Effects of line extensions in the luxury and non-luxury car industry

CCG 8th semester, Spring 2013, Aalborg

University

Andra -Mihaela Cristea

Camilla Lengaard Nrrevang

Helle Mlgaard Christensen

Kristian Skaanning Rasmussen

30/5 2013

Abstract

In the postmodern society, consumers are left with an endless multitude of choices and possibilities,

making it almost impossible to find the best choice. The automotive industry is no exception with many

brands offering a large variety of car models. To make it even more complicated, many car companies are

starting to make line extensions, which mean producing car models that in some way deviates from the

main brand. Either making smaller and more affordable cars, premium models or other models that

somehow differs from their main brand, in order to move into other parts of the market.

The purpose of this project is to investigate if these line extensions have an effect on how some of the car

brands that have made line extensions, are perceived by the consumer in comparison to the brand identity

that the companies want to convey. Herein there will also be a comparison of whether there is a difference

in mainstream brands and luxury brands, to see if it is easier for one of the categories to make successful

line extensions. The subject of analysis is four car brands; two deemed mainstream and two luxury. These

are respectively Skoda, Kia, Mercedes-Benz and Audi.

The analysis of these car brands will be based on two separate analyses; a content analysis of 15

commercials of each of the four brands, and a questionnaire analysis, where 102 people have been

enquired about their perception and knowledge of the four car brands.

The result of these analyses revealed that for three of the four brands; Skoda, Mercedes-Benz and Audi, the

perception of the brands and the brands' identities were similar, while Kia was considered a relatively

uninteresting and cheap brand, even though they seem to want to be perceived as a young and fun brand.

However, this is not the way they are being viewed. This also has an effect on the consumers' positivity

towards Kia making a luxurious car, where many of them did not believe it was a good idea, even though it

would not have an effect on the brands perception. The consumers seemed more positive towards Skoda

and Audi making line extensions, while they were not too positive about Mercedes-Benz making a small

and affordable car. Their perception of the brand would change for the worse if they made such a car.

This suggests that it is the perceived image and identity of the brand have an effect on how a line extension

is received by the consumer. The reception of line extensions seems to be more significant in the luxury

category.

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Table of contents Introduction ................................................................................................................................................................... 3

Methodology ................................................................................................................................................................. 6

Paradigm .................................................................................................................................................................... 6

Research design ......................................................................................................................................................... 7

Content analysis ........................................................................................................................................................ 8

Questionnaire ............................................................................................................................................................ 9

Data generation ....................................................................................................................................................... 10

Sampling .................................................................................................................................................................. 11

Validity ..................................................................................................................................................................... 12

Reliability ................................................................................................................................................................. 13

Literature review ......................................................................................................................................................... 15

Theoretical background ............................................................................................................................................... 25

Brand identity .......................................................................................................................................................... 25

Branding .................................................................................................................................................................. 25

Critique of Branding ................................................................................................................................................ 25

Brand Identity .......................................................................................................................................................... 27

Brand equity, Brand image ...................................................................................................................................... 31

Brand extensions and line extensions ..................................................................................................................... 36

Richard Pollays Advertising Appeals ....................................................................................................................... 42

Analysis of the companies ........................................................................................................................................... 43

Data Generation ...................................................................................................................................................... 43

Coding ...................................................................................................................................................................... 44

KODA-Background ................................................................................................................................................. 47

koda commercial analysis ...................................................................................................................................... 51

Kia Motors-Background ........................................................................................................................................... 55

Kia commercial analysis ........................................................................................................................................... 59

Mercedes Benz-Background .................................................................................................................................... 63

Mercedes Benz Commercial Analysis ...................................................................................................................... 66

Audi Brand Background ......................................................................................................................................... 69

Audi Commercial Analysis ....................................................................................................................................... 73

Questionnaire analysis ................................................................................................................................................ 76

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Data generation ....................................................................................................................................................... 76

Coding ...................................................................................................................................................................... 77

Analysis .................................................................................................................................................................... 78

General result of the questionnaire ........................................................................................................................ 79

Hypotheses .............................................................................................................................................................. 82

Comparison between the analyses ............................................................................................................................. 84

koda ....................................................................................................................................................................... 84

Kia ............................................................................................................................................................................ 86

Mercedes-Benz ........................................................................................................................................................ 87

Audi .......................................................................................................................................................................... 88

Conclusion ................................................................................................................................................................... 89

Limitations ................................................................................................................................................................... 92

Bibliography ................................................................................................................................................................. 93

Appendix ...................................................................................................................................................................... 99

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Introduction

The postmodern society has made it difficult for brands to distinguish themselves. Capitalism has allowed a free

market that generated phenomena like brand cannibalism and a fierce competitiveness. Therefore, companies

have searched for solutions able to become distinguishable and to remain on the market. They have reinvented or

launched new products with the goal of persuading consumers into buying their goods.

If a general definition of a product were to be made, three main levels would be found: the product itself with

tangible features like design, packaging etc., the added services (warranty, after sale services etc.) and the brand

name with its quality perception and reputation (Martinez; Pina, 2003, p. 432).

Brand names convey information about products and their various aspects, that are not so easily quantifiable like

reputation, status, heritage and aesthetics. This aspect occurs in the car industry as well, where brands are very

diverse and play an important role in the buying decision process, especially since car quality is difficult to evaluate

prior to purchase. Thus, consumers have to rely on the carmakers reputation. Concurrently, a cars appeal comes

not only from its functional and tangible level, but also from a symbolic intangible one, the reassurance,

distinctiveness and image of an established brand elevate the perceived value of a car and buyers are willing to

accept a higher price (Baltas; Saridakis, 2009, p. 284).

In the automotive market a specific aspect that reveals the duality residing in the brand is its structure, composed

out of the marque and the model. Baltas and Saridakis afirm that cars are typical examples of products that use a

two-level brand architecture. This implies a sub-branding phenomenon that involves connecting an establish

parent brand name to a product that has his own sub-brand identity. In this manner, a sub-brand may stimulate its

own perception of quality through a consumer inference. For example, Alphanumeric (Nissan 650Z) or foreign

names (Kia Sorento) are types of sub-brands widely used in the industry (Baltas; Saridakis, 2009, pp. 284-285).

Car manufacturers attempt to give their marques distinct images and messages. Their success or failure relies on

how efficiently they do so and on how well this image and messages correspond to the consumers desires, the

reassurance, distinctiveness and image of an established marque elevate the perceived value of a vehicle. Prestige

marques are not only sources of credibility at the functional, tangible level but also at the intangible, symbolic

level. Moreover, cars of a reputable carmaker keep stronger residual values (Baltas; Saridakis, 2009, p. 285).

However, it appears that car companies are interested in creating strong brands not just at the marque level, but

at the model level as well. These sub-brands are connected to a master brand and can therefore augment or

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modify the association with their parent brand. The most common role of sub-brands is to extend the main brand

into meaningful new segments. Following these lines, it is conceivable that model names can produce their own

brand equity, but at the same time they are still dependent on the parents name, brand equity and values. For

example, the brand name Audi A3 has its own identity, but it derives from its master brand Audi (Baltas; Saridakis,

2009, p. 286).

This project aims to look more into the sub-brand actuality, especially in the luxury and non-luxury segment. The

sub-brands will be referred to as line extensions. More on the subject will be elaborated in the theory part.

Nonetheless, it is important to mention in this introduction that line extensions arise when a strong brand is

extended to a new product, in the attempt of capitalizing on the equity that the parent brand has. While the new

product exploits the equity of the main brand, the latter is at risk of wearing out, since there is little doubt that

unsuccessful brand extensions can produce damage to the core product and devalue the parent brand (Baltas;

Saridakis, 2009, p. 287).

Continuing ahead, to the assumption that brands generate perception in the minds of the consumers, it can be

debated that what a consumer associates with a brand is the result of what he or she has felt, learnt, seen and

heard about it. Furthermore, the knowledge that consumers have about certain brands will influence their

reaction when confronted with brand-related stimuli like a brand user, a brand category or a branded product.

This knowledge can generate an impact on the attitudinal and behavioural response of customers and vice versa

(Koll; Wallpach, 2009, p. 338).

The quality of the product is also subjected to perception. Zeithaml perceived quality as the global assessment of

the consumer opinion about the superiority or excellence of a product (Zeithaml, 1998 as quoted in Martinez;

Pina, 2003 p. 436). Aaker and Keller have also made some valid points of view by demonstrating that the

relationship between the perceived quality and line extensions have positive outcomes only when the original and

the extended product create a high degree of similarity. On the other hand, subsequent studies made by

Bottomly and Holden have verified that the perceived quality can exercise a direct consequence on the evaluation

of the line extensions, no matter how high or low the fit between the two is ( Aaker and Keller, 1990; Bottomly

and Holden 2001, as quoted in Martinez; Pina, 2003 p. 436).

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Based on the lines of what was just written the following problem formulation was developed:

How does the line extension affect the differences between the brands identity and the brands image when

referring to luxury and non-luxury goods? Have these line extensions towards different target groups created a

change in the consumers perception of these brands? In what way?

Before moving on to the theoretical framework an edification regarding some of the concepts used in the research

questions has to be made. Thus, when referring to affect the researchers have decided that the concept implies an

alteration between the brand image (consumers perception) and the brand identity. So, if consumers do not see

the same values that the companies want them to, it connotes that line extensions have caused an antithesis

between the two previous mentioned concepts, that reside within a brand (image and identity). As far as

consumers perception goes, this was elaborated in this introductory part. It indicates what people think, believe

or feel as appertaining to a product.

Last but not least, since luxury aggregates itself as an elusive concept, displayed more in the literature review, it

has been decided to provide the reader with a price limit, meant to separate luxury from non-luxury goods. In

consequence, after looking at different car prices for the selected four brands, the amount 350.000 DKK was

decided upon as the borderline.

After this first overview, it has been decided to answer the problem formulation by going through the following

structure. A methodology part, in which the chosen interpretivist paradigm and the research design will be

annotated, then a theoretical framework followed a comparison of two analyses, conclusions and limitations.

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Methodology

Paradigm

When writing a project and conducting a research, it is argued that one of the most essential and important

questions that is to be answered is the question of which research paradigm the research is applicable to. The

paradigm is an important part of the project work as researchers adopt different assumptions about the world,

which influences the choice of methods and the research approach (Saunders, et al, 2009: 108). Guba defines a

paradigm as "a basic set of beliefs that guides action" (Guba, 1990: 17).

In order to determine which paradigm is pertinent to the particular inquiry, two questions are to be answered. An

ontological question: What's the nature of the world and what's the nature of the reality? As well as an

epistemological question: What is the relationship between the researcher and the world?

Depending on which author is used, the paradigmatic stance of this project is interpretivism or constructivism by

Guba's definition. The paradigmatic argumentation of this project will however be based on the definition of

interpretivism by Saunders, et al (2009). Interpretivism lies in strong contrast to the positivistic paradigm which

roots lay deep in the physical sciences. A paradigm dominated by the realist belief that the world consists of one

reality and therefore one truth, this means that everything can be generalized. The interpretivistic paradigm

focuses on people and their roles as social actors. The notion is that people interpret everyday events and social

roles by the meaning that they give these events and roles (Saunders, et al, 2009: 116).

Ontologically the world is viewed through a relativistic perception which means that the world is relative and

consisting of multiple realities (Saunders, et al, 2009:110-111). In relation to the subject of car consumption, there

can be many different situations and social factors that can influence an individual's perception of a certain car

brand. Maybe their parents owned a koda 25 years ago, giving the individual a certain view of this brand, perhaps

as a cheap Eastern European car that broke down on every family vacation, while another person can have a

completely different perception of the brand if they e.g. has only owned a new koda and therefore only has a

positive view of the brand. Thus, exists multiple different realities that can be analyzed.

Epistemologically the relationship between the researcher and the world is that of a subjective nature. This

subjective relationship is a direct result of the existence of multiple realities (Guba, 1990: 25-27). Since multiple

realities exist it can be hard to maintain an objective standpoint, due to the notion that no two people are the

same, which is also the case when it comes to people's perception of car brands. It can however be possible to find

patterns that consist throughout the general perception of different car brands. Though generalizability and the

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collection of reliable data can be difficult to achieve in a subject that is as subjective as this, patterns can prove

valuable in the process of trying to obtain reliable data.

Even though it is possible to appropriately use both qualitative and quantitative methods in any of the research

paradigms (Saunders et al, 2009: 108), interpretivism is usually associated with the use of qualitative methods due

to the subjectivity and the impression that the world consists of multiple realities as well as the aim being to

investigate people as social actors rather than generalizable numbers. As well as the idea that the aim of

quantitative data is to create an objective and systematic analysis that can generate a general conclusion

(Kracauer, 1952: 634) which is also the reason for quantitative methods being used within the positivist paradigm

due to the nature of quantitative research, and how the method fits aim of creating reliable and generalizable

data.

Even though this project has an interpretivist stance, the choice of mixed methods in the form of the

predominantly qualitative content analysis and using quantitative methods such as the survey is to compare the

collected data and uncover if the themes that car brands want to portray correlates with the perception that

people have of the companies. The argument for using a quantitative survey in a project that leans towards the

interpretivistic paradigm is that although the aim is still to understand people as social actors, the desire for a

higher degree of generalizable data is also present. In order to achieve this under the timeline of the project the

best way to achieve this was through the use of a quantitative method.

Research design

A research design can be formed in several ways depending on the purpose of the research. There are several

types of designs like longitudinal, cross-sectional, case study, experimental and comparative. However, in this

study the focus will be on comparative one (Bryman, 2012).

A comparative research strategy uses identical methods to look at different cases in order to answer questions

about the possible differences between the groups investigated. It is important to explain clear which groups are

looked at and thereby is going to be compared (Bryman, 2012, p. 72-76).

In this research a comparative design will be implemented and in order to secure a broad understanding of the

four car companies and the perception of them, mixed methods will be used. A qualitative research focuses more

on words rather than numbers which is a characteristic of quantitative research. This means that for this particular

research, a qualitative content analysis of the four companies commercials will be conducted, focusing on the

companies identities and how they position themselves. In addition, a quantitative questionnaire will be sent out

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among a selected group of consumers, in order to see how their perception of the companies and the products

are (Bryman, 2012, p. 637; Saunders et al, 2009, p. 151-153). Even though, numbers are mostly related to

quantitative analysis, percentages will be used in this research to facilitate the understanding and the comparison

of the obtained from the content analysis results. This also fits with the fact that this study is based on mixed

methods. However, it should be mentioned that even though in the qualitative part percentages and numbers are

used. The researchers have arrived to them through a subjective analysis based on their life experience and

knowledge of the subject. Therefore, the objectivity of the content analysis can be contested due to its lack of

generalizability. Following this knowledge it has been decided to allocate a qualitative nature to this part

(Saunders et al, 2009, p. 151).

In the following sections a further explanation of what a content analysis is and an introduction to the method of

questionnaires will be conducted. In addition it will be shown how these apply to the study.

Content analysis

Leedy and Ormrod describe content analysis in the following way: A content analysis is a detailed and systematic

examination of the contents of particular body of material for the purpose of identifying patterns, themes, or

biases (Leedy & Ormrod, 2010, p. 144).

A content analysis is normally used on forms of human communication such as written, spoken and visual

communication. This e.g. means books, newspapers, blogs, television, movies and music. An example of a content

analysis could be that a researcher looked at how traditional sex-role stereotypes are reflected on television.

Another example is where a researcher looks at how much space in newspapers is devoted to advertisements

(Leedy & Ormrod, 2010, p. 144).

In this research the aim is to look at line extensions (expanding a companys product line) and if they have affected

the relationship between the companies and the consumers. Also the aim is to see, if the consumers perceptions

of the brands have changed or not. Therefore, in order to see how the companies present themselves in

commercials and how it fits their identity, a content analysis of a variety of the companies commercials will be

analyzed.

In order to conduct a proper content analysis, it is important that the following steps are to be followed: The first

step is to identify the material, that should be studied, which in this research will be a selected amount of the four

companies commercials. The second step is to define a set of features to exam within the chosen material. Since

this research focuses on identity, relationship and perception, it has been chosen, as it will be explained in the

theoretical section, to use Pollays appeals to identify which values the companies are using in their commercials.

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These values will be positioned accordingly to the researchers point of views. Thirdly, if the load of material is

heavy, there is a possibility to break it into smaller segments. The last step is identifying the appeals that are

represented in the commercials and afterwards conduct an analysis of the results (Leedy & Ormrod, 2010, p. 144;

Limbistraine, 2006). In the section data generation, it will be elaborated more on which and how the data from the

commercials were collected.

Questionnaire

Parasuraman et al (2007) defines a questionnaire as: A set of questions designed to generate the data necessary

for accomplishing a research projects objectives (p. 280). In other words, it is a way of collecting data and it can

be designed in different ways. First of all, the researcher must have a clear view of how the questionnaire will help

in the research being conducted. Secondly, consider if the questionnaire should consist of non-structured,

structured questions or a mix of them. With a non-structured question the respondent answers the given question

with his/her own words, whereas structured questions mean that there is a given set of options to choose from.

Thirdly, it should be easy for the respondent to answer the questionnaire, meaning that the questions should be

easy to understand and that the layout is clear (Parasuraman et al, 2007, p. 283-286).

In this research the overall aim of the questionnaire is to get an overview of how a selected group of consumers

perceives the four car companies. The questionnaire will be created on the basis of what the content analysis

shows. Meaning that the respondents will be asked to identify which values, from a structured list, they associate

with each brand. The values on the list will be the ones who were most present, less present and not at all present

in the commercials. The purpose is then to see if the values used in the advertisements are also the values that the

respondents tick off. Besides that, the respondents will among others be asked if they see the brands as belonging

to the luxury group or the mainstream group and if their perception of the brands will change, if the companies

extend their product line in reaching another target group than the original. The full questionnaire can be seen in

Appendix 1. How it precisely was created will be elaborated on in the sections about data collection and sampling.

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Data generation

In this research, as said before, both qualitative and quantitative methods will be conducted.

This is done in order to answer the problem statement in the best possible way.

The qualitative methods will be carried out by a content analysis. The analysis will be used to get a better picture

of how the companies want to be perceived, and to investigate the extent of which the four different car brands

are using the Pollay appeals in their commercials, to affect the consumers. This will be done by selecting 15

advertisements from each brand, 60 in total, and analyzing them to see which and how many of the luxury and

non-luxury appeals are present in the commercials. The number of commercials was achieved by the use of a

random number generator at www.random.org. The generator provided the random number, 58. Bearing in mind

that a more even number is easier to divide into four, this value was rounded up to 60.

The 60 selected commercials were chosen on the basis of their versatility, meaning that they are showing the cars

in different surroundings and situation, customized to different segment of the market. Each of the

advertisements will be analyzed from the perspective of each researcher conducting this study. Thereafter, a

comparison will be conducted to gain an overall understanding of which appeals are used and why.

Afterwards the quantitative methods will be conducted through a questionnaire. It will contain closed questions to

make it easier to search for patterns in the respondents answers. However, it could be imagined that closed

questions make it more appealing for people to answer, as they are easier and faster, thereby the chances for

getting a bigger response rate are heightened.

Through the questionnaire it is expected to get a better overview of the consumers perception of the four car

brands.

After these two methods have been conducted, a comparison between the results of the content analysis and the

questionnaire will be carried out, to look for identically and unidentified patterns. This comparison will be used to

answer the problem statement.

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Sampling

Sampling for the content analysis will be done by choosing online commercials for each car brand. For each brand

there will be chosen 15 official commercials, which are in English, however they are not limited to a specific

country or time period. Each has been selected from a variety of different commercials because of its diversity.

The goal will be to get the best and the broadest view of the four car brands, and how they want to be perceived.

The sampling for the questionnaire will be a non-probability sample. This is caused by the fact that the population

is unknown to the research group and therefore there is no way of knowing the size or the effect of sampling

errors (Saunders et al, 2009, p. 213; Survey.cvent.com, 2013). The types of non-probability sampling that will be

used in the research are convenience sampling and snowball sampling. Convenience sampling will be used since

the questionnaire will be sent out through each researchers Facebook page, and thereby the sample is one that is

simply being available for the researchers by its accessibility. The problem with this form of sampling is that it is

impossible to make a generalization of the findings, caused by the population being unknown. However, many

social researches are frequently based on convenience sampling as it is more convenient, less costly and does not

need as much preparation as a probability one (Saunders et al, 2009, p. 233 and 241; Bryman, 2012, p. 201-202;

Survey.cvent.com, 2013).

Snowball sampling occurs when the researcher makes initial contact with a small group of people who are relevant

to the research topic and then uses these to establish contact with others. In this research it is done by the

researcher contacting their social network and getting respondents to post the questionnaire on their Facebook

page, thereby getting respondents that are outside the researchers network. This form of sample is not random,

since do to the nature of the population is unknown it would not be able to be a random sample. The problem

with snowball sampling is that it is unlikely that the sample will be representative of the population (Saunders et

al, 2009 p. 240; Bryman, 2012, p. 202-203). These two types have been chosen on the basis of being the easiest

and most suitable way for the researchers to get as many respondents as possible to the questionnaire. However,

it is important for the researcher to keep in mind that with these two ways of selecting a sample the control over

the sample is quite low and it is hard to find a sample that represents the population (Saunders et al, 2009, p.

236).

As the decisions of who to sample are influenced by the researchers personal judgement and because the

selection is not random this means that the sample is biased. A biased sample means that it does not represent

the population from where it is selected. Bias will also occur if some members of the population have a little or no

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chance of being included in the sample. It is in fact very difficult to remove bias altogether and to deliver a truly

representative sample (Bryman, 2012, p. 188). The members that are most likely to be selected in this research are

students and people in the same age group as the researchers, since the type convenience sampling is used. This

means that people outside these factors have little to no chance of being selected because they are unknown to

the researchers. Therefore it can be argued that the sample is biased.

As mentioned before it will not be possible to generalize a result from the findings of this project. This is caused by

the sampling type and the research paradigm.

Validity

As Bryman states, validity is concerned with the integrity of the conclusions that are generated from a piece of

research (Bryman, 2012, p. 47). With the help of validity the question of what is measured constitutes what really

wants to be measured is answered. Most of the concepts pursued to be measured cannot directly be obtained, so

methods that can calculate a latent variable have to be developed, like questionnaires. By using them every

question becomes a manifest variable that can actually be measured, designed to tease out an underlying latent

concept. (Muijs, 2004, p. 57)

The employment in the analysis of the 60 selected commercials, made it clear that the symbolic issue relevant to

the research could not be addressed without an appropriate coding frame. To do so, a latent variable, not directly

measured has been taken and applied to an instrument to indirectly measure the concepts, through Pollays list of

values. Thus, every appeal became a manifest variable, designed to reveal the underlying latent concept (Muijs,

2004, p. 57).

Content validity refers to how appropriate the manifest variables, in this case Pollays appeals and the survey, are

in order to obtain a fair measurement of the latent concept, which was present in the commercials and in peoples

perception of the brands, and that needed to be identified through qualitative and quantitative methods. The

theory was also of great importance in determining the content validity, since a proof on how well the subject and

its concepts was known, had to be made.

An extensive research upon the theories and the subject this paper is based on have been made in order to

achieve content validity. Therefore, studies on Pollays appeals and their relation to advertising and the

development of materialism have been conducted, and as it was mentioned previously, the list is commonly

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referred to as one of the most comprehensive sets of advertising appeals, a suitable instrument even when not

used in its entirety (Dahl, 2002, p. 46).

Another form of validity present in this research is data oriented validity meant to demonstrate how well the

analysis methods accounts for the information inherent in available data. The four car brands were chosen based

on their well established status as manufacturers in two different consumer segments and on the availability and

diversity of commercials that these companies have, not just for a particular line-up but for their line extensions as

well. Moreover, the respondents of the survey were selected on age basis and occupation. The younger ones

might be more aware of the changes occurring within the brands, while the older ones might be more experienced

and thus, might have a more reliable opinion about the cars, since some might even own one.

Sampling validity is the degree to which a collection of data are either statistically representative of a given

universe or in some specific respect similar to another sample from the same universe so that the sample

can be analyzed in place of the universe of interest. In content analysis, it is the degree to which the

collection of data contains with a minimum of bias a maximum of relevant information about the universe,

correcting particularly for the bias in their selective availability. (Krippendorff, 2004, p. 73). For the first part of

the research simple random sampling was chosen, so that each unit of the population within the sample frame

could have a fair chance of inclusion in the sample. By proceeding in this manner, the changes for a representative

sample and a smaller sampling error were increased.

On the other hand, for the survey part the situation is the opposite since convenience sampling is used, therefore

some units of the sampling population were more privileged than others.

Reliability

Reliability concerns with the repeatability that the studys results might have and it is likely to be in connection

with the research (Bryman, 2012, p. 46).

In this projects case, when referring to reliability it is important to mention the inter-observer consistency,

because a great deal of subjective judgement is involved in the research part, especially in the content analysis

where a decision on how to categorize the media items had to be taken (Bryman, 2012, p. 169).

Another concept related to this type of reliability is intercoder agreement. Krippendorffs understanding of the

difference between agreement and reliability is that while agreement is what we measure, reliability is what we

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wish to infer from it. Moreover, the most important interpretation of reliability is said to be reproducibility

(Krippendorff, 2004, p. 215). Following this judgement, the research took into consideration the authors

recommendations of an agreement coefficient becoming an index of reliability. This index was applied to proper

reliability data. Krippendorff describes such data as a result of duplicating the process of describing, categorizing

or measuring a sample of data obtained from the population of data whose reliability is in question (Krippendorff,

2004, p. 3). These duplications were achieved by the use of four coders, working independently from each other,

applying the same coding instructions to the same units of analysis.

Step two is actually part of the coding process, regarding foreboding the assumption that the knowledge is

necessarily correct. More specifically, what mattered was not truth, correlations or predictability of each coders

use of categories, but the agreements or disagreements among the data, building a coefficient on the observable

coder idiosyncrasies (p. 3). The final step is assuming that the agreement coefficient is in correlation with the

conditions under which enable to rely on imperfect data.

Moreover, in order to ensure the highest possible reliability, threats such as a poorly executed coding scheme,

inadequate coder training or coder fatigue were eliminated in the best possible manner.

As for the second part of the research, the reliability of the survey can be questioned, due to the subjective nature

of the answers provided. Thus, the study cannot be repeatable over long periods of time, since peoples opinions

are likely to change. Another reason that can determine its incapacity of repeating itself, is because the image of

the brand is also dynamic.

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Literature review

The present study will focus on a gray area that the brand extensions and line extensions have created both in the

luxury segment and in the mainstream one. In other words, the research aims to analyze to what extent the brand

image and the brand identity has been changed with these line extensions. In order to do so, a great deal of

attention is going to be paid towards the perception that people have about the brands in question. Because the

gap between luxury and mainstream goods has narrowed down, due to line extensions, the increase in income

and living standards and to the rebranding strategies, the car industry has taken into consideration these factors

and some car brands, that in the past were exclusive luxury products have started addressing the mainstream

segment and vice versa. This aspect can be proved by the fact that car brands such as Mercedes and Audi (Audi,

2013 ; Mercedes, 2013) have started manufacturing smaller and more affordable cars, therefore accommodating a

broader, more mainstream segment. At the same time, these brands have a large history behind them and the

values that have helped build their brand identities are the same as they were in the past. Ever since these brands

have penetrated the market, they have been considered as luxury goods and that is why they are highly sought

after. Therefore, a more affordable model can become popular within the mainstream segment (Audi, 2013).

At the same time, car brands such as koda (koda, 2013) and Kia (Kia, 2013) have started manufacturing better

cars in design and technology. Still, in comparison with the above mentioned brands, these are more affordable

and people do not tend to see them as luxuries. That is why they have chosen a change in their brand identity and

for the last couple of years they have tried to rebrand their products either through mergers with bigger and more

successful companies like Volkswagen, or through a change in the communication strategy and in the production

design.

So, starting from the research question: How does the line extension affect the differences between the brands

identity and the brands image when referring to luxury and non-luxury goods? Have these line extensions

towards different target groups created a change in the consumers perception of these brands? In what way?,

in which by affect refers to peoples perception and to the image that they have in respect to the four brands, a

need to clarify a series of concepts like brand identity, brand image, line extension rises. These will be debated in

the theoretical framework of this paper. However, even with a clear image of these concepts, a full understanding

of this research, cannot take place without providing the reader with an in-depth view of what luxury is and how

this concept has evolved over time. Since this project is interested in some brands that are considered luxurious,

this part is considered vital for further steps.

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So, what exactly is luxury? There has been significant literature written on this subject. Authors were interested in

luxury in the fashion sector, others in counterfeits and some even in the luxury consumers. Therefore, this review

aims to look at what they had to say in respect to luxury and to sum up, in a critical manner their points of view. In

pursuance of this, academic journal articles and books which focus on luxury are going to be consulted.

As Kapferer says, luxury is an elusive concept. Most people can identify which brands can be called luxury and

which cannot, but despite this most people find it hard to provide a precise definition of the term luxury

(Schroeder et. Al., 2006, p. 67). Thus, he proposes a multifaceted approach to luxury, from an economic, semiotic,

sociological and psychological angle (Schroeder et. Al., 2006, p. 68).

Economic approach

For economists, goods that belong to the luxury segment are an oddity, in economic terms, luxury objects are

those whose price/quality relationship is the highest on the market. However, for an economist quality means

tangible functions (Schroeder et. Al., 2006, p. 68).

Therefore, luxury brands are the ones that have been able to justify a higher price in comparison to other products

that have comparable tangible functions (Schroeder et. Al., 2006, p. 68). But is this definition enough? If it is to be

considered, that would mean that all products can become luxurious, as long as they have a higher price than the

competition. Another economic perspective is Veblens, one of the first authors who analyzed luxury goods in the

social economic context. These initial economic theories focused on distinctions between luxury and necessity

(Klaus-Peter Wiedmann , Nadine Hennigs (Eds.), 2013, p. 40). Today, the focus has switched towards the influence

of pricing strategies, which associate luxury with a high or exclusive price. Based on the connection that was

created between price and exclusivity, Groth and McDaniel developed the so called Exclusive Value Principle,

through which marketing strategies could achieve brand exclusivity (Groth, J.C./McDaniel, W. as quoted in Klaus-

Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p. 40). According to this principle, the market price for a product is

the sum of pure utilitarian value and the exclusive value principle. The pure utilitarian value refers to the utility

that a product has, and in the case of luxury goods, sources of utility include aesthetic design, quality, excellence

of service, while the exclusive value principle incorporates external factors like advertising and promotion

campaigns, that motivate the consumption of such goods (Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p.

40). So, basically from this perspective luxury goods are the ones that have a higher price due to their higher

quality. Good marketing campaigns are highlighting such features, and trough this way they can generate

consumer behaviour. Unfortunately, the economic angle is not enough to understand a concept that has been

used since antiquity and that has changed throughout history.

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Etymological approach

If a look at the etymology of the word is to be taken, it is considered to have some connotations with Lux, the Latin

word for light (Schroeder et. Al., 2006, p. 68). But why do people associate luxury with light? Apparently, the

answer resides in the fact that they are flattering the ego, and thus the semantic halo is justified. If one believes

that luxury comes from Lux, one accepts the fact that just like light luxury glitters, is enlightening and brilliant:

each and every item is like a jewel and shines like gold (Schroeder et. Al., 2006, p. 68). The fact that luxury can be

seen, just like the light, is important. Luxury is meant to be visible by oneself, but most importantly it is important

to be seen by others. Despite this, the real etymology of the word comes from agriculture where Luxus means

growing apart, or in a non-straight manner (Schroeder et. Al., 2006, p. 68). Therefore, Luxus is a difference, a

step-aside from the normal conventions. Furthermore, if the origins of the word are researched more, they can

also relate to luxuriance, which means something that is characterized by the richness, abundance and

extravagance, something that tends to excess (Websters Dictionary as quoted in Schroeder et. Al., 2006, p. 68). In

other words, etymology is trying to say that luxury is meant to be rich, extravagant, is supposed to excess and

more importantly is supposed to be visible.

Psychological approach

But if its meant to be perceived by others, this means that it has some sociological and psychological implications

as well.

Psychology states that if the word luxury has only one root, then its meaning is shaped by the local culture. Luxury

brands are global, however there are hidden differences of understanding when it comes to dealing globally.

There is an illusion of shared understanding, but research has shown that among the same age group, the term

luxury was not associated with the same attributes (Schroeder et. Al., 2006, p. 69). Another psychological view

defines luxury from the consumption motivations point of view, based on interpersonal or external factors like

suggestions or interactions with others, opinion and approval, and on personal or internal factors such as

emotions and feelings that can stimulate the consumption (Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013,

p. 40).

Thus, people buy luxury products for social recognition, positive impression and status or for hedonic and

pleasure-seeking purposes (Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p. 40). As a matter of fact, Dubois

and Laurent pointed out that emotional values are vital for luxury brands, because due to them a majority of

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people subscribe to the hedonic motives for buying luxury for their own pleasure (Dubois, B. /Laurent, G. 1996 as

quoted in Klaus-Peter Wiedmann , Nadine Hennigs (Eds.), 2013, p. 40).

The fact that marketing theories on luxury brands have a ground in economic and psychological theories is

acknowledged, since they primarily deal with the differentiations of luxury from non-luxury goods, as well as with

defining salient product features that might constitute luxury (Klaus-Peter Wiedmann , Nadine Hennigs (Eds.),

2013, p. 40).

Vickers and Renand are two authors who developed a three dimensional model that differentiates luxury brands

from the non-luxury ones based on the symbolic meanings that these brands have in terms of functionalism,

experientialism and symbolic interaction. In their vision, functionalism is defined as the features of a product, such

as superior quality, durability, strength, confidence of item's replacement, able to solve a problem or at least a

potential one. Experientialism is based on features like traditional and exclusive design, special richness and tone

of decoration, elegance of days gone by, that can stimulate hedonic consumption and sensory pleasure. Last but

not least, symbolic interaction refers to products components, like a prestigious brand name or a recognizable

designer style, that relate to status, group membership and self-enhancement (Vickers, S.J./Renand, F. 2003 as

quoted in Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p. 40).

Sociological and historical approach

Moving on, to what sociology and history have to teach about the concept, if a look back in time is taken, for

decades luxury has been the appendage of the aristocracy. In order for one to be invited and live at the court of a

king or queen, he or she had to stand up to the royals rank, by spending a large amount of money on goods of the

highest quality.

Since aristocracy was a non-working class, these goods were judged by their rarity and by the amount of pleasure

they delivered, and not by their functionality. For example, the clothes that the court designers were appointed to

design were made from the rarest material and the most sophisticated fabric. Furthermore, being appointed to

design something for the monarch was a great honour since luxury was the product itself and it was supposed to

be rare, unique and unseen before (Schroeder et. Al., 2006, p. 69).

The situation has changed, though. In time the designers, the obscure tailors, opened shops and their name made

them famous. It was a turning tables phenomenon, because the aristocracy and the rising bourgeoisie started

coming to their stores, fashionable places to patronize, where one had to be seen (Schroeder et. Al., 2006, p. 69).

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The name of the shop along with the name of its creator started receiving visibility and importance, since it was an

indicator of if one was trendy or not, and it was also an indicator of the amount of money one was willing to pay

for certain goods. This visibility was of extreme importance for the bourgeoisie, found in a constant struggle to

devoid of aristocratic lineage and to create its own hierarchy of work and money. Thus, since luxury was most

visible, it positioned the owner (Schroeder et. Al., 2006, p. 69).

Advancing in history, it can be argued that the luxury market is no longer described by income levels, spending

budgets or personal wealth. It has become something accessible for everyone. Furthermore, in the American

society of the 21st century, where the economy is patronized by information, luxury is where the action is, no

matter where you start (Danzinger, 2005, p. xvii).

New luxury-old luxury

Todays luxury market can be described with an innovative concept called the new luxury. The official birth year

of this new luxury is 1984, when President Reagan won his second term. By that time the economy had rebounded

from a national recession and the American consumerism returned in its full force. The presidential couple set the

tone for the hoi polloi to follow, when they spent $11 million for the most extravagant inaugural celebration

that the history has seen, at that time. In addition, encouraged by Reagans commitment and enthusiasm for free-

market politics, Americans felt safe about the economy, so this rising consumer confidence helped the economy

rise with 7.2 percent in 1984. Based on this growth, two landmark events took place. That same year Bernard

Anault purchased the luxury fashion house Christian Dior, which later on became the luxury goods conglomerate

LVMH, a luxury empire that extends across jewelry and watches, wine and spirits, fashion and leather goods,

cosmetics and perfumes and luxury retailing. The second occurrence was the launch of the super premium

American Express Platinum Card, a card designed for luxury consumers passionate about travel (Danzinger, 2005,

p. 1-2).

Following these two trendsetters, the decade of the 90s was an exciting one for marketers, who staked their claim

to luxury. While the availability of luxurious goods was expanded to a wider range of consumers, the emergence

of a younger, more affluent luxury consumer was transforming the luxury market from its traditional conspicuous

consumption model (Danzinger, 2005, p. 7). These young consumers had a passion for self-indulgence and an

iconoclastic world view that disdained conspicuous consumption for the sake of conspicuous consumption

(Danzinger, 2005, p. 7).

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The model for the new luxury market was based on an individualistic consumer, who was driven by new needs and

desires for experiences. This paradigm shift in the luxury segment from conspicuous consumption to the new

experiential luxury was marked by a change in the definition that people attribute to luxury. Thus, old luxury was

about attributes, features of the product and the appeal derived from prestige and status, while the new luxury

thinks about the product from the consumers point of view, it focuses on the experience of luxury enclosed in the

goods and services they purchase. Rejecting status and prestige, the people that consume luxury today have

embraced a democratic ideal of the concept, they feel that luxury is for everybody, but at the same time it is a

notion that is different in meaning for each and every one (Danzinger, 2005, p. 7-8).

Concurrently, for the new generation of baby-boomers the focus was more on the desire for living the good life,

they did not care so much about what they had or what they owned, but focused more on the pleasure that they

received from that specific product. The experience was what mattered (Danzinger, 2005, p. 13).

The word luxury is recognized as the opposite of necessity, at its roots being experienced as a voluptuous self-

indulgence. However, during the past century, luxury has lost much of the decadence and moral taint that it

implied. So, during the 20th century it was used to describe a product, an industry and an objective thing, its

meaning started including descriptions like expensive, the best of the best, affordable only to the rich, and an

object of high quality. For the majority part of the 20th century, luxury was used to describe the elite lifestyle, but

during the mid-1980s the baby boom generation caused a shift in paradigm towards an experientially based view,

as mentioned before (Danzinger, 2005, p. 13-18).

The new luxury term refers to more recent and more affordable luxury concepts. It is often associated with the

democratization of luxury, but the paradigm shift that represents new luxury is the consumer centric way

people are defining luxury as an experience or feelings. In other words, old luxury is about the thing, whereas new

luxury is about the consumers experience (Danzinger, 2005, p. 19).

Danzinger affirms that this consumer centric definition focuses on the feeling, on the experience, the personal

dimension that consumers have towards luxury. Moreover, when referred to luxury from the consumers

experiential perspective, the brand becomes irrelevant. All that matters is how brands can deliver or not the

promised feeling of luxury or the luxury experience (Danzinger, 2005, p. 19-21).

On the other hand, Glyn Atwal and Allistair Williams, both Marketing Professors at different universities, define

new luxury as products and services that possess higher levels of quality, taste, and aspiration than other goods in

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the category but are not so expensive as to be out of reach (Silverstein , M . And Fiske , N . 2003 as quoted in

Atwal, Williams, 2008, p. 339).

An example of this new direction that luxury has started following was the launch of a clothing line by Karl

Lagerfeld or Stella McCartney for the fashion retail chain H&M. By manufacturing such products, middle-market

consumers have started trading up for products that met their aspirational needs, which scholars call the

luxurification of society.

Furthermore, the quoted authors have even compared the contemporary luxury consumption with

postmodernism, a western philosophy that encourages people to think away from the modern, functional and

rational, also described as the evasion of the subconscious. In terms of the experiential marketing, the

postmodernist discourse has two relevant aspects: hyper-reality and image. The first one occurs when the

distinction between real and unreal is blurred, and the prefix hyper signifies more real than unreal. As an example

that can help the reader grasp this concept is a situation in which the real that is the environment is no longer a

given, but instead it is a reproduction by a simulated environment, which does not make it unreal, but rather

realer than real. However, this hyper-reality has some negative implications, since it can induce a loss in the sense

of authenticity, and one cannot distinguish reality from non-reality anymore. For example, visitors at the

Kempinski Hotel at the Mall of the Emirates can enjoy an Alpine experience indoors, in the worlds third largest

resort of this nature. The result is that in contemporary societies people consume the imaginary, and no longer

focus on the meanings of the images (Atwal, Williams, 2008, p. 339-340).

The two authors also acknowledge that there has been a change in marketing because of the branding,

communication and information revolution that the world is facing at the moment. Therefore, marketers have

started viewing consumers as emotional beings concerned with achieving pleasurable experiences. So, in the end

it all comes down to experiential marketing in the luxury segment. This experiential marketing, a growing trend

worldwide, was first introduced by Pine and Gilmore. According to them, when a person purchases an experience

he expects to spend some time enjoying a series of memorable events, in which the company/brand promises to

engage him in. Thus, this new way of marketing is about taking the essence of a product and amplifying it into a

set of tangible, physical and interactive experiences that reinforce the offer (Atwal, Williams, 2008, p. 341).

Among the experiential aspects of consumption Holbrook and Hirschmann identify the following: feelings, fun,

fantasies (Holbrook , M . B . And Hirschman , E . C .1982, as quoted in Atwal, Williams, 2008, p. 341).

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Returning to Danzinger, she proposes four dimensions identified and described by consumers that put the new

and old luxury into perspective. The first one is luxury as a brand. Only 24% of the luxury consumers she

interviewed agreed with this one. So, according to them luxury is defined by the brand of the product. Brands like

Mercedes Benz, Tiffany, Rolex, Cartier, Gucci, Prada and Rolls Royce are among those luxury brands that

consumers have mentioned. These are status conferring brands that took decades to create. They have a heritage

and can emotionally connect with the consumers. Still, even though some of these brands have achieved the

luxury status, some might not consider them as a luxury, since this concept is subjective and it connects with ones

individual passion. The second dimension is luxury as luxe product features. People are more likely to describe

luxury as specific qualities, features that are generally recognized as belonging to a luxury goods category. Thus, a

platinum jewelry is considered luxury while the golden one is not. Among the most important features people

have included: handcrafting, superior quality, cutting-edge design, long lasting, and careful attention to detail.

Within the experiential dimension, the intrinsic product features that can transform something ordinary into

extraordinary are the ones that truly matter. For example, a person might select an ordinary car brand but equip it

with all sorts of luxurious features. So, instead of buying the Nissan Infinity, the luxury car from Nissan, you can

buy the Nissan Altima with the full luxury package. You might not have the brand value that the Infiniti confers,

but the full package experience can make you feel more satisfied since you paid less and got the virtual luxury car.

Mercedes Benz is using this strategy. The company is trying to extend down into the near-luxury price range. Their

new way of thinking is why not deliver the Mercedes Benz brand features and qualities at a more affordable price,

this way they can build brand loyalty, because they are meeting automobile consumers at nearly every price point

throughout their lives. By doing so, 30+ C-class consumers can become 40+ E-class drivers, then on to a 50+ S-class

buyer and then return to a C-class model after retirement. Moving on to the third dimension, luxury as non-

necessities, some consumers feel like luxury is more of what you want and less of what you need. It is different

from one person to another. For example, what luxury is for some, is a way of living for others. Last but not least,

the fourth one is luxury as the power to pursue. This ultimate expression is defined as the power to pursue

passions and dreams. Totally separated from the intrinsic product-based definition of luxury, this dimension makes

us think about that place deep inside where luxury resides (Danzinger, 2005, p. 21-26).

The more luxury is analyzed from consumers perspective, the bigger it distances itself from the marketers point

of view. So, if luxury is about the experience and not about the item per se, then it is no longer a noun, but a verb

instead, connoting the action and the delivery of the luxury experience and feeling to the consumer (Danzinger,

2005, p. 27). More active than passive, luxury becomes luxury when the individual experiences it, the object,

thing, brand that delivers the luxury feeling is a catalyst for the feeling, but it isnt the cause of the feeling. The

luxury feeling comes from how the consumer personally interprets the luxury (Danzinger, 2005, p. 21-26).

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Another article that deals with the old luxury-new luxury comparison is Probing brand luxury: A multiple lens

approach by Karen Miller and Michael Mills.

The authors quote Nueno and Quelch (1998), who see the old luxe, derived from Latin, as indulgence of the

senses regardless of the costs (Miller and Mills, 2011, p. 43). They also associate old luxury with a more product-

centered approach, with rare or hard to obtain products, handcrafted and of excellent quality, where high prices,

aesthetics and history are defining factors. The old luxe consumer is a person of good taste, savvy, he does not

need to see the label in order to recognize the brand and most importantly is willing to be put on a waiting list, so

that he/she can receive a limited edition good, which he/she can share with significant others (Miller and Mills,

2011, p. 43).

As for the new luxury part, the two agree that with the new luxe the products are more accessible and that

symbolism is more important than aesthetics. The new luxury consumers make money quicker, are mobile,

flexible, willing to trade-up in order to obtain and display the luxury (Miller and Mills, 2011, p. 44). Moreover, to

the new luxury consumer the tangible elements of brand luxury are a badge, a measure of social stratification by

which consumers measure their own self-worth and the worth of others by the luxury brands worn and/or

conspicuously displayed(Gao et al, 2008; Park et al, 2008 as quoted in Miller and Mills, 2011, p. 44).

Uniqueness is an attribute associated with old luxury, a brand element linked with originality, scarcity, creative

excellence and imagination, innovative design, symbols, logos and package design. However, Miller and Mills

argue that uniqueness, culture, country of origin, success and leadership are not strictly limited to luxury brands.

Instead, they can be associated with brands in general (Miller and Mills, 2011, p. 44).

If luxury is seen as a more affordable experience, then where is the rarity in it? Is it not meant to be rare, to be for

the classes and not for the masses?

Kapferer seems to identify two visions of luxury separating the East and the West: one associates luxury with

rarity, while the other one does not. For instance, this is the reason why the well known brand Louis Vuitton

makes 40 percent of its sales in Japan, where most office ladies can be seen carrying such a bag. Still, if this were

to happen anywhere else in the Western world, the brands equity would be harmed. So, how can a brand grow in

these conditions and still remain rare? The answer can be found in the distinction between actual and virtual

rarity. The actual rarity resides in the craftsmanship and in the ingredients, like a handbag made out of ostrich or

24

sharkskin, quite rare and quite desired. But when the companies are not using rare materials, then they should

create impressions of rarity, virtual rarity (Schroeder et al, 2006, p. 70).

Luxury consumers

Going forward, in a literature review about luxury, the consumers cannot be overlooked, since without them,

brands cannot call themselves brands anymore. So, the question is why do people buy luxury goods?

A lot of consumers spend significant amounts of money from their income on luxury goods, luxuries being

products with a premium quality and a design that has an aesthetic appeal. However, the higher income is not a

sufficient explanation for luxury acquisitions. Even people that have a lower income buy this type of goods. So why

is that? If the classical economic theory were to be considered, according to which humans have a rational buying

behaviour, then there cannot be a reason for why they purchase products which are so expensive and do not have

an additional utilitarian benefit, compared to their cheaper counterparts. Despite this, luxury offers some

psychological benefits which the cheaper products do not (Vigneron and Johnson, 2004 as quoted in Hudders,

2011, p. 609-610).

Miller says that the luxury brand consumption occurs on account of their power to signal hidden information, such

as wealth, status, personality characteristics about the owner to significant others (Miller, 2009 as quoted in

Hudders 2011, p. 610). Generally, the motives for buying expensive brands can be summed up in three categories:

the need for uniqueness, the need for conformity and need for communicating ones own identity. First, luxuries

can be used to distinguish oneself from the lower classes (Veblen 1899/1979, Mason, 1981 as quoted in Hudders,

2011, p. 610).

Leibstein refers to the above described phenomenon as the snob effect. This effect appears when a consumer

can afford a luxury brand when others cannot. Also, when a consumer makes a purchase just because he/she

wants to conform to the consumption pattern of the group they reference themselves, the same author calls this

the bandwagon effect(Leibstein, 1950 as quoted in Hudders, 2011, p. 610).

On the other hand, Thai argues that in general, the impressive motives for buying luxuries are divided into two

components: emotional and functional, since firstly the consumers are searching for personal rewards and

pleasing qualities and secondly they are looking for brands that offer a superior quality (Thai, 2005, as quoted in

Hudders 2011, p. 610-611).

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With the above presented in mind, the next part of the project will focus on explaining the brand related concepts,

mentioned in the beginning of the review.

Theoretical background

Brand identity

The following section will account for the theoretical background of brand identity, mainly focusing on the

theoretical works of David A. Aaker. During this exploration of the concept brand identity, the branding in general

will also be touched, as well as a modern critique of the concept of branding as a marketing tool.

Branding

In the modern world of marketing, the branding imperative has become one of the major buzzwords. Starting in

the 1920's with Marlboro patenting a particular shade of the colour red because they thought that it could make

consumers associate that shade of red with the Marlboro brand, therefore utilizing this as a particular brand

symbol. However, the concept of making associations between different brands/corporations and colours or

different objects has been around for much longer. As an example, the Roman Emperor made his soldiers wear a

certain kind of armour, which came along with a set of values. It was easily recognizable and conferred a certain

status etc. Branding is also something that is associated with the tradition of cattle branding where farmers burn

their brand on the hind of their cattle, so potential buyers know that this meat comes from a certain farm. It was a

symbol of quality, making the purchase decision easier for potential buyers. Lately the concept of branding has

really made its move into the field of marketing. This is largely due to the increased variety of products and

services, rendering them indistinguishable from each other. The consumer is faced with infinite choices in

products, therefore differentiation is imperative. It is important to stand out and be remembered in order to sell a

product or service. Good brands build companies while ineffective brands undermine success (Wheeler, 2006: 4).

Critique of Branding

Not everyone believes that branding is such an effective marketing tool. Augustine Fou calls branding ineffective,

irrelevant, irritating and impotent and says that it only plays a small role in the overall purchase decision (Fou,

2009). Fou points out that all these different brand tools are just a way of getting people to purchase products

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without offering anything innovative. Many companies spend millions of dollars on using brand strategies, making

consumers believe what they want them to believe about the companies, and blasting these messages at the

consumers through advertising campaigns (Fou, 2009). Fou argues that the exact shade of pink on Victoria's

Secret's logo in reality has little to no effect on the buying decision of the consumer.

But the biggest problem Fou has with branding is that it seems old fashioned. With the digitalization of everything,

it meant that consumers could be able to communicate with each other offering reviews and ratings as wells as

feedback and recommendations. This means that the advertising created by the brand is not the only way that the

consumer can get information on products. They now have many different sources of varying degrees of

trustworthy and objective information. Fou claims that many times the opinions of peers rather than the claims

from the brand are what affects a consumer's buying decision, making branding claims irrelevant (Fou, 2009).

Furthermore, he states that in order to create sales, they should not focus on elaborate branding campaigns but

should rather focus on making good and innovative products. If the products are good, then that will show

through the sales. He mentions Apple as an example. They have never stated that they made aesthetically pleasing

products that are easy to use, but this is what many consumers thought and that has stuck with them. So his

argument is that true brands do not do elaborate branding campaigns, and make up things that the companies

want the consumers to think about them. They create a reputation through their products, so the brands become

a symbol of this reputation and help new customers in making a purchasing decision (Fou, 2009).

However, this does not mean that branding is completely useless, but it states that the old way of branding does

not cut it anymore. It is about, being true to the brand, and create products that the consumer can vouch for

instead of trying to brand a company into being something that it is not, in order to sell their products, because

the consumers simply do not believe that anymore.

Fous contribution is acknowledged, since he proposes a series of valid challenges to the use of branding in

marketing. However, this paper sides with David A. Aacker, who believes that an effective brand is essential to

getting customers to identify and distinguish your product (Aaker, 2010). Plus, the history that stands behind two

of the brands the project focuses on can form an argument against Fous attitude towards branding. It is true that

they have brand elements such as logos, slogans, sounds, smell, advertising and so on, but people have started

trusting companies like Mercedes Benz and Audi mostly because of the quality they are provided with, quality that

over time has transformed into an experience. And since mentioned product quality was mentioned as an

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important part of the trust building between a company and its target group, could this quality aspect be included

in the brand identity concept? And what is brand identity exactly?

Brand Identity

The brand identity is the visual and verbal representation of a brand and it is a portrayal of the way a company

wants to be perceived by the consumer. It is a depiction of a company's core values that manifests itself through

the name, logo and other communicatory tools that are present in the company's communication both internally

and externally. A good brand identity is memorable, authentic, meaningful, differentiated, sustainable and adds

value to the brand. Having a strong brand identity helps build brand equity (Wheeler, 2006: 6). David Aaker

organizes brand identity around four different perspectives: Brand as Product, Brand as Organization, Brand as

Person and Brand as Symbol (Aaker, 2010).

The Four Traps

These four perspectives are determining for the brand identity, and they are a portrayal of the values and

properties that the company wants to be associated with. Aaker also talks about four traps that brand strategists

often fall into. These are the Brand Image Trap, the Brand Position Trap, the External Perspective Trap and the

Product-attribute Fixation Trap. These four traps can lead to creating a brand identity that is ineffective and/or

dysfunctional for the company (Aaker, 2010).

The Brand Image Trap is based on the knowledge a company has of how the consumer perceives the brand. This

knowledge can be beneficial for the company and give some important background information when working

with a company's brand identity. However, due to lack of resources, patience and expertise this information

sometimes creates the brand identity purely based on the brand image as perceived by the consumers. This

means that the consumer is the one that determines what values belong to a certain company. Of course,

companies can regard this as a potential problem since the brand identity should contain their visions and their

soul (Aaker, 2010).

The Brand Position Trap usually happens when the information of the brand identity is passed on to the

developers of the communication programs. Sometimes this transition causes a shift where the properties and

benefits of the brand become central rather than the personality of the brand and the brand symbols. This often

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leads to the creation of a new line of marketing material that does not cater to the identity of the brand (Aaker,

2010).

The External Perspective trap occurs when the brand strategists only focus the brand identity on creating a larger

revenue for the company and forget that a brand identity can play a crucial role internally in the company. By

making sure that the strengths, values and visions of the company are an integrated part of the employee's

perception of the company, it is easier to ensure that the employees work goal is oriented and strives to achieve

the visions of the company (Aaker, 2010).

The Product-attribute Fixation trap occurs when the strategic and communicatory marketing is primarily focusing

on highlighting the attributes and benefits of the product. By doing this the brand identity can become hard to

differentiate from other brands. At the same time it becomes easier for other brands to copy the brand identity.

This kind of marketing appeals to the rational consumer who either does not understand the information

provided, or is more interested in the design, status, etc. that are connected to the product. If a company is

associated with a certain attribute it becomes harder to expand the marketing later on, and it becomes even

harder to adapt the brand to a new and changed market (Aaker, 2010).

The Four Perspectives

Brand as Product

The Brand as Product is the first of the four perspectives that Aaker mentions and that have an important role in

creating a brand identity. Even though the Product-attribute Fixation trap states that product attributes should be

avoided when creating a brand identity, it is important to relate to different elements of the Brand as a Product.

Aaker relates to this perspective by looking at the visual aesthetics of the product, and the attributes and

characteristics of the product. He mentions six elements that describe the product: Product scope, product

attributes, quality/value, use occasion, users and country/region (Aaker, 2010).

The product scope establishes the product-category that the brand belongs to. This element is important because

it establishes which product/products the company is associated with. In this element it is important that products

are associated with the brand rather than the brand being associated with certain products. For example that a

consumer thinks of McDonald's when they want a burger, rather than just thinking of burgers when McDonald's is

mentioned (Aaker, 2010).

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Product Attributes establishes the attributes and benefits of the products. It is working with this element when the

Product-Attribute Fixation trap can become a danger, if the strategist only focuses on product attributes such as

price, design and quality (Aaker, 2010).

The quality/value element is concerning the quality and/or the value of the product. A lot of companies emphasize

on the quality of their product in their marketing, which makes this an element in their brand identity. It is

important to consider the value of the product since focus on the quality of the product creates a continuous

demand from the consumer about the price and the products (Aaker, 2010). It is essential to create a balance

between quality and value in order to make sure that the product and brand is perceived in the desired way.

Use occasion determines what the brand is associated with. When creating a brand identity it is important to

consider if the brand should be associated with the use of the product, or if it should be associated with an

emotional feeling that is connected to the company as a whole. A restaurant can for example be associated with

the food there, or maybe with a certain interior decor that is special to that restaurant (Aaker, 2010).

Users and country/region are the last two elements that Aaker mentions in the Brand as Product perspective. The

users element is concerning the opportunity to market a product to a certain group of users, if the product has

some attributes that are attractive to a certain group of consumers (Aaker, 2010). The country region element is

concerning the opportunity to associate a product with a certain country or region, which could have some

benefits since some countries of regions are known for quality within a certain product group (Aaker, 2010). This

could e.g. be wines, where certain countries such as France have a long tradition of making good quality wines or

Germany making good and reliable cars.

Brand as Organization

Brand as Organization views the brand from an organizational context. This perspective is different from Brand as

Product because it focuses on the characteristics of the company as an organization rather than looking at the

characteristics of the products. For example quality can be product related if it is concerning the design and the

functions of the product, but it can also be organizationally related, if it is an integrated part of the employees,

culture, values and programs of the company (Aaker, 2010).

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Brand as Person

The Brand as Person considers the brand from the human characteristics that are associated with the brand. Aaker

argues that a brand can be attributed a certain personality and it can be described in the same way that one would

describe the personality of an individual. This gives the company some more elements to work with. Firstly, the

brand's personality can become a way for the consumer to express their own personality. Secondly, a mutual

relationship between the consumers and the brand can develop since consumers value the same criteria as when

choosing friends. Thirdly, an explicated brand personality can create attention to the attributes of the product.

Brand as Symbol

Brand as Symbol is concerning the audio and visual expression that is associated with the brand. By using a strong

visual symbol a brand can create a larger cohesion and structure to an identity and make it easier for a consumer

to recognize and remember a brand (Aaker, 2010). A logo can act as a stro