FACING INNOVATION WITH BRAND
EXTENSION
By
Brand extensión in autonomous cars
Why Brand extensions are important?
Using an established brand name to launch new products or to reach new markets is a popular strategy among companies
• 82 % of new product introductions are brand extensions. (Simms (2005)
Brand extensión in autonomous cars
Why autonomous cars are used in the study?
• Disruptive innovation (New product a new market) vs incremental innovation and other known products (FMCG)
• Consumers can identify the product (Fully or partially self driven) • Big brands are entering the race to build an autonomous car.
• More than a short term trend, a long term necessity (The problem of mobility in the near future). Conjoint efforts from different parts
(Public and private sector).
• Brand Extension is a potential and viable strategy that brands
Research question
• What are the drivers of brand extension success for autonomous cars?
Reasons
• Extend the scope of previous studies and test their findings: This is a opportunity to analyze disruptive innovation in Brand Extension
(previous research was limited to incremental innovations).
• From attitudes toward the brand extension to preferences toward the brand extension
Research process
• Literature review (Identify the most relevant variables in the brand extension theory)
• To answer the research question, a model with the most relevant
variables of bibliographic review was constructed and a methodology was chosen.
Literature Review (1)
• Used twenty four studies on brand extension evaluation for years 2006 – 2014 (help to construct measures of the Brand extensión success factors).
• Twelve suggested variables from the conceptual model of Volcker & Sattler, (2006) used as a benchmark (also their constructed measures of the Brand extensión success factors).
Methodology
• To analyze consumer preferences on brand extension for autonomous cars, it is used choice based conjoint analysis (CBC) - wide
acceptance for eliciting consumer preferences (Louviere and
Woodworth, 1983; ; Eggers, Eggers & Kraus, 2014 ) closer to real situations (use situations in a competitive market) than other
traditional conjoint methods.
• To collect data, a online survey was conducted using
Advantages of CBC for the study
• Choosing a preferred product is natural consumer behavior.
• It Is possible to quantify interactions because CBC are constructed by borrowing information across respondents
• The utility values could be used to simulate and predict market reactions to product attributes
Levels and attributes of the CBC model
Brand Autonomy Price 1. Tesla Motors 1. Partially
Survey -Craft
Picture yourself in the year 2025. Imagine that you are going on holiday to a destination that you have never visited before.
Instead of renting a manually-driven rental car you are also considering the newly available self-driving cars.
These autonomous, self-driving cars do not have to be rented for the entire time of your holiday but can be requested via an app whenever needed. You do not have to pick up the car because the car can drive to you and can park itself when you do not need it anymore. You only
Survey (0/1 coded responses)
Choice sets Design
• Number of choice sets : 11 per respondent (Include choice among preferred alternative and Choice between most preferred and no choice)
• Balanced – Each level is displayed an equal number of times.
• Orthogonal – Each level combination appears an equal number of times; no correlation between attributes).
• Minimal Overlap – Most attributes levels appears only once in the choice set combination
Estimation CBC model
• For non Brand attributes a partworth Model was used (effect coding) and for the remaining attributes a vector model was used.
• Indexes were created for both level of involvement and consumer innovativeness using factor analysis and reliability analysis
• 4 models were estimated
• Model 1 Brand, Level of autonomy and Price per hour
• Model 2 (in which it is included all success factors considered in the conceptual model), Model 3 (Model 2 plus all Moderating effects).
• Model 4 (Model 2 plus only significant moderating effects). This is the better model according to different measures of model fit R2adjusted, likelihood ratio test,
Results
Data Support of the hypotheses
• H1 The fit between autonomous cars and the parent brand has a positive effect on consumers’ attitudes toward the brand extension (IMAGE.FIT + CATEGORY.FIT = 0,3),
• H2 Perceived parent brand quality has a positive effect on consumers’ attitudes toward autonomous cars (0,3),
• H3 Parent-brand conviction has a positive effect on consumers ‘attitudes toward autonomous cars.Brand Extensions Product Category
Characteristics (BCTRUST + BCEXPECT +BCCONFIDENCE =1,28),
Conclusions & Discussion (1)
• Brand extension is positive since the customer continues to consider the brand as an efficient tool that identifies a new product in a new market where there is not much information however brands that currently
offer products and/or services that are closely tied to self-driving cars are less effective.
• The quality of the brand as a signal to infer the quality of the extension product.
• A great opportunity for brands that evoke strong senses of trust, confidence and great expectations regarding their offer.
• No transfer of brand experiences.
Conclusions & Discussion (2)
• The advertising effect on brand extension could be improved by advertising the brand as well.
• no evidence to confirm the interaction between Fit and parent brand conviction and brand quality.
• Early adopters and Innovators require a better Fit to prefer one option over another
• When the consumer acquires new information about the product because the consumer will start to depend more on this new information than on the one obtained through the brand.
Limitations & Further Research
• Heterogeneity of the consumer was considered in the choice of the model • Limitation of the sample (Most of the respondents age are between 15-25 ,
and concetrated in 3 countries)
• It was not possible to obtain the main effects for the variables related to the consumer characteristics
• Possible differences between Intention and observed behavior (use) that is described in theory.
Future research
