Wednesday, December 4, 2019
The Relationship of Brand Equity and Brand Extension Essay Example
The Relationship of Brand Equity and Brand Extension Essay Title The Relationship of Brand Equity and Brand Extension: Low Involvement products vs. High Involvement Products Background and Significance In the present, technology enhances modern goods production resulting producers can provide resemble products in physical aspects such as quality or packaging. These create no differentiate of products. Consequently, Product Brand as well as the customer’s perception is the significance that promotes product differentiates or product advantages. Marketing professionals and organizations focus with Brand and try to position their Brands into customer’s mind. That establishes the Brand Equity (Keller, 1998). â€Å" Brand equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers†(Aaker, 1996). Marketing Science Institute conducted the survey in fifty famous companies in the United States. As the survey, the main topic that was interesting to research is the Brand Equity. That means all successful organizations pay attention with the Brand Equity and prefer to support the budget for the well management of the existing Brand Equity. These organizations also realize that their brand equity eliminate the chance of using the price strategy. The price strategy may decrease the existing value of the brand equity. As the well management of brand equity, organizations attempt to gain the great marketing communication for creating their product differentiates. We will write a custom essay sample on The Relationship of Brand Equity and Brand Extension specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on The Relationship of Brand Equity and Brand Extension specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on The Relationship of Brand Equity and Brand Extension specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Additionally, the other researched topic in their interest is the estimation of Brand Equity (Keller, 1998). Brand Equity is the significant issue in the consideration of all organizations because it creates the brand loyalty that motivates product perception, increases the repeated buying behavior and elevates sales of other products from the same brand including prohibits any mind changing to competitor’s brands. In the crisis economy, consumers normally choose products from the strongest brand for avoiding wrong decision making. The strong brand also generates the brand equity in consumer’s perception leading to the capability of higher price setting for instance, the preserved fruit can from â€Å"Malee†can set its price 20% higher than others but Male earns more market share than UFC preserved fruit cans. Male is the top of the preserved fruit cans in the current market because the Male brand gains the great consumer’s perception resulting to the willingness of consumer to pay more for the well-known brand even if the product itself has slight differentiate from others. The strong brand can provide large income to any organization. Besides the significance of brand equity, the strong brand can converse to be currency value. The value of this strong brand is estimated more than the real asset value in the company’s balance sheet. For instance, Interbrand and Citigroup in the USA arranged the companies value stated that Coca-Cola earned the highest market brand value as 80 billion dollars in 1999 (see in table 1. 1 below). Table 1. 1       Top Ten Brand Value in the World |No. Brand |Market Brand Value | | | |(Billion Dollars) | |1 |Coca-Cola |83. 8 | |2. |Microsoft |56. 7 | |3. |IBM |43. 8 | |4. GE |33. 5 | |5. |Ford |32. 2 | |6. |Disney |32. 3 | |7 |Intel |30. 0 | |8. |McDonald’s |26. 2 | |9. |ATT |24. | |10. |Marlboro |21. 0 | Source: Narong Jiwangkul (1998), Brand is really about the customer relationship. BrandAge Magazine, Dec 7: p. 69-70. The strong brand offers the benefits in the Brand Extension that le ad the companies spend fewer budgets than creating a new product brand, for instance Unilever employed the brand extension strategy from its existing successful brand. Lux SuperRich Shampoo of Unilever extended from Lux Soap. In addition, new products as well as Sunsilk Extra Mild Shampoo with Almond Milk for all hair types or Sunsilk Hair Oil Treatment for root treatment and Sunsilk Blackshine Shampoo for black hair extended from the Parent Sunsilk Brand that is the strong brand in the shampoo market. These advance the big advantage over the competitors in the budgeting of brand awareness. As the well-known product brand, the opportunity of success is higher because customers experienced in the product quality (Unilever-PG, High Competition from Skin to Hair, 1998). In the electronic market, the brand extension can see in Sony electronic products. Sony brand is strong in the electronic market with the strengths of the specific categories as audio and picture. Sony extended to cover the Digital Camera market that gained customer’s favors since a last few years. But Sony earned the same successful level of other existing strong brands in digital camera market such as Fuji, Kodak and Canon (Digital Camera War, 1998). As the strong brand of Sony and its continuing image creation in modern and endless technology development, brand extension of Sony is successful in digital camera market with no doubt. The success of brand extension depends on the Consumer Evaluation of Brand Extension. That consists of many components such as Brand Attribute Association, Attitude toward the Original Brand, Fit between the Original and Extension Product Class comprising with Complement Fit, Substitute Fit and Transfer from the parent brand including Perceived Difficulty of Making the Extension (Keller, 1993). Customers may evaluate between the existing parent brand and the brand extension, then leading to their buying decision. As the significance and benefits of brand equity in consumer’s mind mentioned above, the researcher is interested in the study of the different levels of involvement in products and their relationship with brand equity that may influence the components of the Consumer Evaluation of Brand Extension. Research Objectives 1. To study the levels of brand equity in customer’s mind of the researched product. 2. To research the differences of brand equity in customer’s mind between products with the different level of involvement. In order to find suitable approach to build, manage and maintain brand equity among each different product categories. . To study the relationship between brand equity in customer’s mind and the components of the consumer evaluation for the brand extension. Research Problems 1. How does the Brand Equity in customer’s mind do in this research? 2. How do the different involvement relate to the different levels of the brand equity in customer’s mind? 3. How brand equity in customer’s mind relates to customer evaluation of brand extension? Scope of the Study The sample group in this research consists of males and females with the age between 18-45 who lived in Bangkok. Selected brands in this research are well known brands as the first one, yogurt extended brand to the pasteurized milk that represented the low involvement product. For this low involvement product, the researcher used a substitute product in this research. Other brand as initial vehicle product extended to all-purpose vehicles that represent the high involvement product. Definitions Customer-based Brand Equity refers to customers gain brand knowledge that consists of 1) Brand Awareness as recognition and recall, and 2) Brand Image as strength, favorability, and uniqueness. Involvement refers to the levels of product involvement between consumers and products depending on types of product, interest, attitude, price and so fort. The involvement can be categorized into two types as the followings: 1. High involvement product, in this research, the computer notebook that offered an extending brand to the Computer PC. 2. Low involvement product, in this research, the Air Condition that expanded to an extending brand as the fan. Brand Extension refers to any organization takes advantages of the well-known brand for launching new products to the market. The new products will be called as an Extending Brand and the existing brand is called a Parent Brand. Consumer Evaluation of Brand Extension refers to the process and elements of the consumer evaluation of the brand extension. It consists of: 1) Brand Attribute Association, 2) Attitude toward the Original Brand, 3) Fit between the Original and Extension Product Class comprising with Complement Fit, Substitute and Transfer of the Parent Brand, and 4) Perceived Difficulty of Making the Extension. Expected Benefits 1. The professional marketers may consider the components of the Brand Equity in their decision making for evaluating or improving the Brand Equity for their organizations. 2. The marketers or anyone who’s interested in may take the research result as the basic information of consumer behavior for the evaluation of the brand extension focusing with the cost effectiveness and the opportunity of success. 3. The research result may be the basic information for all professional marketers in long-term product strategy by considering the components in the consumer evaluation of the brand extension. That may be helpful for product strategy in the brand extension for the further success. 4. This research will be beneficial for learners and others for research conduction and well understood of Brand Name and the involvement between Brand and the influenced factors of consumer’s decision making. This research result can claim as the fundamental information for conducting the related research about Brand and the Customer Evaluation of Brand Extension. Literature Review This research aims to research about the consumer evaluation of the brand equity and study the involvement of the brand extension. The researcher studied related researches, theories, concepts and literatures focusing with the followings: 1. Concept of Consumer-based Brand Equity  ·Ã‚      Definition of Consumer-based Brand Equity  ·Ã‚      Consumer-based Brand Equity Measurement  ·Ã‚      Managing Brand Equity 2. Concept of Brand Extension  ·Ã‚      Advantages of Brand Extension  ·Ã‚      Disadvantages of Brand Extension 3. Concept of Consumer Evaluation of Brand Extension 4. Concept of Consumer Behavior and Consumer Decision Process  ·Ã‚      Consumer decision process Research Hypothesis As the theories, concepts and related literatures mentioned above, the researcher established the specific hypotheses for this research about the involvement between Consumer-based Brand Equity and the Consumer Evaluation of Brand Extension as the followings: 1. Brand differentiation is in consumer’s mind. The Brand Knowledge consists of a) Brand Awareness as brand recall and recognition, and b) Brand Image as strength, favorability and uniqueness. The high brand knowledge will stimulate high Brand Equity. The low brand knowledge will lead to the low Brand Equity. These show in both low and high involvement products. . As the levels of Consumer-based Brand Equity, the high involvement product may gain higher consumer-based brand equity than the low involvement product with the low consumer-based brand equity. 3. Consumer-based Brand Equity of any parent product has positive correlation with the Consumer Evaluation of Brand Extension. Details are as the followings: 1) Brand Att ribute Association, 2) Attitude toward the Original Brand, 3) Fit between the Original and Extension Product Class comprising with complement fit, substitute and transfer of the Parent Brand, and 4) Perceived Difficulty of Making the Extension. The Consumer-based Brand Equity and the Consumer Evaluation of Brand Extension vary in the similar direction. In both high and low involvement products, higher brand equity, higher consumer evaluation of brand extension or lower brand equity, lower consumer evaluation of brand extension. Research Methodology This research is the quantitative research with survey research method and specific questionnaire. The researcher established the research method involving with population, sample group, research tool, information collection, and statistical analysis as the details below: Population Population group of this research is consumers in Bangkok with the age between 18-45. Television and an extended brand as camera is the selected product in this research. Sample Group As the determination of sample group in this research, the researcher takes the principle of total variance between sample group and variances of random sampling of Taro Yamane (1976: 886-887). The population size is 2,657,186. The reliability is 95%. The standard deviation is 5%.               =           N                 (1+Ne2)            When  n         =         The sampling size                        N        =         The population size                        e         =         Sampling variables            As these numbers mentioned above, the calculation becomes as: ‘n’            =     2,657,186 (1+2,657,186 (0. 05)2) =         399. 93 Hence, the sample size is equal to 400. Sampling Method The researcher takes both non-probability sampling and probability sampling in this research. Fifty districts in Bangkok (Office of Urban Design, Bangkok, 1998) are as Pranakorn, Dusit, Nongjok, Bangruk, Bangken, Bangkapi, Pathumwan, Pomprab-sattrupai, Prakanong, Minburee, Ladkrabang, Yannawa, Sumpanthawong, Payathai, Thonburi, BangkokYai, Hoykwang, Nongkham, Rajburana, Bangplad, Dindeang, Beungkum, Sathorn, Bangsue, Jatujak, Bangkorlaem, Pravej, Klongteoy, Suanloung, Jomthong, Donmuang, Rajchathevi, Ladprao, Wattana, Bangkae, Luksee, Saimai, Kannayaow, Sapansung, Wangthonglang, Klongsamwa, Bangna, Thaveewattana, Thungkrue and Bangbon. The researcher conducts the purposive sampling with the selected districts that gained abundant commercial and residential areas. These districts are separated by The Urban Design Act in 1975 (Office of Urban Design, Bangkok, 1998). The selected districts enhance the research approach and convenience of information collection. The abundant commercial and residential areas are 36 areas as: (see in the chart 3. 1) 1. Dusit, 2. Bangruk, 3. Bangken, 4. Bangkapi, 5. Prathumwan, 6. Pomprab-sattrupai, 7. Prakanong, 8. Yannawa, 9. Sampanthawong, 10. Payathai, 11. Thonburi, 12. BangkokYai, 13. Hoykwang, 14. Klongsan, 15. BangkokNoy, 16. Pasrijareon, 17. Rajchaburana, 18. Bangplad, 19. Dindeang, 20. Buongkum, 21. Sathorn, 22. Bangsue, 23. Jatujak, 24. Bangkorlam, 25. Pravej, 26. KlongTeoy, 27. Suanluong, 28. Jomthong, 29. Donmuang, 30. Rajchathevi, 31. Ladprao, 32. Wattana, 33. Bangkae, 34. Luksee, 35. Wangthonglang, and 36. Bangna. Then, researcher takes the probability sampling in the simple random sampling by the sampling selection of non-mimic sample. This method scales down the sample size to be 7 districts as 20% of commercial and residential areas as the followings: 1. Bangsue, 2. Thonburi, 3. Prathumwan, 4. Dusit, 5. Bangkapi, 6. Klongteoy, and 7. Bangplad. The researcher gathers information with the convenience sampling in each district until complete total 400 population. Type of Product in the Research This research emphasizes to study in Consumer-based Brand Equity and Consumer Evaluation of Brand Extension. The selected products in this research aree products that offer the brand extensions in horizontal and category. This research considers in products that have the differences in the market share. They will address the clear identification of the involvement between Consumer-based Brand Equity and Elements of Brand Extension. Details are as the followings: The low involvement product as Yogurt-sour milk earns the extending brand as pasteurized milk. Based on the marketing information in 1998, the market value of pasteurized milk was 18,000 million baht. Meji was the top brand with 52% market share. Foremost earned 17%. Dutch Milk shared market as 17% and Nongpoe Milk was 2%. Chokchai Milk was 5%. Calcemax earned 2% and others gained 5% (Krungthep Business, 1998). The selected yogurt in this research is Yakool and Betagent that presented the large differences of market share. As the high involvement product, the researcher selects, with the consideration of product market share, the vehicle products that provide the extending brand to the all-purpose vehicle. In 1998, Toyota gained the largest market share as 36%. Honda earned 30%. Nissan hold 14%. Mitsubishi had 6%. Mazda kept 2% and others earned 12% (Thansetthakit, 1998). Consequently, the selected brands in this research are Toyota and Mazda because they had huge differences in their market share. Research Tool Research tool is the specific questionnaire that was designed and developed for this research. It contains 5 sections with different questions and purposes as the followings: Section I        Population characteristic involves with age, gender, marital status, education level, occupation and individual monthly income. Section II       Consumer-based Brand Equity of Yogurt is examined by questions in this section. Section III     Consumer Evaluation of Brand Extension is determined as consumer attitude in brand extension of the product, pasteurized milk. Section VI     Consumer-based Brand Equity of vehicle products is evaluated in this section. Section V       Consumer Evaluation of Brand Extension involves with consumer attitude in brand extension of all-purpose vehicle. A measuring tool for consumer-based brand equity is modified from Keller’s research (Keller, 1993). The other measuring tool for brand extension is developed from the research of Aaker and Keller (1990). These tools are qualified with the validity and reliability test. In addition, this questionnaire is determined the content validity by professional opinion. And then, this questionnaire is launched to do the pre-test with 20 people who had similar characteristics of the sampling group. The coming results assist to develop the final questionnaire that had been used in the real information gathering. Variances Individual product was suitable for variance measurement and scoring as the followings: 1. Consumer-based Brand Equity     This research followed the Keller’s concept in Consumer-based Brand Equity as Brand Knowledge. Brand Knowledge contained with Brand Awareness as brand recall and recognition, and Brand Image as strength, favorability and uniqueness. 2. The elements of Consumer Evaluation of Brand Extension         This research obtained the elements of Consumer Evaluation of Brand Extension from Aaker and Keller (1990). It consisted of Brand Attitude Associations, Attitude toward the Original Brand, Perceived Difficulty of Making the Extension and the element of Aaker and Keller (1992) in the perceived fit of the proposed extension with the company. Scoring Measurement of Brand Equity 1. Questions for the brand awareness were measured brand recall and recognition (Nantana Boripanthananun, 1997). 1. 1           What brands do you know?  ·Ã‚          The first brand in consumer recognition      3 points  ·Ã‚          The second brand in consumer recognition 2 points  ·Ã‚          The third brand in consumer recognition     1 point 1. 2  Do you know this â€Å"†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ Brand?  ·Ã‚      Yes, I do. 1 point  ·Ã‚      No, I don’t. 0 point 2. Questions for measuring the brand image involved with 3 aspects as strength, favorability and uniqueness. Keller (1993) expressed that many measurement tools indicated with the highest to lowest levels of consumer’s opinion were fit for measuring the brand image. Hence, researcher decided to take the measuring tool as the rating scale with 5 levels for both high and low involvement products as the followings: Absolutely agree                                                  Absolutely disagree   5                           4                     3                     2                     1 The best The worst 5                           4                     3                     2                     1 Outstanding                                                                     same as others 5                           4                     3                     2                     1  The pre-test generated the questions about product attribute in the final questionnaire that was used until complete process of information collection. Measurement of the Elements in Consumer Evaluation of Brand Extension 1. Brand Attribute Association contained the open-ended questions involving with brand recognition of consumer. As the Attribute toward the Original Brand, Aaker and Keller (1990) took the rating scale with 7 levels but the researcher modified and developed the new rating scale with 5 levels in both high and low involvement products as the followings: The best                                                                           The worst 5                           4                     3                     2                     1 . Attitude toward Brand Extension was determined by the 5-level rating scale in both high and low involvement products as the followings: The best                                                                            The worst 5                           4                     3                     2                     1 Surely buy it                                                                     Will never buy it 5                           4                     3                     2                     1 . Perceived Difficulty of Making the Extension was evaluated by 5-level rating scale in both high and low involvement products as: Absolutely agree                                                  Absolutely disagree   5Â Â Â Â Â Â Â Â Â Â Â Â Â Â à ‚             4                     3                     2                     1 Need special knowledge                          No need special knowledge 5                           4                     3                     2                     1 4. Perceived Fit of the Proposed Extension with the Company also took the 5-level rating scale for measuring in both high and low involvement products as: Very fit                                                                            Not fit at all 5                           4                     3                     2                     1 High involvement                                                            Not involved at all between company and product 5                           4                     3                     2                     1 Research Analysis and Results As the complete information collection, researcher provides coding and computed the results by the computer and the software SPSS for WINDOWS. The research analysis obtains the descriptive statistics for clear identification of sample group’s characteristics, the percentage (%) for notable explanation of information, the inferential statistics, the Pearson’s product moment correlation coefficient and the statistical T-Test for evaluating the correlation of each pair of variances depending on the hypothesis. References Aaker D. A. (1996). Building Strong Brands, The Free Press, New York Crainer, Stuart The real power of brands : making brands work for competitive Imprint London : FT Pitman, 1995 Descript 214 p. : ill. ; 25 cm Note The Financial Times/Pitman Publishing SeriesJacket Subject Brand name products Product management. Dhiti Butratana. (1998). THE MEASUREMENT OF BRAND EQUITY IN BEER CATEGORY. Chulalongkorn University. Bangkok (Thailand). Graduate School. Major Master. Arts (Advertising). Karat Latawan. (2000). CONSUMER-BASED BRAND EQUITY AND CONSUMER EVALUATION OF BRAND EXTENSION. Chulalongkorn University. Bangkok (Thailand). Graduate School. Major Master. Arts (Advertising). Keller, K. L. (1993) Conceptualizing, Measuring and Managing Customer-Based Brand Equity. Journal of Marketing 57, pp. 1–22. Narong Jiwangkul (1998), Brand is really about the customer relationship. BrandAge Magazine, Dec 7: p. 69-70. Piyawan Phumpho. (2000). BRAND LOYALTY, BRAND EXTENSION AND CONSUMER EVALUATION OF FACTORS AFFECTING BRAND EXTENSION. Chulalongkorn University. Bangkok (Thailand). Graduate School. Major Master. Arts (Advertising). Varrinya Leelayuvat. (2000). MEASURING BRAND EQUITY FROM BRAND- CONSUMER RELATIONSHIP. Chulalongkorn University. Bangkok (Thailand). Graduate School. Major Master. Arts (Advertising)Tauber, EM, 1981. Brand franchise extensions: new products benefit from existing brand names. Bus Horiz 24 2, pp. 36–40
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