Understanding Consumer Perception Of Brand Identity: How To Avoid Failure When Extending A Well Established Brand

6803 words - 27 pages

AbstractBrand extensions allow companies to leverage the equity they have established into new product and market areas, reducing the costs and risks associated with the fearful task of launching a new brand in today's viscous markets. However, brand extension is a two-sided blade, and miscommunication between consumers and brand managers can easily lead to image confusion and, ultimately, failure.This paper investigates the importance of a clear understanding on consumer perception of a company's brand identity when evaluating possible brand extension. Through the analysis of three different corporate examples of extensions (McDonald's, Harley Davidson, Heinz) we explore the detriments of failed brand image transfers. All three companies discussed tried to extend their brand in a direction that did not fit with their brand identity, therefore failing to understand their perceived brand identity and unsuccessfully trying to extend their brand.Table of Contents1 Introduction...........11.1 Background.........11.2 Problem..............11.3 Purpose 21.4 Method 22 Theoretical Framework 32.1 Brand Identity 32.2 Brand Loyalty 32.3 Brand Image 32.4 Brand Awareness 32.5 Brand Equity 42.6 Valuing Brand Equity 42.7 Brand-added Value 52.8 Brand Extension 53 Empirical Findings 93.1 Mc Donald's 93.2 Harley Davidson 123.3 Heinz 134 Analysis 154.1 Mc Donald's 154.2 Harley Davidson 164.3 Heinz 165 Conclusion 171 Introduction1.1 BackgroundThe high degree of International interest in branding is a relatively recent phenomenon. During the 1980's, there was a wave of takeovers, acquisitions and mergers by companies trying to unite business operations--both similar and unrelated--under one strong brand name. As a resultant price-to-earnings ratios skyrocketed, and brand extension strategy was viewed as the new pathway to industry success and market domination (Kapferer, 1997).According to Kotler, Wong & Saunders (2005), brand extension (also called brand stretch-ing) is any effort to use an already successful brand name to launch new or modified prod-ucts in a new category. Riezebos (2003) says that in an extension strategy, the branded arti-cle for which the brand name already exists is called the parent product or if you refer to a product that consumers most closely associate with the brand name it is called flagship product. The new introduced article, for which the same brand name is used, is named the extended product. Assigning brand associations from the flagship or parent product to the extended product is based on the process of image transfer.1.2 ProblemDue to the rising costs of advertising and the competitiveness of contemporary markets, experiencing success with a new product is becoming increasingly more difficult. In order to overcome these obstacles, companies use brand extensions to help nurture and support the introduction of new products. According to Riezbos (2003) this is one of the two main reasons for the increased usage of brand...

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