumer acceptance other than brand extension strategies.
differences in the brand names themselves. Fourth, the study provides only correlation data and hence the strength of its implications is limited.
In this perspective, it is very interesting to have a further look what the effect on consumer evaluations might be for different combinations of brand name strategies and brand names for new products varying in their level of fit with the parent brand.
1.2 Problem statement
The objective of this study is to identify what combination of brand name strategy and brand name are most effective for new products introduced by an existing brand. Moreover, brand name strategy is proposed as an important moderator in determining consumer evaluation of a new brand. This leads to the following problem statement:
What is the effect of brand name strategies, brand names and new products of an existing brand on consumer evaluation?
Based on the above problem statement the following research questions are composed: 1. What is the most important cue to evaluate new products for consumers?
2. What kind of brand name strategies exist, what is an important characteristic of brand name strategies and how can they be categorized?
3. What kind of brand name types exist, what is an important characteristic of brand names and how can they be categorized?
4. What are aspects of consumer evaluations?
5. What is the effect of brand name strategy, brand names and new products of an existing brand on consumer evaluation?
This study will systematically analyze different new products, brand name strategies and brand name types and assess the most important characteristic for categorizing them. Then, based on these characteristics, suitable categorizations are composed which result in several hypotheses and a conceptual model.
Furthermore, this subject is relevant for Globrands, because regularly they have to create a brand name for a new product and give advice which brand name strategy and accompanying brand name is most suitable to apply for new products.
Additionally, ‘everybody’ finds it logical that a new brand which has low similarity with the parent brand should be introduced without the parent brand (e.g. Yummy). A new product which has high consistency with the parent brand should be introduced with the parent brand (e.g. Bolletje Yummy). However, there has not been any research which confirmed that this reasoning will be most effective from a consumer perspective.
It should be mentioned that there is quite some literature about brand extensions. Though, a limited amount of research about brand strategies and brand names. Finally, the research about these topics is not very recent.
1.3 Structure thesis
Chapter 2 Literature research
This chapter will first discuss brand extensions, because this subject provides a starting point for new product introductions in general. In addition, creating a new brand starts with determining the type of product which will be launched on the market. Furthermore, it will address several brand name strategies, for the reason that it is important to decide on the role of the parent brand for the new brand. The parent brand can play a very prominent role or will have nothing to do with the new brand. Subsequently, it explains the different brand names which are used in academic research and practice. The brand name strategy partly determines what brand name type is most suitable to apply for the new brand. A non-meaningful brand name may have a wider scope for future product introductions. Afterwards it addresses how to measure the effectiveness of a new brand. Finally, the first four research questions will be evaluated.
2.1 Brand extensions
Companies aim to grow their businesses and research on brand extensions has received considerable attention, because a new product can capitalize on the existing brand’s equity. Many firms introduce their new products together with an established brand (or parent brand) to obtain growth. Aaker & Keller (1990) were one of the first to research consumer behaviour towards this subject. A brand extension is ‘the use of established brand names to enter new product categories’ (Keller & Aaker, 1992, p.35). Farquhar (1989, p.29) distinguishes between two types of brand extensions. A line-extension applies an existing brand name to a product in one of the firm’s existing categories (e.g. Coca-Cola brand has Classic Coke, Diet Coke, Zero Coke). A category extension applies an existing brand name to a new category (e.g. Bic disposable lighters). On average more than 80 percent of new product introductions are line extensions (Keller, 2003). Before discussing brand extensions in depth, the difference between a product and a brand is outlined. Subsequently, advantages and disadvantages of brand extensions are discussed. Finally, an important characteristic for evaluation of brand extensions is described.
2.1.1 Difference between product and brand
differentiate a product only based on its product characteristics; hence creating a brand is a solution for this problem.
A brand can be defined from two different perspectives (Alsem, 2007; Riezebos, 2002 and De Chernatony & Dall’Olmo Riley, 1999): the supply-side perspective (the company/manufacturer) and the demand-side perspective (the customer). From the supply-side perspective, the brand can be defined as: ‘a name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors’ states Kotler (1991, p.422). The second definition of a brand from the demand-side is as follows: ‘a set of associations linked to a name, mark or symbol’ states Alsem (2007, p. 228). This means that a brand is something what exists in the mind of the consumer. This is further emphasized in the definition of Leone, Rao, Keller, Luo, McAlister & Sriastava (2006), they state ‘the power of the brand lies in the mind of the consumer and what they have experienced, learned and felt about the brand over time’. Overall, branding itself is all about creating differences and adding value for the consumer. The different components of a brand that identify and differentiate the brand are brand elements. The main brand elements are brand names, logos, URL’s, symbols, characters, slogans, jingles and packages (Keller, 2003).
2.1.2 Advantages and disadvantages of brand extensions
However, there are also serious disadvantages of brand extensions. The main disadvantage of a brand extension will be that it does not succeed and harms the existing brand. Cannibalization might occur when consumers switch from the existing brand to the new product offering (Reddy, Holak & Bhat, 1994). In addition, when the products belong to a family brand, there is an increased risk that when one product fails, negative associations will transfer to the other brands in the family (Sullivan, 1990). Furthermore, the company has not the chance anymore to create a completely new brand which has its own image. This reduces the freedom of the product to position itself differently compared to the existing brand (Keller, 2003).
Aaker & Keller (1990) found that consumer acceptance of a brand extension is more likely to be evaluated positively when the following conditions are present:
Quality: if the parent brand is associated with high quality, the new product should benefit,
but when it is associated with poorer quality, the new product should be harmed (Aaker & Keller, 1990; Boush & Loken, 1991 and Chowdhury, 2007).
Difficult: when consumers perceive the new product very easy to make, they will evaluate the
new product less positive (Aaker & Keller, 1990).
Fit: substantial research has indicated that a greater perceived fit (similarity) between the
parent brand and the new product by consumers will result in more positive consumer evaluations of the new product (Boush & Loken, 1991; Volckner & Sattler, 2006 and Chowdhury, 2007). When there is a good perceived fit by the consumer between the existing brand and the product extension, it will result in a better transfer of associations (negative or positive) to the new product (Aaker & Keller, 1990).
2.1.3 Perceived fit of brand extensions
‘Brands can be thought of as categories that have become associated with specific products and related beliefs over time’ states Milberg et al. (1997, p.120). Previous research suggests that consumers’ evaluation of the extension is very sensitive to the level of the perceived fit between the existing brand and the product extension (Aaker & Keller, 1990; Park et al., 1993 and Maoz & Tybout, 2002).
Tauber (1988, p.28) uses the definition ‘fit is when the consumer accepts the new product as logical and would expect it from the brand’. Another definition of brand (perceptual) fit is ‘whether a consumer perceives the new product to be consistent with the parent brand’ (Aaker & Keller, 1990). According to Aaker & Keller (1990), fit has three components. The first component is producer-related and the latter two are product-related (Riel, Lemmink & Ouwersloot, 2001):
Transfer: ‘it reflects the perceived ability of any firm operating in the first product class to
make a product in the second product class’ states Aaker & Keller (1990, p. 30). In other words, do consumers feel that the assets (skills, personnel and facilities) the company uses for making the current product are also suitable (can be ‘transferred’) for making the new product?
Complement: ‘it indicates the extent to which consumers view two product classes as
complements. Products are considered complements if both are consumed jointly to satisfy some particular need’ Aaker & Keller (1990, p. 30).
Substitute: ‘is the extent to which consumers view two product classes as substitutes.
Substitute products tend to have a common application and use context such that one product can replace the other in usage and satisfy the same needs’ Aaker & Keller (1990, p. 30).
Aaker & Keller (1990) concluded that either a fit on transfer or complement may be adequate, a good fit on both is not necessary. Riel et al. (2001) replicated the study of Aaker & Keller (1990) to service categories. They concluded that in a service context, consumers use
complementarity to the original category as a major cue to evaluate extensions.
The perceived fit of consumer depends on two types of fit (Park et al., 1991). First,
‘product-feature similarity perceptions, which depend on identifying the relationships between product
2.1.4 Relationship between perceived fit and brand extension evaluation
There are two views of the relationship between fit and the brand extension evaluation: a positive linear fit relationship and an inverted-U fit relationship.
First, there are researchers who assume the existence of a simple positive linear relationship between the ‘fit’ (similarity) of the brand with its extensions: an increase in fit leads to more positive consumer evaluations (Boush & Loken, 1991; Park, Milberg & Lawson, 1991 and Park et al., 1993 and Chowdhury, 2007). This linear relationship has been based on categorization theory.
‘A category exists whenever two or more distinguishable objects are treated equivalently’ states Mervis & Rosch (1981, p. 89). Categorization theory states that when people are confronted with a new object, they will assess the degree to which this new object is consistent (or fits) with their existing knowledge category. In the case of brand extensions, when an existing brand introduces a new product, the consumers will consider the degree to which this new product is consistent with the associations they have with the existing brand. There are two characteristics of category structure which are interesting for understanding how consumers evaluate new brands: graded structure and brand breadth.
‘Graded structure refers to a continuum of category representativeness, beginning with the most representative members of a category and continuing through its atypical members to those non-members least similar to category members’ states Barsalou (1985, p. 630). For example, for the category birds, people agree that a robin is very typical, a pigeon moderately typical and ostrich is atypical. Furthermore, non-members differ in how typical a non-member they are of a category. For example, an unrelated object such as a chair is a better non-member of the category bird (Barsalou, 1983). In the context of brand extensions, graded structure implicates that some products are more representative of a brand category than others.
Moreover, the brand breadth depends on the brand or marketing manager. For example the brand Virgin continuously extends into products which are not very much alike (e.g. cola and airplanes) and the result is a broad brand. However, Bolletje has a narrow brand, because it continuously introduces new products which are very typical of the current products (e.g. different types of cookies).
Second, other researchers have shown that a linear relationship between fit and the brand extension does not exist, but an inverted-U relationship. Meyers-Levy, Louie & Curren (1994) and Maoz & Tybout (2002) results indicated that products which are associated with moderately incongruent brand names were evaluated more positively than very congruent or incongruent brand names. This outcome has occurred as a function of increased cognitive elaboration (Percy & Elliott, 2005).
Moreover, ‘people’s preference for products with moderately incongruent brand names seems to occur because they process ads more extensively when products bear incongruent brand names and they experience the satisfaction associated with identifying a meaningful relationship that fits the brand name with the product, which occurs only when the brand name incongruity is moderate, not extreme’ (Meyers-Levy et al., 1994, p.52).
However, Maoz & Tybout (2002) discovered that an inverted-U relationship will only occur when there is high involvement. In other words, when people have to process information extensively, because they know their individual answer is very important and hence are highly motivated, they will evaluate the moderately incongruent extension the most positive. When low involvement exists, people are less motivated to process information. As a result, the most congruent extension was evaluated more positively than the moderately incongruent extension and a positive linear relationship occurred.
Bhat et al. (1998) proposed that the perceived fit between the existing brand and the new product could also be an important factor in consumer acceptance other than brand extensions.
2.2 Brand name strategies
‘The brand strategy or brand architecture for a firm tells marketers which brand names, logos, symbols and more to apply to which new and existing products’ states Keller (2003, p.433). This research is focused on brand strategies from a naming point of view; hence it will be referred to as brand name strategies.
A new product can be introduced with the following four main brand name strategies: a completely new brand name, a new brand is introduced by the parent brand, a new brand is used adjacent to the name of an existing brand or the brand of the parent brand is used.
The next paragraph will discuss the four main brand strategies, followed by differences between brand name strategies for services and products. Finally, the effect of brand name strategies on consumer evaluations is outlined.
2.2.1 Types of brand name strategies
The brand which launches a new product will be referred to as the parent brand or existing brand in this study, see exhibit 1 for the models mentioned in paragraph 2.2.1.
1. A completely new brand name
brands. A sub-category of the house of brands is the shadow-endorser strategy. This strategy
does not show the brand name of the company on the package. LaForet & Saunders (2005) approach the different naming strategies from a corporate perspective; they call this strategy a
branded strategy. It can be further specified into a mono brand, when a single brand name is
used or a furtive brand which is similar as the shadow endorser from Aaker & Joachimsthaler (2000).
This strategy helps firms to position brands on functional benefits and to dominate niche segments. The advantage of this strategy is that negative associations of the parent brand are not transferred to the new product. In addition, the new brand name does not have a lot effect on existing brands, because consumers will not make a connection. However, the disadvantages are that it costs time, money and effort to make the brand name more popular and position the new brand, because it cannot profit from the brand equity of the parent brand. Also the consumers might perceive higher risk to try the new product. The shadow-endorser
strategy or furtive brand is not connected visibly to the endorser brand, but many consumers
know about the link. It has a minimal impact on the image of the new brand, but it provides credibility and helps in many segments (Keller, 2003; Aaker & Joachimsthaler, 2000; Bhat et al., 1998 and Farquhar, Han, Herr & Ijiri, 1992). An example of a company which uses this strategy is Procter & Gamble. An example for the branding of a new product: Colgate introduces a body lotion with the brand name ‘Lavish’.
2. A new brand is introduced by the parent brand
Bhat et al. (1998) refer to this type of naming strategy as nested branding. Farquhar et al. (1992) term this type of strategy brand-bridging. Milberg et al. (1997) refer to this strategy as being a sub-branding strategy. Furthermore, Park et al. (1993) call this an associative brand
strategy. However, most of the time this type of naming strategy is mentioned an endorsing strategy or endorsing structure (Riezebos, 2002; Olins 1989; LaForet & Saunders, 2005 and
Globrands, 2008).
Aaker & Joachimsthaler (2000) also refer to this strategy as endorsed brands which are ‘helped’ or ‘introduced’ by another brand, most often an organizational brand. The brands are independent and the endorser plays a minor driver role and the endorsed a major driver role (e.g. Obsession (endorsed) by Clavin Klein (endorser)). Often this strategy is used to create over time a freestanding brand (e.g. only ‘Obsession’). They mention further the sub-category
of brands (e.g. McDonald’s has the Egg McMuffin, Big Mac, McRib; OfficeJet from LaserJet; easyCruise from easyJet and Nesquick, Nescafé from Nestlé ). Riezebos (2002) refers to this sub-strategy as serial brands.
This brand name strategy is often used when the parent brand aims to move to a more distant product category. The advantage and at the same time the disadvantage of the strategy is that it can clearly separate the new product from the parent brand in consumer’s mind. An endorsement by a well-known brand provides credibility and substance to the offering; it usually plays a minor driver role. In addition, it can provide some useful associations for the endorser. Linked name strategies allow more ownership and differentiation than a descriptor brand strategy. However, an endorsing strategy might fail when the parent brand aims to connect product categories which are too far apart in the consumer’s mind (e.g. Bolletje which is famous of its cookies, should not try to introduce smashed potatoes) (Keller, 2003; Aaker & Joachimsthaler, 2000; Bhat et al. 1998 and Farquhar et al., 1992). An example for the branding of a new product: ‘Lavish by Colgate’ or ‘Lavish from Colgate’ or ‘Lavish, Colgate’.
3. A new brand is used adjacent to the name of an existing brand
Bhat et al. (1998), Farquhar et al. (1992), Globrands (2008) call this a sub-branding strategy. Farquhar et al. (1992) distinguishes between two types of sub-branding strategies. The first, a parent brand is combined with a brand modifier, a descriptor is added (e.g. Jell-O plus ‘No Bake’). The second, a parent brand is combined with a brand name which together form a
dual mark (e.g. Du Pont plus ‘Stainmaster’). Also Aaker & Joachimsthaler (2000) refer to this
Riezebos (2002) this branding strategy should be called a product line extension which is part of a dualistic brand name strategy, because again the product carries two brand names. A product line extension is in his perspective a parent brand name combined with letters or numbers. In addition, according to Keller (2003), the combination of a new brand and an existing brand is a sub-brand.
The advantage is that the sub-brand has a lot of potential to affect the associations of the master brand. Also the sub-brand name serves as a qualifier of the existing brand. It is mainly used for differentiating different levels or classes in a product line. However, at the same time the disadvantage is that the sub-brand has the potential to negatively affect the associations of the parent brand. Also has the sub-brand less freedom to create its own associations (Keller, 2003; Aaker & Joachimsthaler, 2000; Bhat et al. 1998 and Farquhar et al., 1992).
An example for the branding of a new product: ‘Colgate Lavish’. The difference with the previous strategy is that the new product brand name appears after the parent brand.
4. The brand name of the parent brand is used
Bhat et al. (1998) refer to this strategy as brand extension where the parent brand name is used as a brand name for the new product, often accompanied with a descriptor. This definition is similar as Farquhar’s et al. (1992) first type of sub-brand strategy. The corporate brand functions as an umbrella brand (Globrands, 2008).
The term brand extension is referred by Keller (2003) and Alsem (2007) as being the use of an existing brand ànd a combination of an existing brand and a new brand. Olins (1989 in LaForet & Saunders, 1994) calls this type of strategy monolithic structure and Riezebos (2002) monolithic brand name strategy, because this is the result of the company using one brand name and one visual style the whole time.
The parent brand is the dominant brand driver across many offerings when applying this strategy. The advantage is that the extension can capitalize directly on the equity of the existing brand. An existing brand has already many consumers and the extension can profit from this existing consumer base. In addition, the brand name may also be known to non-consumers. It creates synergy, because associations in one business transfer to other businesses. Finally, the master brand provides brand leverage.
Disadvantages are that a brand extension may not profit from the existing brand when there is not a good fit between the existing brand and the new brand. Also the brand extension can harm the existing brand when the extension has low quality or does not perform as expected. Finally, it is difficult for the company to maintain a certain image when many different products are branded under the same name (Keller, 2003; Aaker &Joachimsthaler, 2000; Bhat et al.1998 and Farquhar et al., 1992).
2.2.2 Difference between brand name strategies for products and services
LaForet & Saunders (1994) researched the brand name strategies of twenty companies of major grocery products. They arrived at the conclusion that most of the firms studied, use some form of mixed branding (two brand names) or mono branding (only one brand name). Furthermore, Saunders & Guoqun (1997) concluded that competing companies in the United Kingdom confectionary market are inconsistent in their use of brand strategies, mono brands compete with mixed brands for example.
Around ten years later LaForet & Saunders (2005) conducted a repeat audit of the use of brand portfolios by leading companies and they elicited that a lot has changed. The brand strategies had altered among the twenty companies of major grocery products which were investigated, but not consistent in one direction.
They arrived at the conclusion that mixed brand strategies, more specifically; dual branding and endorsing were used the most. At the same time more brand strategies were applied and a decline in the use of corporate brands occurred.
Brand leverage is important, because the costs of branding are increasing due to the decline of broadcasting and the fragmentation of communication and distribution channel (LaForet & Saunders, 2005). Hence, this explains why endorsed and dual brands are so popular compared to stand-alone brands, because using another brand than the corporate brand will reduce the risk of harming the company’s reputation, but at the same time brand leverage can occur.
Devlin (2003) investigated what kind of brand name strategies financial services would apply. He found a small amount of support for the branded structure, where every new service product receives the corporate brand name. This in contrast with previous literature, which suggests that service firms are likely to adopt the corporate branding approach (Berry, 2000 and Berry, Lefkowith & Clark, 1988). The use of a house of brands (mono brands) where every new service product receives a new brand name and the use of sub-brands was hardly supported. However, the multi-corporate approach received the most support. This is when a firm has a family of main brands which are incorporated into organizations brand architecture. It is a desirable approach, because it keeps the opportunity for the company to maintain a strong relationship with different customer groups and signal distinct competencies.
2.2.3 Effects of brand name strategies on consumer evaluation
Most research of brand name strategies is about negative spill-over effects and which strategy is the best to diminish this potential threat for the parent brand.
First, Park et al. (1993) examined how the degree of fit (product and concept consistency) of a brand extension affects the extent of negative effects (the changes in the consumer’s original brand attitude and beliefs caused by the brand extensions) caused by the extension. They compared an associative brand name strategy (see paragraph 2.2.1 under 2) with a direct extension strategy (see paragraph 2.2.1 under 4).
In addition, Milberg et al. (1997) investigated the relation between direct brand extension strategy (e.g. Marriott Hotels, see paragraph 2.2.1 under 4) and sub-branding strategy (e.g. Courtyard by Marriott, see paragraph 2.2.1 under 2) and negative feedback effects of these extensions. Notice that they use different definitions for the brand strategies. They found that a sub-branding strategy decreases the negative feedback effects of brand extensions and improved consumer evaluations of extensions belonging to dissimilar product categories. This strategy appeared to create some distance between an extension and a parent brand, which results in a reduction of negative spill-over effects.
Furthermore, Vanhonacker (2007) conducted an exploratory research and studied the impact of two extension brand strategies adopted. More specifically direct extension (brand extension, see paragraph 2.2.1 under 4) and indirect extensions (sub-branding used as in the formulation of Milberg et al., 1997). He researched how the brand’s perceived expertise in the extension category and various brand traits (predictability, dependability and faith) interact with these extension strategies. His results showed that brands with good predictability could benefit by using a direct extension brand name strategy. And the extension introduced with an indirect extension strategy is not likely to succeed when consumers perceive the brand to lack expertise in the extension product category. Finally, when a consumer has a lot of faith in a brand it will subsequently also have more faith in the extension and hence it does not matter which brand name strategy is used.
Their research has quite some limitations by the nature of the study design. First, they used three different brands with only one new product for each brand. Second, this new product was not manipulated in the degree of fit. Third, the study provides only correlational data and hence the strength of its implications is limited. Finally, the differences in consumer evaluation to the new products with the different brand name strategies might be due to the differences in the brand names themselves
2.3 Brand names
Brand names can come in many different forms; they can be based on real people, places, animals, birds, things and objects or just be made up (Keller, Heckler & Houston, 1998). For the introduction of a new product, the company has to decide which type of brand name is most suitable to apply considering the identity of the existing parent brand and the new product. There are different brand names which can be categorized on several dimensions. In the literature, many brand name categorizations are used by both academics and practitioners. First, a definition of brand names is provided and then brand name roles are described. Subsequently, brand name types and brand name dimensions are discussed. Finally, an important characteristic of brand names is depicted.
2.3.1 Importance of brand names
Farquhar (1989) states that branding is centuries old. Brick makers in ancient Egypt placed symbols on their bricks to identify their products. Brand names, however, first appeared in the sixteenth century. A commonly used definition of a brand name is that it is ‘the component of a brand which can be spoken or verbalized’ Bennett (1988 in Turley & Moore, 1995, p.43). The brand name can contain words, numbers or letters.
According to Riezebos (2002), the brand name is an extrinsic attribute, which can make it easier for the consumer to distinguish products from each other. According to Keller (1993, 2003), the brand name is one of the brand elements which can build brand equity. Brand elements are trademarkable devices that identify and differentiate the brand. Other brand elements are logos, URL’s, symbols, characters, slogans, jingles and packages (Keller, 1993, 2003).
1993, 2003). Also Kapferer (1996) argues that the brand name is one of the most powerful sources of brand identity.
According to Klink (2000, 2001), the selection of a new brand name for a product or service is the focal point of introductory marketing programs. In addition, Kohli & Leuthesser (2001) and Collins (1977) argue that brand names should be viewed as long-term commitments and be thought of carefully before introducing it, because it is the one unchangeable part of the marketing mix. Osler (2004, p. 81) states ‘names, unlike strategies, initiatives and even logos, have extremely long shelf lives, and the really good ones never change’. Finally, Keller (2003) and Meyers-Levey et al. (1994) agree that when a brand name which is very good developed and managed, a consumer makes certain associations with the brand name, which can create brand equity for the company and brand equity is highly valued by companies. However, it will take some time to build brand equity, but ‘a carefully chosen brand name can provide inherent and immediate strength to the brand’ state Kohli & Suri (2000, p. 112).
There are two situations that create the need for a new brand name (Osler, 2004): 1. The creation of a new business or a new offering that the company will market.
2. Some change in the business condition that necessitates renaming an existing company or offering.
Every marketer has been faced with the challenge to choose a name for a new product or service. Zaltman & Wallendorf (1979, p.3 in Robertson, 1987) state ‘the brand name assigned to a new product may account for over forty percent of its success or failure’. Therefore, choosing an effective brand name is crucially important for a new product to succeed.
2.3.2 Roles of brand names
A brand should provide meaning to a consumer. Often advertising around the brand is an important tool to achieve this goal. However, the brand name itself can also provide meaning to the brand. Hence, a brand name can evoke two different types of associations for consumers.
1. Learned associations
suggests that it does not matter which name you have, but what you have learned associating with it. In other words, the verbal form of ‘rose’ does not have any meaning itself.
Considering this Juliet principle, it does not matter how a brand name sounds and what kind of associations a consumer has the first time hearing or seeing the brand name. But it matters what a consumer associates with the brand name through marketing communication. According to this principle, brand names do not have any intrinsic meaning, but only meaning which has been taught to the consumer. In this perspective, are powerful brands, brands which give words another meaning (Kapferer, 1996).
2. Associations of the name itself
The Juliet principle would say ‘a rose by any other name…etc’. The alternative Joyce
principle would say ‘a rose is a rose is a rose……states Collins (1977, p. 344). This means,
when confronted with the brand name the first time, the brand name will evoke certain associations for the consumer. Collins labels this the Joyce principle, named after the writer James Joyce, who uses phonetic symbolism in his books. There are two aspects which are part of the Joyce principle: (1) the initial association of a brand name can evoke associations and (2) the sound of a word can evoke associations.
Considering the former, a great part of language is purely referential. This means, that certain words derive their functional significance by being associated with particular objects. For example, the word ‘table’ refers to an object table. In addition, a brand name ‘Banana Republic’ for clothing would not be suitable according to this principle, because the brand name does not evoke associations with clothing.
Taking the latter into account, words can have meaning on a symbolic level. Further explained, the sound of a word can bring to mind certain associations, because sounds have a certain meaning in themselves. For example, the vowel sound ‘i’ is associated with something small and the vowel sound ‘o’ is associated with something big.
Riezebos (2002) emphasizes that for creating a new brand name, the Joyce principle is not better than the Juliet principle or vice versa. It depends on the degree of marketing communication a company aims to invest to provide meaning to the brand name.
2.3.3 Types of brand names
This paragraph will present five types of brand names together with their definitions, which are used in the literature most often: generic, descriptive, suggestive, arbitrary and coined. These five brand name types are selected, because they form the main categories of brand name types. Moreover, the literature contains a lot of different brand name types, for example geographic brand names, abbreviations and alpha-numeric brand names, which are outlined in exhibit 2 (Globrands, 2008; Alsem, 2007; Muzellec, 2006; Riezebos, 2002; Turley & Moore, 1995 and Pavia & Costa, 1993).
Generic brand name
‘It is the general term used for the product’ (e.g. ‘facial tissues’) according to Kohli & Suri (2000) derived from Cohen (1986).
Descriptive brand name
‘It describes the product for which it is intended’ according to Muzellec (2006), Kohli & Suri (2000), Interbrand (2008), Landor (in Keller, 2003) and Latour (1998). For example ‘Rent-A-Car’ or ‘Newsweek’ for a weekly news magazine. Turley & Moore (1995) say ‘it is the name of the service or a key benefit or aspect associated with the product’. Riezebos (2002) applies a more extensive definition ‘it refers in a direct way to the product as a whole, the composition of the product, the characteristics of the product and the function of the product or the possible product advantages. Alsem (2007) labels this type of name functional brand
name. He further mentions that a special category of functional name includes questions,
sentences and specific promotions (e.g. www.iwantacheaperloan.us).
Suggestive brand name
‘This evokes the product or its benefits’ (e.g. ‘Eveready’ batteries) according to Kohli & Suri (2000) and Landor (in Keller, 2003).
Arbitrary or freestanding brand name
‘This is a common English word with no apparent relation to the product category (e.g. ‘Camel’ for cigarettes or ‘Apple’ for computers) according to Kohli & Suri (2000) and Landor (in Keller, 2003). According to Muzellec (2006) and Interbrand (2008), this type of name has no link with the product or service that it refers to, but might have meaning on its own (e.g. ‘Orange’ or ‘Penguin’). In some cases, this name does not have intrinsic meaning at all (e.g. ‘Kodak’ or ‘Xsara’), in which case they may be called abstract. When the brand name has no intrinsic meaning at all, it is most often classified as a coined, fanciful or fictive brand name.
Coined or fanciful or fictive brand name
‘It is a fictional word, unrelated to the product and product category’ (e.g. ‘Kodak’) according to Kohli & Suri (2000) and Interbrand (2008). ‘The brand name does not refer to the product at all’ state Riezebos (2002) and Globrands (2008). There is a variety or fictive brand names: fantasy names (e.g. ‘Kodak’, ‘Luxaflex’ and ‘Rolex’), nouns and verbs, which can be classified as not to the product related descriptive words (e.g.; ‘Arrow’, ‘Camel’, ‘Penguin’ and ‘Shell’) , strange words or names and derivations (e.g. ‘Nike’ (the Greek goddess of victory) and ‘Xerox’ (the Greek word ‘xerography’) and abbreviations and acronyms (e.g. ‘Fiat’ (Fabrica Italiana Automobili Torino), ‘Seat’ (Sociedad Espanola de Automoviles de Tourismo) and ‘Esso’ (an acronym derived from the abbreviation for Standard Oil)). Also the
person-based and geographic brand names are part of the fictive brand name types according
to Riezebos (2002), see exhibit 2.
2.3.4 Dimensions for categorizing brand name types
Academic researchers investigated different types of brand names often arranged along a certain dimension. There are also authors who did not use any dimension for structuring their brand names. This paragraph will discuss the dimensions which are used the most in research and practice.
1. Dimension descriptive to abstract
Figure 2.1 Types of corporate brand names (Muzellec, 2006, p.310)
Globrands (2008) has developed its own spectrum of types of brand names with different definitions, which are not commonly used in the literature, see figure 2.2. The definitions of these brand names can also be found in exhibit 2.
Figure 2.2 Brand names (Globrands, 2008)
2. Dimension low legal to high legal protectability
The spectrum meaningful to non-meaningful from Kohli & Suri (2000), the spectrum
product-related to product unproduct-related and low legal protectability and high legal protectability from
Riezebos (2002) are both derived from the work of Cohen (1986). Cohen (1986) describes five brand name types which are categorized according to their level of legal protectability. Kohli & Suri (2000) have used his brand name type spectrum to arrange them along their level of meaningfulness. Riezebos (2002) based his brand name spectrum also on Cohen’s spectrum, see figure 2.3. The definitions of these brand name types are described in paragraph 2.3.3.
Figure 2.3 Brand name spectrums (Cohen, 1986; Kohli & Suri, 2000 and Riezebos, 2002)
The different spectrums of figure 2.3 are related. A brand name which has low legal
Suri, 2000) brand name. A meaningful brand name conveys relevant information about the product, or an important product attribute and hence is product-related (Riezebos, 2002).
3. Other dimensions
Lerman & Carbarino (2002) make a distinction between words and non-words. Words are meaningful, ‘can be found in the dictionary’ and ‘are relevant to an attribute or benefit of the product’. Non-words are non-meaningful, ‘cannot be found in the dictionary’ and ‘are not relevant to an attribute or benefit of the product’ brand names. Zinkhan & Martin (1987) made a distinction between typical names and atypical names. Typical name ‘one which calls to mind imagery that reminds the consumer of the product category’. Robertson (1987) distinguished between high and low imagery brand names. High imagery word is a concrete word which generates both verbal and visual memory codes. Low imagery word is an abstract word which would be less likely to generate a visual code.
Meyers-Levy (1989) compared high frequency brand names, common words, with low
frequency brand names, rare words.
4. No dimension
Alsem (2007) did not use a dimension for structuring the brand name types described. He drew up the following brand names: functional, meaning, abstract and abbreviations or numbers. Landor’s Brand Name Taxomony in Keller (2003, p. 147) describes the following brand names: descriptive, suggestive, compound, classical, arbitrary and fanciful.
Turley & Moore (1995) described their brand name types based on which brand names were used the most by service organizations: descriptive, person-based, associative, geographic and alpha-numeric.
2.3.5 Meaningfulness of brand names
Many marketers, when developing a new brand name, consider the use of a meaningful brand
name versus a non-meaningful brand name (Kohli et al. 2005). Moreover, Kohli & LaBahn
(1997) mentioned relevance to the product category as the most important criteria for the evaluation of new brand names. The literature about brand names reveals that there are basically two ways to approach a brand name as being meaningful, based on the Joyce
1. Referential level
A meaningful brand name can be defined as ‘a brand name which conveys relevant information about the product, or an important product attribute, or establishes a connection between the product and the product category’ (Keller et al. 1998). In this perspective, brand names can be made meaningful in three ways:
1. The brand name can support semantically the product category (e.g. JustJuice juices). 2. The brand name can support a particular attribute or benefit of the product (e.g. Soft & Silk body lotion).
3. A combination of both (e.g. easyJet).
When using this definition of meaningfulness, the brand name refers to the product category and subsequently the brand name is made more meaningful. This definition was applied by the previous discussed brand name types in paragraph 2.3.3 and exhibit 2.
Kohli & Suri (2000) found that meaningful (related) brand names are easier to recall than unrelated (non-meaningful) brand names. However, non-meaningful brand names had a significant recognition advantage. In addition, they arrived at the conclusion that consumers prefer meaningful brand names over non-meaningful brand names. Kohli et al. (2005) researched the extent to which meaningful versus non-meaningful brand names benefit from repeated exposure. Their results showed that meaningful brand names continued to be evaluated more favourably than non-meaningful brand names, this happened even after repeated exposure. However, the evaluations of the non-meaningful brand names enhanced at a greater extent than the meaningful brand names. Additionally, Lerman & Carbarino (2002) found that word names had a significant recall advantage compared to non-word names. Zinkhan & Martin (1987) concluded that typical names are perceived more favourably than atypically named brands. Robertson’s (1987) results showed that high imagery brand names had a memory advantage. Meyers-Levy’s (1989) results indicated that when brand names consist of high frequency words, information relevant to the brand is better remembered when the set of associations tied to the brand names are small rather than large. However, when brand names are words low in frequency, memory for material concerning the brands is relatively insensitive to the association size set.
2. Symbolic level
can evoke desirable associations and which can make the brand name more meaningful on a more symbolic level.
Klink (2000) found that the sound of a brand name can communicate information about the product (e.g. its size, speed, strength). In addition, Klink (2001) investigated consumer response to products introduced with meaningful new brand names. He researched two methods for creating new meaningful brand names: using sound symbolism to convey product-related information and using sound symbolism plus semantics. He concluded that the former method enhanced product liking and positioning in the mind of the consumer and the latter further improved this effect. Moreover, Yorkston & Menon (2004) extended the research of Klink (2000, 2001) and researched also phonetic effects of brand names on consumer evaluations/judgements in addition to attribute perceptions. They concluded that consumers use information they gather from phonemes in brand names to infer product attributes and to evaluate brands. Finally, Lowrey & Shrum (2007) explored the implications of phonetic symbolism for creating brand names and they focused specifically on vowels and consonants. They concluded that sounds of words can convey meaning apart from their actual definitions and this meaning can systematically bias perceptions and judgements.
It depends on the brand objectives if a meaningful or a non-meaningful brand name is the most effective brand name for a new product. When recall and likeability are important, a meaningful brand name might be the most desirable.
However, when transferability and recognition are essential, a non-meaningful brand name might be more appropriate, because a meaningful brand name can be quite restrictive to extend to other product categories (Kohli & Suri, 2000 and Kohli & LaBhan, 1997).
2.4 Effectiveness new brand
The effectiveness of a new brand can be evaluated along certain criteria. An effective brand is a brand which leads to positive consumer evaluations and hence aids to build brand equity. First, the concept brand equity is explained and afterwards types of consumer evaluation are discussed.
2.4.1 Brand equity
Brands are important, because of the value they create for an organization. Farquhar (1989) was one of the first to define brand equity as the ‘added value’ with which a brand endows a product. According to Farquhar (1989, p.25), a product is something that offers a functional benefit (e.g. toothpaste, a life insurance policy or a car). The ‘added value’ can be viewed from the perspective of the firm, the trade or the consumer. His definition has been the starting point for further brand equity definitions. Second, Aaker (1991, p.15) defines brand equity ‘as a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or that firm’s consumers’. Third, Keller (1993, 2003) introduced the customer-based brand equity (CBBE) model. CBBE is defined as ‘the differential effect that brand knowledge has on consumer response to the marketing of that brand’ (Keller, 2003, p.48). ‘Brand equity occurs when the consumer has high level of awareness and familiarity with the brand and holds some strong, favourable and unique associations in memory’ states Keller (2003, p. 53).
Consumer based brand equity can be divided into two dimensions (Bamert & Wehrli, 2005; Myers, 2003; Franzen & Bouwman, 1999) which is based on Keller (2003) and Aaker (1996): 1. Mental brand equity: the incorporation of a brand in the consideration set of costumers. In
other words, this is the conscious and active preference for a brand which is based on customers’ perceptions and feelings. These perceptions are: brand awareness, brand
associations and perceived quality.
2. Behavioural brand equity: the customary or conscious loyal purchase of a brand by
customers to anticipate in an important part of their category need. This behaviour is reflected in the loyalty of the customer towards the brand.
