Optimising the brand-to-brand customer interface through the Brand Association base Henrik Uggla Author contacts Henrik Uggla Ph.D Strategic Brand Management Department of Brand Architecture School Of Business University Of Stockholm, 106 91 Stockholm Sweden. e-mail hu@fek.su.se voice+4686747447 fax+4686747447 Abstract: The paper presents and explains a model for how brands can collaborate and be strategically leveraged together in order to create more meaningful and valuable differentiation and increasingly customized brand associations in a mature marketplace. The model adopts a more balanced perspective than existing models of co-branding and ingredient branding through the introduction of a leader brand, a partner brand and a brand association base, connecting the above entities. The key argument developed in the text is that the distribution of brand identities will probably be more important in a mass customization context, than one forever fixed and stable brand identity. 1 “The brands are the companies capital mantra is an oft repeated one, yet in reality, decapitalization is everywhere” Kapferer (2002) “As mass customization becomes part of our everyday lives, most Americans will intuitively understand how it represents an improvement over mass production. Clothes will fit better. Entertainment will be more enjoyable. Doctors and hospitals will have individualized tools to make us healthier” (1999)The Right Stuff: America's Move to Mass Customization, Policy Report, No 225. Introduction Mass customization has been discussed as a customer centric strategy enabling more individualized products based on common product platforms. (Davis, 1987; Pine 1993). More recently, global mega brands such as LEGO, BMW and the Adidas group has developed platforms for mass customized products. (Tseng and Piller, 2003) Although the technological dimension of mass customization and supply chain management has been rather extensively covered in articles and books, strategic brand management appears to be a fairly under researched area with respect to this important issue. Furthermore, to the extent that the brand has been covered, this discussion suffers from a serious dichotomy between an absent-present position for the brand. In an attempt to unfold the myths of mass customization, Piller, (2001) argued that there is an unrealistic tendency in the literature to downscale the magnitude of the brand in the mass customization discourse and make it unimportant: “Mass Customizers like Reflect.it com or myCereal are examples of an often cited trend: With mass customization, the customer becomes her own brand, creating her own brand personality. But brand names and their owners have a huge capability to overcome the uncertainties and burdens the configuration process of mass customization offers. Brands are strong signals that consumers can trust the product concept-remember that they have to pay and wait for something that does not exist during time of purchase. However, brand prepositions have to change from product based concepts to brand names representing the capability of a supplier to offer value to the customer” (Piller, 2001, p.2) The concern for a more realistic brand strategy has also been discussed from within the brand management discourse. For example, Aaker and Joachimstahler (2000) suggested a paradigm shift from single to multiple brand focus and from simple brand structures to complex brand architectures. Kapferer (2001) argued that the increasing use of technology and individualized product development would speed up a process of decapitalization away from more unified and overarching brand structures based on corporate and family brands towards complex and mixed brand structures. This paper offers a response to concerns raised by Kapferer (2003) to introduce new and perhaps more flexible models and concepts of brand management that captures some of the future trends, involving the customer and brands the surrounding environment. Aim The aim with this paper is to introduce a flexible conceptual framework for managing flexible transfer of meaning between brands using a more structured and strategic approach. A model is introduced that distinguishes between three components: the leader brand, the partner brand, and the customers’ image of the brand. Implications for mass customization and personalization are discussed at the end of the paper. 2 Key Definition The brand association base can be defined in the following way: “The brand associations managed by a leader brand (category), extended through identity transfer or leveraged through image transfer through partner brands (categories) that contributes in a positive/negative way to customer derived meaning for the brand (image) and value (equity)” Figure 1. The Brand Association Base, source: Uggla 2001. The above definition is implicitly biased toward an order between brands in a larger system; this is not necessarily a natural order since brand collaboration between two brands with perfect and symmetric distribution of power could equally well be described as brand x and y or A and B (Simonin and Ruth, 1998). However, in a real business context, a particular brand will tend to dominate or influence the other brands in the larger system. For example, Adidas is ranked as number 67 among the worlds 100 strongest brands (Business week, 2003) and a much stronger brand than its collaborative partner brands in retail. Consider how this power asymmetry with respect to strategic intent has been described in relation to the customized shoe product, mi adidas: “Adidas customization model requires the physical interaction with each consumer. As Adidas has no retail chain of its own, cooperation with retailers or other intermediaries is crucial, as management decided not to build up a whole network of own retail stores (apart from some flagship stores). This option is much too costly. However, when cooperating with retailers, Adidas wants to be the clear leader of the system (manufacturer-driven collaboration) especially as mi adidas should become a major instrument to strengthen the whole Adidas brand name, (in regard to technology and innovation leadership and customer proximity) (Piller et al, 2003, p.25-26) Within the context of the above definition, Adidas might be viewed as a leader brand and mi adidas as a silver bullet leader sub brand while partners should be viewed as partner brands at best or maybe just even as business partners in retail. In a similar manner, McFlurry ice cream from Mc Donalds should be viewed as the leader brand in relation to any kind of partner brand topping that the individual consumer prefers, be it Smarties, Nestlé crunch or Daim chocolate. In the next section, some characteristics of leader brand, partner brands and the customer within this brand system. 3 The leader brand The leader brand is the brand that owns the customer base and a channel to customer franchise and brand loyalty. It will often but not always be a corporate brand. For example, Universal Studios is a corporate brand but it is also a leader brand. Within the context of Universal Studios larger association base, the brand has established relations to a number of important partners. An important strategic consideration for the leader brand relates to how it should be positioned in relation to its partners. The roles and positions of partner brands will depend upon the more specific product market context where these partners appear. In the case of Universal Studios, a basic distinction has been created between partners, sponsors and supplier brands. Another important characteristic of the leader brand is that it defines and delimits the category towards the end customer. The brand alliance between Siemens and Porsche Design around a coffee maker, nicely illustrates this point. The product category for this new line of co-branded products is consumer electronics. This category by tradition belongs to Siemens. We understand this from the point of the consumer. Siemens is the leader brand with an almost natural category prerogative and Porsche Design is the modifying partner brand that helps to transcend and transform the natural category boundary with brand associations from another domain, including another type of core values and core competencies, such as design, emotion and self expression. In comparison, the Smart Car is an individual brand, based on implicit co-branding and subtle endorsement by Mercedes as a leader brand and Swatch as vitalizing partner brand. The partner brand Partner brand associations are defined here as associations secondary to the identity and more immediate territory of the leader brand1 Partner brand associations contribute with brand equity to the overarching leader brand and its association base through an image transfer of meaning in either of to ways, asymmetrical or symmetrical forms of collaboration. In an asymmetrical collaboration, one brand is generally more dominant than the other. Symmetrical collaboration refers to a more balanced relationship between the partner and leader brand. In some cases, partner brand associations becomes so strong and important as drivers for end consumer decision that they become a natural part of the overarching brand structure of the leader brand and transform into a partner sub brand. The Michael Jordan partner brand had that character in relation to Nike (e.g., Nike Air Jordan). The GoreTex brand has a similar relationship with the ECCO shoe brand. The structure “ECCO-GoreTex” reflects a partner brand structure. Partner brands might be distributed as co-brands with separate customer bases that also sell separately (e.g Philips-Alessi) or as ingredient brands, that only appear together with the leader brand in the offering (Riezebos, 2003). Advanced mass-customization will probably allow for a more flexible and consumer-driven selection of partner brands in general and leader brands in particular. For example, a particular customer might prefer Goretex fabric in the mi design step of the mi adidas customized shoe process. Partner brands such as Lycra, Bosh, Intel Inside, Daim-chocolate and Kevlar can thus become potent tools for the reinforcement of certain aspects of the value proposition in a mass customized society (Malaval, 2001). Customers Brand Image From a traditional brand management perspective, brand image is merely a passive construct, i.e., a received image, created through above the line activities and media advertising. The brand association base allows for a more flexible and selective brand image to emerge. The customer will derive his or her perceived equity from one or more elements related to the brands sharing the association-base. Brand values of the leader brand and 1 There is an affinity between partner brand association and Kevin Lane Keller concept of secondary brand associations, defined by him as brand associations that could be leveraged from secondary sources outside the brands own identity. See for example, Keller, K.L. (2003) “Leveraging Secondary Brand Knowledge to Build Brand Equity” Strategic Brand Management, Prentice Hall, NJ, USA. See also Lederer and Hill (2001). 4 partner brand as well as product attributes, brand personality and organizational association can be important elements in this process (Aaker och Joachimstahler, 2000). Moreover, the customer will also feed back associations to the base through a consolidation of use pattern and user imagery. In this way, outdoorsy associations that consumers might have with the Patagonia brand might spill over to Gore-Tex in this alliance. Customers brand image and final evaluation will depend on the attitude toward the leader brand, partner brand(s) and individual product preferences. This process is customer based and the perception of fit is no perfectly symmetrical evaluation, emotional fit and brand personality fit can be high, while at the same time product fit and functional brand fit can be low. Mass customization will allow for a more active and selective process where the customer might be viewed as a true basis of fit that shapes and modifies the brand image as a whole. In contrast to traditional brand management, the consumer becomes an active part in the gradual shaping, selecting and modifying of brand associations. Beside traditional components of brand evaluation such as brand and product fit (Baumgarth, 2003) brand trust, brand attitude, and level of customization in product supply and design might be of increased importance. (Baumgarth, 2003; Uggla, 2003). Particularly from a mass customization perspective, the consumer will weigh the importance of the involved brands in terms of symmetric asymmetric brand association base. Figure 2. Customer evaluation of the brand association base. Symmetric brand association base • Both brands should be highly familiar2 ideally; they should have established a top of mind position in their respective product categories. Phillips and Nike have recently developed a line of ergonomic CD and MP3 players for the fitness segment. Both brands are among the strongest in their respective product categories with a high level of brand awareness. • Both brands should be communicated and have a balanced graphic expression and representation on the product or package. The Sony Ericsson co-brand around cellular phones represents a balanced, symmetric co-branding with respect to the communicative 2 Simonin, B.L and Ruth, J.A., (1998) Is a Company Known by the Company it Keeps? Assessing the Spillover Effects Of Brand Alliances on Consumer Brand Attitudes, Journal Of Marketing Research, Vol 35 (February) pp. 30-42. 5 dimension. Both brand names are inscribed on the product, with the same typeface and size. This type of graphic expression indicates a reciprocal and balanced commitment to the brand alliance. •Both brands should be independent of each other and also sell outside the co-branded offering3. Consider the following symmetric co-branding efforts: Häagen-Dazs Ice Cream and Baileys whisky liqueur have developed a co-brand around an Ice Cream with the flavour of Baileys. Both brands are autonomous and represent distinct and separate customer bases that also sell outside the co-branded alliance. •Both brands must be prepared to assess and invest their core values in the alliance and either reinforce or complement the same values. Nokia and Marimekko have co-branded around a transparent woven package for cellular phones. Nokia is a leading global brand in cellular phones and Marimekko is a premium brand in men and women’s clothing, both with a Scandinavian brand origin from Finland. In all of the above cases, the involved brands also sell separately to established customer bases. In the ideal situation, the target groups of each brand will also try out the core product of the other brand (e.g., a women interested in Marimekko clothing with an incentive to buy a Nokia cellular phone, or a Nike equipped person, more open minded towards Phillips product range outside the more specific Phillips-Nike offering. Figure 2 Symmetry Between leader and partner brand. Asymmetric brand association base. In many cases, the brand alliance will have an asymmetrical character and the contribution to the brand alliance from the involved parties will be different and asymmetrical. Endorsement strategies and ingredient branding strategies are both based on an asymmetrical distribution of the brands associations. Asymmetrical brand alliances will often be characterised by: •A positioning based on a visible asymmetry in the graphic representation and expression of collaborating brands. The Grandma’s logotype is dominating and the Sun maid Raisins logotype is positioned as an ingredient co-branding brand in the alliance between Grandma´s Cookies and Sunmaid Raisins4 Riezebos, R (2003) “Two routes of brand development” Brand Management, Prentice Hall, pp.80-100. A strategic distinction can be made between pure ingredient branding and a brand structure based on a co-branded ingredient. In the former case, the ingredient brand does only appear in a constellation together with the co-brand (e.g. GoreTex with the leader brand) In the latter case, the co-branded ingredient can also be bought separately by the end consumer (Sunmaid Raisins can be bought in any supermarket.) 3 4 6 •The leader brand reinforces a single attribute or benefit or benefit from the partner brand. •The branded ingredient can contribute with a deepened functional dimension to the value proposition of the host brand. Any leader brand working with the Gore-Tex membrane brand leverages the “Guaranteed to make you dry” association. • One brand in the asymmetrical alliance is more familiar than the other brand The less familiar brand leverages a stronger spillover effect than the more familiar brand. • The core values of each brand is not a critical foundation and primary incentive for the alliance. The composition of different brands will be judged and evaluated by the end-customer and sometimes a partner brand will have more weigh for the end consumer than the leader brand (Uggla, 2000; Malaval, 2001; Freter and Baumgarth, 2000). Mass-customization with ingredient branding, will allow for more flexible and informed consumer decision process with respect to the balance between leader and partner brands and it will probably be an important trend for the future. Concluding Remarks With the emergence of mass-customization and enabling marketing technologies, the traditional supply side brand management perspective must be adapted and balanced with new business realities, involving customers in the development process of products and reframing the corporation as a solution provider, rather than a supplier of fixed products (Piller, et al , 2003). Major brands such as BMW, Lego and ADIDAS are already engaged in mass customisation programs (Tseng and Piller, 2003) that will modify the shaping of brand identity of the same brands and the customer based brand equity as well. Moreover, some of the winners in global brand value on the 2003 Interbrand list of the worlds strongest brands, rely on mass customization as a business strategy (Business week, 2003). The present paper offers an alternative stance and design to the formation of efficient brand strategy, adapted to a mature market setting with brand equity for hire, ongoing media convergence, multiple distribution channels and digital technologies as a norm. It is suggested that more emphasis should be put on the design and configuration of image transfer processes between brands and to and from the end customer. The holistic and inclusive nature of the brand association base model makes it particularly useful for decentralised brand planning in relation to brands in the surrounding environment and end customer preference. In this new market situation the egocentric notion of sub brands needs to be complemented by partner-sub brands (Uggla, 2003 a) and the different dimensions of a brands value proposition in terms of function, emotion and self expression will not always be crafted from one brand. Instead, part or whole of the value proposition might be transferred to the leader brand from a partner brand in the market, or customized and adapted to the preferences and brand knowledge of a single customer. Moreover, a more complex meaning of fit will gradually emerge, that cover not only brand to category, or brand-to- brand 7 interactions, but also presupposes a more active role for the consumer. In comparison, traditional fit-bases in brand extension research might include complement, substitute and perceived difficulty of making the extension (Aaker and Keller, 1990; Keller and Aaker 1992) co-branding contexts might include brand fit, product fit, brand personality fit and brand attitude for brand A and brand B respectively (Simonin and Ruth, 1998; Baumgarth, 2003). From a mass customisation perspective on the contrary, the customer should be viewed as having an active brand identity of its own and fit will also include the customer preference function in terms of customer personality, customer product fit, and customer brand attitude customer. For a specific product each of the above dimensions might be further subdivided in accordance with the individual preference function and product category type. For example, for apparel, product fit might include component choice in terms of component, style and fabric (Kamali and Loker, 2002). Implication for future research agendas Individualized marketing and the field of mass customization The ideas developed in the present paper opens up several new research options and perspectives for emerging forms of individualized marketing. The brand association base model can be a useful tool for integration of many contemporary technologies used in marketing and management with the brand and CRM. The ability to organize and share brand associations from different actors opens up new possibilities for integrating customer equity with brand equity by viewing the customer as and individual brand with is own “fit bases” in the mass- customisation process. Beside the traditional fit bases such as brand to category (brand extension) and brand to brand (brand alliances) a third fit reason should be considered and more fully elaborated in terms of “customer fit “. In some product/market context and research settings, the emphasis will be put on the fit between one the leader brand and the customer (e.g. between the Adidas brand and a single consumer in the development of My Adidas shoes, Till et al. 2003). If the individualized offering is an outcome of brand alliance however, fit must be assessed in relation to both brands associations and the association of the new co-brand conjunction in relation to the individual consumer’s specific fit-preference profile. Moreover, the brand association base can be a helpful tool for crafting and designing the emotional side of the customer relationship marketing effort. (CRM). Brand sponsorship options in mass customization contexts The brand association base facilitate important brand sponsorship decisions within marketing management with increased relevance for mass customization. With its explicit focus on leader brand (category) partner brand (category), the brand association base model can visualize and provoke more balanced reflection around the four options offered to a manufacturer, in terms of building a manufacturers brand, selling to resellers that build private brands, brand licensing or co-branding. The model hi-lights the psychological opportunity cost of building brand identity in terms of borrowing or transferring brand image and associations from a partner. Within a mass customization context, the challenge for a traditional leader brand might be to borrow, rather than building brand identity from an outside actor. For example, a leader brand such as Adidas or Nike might be forced to expand and extend their own association bases and invite several partner brands on demand, in accordance with individual end customer preferences. For example, an Adidas shoe with a combination of different ingredient brands such as Gore-Tex fabric and Goodyear rubber. Collaborative modes and customer interface improvements in mass customization contexts Piller et al. (2003) Identified four generic collaborative modes; consumer direct, manufacturer driven collaboration, retail driven collaboration and intermediary based collaboration within a mass-customization context. The brand association base model provides as opening for a refined discussion of collaborative modes on brand level within mass customization contexts. 8 The concepts of leader and partner brand and symmetric versus asymmetric modes of collaboration can be fruitful in order to develop a more structured brand architecture around possible collaborative modes. Consumer behaviour issues The brand association based model opens up a new arena in relation to consumer behaviour in general and consumer decision making in particular. In a mass customized setting, the customer will probably be more driven by goal-derived categorization in his/her own market behaviour than traditional consumer decision making according to a linear model. As a consequence the consumer might combine/recombine brands, parts, sub brands, product categories and ingredient brands in a pattern that better represents his or her individual goals. 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