TO WHAT EXTENT BRAND EXTENSIONS MIGHT INCREASE BRAND LOYALTY? APPLICATION TO LUXURY WOMEN?S WEAR AND ACCESSORIES MARKET: THE TOD?S CASE

TO WHAT EXTENT BRAND EXTENSIONS MIGHT INCREASE BRAND LOYALTY? APPLICATION TO LUXURY WOMEN’S WEAR AND ACCESSORIES MARKET: THE TOD’S CASE

INTRODUCTION

 This article has the aim to explore the impact of brand extensions on brand loyalty towards luxury brands in order to evaluate if the benefits of the first ones might be useful to strengthen the link between the Brand and the Customers. The first section is a concise presentation of brand extensions through some articles and followed by a brief description of models and concepts. The second part defines the topic of brand loyalty thanks to some recent articles and some abstracts taken from the wide existing literature. The next section starts with a short introduction on the main features of the Luxury Market and follows with the research that has addressed Consumers of luxury brands in order to understand their attitudes and perceived benefits towards luxury brands extensions. This article finishes off with a description of the obtained results, discussion and conclusion.

I. Brand Extensions

I.1 Main Features and Articles

Nowadays, Companies look more and more for brand extensions in order to get several advantages, both financial and marketing ones. Indeed they allow Companies to reduce risks and costs of launching new products and the investments in communication, increase incomes and market shares, strengthen the brand awareness.

Brand extensions increase the consumer perceived value of the brand. For successful brand extensions, consumers have to be able to perceive high fit between the extended product and the core brand. Thanks to this determinant the evaluation of the extension results credible and very likely to be based on the parent brand beliefs and the Customers will immediately infer the quality of the new offer. Aaker & Keller propose an attitude-based model in which describe fit as a key factor with attitude toward the original brand and perceived difficulty of making the extension. Other variables are involved in leveraging brand image in brand extensions as communication policy (Pina and Montaner 2009), brand type and cultural differences (Buil, De Chernatony and Hem 2009). In addition, Kapferer’s model based on brand types demonstrates the importance for the brand to have a high brand meaning more adaptable and reliable into other categories. Finally Davidson and Taylor confirm this tendency, creating two models in order to prove the importance of a strong core in order to evolve successfully in to a broader brand.

 

Most brand extensions occur as line extensions, which use the existing brand names and products and extend them remaining in the existing product category. These extensions are seen as very low risk to both company and consumers due to low introduction costs and the target market product familiarity. Category extensions involve higher risks and costs, as both actual and potential consumers are motivated to buy very different products, which have been created from existing brand names and extended to new-product categories, then there are intermediaries and consumers unfamiliarity with the product.

Following some useful articles will be proposed for a better understanding of the issue.

A very interesting one which moves in brand extensions field is “Extending the brand: controllable drivers of feedback effects” by Montaner and Pina (2009). This paper seeks to analyse the influence of three variables: communication policy, brand breadth and extension-brand fit. The results show that brand extensions far from the current markets damage the brand associations, although the use of advertising focused on the new product can reduce this negative effect. Moreover, feedback effects are less negative when the brand has not been over-extended in the past. The results suggest how to manage the launching of brand extensions in order to protect the extended brand image. It shows what kind of advertising is more appropriate for marketing extensions as well as role of brand breadth and perceived fit.
moreover, Buil, de Chernatony and Hem with “Brand extension strategies: perceived fit, brand type, and culture influences” (2009) examined the impact of perceived fit, brand type and country’s culture on the consumers’ attitude towards brand extensions and on the parent brand equity. Brand extensions with high fit receive more favourable consumer evaluations and decrease the negative feedback effects of extensions on parent brand equity. Results also reveal that parent brand equity dilution is higher when the brand used to launch the extension has high equity. Finally, this study reveals that the country where an extension takes place may condition its results, mainly due to cultural differences. Managers should launch extensions with high perceived fit. In addition, greater effort is needed to extend high equity brands, due to their greater dilution. Finally, managers need to understand that consumer evaluations and feedback effects of the same brand extensions can vary due to cultural differences between consumers. Therefore, standardised brand extension strategies should be carefully considered.

II. Brand Loyalty

II. 1 Main Features and Articles

Since retaining an existing consumer is often more profitable than finding a new one and dealing with economic downturn is more and more difficult, brand loyalty is becoming an important objective for Marketers, as long as it has direct impact on long-term sustainability of a brand. There are several advantages, indeed Brand Loyalty: reduces marketing costs, attracts new consumers and increases brand awareness thanks to word of mouth, reduces the sensitiveness to price and gives the Company more time to respond to Competitors’ new challenges.

The simpler definition for brand loyalty is the “repeated purchase” factor, but we should take into account several variables in order to understand this issue. High brand loyalty could be identified in the case of high purchase frequency, high penetration rate, when the price is higher than average in the category, when it refers to a leader brand. In addition to this, brand loyalty starts with the product in an initial stage and meet the brand in a mature stage (Torres-Moraga, Vasquez-Parraga, Zamora-Gonzalez 2008), it means that satisfaction is very important too, and it is used as a predictor of future consumer purchase. Recent studies consider the contextual factors able to impact the degree of brand loyalty and the purchase decision (Shukla 2009), because they in turn influences self image, lifestyle and consumption pattern. Furthermore, several models have been created in order to identify how likely a customer switches to another brand as the one named Aaker’s Brand Loyalty Pyramid which measures 5 kinds of behaviours in the loyalty scale or the Hofmeyr & Rice Brand conversion model, which segments the Market on the basis of two variable: Consumer’s Attitude and Behaviour. Very interesting for my research is Kapferer’s Brand Loyalty model, which introduces as dimension of brand loyalty the trial of brand extensions next to brand presence and single product repeated purchase.

 

Some articles will be mentioned in order to enter better in the topic.

“Customer satisfaction and loyalty: start with the product, culminate with the brand” written by Torres-Moraga, Vasquez-Parraga and Zamora-Gonzalez (2008) enhances that studies on customer satisfaction and loyalty have focused on brand rather than product. It is not that brand is not important, but the process of loving a brand starts with a product. Customers appreciate products by themselves, independent of the brand, as shown in their pursuit of satisfaction and development of loyalty. Such appreciation seems to be prominent regarding innovative products when compared to traditional products. Their results show that the relationship satisfaction-loyalty is significantly present when evaluating products alone and has a weaker presence than when evaluating brand alone. The relationship satisfaction-loyalty is also present when evaluating product and brand combined, indicating that there is an intermediate position between product and brand. There are practical consequences of applying the typology and examining the findings, the relationship satisfaction-loyalty starts with the product, includes the product-brand, and culminates with the brand.
This study introduces a typology underscoring the pursuit of satisfaction and development of loyalty in three conditions of product presence versus brand presence, that is, product alone, brand alone, and product and brand combined.

Moreover, “Impact of contextual factors, brand loyalty and brand switching on purchase decisions” by Paurav Shukl (2009) starts from the concept the consumer culture in recent times has evolved into one of the most powerful ingredients shaping individuals and societies. Although the behavioural intentions and purchase decisions related models continue to dominate research and managerial practice, a deeper look indicates that most studies do not take the complete picture in account and study parts of the above mentioned phenomena. Furthermore, consumers operate in a dynamic and ever-changing environment which in itself demands a re-examination of their behavioural intentions and purchase decision influences from time to time. The findings suggest that contextual factors have the strongest influence on purchase decisions as long as thy influence the brand loyalty and switching behaviour.

III. To what extent Brand Extensions might increase Brand Loyalty?

         The TOD’S case

III.1 A quick look to the Luxury Market

The luxury industry is experiencing unprecedented upheaval. During the last five years a new environment has demanded a real reinvention, so

marketing tool advertising used

Source: http://articlesinside.co.cc/advertising/to-what-extent-brand-extensions-might-increase-brand-loyalty-application-to-luxury-womens-wear-and-accessories-market-the-tods-case

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