ABSTRACT
Extension of Brand Extensions to Differentiation and Corporate Identity
Kim, Hwa Dong
Dept. of Business Administration
Graduate School of Chung-Ang University
Academic Advisor Dr. Choi, In Hyok
1. Introduction
Brand extension has mentioned as a important means of marketing strategy according to intense competition among companies and difficult differentiation of product itself. The interest of brand extension increased since companies had understood that brand, functions together with price, package, distribution, company and advertising, can offer additional and differentiated value to products.
Because of this situation, many companies has used actively to marketing strategy of new product and many academic studies on brand extension has practiced. These previous studies have focused mainly characteristics of individual brand and category fitness between existing product and new extension product. However, when marketers or brand managers of company used brand extension to new product, they considered not only characteristics of individual brand and category fitness but also differentiated characteristics and competitive value of corporate such as high cognition and reputation.
Thus this study introduced corporate identity which indicates differentiated characteristics and competitive value of corporate through perceptual evaluation of consumers on general corporate activities, and examined how corporate identity affects product of brand extensions.
2. Purpose of Study
This study seeks to examine effect of corporate identity indicating differentiated characteristics and competitive value of corporate on product of brand extension. Therefore this study has specific purposes as follows;
First, to re-establish the concepts of brand extension and corporate identity and to conceptualize five components of corporate identity in perspective of differentiated characteristics and competitive value through literature study.
Second, to test empirically how corporate identity and its components affect products of brand extension and how these effects are different according to forms of brand extension determined by the type of brand and the degree of manufacturing skill using to extension products.
Third, on a basis of the empirical results, to review brand extension from new perspective and to present the practical implications for establishment and execution of brand extension to marketers or brand managers.
3. Methodology of Study
In order to realize these purposes, this study carried out simultaneously literature study and empirical study. In literature study, this study reviewed general concepts and previous studies related to brand extension and corporate identity, provided theoretical basis about the relationship of corporate identity and brand extension, and established model and hypothesis testing empirically. In empirical study, after research design was set for collecting data, research hypothesis was verified by analyzing data which collected through survey.
4. Empirical Analysis
1 Research Design
For collecting data using verification of hypothesis, a field survey was carried out to 2 stages, preliminary survey and main survey. Preliminary survey was undertaken to select companies, brands and extension products. Main survey was undertaken to collect data using empirical analysis through questionnaire. The subjective of survey was sampled among male and female undergraduates at university in Seoul. Questionaries were divided 4 types by each corporate and distributed 210 of each type. Finally the data was collected from 800 copies of questionnaire answered correctly.
2 Analytical Method
SPSS for Windows 9.0 was used for statistical program of empirical analysis. At first, T-test was utilized to test the adequacy of selection of the extension products which is based on consistency of manufacturing technology in preliminary research. Factor analysis and reliability analysis were utilized to evaluate validity and reliability of measuring items as a means of evaluating components of corporate identity.
And then multi-correlation analysis and regression analysis were used to verify research hypotheses on relationship between corporate identity and brand extension.
3. Major Findings
Major findings of empirical analysis can be summarized is stated below.
First, corporate identity has positive effects on evaluation of extension product with irrelevance to the type of extension products. Therefore, it is reasonable for us to recognize corporate identity as a factor including differentiated characteristics and competitive value of corporate. And it is desirable to study corporate identity as another independent variable for brand extension.
Second, showing the result of difference analysis among companies of research on how components of corporate identity affects extension product, we found that in case of companies producing high involvement product, corporate identity that is recognized as differentiated characteristics and competitive value affects brand extension on all aspects of 5 components such as product, service, personnel, distribution, and image, but in companies producing low involvement product, corporate identity affects brand extension only on aspects of product, service, and image.
Third, in case that consistency of manufacturing technology and type of brand extension determine the form of extension product independently, the effect of corporate identity and its components on brand extension depend on the form of extension product.
Fourth, in case that the form of product extension is determined by consistency of manufacturing technology and the type of brand extension both together, the effect of corporate identity and its components on brand extension depends on the type of extension product.
5. Conclusions
Through literature review and empirical analysis, this study shows that corporate identity and its components has a positive effect on of products brand extension and their effects depend on the form of brand extension.
The results of this study provide the following implications in academic and practical aspects. In academic aspect, corporate identity that is still evaluated in the level of propositional level is specifically evaluated as differentiated characteristics and competitive value of corporate in this study. By understanding the effect of corporate identity on evaluating product of brand extension, this study provides a new model of brand extension including factor of corporate level.
In practical aspect, as the result of this study provides strategy of new product development and brand extension using corporate identity, it presents direction of product diversity to specialize corporate, and strategy of brand management to build differentiated characteristics and competitive value of corporate.
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