Theoretical and Empirical Linkages Between Consumers' Responses to Different Branding Strategies

Aron M. Levin, University of Kentucky
J. Charlene Davis, University of Kentucky
Irwin Levin, University of Iowa
[ to cite ]:
Aron M. Levin, J. Charlene Davis, and Irwin Levin (1996) ,"Theoretical and Empirical Linkages Between Consumers' Responses to Different Branding Strategies", in NA - Advances in Consumer Research Volume 23, eds. Kim P. Corfman and John G. Lynch Jr., Provo, UT : Association for Consumer Research, Pages: 296-300.

Advances in Consumer Research Volume 23, 1996      Pages 296-300

THEORETICAL AND EMPIRICAL LINKAGES BETWEEN CONSUMERS' RESPONSES TO DIFFERENT BRANDING STRATEGIES

Aron M. Levin, University of Kentucky

J. Charlene Davis, University of Kentucky

Irwin Levin, University of Iowa

Different marketing concepts and branding strategies revolve around the image a brand has and its role in settings such as brand extensions (Aaker and Keller 1990; Broniarczyk and Alba 1994) and product bundling (Gaeth, Levin, Chakraborty and Levin 1990; Venkatesh and Mahajan 1993). Recently, marketers have begun using new branding strategies such as dual branding and co-branding in which two brands are combined on a single product. Because of their very recent status, these strategies have not been explored in the academic literature. This paper will describe how central concepts such as brand image and brand equity affect and are affected by the various branding strategies. In addition, we will develop experimental designs and analytic procedures to uncover the common and distinct processes in consumer evaluations of these different strategies. Finally, a demonstration study is included which serves as an initial exploration of one of the experimental designs.

Although each of the above strategies has unique characteristics, they all share a common thread. Specifically, they require consumers to make an overall product evaluation based on two potentially inconsistent evaluations. In addition, it is possible that consumers' attitudes toward one brand will impact their evaluations of the brand that it is paired with. Thus, our primary interest lies in exploring both how consumers integrate impressions of two different brands to make a purchase decision, and how one brand's image impacts the other's image. Our conceptualization of brand image is consistent with Keller's (1993) definition of "perceptions about a brand as reflected by the brand associations held in consumer memory" (p. 3).

OVERVIEW OF BRANDING STRATEGIES

Product Bundling

Product bundling is a strategy in which two or more different products are sold together for one price. A bundle typically includes a primary product and a less expensive tie-in product. Some examples are a cellular phone "free" with the purchase of a television set and a computer that comes complete with a printer. Although bundling has been studied primarily from a pricing perspective (Guiltinan 1987), it can also be considered a branding phenomenon. In some instances, both components of the bundle are the same brand (a Panasonic phone bundled with a Panasonic television), while in others the components of the bundle are different brands, such as a bundle that includes a Packard Bell computer and an Epson printer. Interestingly, past research has found that despite the fact that the primary product is usually worth considerably more than the tie-in product, consumers may place equal weight on each part of the bundle in forming evaluations of the overall package (Gaeth et al. 1990).

One implication of such findings is that a negative evaluation of one brand may have serious effects on the other brand's equity. Briefly, brand equity is the perceived added value that a brand name brings to a product (Farquhar 1989; Keller 1993). For example, when a low quality tie-in brand is bundled with a high quality primary product, the consumer's negative evaluation of the low-quality brand may be transferred to the higher quality brand (Gaeth et. al 1990).

Brand Extensions

Companies have long recognized that by capitalizing on their well-known brand names, the tremendous cost and risk of launching a new product can be reduced. By extending brands, a firm hopes to capitalize on one of its most important assets, specifically, its brand name (Aaker 1991). A brand extension strategy uses an existing brand name as part of a brand for a new product. Some recent brand extensions are: Ocean Spray candy, Reeses Peanut Butter Cup Cereal and Colgate toothbrushes.

Research on brand extensions has suggested that brand equity can become "diluted" when consumers are unfavorable toward the extension (Loken and Roedder John 1993). Interestingly, most studies in this area have found that unsuccessful extensions tainted consumers' beliefs about the overall brand only when the extension was similar to other products under the particular brand (Keller and Aaker 1992; Loken and Roedder John 1993; Romeo 1990). It is possible that comparable effects exist when consumers evaluate co-branded products, dual brands or product bundles.

Dual Branding

As a relatively new concept, dual branding has yet to be clearly defined. The term is commonly used to denote hybridized retailers utilizing a single location site (Nation's Restaurant News 1994). This strategy is increasingly popular in the fast-food industry, where a number of franchised chains have recently joined alliances with each other and created dual brands. For example, it is now possible to buy Arby's and Long John Silvers products in the same building. Dual branding may appeal to franchise owners because it extends their menus and gives the customer more selection. It is particularly convenient for families or co-workers who dine out, but cannot agree on where to go (Benezra 1994). In addition, this strategy may be an effective counter to strong competition by sharing costs and acquiring a more desirable location (McDowell 1994; Nation's Restaurant News 1994).

We foresee dual branding research developing parallel to our study of co-branding; assessing the impact that one brand's image has on the other in a dual brand situation. A recent example highlights the potential risks and benefits of such alliances. Earlier this year, the Wall Street Journal reported an agreement between Sears and Jiffy Lube in which the two companies would share space at Sears auto-service centers. The agreement allows Jiffy Lube to expand its current operations by 456 locations, and offers Sears an opportunity to shore up its reputation in light of consumer fraud scandals that rocked the company in 1992 (Patterson 1995). As with other branding strategies, the possibility exists that Sears' tarnished brand image may have negative effects on Jiffy Lube's image. Conversely, the possibility exists that if Jiffy Lube's brand image is sufficiently strong, it may enhance consumers' perceptions of Sears auto-service centers.

Co-Branding

As with dual branding, the recent emergence of the co-branding strategy leaves it loosely defined. Co-branding is the use of two distinct brand names on one product. The strategy has become very popular with credit cards (the Ford Visa card, for example) and food products (Betty Crocker cake mix with Sunkist lemon flavor) as a way of enhancing brand equity (Carpenter 1994). Similar to product bundles, co-brands typically include one component of the product that is more prominent than the other. Hereafter, we refer to these as base and supplemental products. For example, Ben and Jerry's Heath Bar Crunch includes a base product (Ben and Jerry's ice cream) and a supplemental one (Heath candy bar pieces). Similar to product bundling (and unlike dual branding), the consumer cannot choose between the two brands.

THEORETICAL FOUNDATION

A primary purpose of this paper is to consider the processes by which consumers evaluate brands used in various branding strategies. For example, in co-branding, we are interested in how consumers reconcile their attitudes toward two brand name products that are packaged and sold as a single unit. In the case of dual branding and product bundling, consumers may partake of one brand name product and avoid consumption of the other branded product. For co-branding, however, the branded products are virtually inseparable. In spite of differences with respect to separability and consumption of the two brand name products, we contend that all three strategies share common elements in that each relies on a brand's image to attract consumers and each features the introduction of additional information (and attitude objects) for the consumer to process and evaluate.

Our interest lies in whether consumers tend to contrast or assimilate attitudes toward two separate brands when they are combined in a marketing strategy. A contrast effect occurs when the evaluation of an object is moving away from a point of reference, while a judgment of an object that tends to move toward a contextual anchoring point is known as assimilation (Meyers-Levy and Sternthal 1993; Sherif and Hovland 1961). In this case, a contrast effect would occur if an unknown brand enhances consumers' reactions to a known brand or if a known brand diminishes evaluations of an unknown brand when they are part of the same marketing strategy. Conversely, assimilation would occur if a well known brand enhances evaluations of an unknown brand or if an unknown brand diminishes evaluations of a known brand. Research on brand extensions (Loken and Roedder John 1993) and product bundling (Gaeth et. al 1990) suggests that when consumers evaluate such marketing strategies, they often assimilate information. That is, a consumer's affect toward one element may be transferred to the other element. It is possible that consumer evaluations of co-brands and dual brands will parallel these findings.

A number of theories attempt to explain whether people will tend to contrast or assimilate pieces of information or attitudes (Martin and Tesser 1992). One theory that predicts assimilation between attitudes is known as balance theory (Heider 1945). We suggest that balance theory provides a reasonable explanation of the phenomena of interest, and predicts how consumers' separate attitudes toward brand names are reconciled in evaluating the combined brand package.

Heider's balance theory (1945) is one of a set of concepts known as cognitive consistency theories (Schewe 1973). Congruity theory and cognitive dissonance also belong to this set of concepts. All three theories hold that individuals seek to maintain consistency or internal harmony among their attitudes, values and opinions (Festinger 1957; Heider 1945, 1958; McCaul, Ployhart, Hinsz, and McCaul 1995; Okechuku and Wang 1988; Osgood and Tannenbaum 1955; Schewe 1973; Tellis 1988). In the branding strategies previously described, the potential for disharmony between attitudes toward the two brands is a significant consideration. A cursory reading of the popular business press illuminates the importance of preserving a brand's equity. Companies are battling the value conscious consumer of the 90's by combining two brands in an effort to create the perception of increased worth of the product (Carpenter 1994). Pairing two brands creates the potential for linking a brand that has positive affect with one that has less positive - or even negative - affect. In the present context, balance theory would predict assimilation; if an unknown or less preferred brand is paired with a well known brand, the consumer's evaluation of the unknown brand may be enhanced. Conversely, and consistent with balance theory, we argue that it is also possible for the evaluation of a well known brand to be diminished when it is paired with an unknown or less preferred brand.

Because balance theory is concerned with the direction of attitude change, it is possible to predict outcomes of combining positive, neutral, and negative brand names (Heider 1945, 1958). These varying combinations can lead to different evaluations of the separate brand names as well as the resulting overall evaluation. Balance theory will help us interpret results of the studies designed to address the research questions enumerated in the next section.

RESEARCH QUESTIONS AND HYPOTHESES

We will describe procedures for addressing basic research questions such as the following:

1) How important is brand name as part of the mix of elements present in a particular marketing strategy? Is the presence of an established brand name the most important element?

2) How are various elements of a branding strategy combined in determining consumers' reactions to the strategy?

3) How does the overall evaluation of the strategy impact the subsequent image of the brand?

4) How do each of the above, particularly #3, differ across particular branding strategies? For example, is a brand's image apt to be impacted more by using it as part of a brand extension, dual branding, product bundling, or co-branding strategy?

Research questions 2 and 3 represent perhaps the key issues to marketers. Balance theory provides the basis for specific hypotheses. If a branding strategy includes addition of a brand that is evaluated unfavorably, then that brand will bring down the consumer's reaction to the strategy and will also damage the image of the brand that it is paired with. Conversely, if the added brand is evaluated favorably, then it will raise the consumer's evaluation of the strategy and will enhance the image of the original brand. Thus, we state the following hypotheses:

H1: Evaluation of a co-branded product will be an average of the evaluation of the individual brands.

H2: A brand's equity will be enhanced by the addition of a brand that raises the evaluation of the strategy; a brand's equity will be diminished by the addition of a brand that lowers the evaluation of the strategy.

The following is an illustration of how such research questions and hypotheses may be addressed for a particular branding strategy. Later, we discuss applications to the other branding strategies of interest.

TABLE 1

MEAN RATINGS OF BROWNIE-CHOCOLATE CHIP CO-BRANDS AND COMPONENT BRANDS

DEMONSTRATION PROJECT ON CO-BRANDING

To illustrate how the ideas expressed here may be operationalized and tested, a demonstration study of co-branding was conducted. Subjects were given a sample of brownie with chocolate chips to taste and asked first to rate the combination and then the separate component products. All subjects were given the same combination of Martha White brownies with Nestle's chocolate chips. Although co-brands exist in this product category with two well-known brands (Betty Crocker brownies with Nestle's chips, for example), an off-brand was chosen to minimize the possibility of a ceiling effect. Next, different subjects were provided different labels for the co-brand: Betty Crocker brownies with Nestle's chocolate chips, Betty Crocker brownies with Rich's chocolate chips (a fictitious brand), Mrs. Bakewell's brownies (a fictitious brand) with Nestle's chocolate chips, and Mrs. Bakewell's brownies with Rich's chocolate chips. In other words, we employed a 2 X 2 factorial design to manipulate whether the base product was designated as a well-known brand or as a fictitious brand and whether the supplemental product was designated as a well-known brand or as a fictitious brand. This design was intended to determine how each component brand affects the evaluations of the co-brand and, further, how variations of one brand affect evaluations of the other brand. For example, if ratings of the brownies are higher when a well-known brand of chocolate chips is added than when an unknown brand is added, this would be a demonstration of assimilation effects.

Procedure

Seventy students from two Marketing classes at a large Southeastern university were told they were part of a taste-test study. Each student was given a 2-inch by 2-inch sample of the brownies with chips to taste and was asked to fill out a response booklet. In the booklet, the co-product was labeled as one of the four combinations described above. The booklets with the different labels were given out in random order. Participants were asked, first, to rate the taste, quality, and likelihood of purchase of the combined product. Each rating was on a scale of 1 to 10 (The three scales were highly correlated and were thus combined for analysis with MANOVA). Subjects were then asked to rate only the brownie component and then only the chocolate chip component on each of the three scales. It was stressed that these component ratings were designed to obtain their evaluations of the single products separate from their evaluations of the combined product (co-brand).

Results and Discussion

Table 1 shows the mean composite ratings from the MANOVA (also on a scale of 1 to 10) for each combination of product label and each type of judgment. The overall MANOVA model was significant (F=2.3, Wilks' (=.748, p<.03). Ratings of the composite co-brand (top of Table 1) show that the labeling of the supplemental product (chocolate chips) actually had a larger effect than the labeling of the base product (brownie mix). In fact, only the supplemental product label had a statistically significant effect on the ratings of the composite co-brand, F(1, 66)=4.40, p<.05.

Ratings of the base product, interestingly enough, were also affected more by the labeling of the supplemental product than by the labeling of the base product itself. Substituting a fictitious brand name for the supplemental product apparently affected the evaluations of the base product. The effect of the supplemental product label, in this case, was of borderline statistical significance, F(1,66)=2.75, p=.10. Finally, as seen at the bottom of Table 1, ratings of the supplemental product were greatly affected by its labeling and this effect was statistically significant, F(1,66)=6.75, p<.01.

It is important to note here that these effects were demonstrated with relatively modest sample size and, more importantly, without varying the actual product experience. Participants in the different conditions tasted the same co-branded product; only the brand names were varied. These labeling effects are reminiscent of the framing effect found by Levin and Gaeth (1988) where ground beef labeled as "75% lean" was evaluated more favorably than ground beef labeled as "25% fat", despite the fact that all subjects tasted the same ground beef.

Even larger effects would be expected if, for example, the actual quality of the supplemental product was varied. More important than showing that labels affect evaluations of the composite co-branded product was showing that one brand's label affects evaluations of its co-brand. It is an empirical question as to whether other supplemental brands will have the same effect as chocolate chips in brownies. Future research should also include a control group who evaluates the separate products without experiencing them in combination. Nevertheless, this demonstration showed that brand image can be affected by the co-branding strategy in a manner consistent with balance theory; when one brand (chocolate chips) was thought to be inferior, it brought down both the evaluations of the composite product and the evaluations of the other brand (brownie mix). Recall that studies of product bundling found that even an inexpensive tie-in product can have a disproportionate influence on evaluations of the bundle (Gaeth et al., 1990). Given the similarity of the present findings to earlier studies of product bundling, an empirical link seems to be established between bundling and co-branding. In general, however, studies of product bundling have not included measures of the impact on the image of the primary product. Future studies should include such measures.

RESEARCH EXTENSIONS

The basic features of the demonstration project on co-branding were: 1) factorially manipulating some characteristic of both brands; 2) asking subjects to rate the combined product; and 3) asking subjects to rate each component product separately. These basic design and measurement features can be extended to assess consumers' reactions to other branding strategies.

For dual branding, consider a pizza parlor and an ice cream/frozen yogurt shop housed together. The pizza parlor could be identified by any of several brands varying in familiarity and/or perceived quality; Likewise for the ice cream/frozen yogurt shop. Pilot work would be necessary to identify distinct instances of each category. Subjects would then be asked to consider the various hypothetical combinations formed by factorially manipulating these two categories. Some of the combinations would be compatible in terms of brand recognition. For instance, a familiar and highly regarded ice cream company could be paired with a familiar and highly regarded pizza parlor. Others would be incompatible, high in one case and low in the other. An additional independent variable of interest might be the distance saved in making a single trip to the joint location as compared to separate trips for pizza and ice cream. And, of course, by broadening the categories one could examine the importance of complementarity of the dual brands: how does a pizza-ice cream parlor combination compare to a pizza-cookie shop combination?

As with the co-branding illustration, a variety of scales could be used to assess the attractiveness and convenience of each dual brand. Most basic, however, would be the consumer's judged likelihood of patronage. ANOVA (or MANOVA) could then be used to decompose these judgments into the contribution of each type of brand on the overall judgment (Anderson 1982).

Finally, in order to assess whether brand image was affected by the dual branding strategy, each brand would be rated on scales such as quality and prestige after consumers reacted to that brand as part of a dual brand. These ratings could then be compared to those obtained from a control group not exposed to the dual brands. Is the image of Pizza Hut enhanced by associating it with Ben and Jerry's? What about Ben and Jerry's image?

While interesting research has already been done on product bundling and brand extensions, gaps in this research are revealed by applying the present conceptual framework. Within this framework, research can simultaneously address the following issues: 1) how brand names contribute to consumers' perceptions of a branding strategy; and 2) how brand image is affected by a brand's inclusion in the new marketing strategy.

Research addressing both issues simultaneously can be accomplished as readily with product bundling and brand extensions as with co-branding and dual branding. In each case the key is to include evaluations of the brand or brands separate from evaluations of the entire package (the product bundle or the new product with the established brand name). To investigate brand extensions, for example, the following two-part procedure could be used: 1) compare consumers' evaluations of the brand extension when the actual brand name is given vs. a fictitious name; 2) after collecting ratings of the brand extension, ask the consumers to rate the brand name on a series of bipolar scales such as trustworthy-untrustworthy, high quality-low quality and reliable-unreliable and compare these to ratings obtained from consumers who were not exposed to the brand extension.

SUMMARY AND IMPLICATIONS

This paper describes a common framework for addressing consumer reactions to several different branding strategies. The strategies of co-branding, dual branding, product bundling and brand extensions all involve positioning an established brand name in a new context. We suggest that simple, straightforward experimental designs can simultaneously address two important issues common to each branding strategy: how the brand name contributes to the evaluation of the new marketing strategy and how the brand's image is ultimately affected. A general scheme for dealing with the first issue is to manipulate whether the well-known brand name or a fictitious name is identified in the new marketing strategy. The second issue can be addressed by comparing evaluations of the brand name between those consumers who were exposed to the new marketing strategy and those who were not.

Results from the demonstration project on co-branding lead us to predict that consumer responses to each branding strategy will reveal both an effect of brand equity on the acceptance of the branding strategy and an effect on the brand's subsequent image. There is also ample theoretical justification for such predictions. According to balance theory (and more generally, theories that predict assimilation between attitudes), judgments of a new marketing strategy will be based on balancing the impressions of each element in the mix (see also N. H. Anderson's 1982 averaging theory) and the impression of each individual element (e.g., brand name) will be adjusted to fit the evaluation of the entire mix. It is a question for future research to compare the magnitude of these effects across the various branding strategies.

For consumer researchers it is important to discover the extent to which common processes are involved in reactions to different marketing strategies. For marketers it is important to develop tools for measuring consumer reactions to various strategies and the potential impact on the image of their brand by including it in a new marketing strategy. In this paper we attempt to provide some simple but effective tools.

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