The Effects of Corporate Branding Strategies on Brand Equity

Kevin Lane Keller, Stanford University
New product development is vital to the long-term financial success of a company. A new product may vary by the extent to which it is identified with a particular company. Companies may choose to introduce a new product with the company name, a new name, or a combination of both (i.e., as a subbrand). By establishing a link with the company, existing associations for the company (due to its other products or corporate image efforts) may become linked to the brand. This special topic session considered issues related to the effect of the corporate branding strategy on brand equity by examining how consumers evaluate proposed new products depending on the branding strategy adopted and, more importantly, how the introduction of new products affected the images of the core brands.
[ to cite ]:
Kevin Lane Keller (1993) ,"The Effects of Corporate Branding Strategies on Brand Equity", in NA - Advances in Consumer Research Volume 20, eds. Leigh McAlister and Michael L. Rothschild, Provo, UT : Association for Consumer Research, Pages: 27.

Advances in Consumer Research Volume 20, 1993      Page 27

THE EFFECTS OF CORPORATE BRANDING STRATEGIES ON BRAND EQUITY

Kevin Lane Keller, Stanford University

New product development is vital to the long-term financial success of a company. A new product may vary by the extent to which it is identified with a particular company. Companies may choose to introduce a new product with the company name, a new name, or a combination of both (i.e., as a subbrand). By establishing a link with the company, existing associations for the company (due to its other products or corporate image efforts) may become linked to the brand. This special topic session considered issues related to the effect of the corporate branding strategy on brand equity by examining how consumers evaluate proposed new products depending on the branding strategy adopted and, more importantly, how the introduction of new products affected the images of the core brands.

The first paper by Kevin Lane Keller and David Aaker described the results of two laboratory experiments that examined the effects of corporate images and branding strategies on new product evaluations. Corporate images were manipulated such that the company was characterized as being innovative, environmentally concerned, involved with the community, or having high quality products. Branding strategies were manipulated such that the new product was given the company name, an individual brand name, or a subbrand name (combining the company name with an individual brand name). The results indicated that corporate images can help to establish product images if none exists and improve evaluations of a corporate brand extension. Corporate images can also enhance perceptions of a new product positioned on other image dimensions. There were no differential effects between the company and subbrand name strategies for the corporate brand extension. More favorable evaluations of a very dissimilar new product, however, were generally achieved when it was given an individual brand name. The results also indicated that advertising to position a corporate brand extension can also help to establish corporate images if none exist and enhance perceptions on image dimensions different from existing ones.

The second paper by C. W. Park, Michael McCarthy, and Sandra Milberg reported the findings of an experiment that examined two issues: (1) the extent to which brand extensions cause negative reciprocity effects on brand attitudes, and (2) how the use of an associative brand extension strategy (e.g., Syntax by Timex) might mitigate negative reciprocity effects while simultaneously allowing for favorable evaluations of the brand extensions. The results revealed that while the use of a direct brand extension strategy did tend to result in negative reciprocity effects, the use of an associative brand extension strategy tended to mitigate those effects. Furthermore, brand extension evaluations were virtually identical for the two strategies. These results indicate that marketers may be able to extend their product lines farther with an associative branding strategy than with a direct brand extension strategy, due to the possibility of avoiding negative reciprocity effects.

The third paper by Sheri Bridges and Amna Kirmani reported the findings of an experiment that considered the effects of corporate branding strategy on consumer response to extending the range of a particular product line by reducing or increasing the number of features and/or quality of the brand (i.e., "brand-line stretching"). Specifically, subjects evaluated upward and downward stretches for four brands: BMW, L.A. Gear, Pioneer, and Budweiser. In the subbrand condition, subjects were told that the new products would be called the BMW Quest, Surge by L.A. Gear, AudioPrix by Pioneer, and Steinbrau by Budweiser. In the new name alone condition, subjects were told that the new product would not bear the original brand name but would simply be called Quest, Surge, AudioPrix, and Steinbrau. Results showed a significant effect of direction of the stretch, with upward stretches being perceived as higher quality but lower value than the original brand and downward stretches being perceived as lower quality but higher value than the original brand. Branding strategy had no effect on consumer evaluations of the new product.

The concluding discussion by Susan Broniarczyk highlighted commonalities in the three papers while discussing future research areas.

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