TO WHAT EXTENT BRAND EXTENSIONS MIGHT INCREASE BRAND LOYALTY? APPLICATION TO LUXURY WOMEN’S WEAR AND ACCESSORIES MARKET: THE TOD’S CASE
INTRODUCTION
This article has the aim to explore the impact of brand extensions on brand loyalty towards luxury brands in order to evaluate if the benefits of the first ones might be useful to strengthen the link between the Brand and the Customers. The first section is a concise presentation of brand extensions through some articles and followed by a brief description of models and concepts. The second part defines the topic of brand loyalty thanks to some recent articles and some abstracts taken from the wide existing literature. The next section starts with a short introduction on the main features of the Luxury Market and follows with the research that has addressed Consumers of luxury brands in order to understand their attitudes and perceived benefits towards luxury brands extensions. This article finishes off with a description of the obtained results, discussion and conclusion.
I. Brand Extensions
I.1 Main Features and Articles
Nowadays, Companies look more and more for brand extensions in order to get several advantages, both financial and marketing ones. Indeed they allow Companies to reduce risks and costs of launching new products and the investments in communication, increase incomes and market shares, strengthen the brand awareness.
Brand extensions increase the consumer perceived value of the brand. For successful brand extensions, consumers have to be able to perceive high fit between the extended product and the core brand. Thanks to this determinant the evaluation of the extension results credible and very likely to be based on the parent brand beliefs and the Customers will immediately infer the quality of the new offer. Aaker & Keller propose an attitude-based model in which describe fit as a key factor with attitude toward the original brand and perceived difficulty of making the extension. Other variables are involved in leveraging brand image in brand extensions as communication policy (Pina and Montaner 2009), brand type and cultural differences (Buil, De Chernatony and Hem 2009). In addition, Kapferer’s model based on brand types demonstrates the importance for the brand to have a high brand meaning more adaptable and reliable into other categories. Finally Davidson and Taylor confirm this tendency, creating two models in order to prove the importance of a strong core in order to evolve successfully in to a broader brand.
Most brand extensions occur as line extensions, which use the existing brand names and products and extend them remaining in the existing product category. These extensions are seen as very low risk to both company and consumers due to low introduction costs and the target market product familiarity. Category extensions involve higher risks and costs, as both actual and potential consumers are motivated to buy very different products, which have been created from existing brand names and extended to new-product categories, then there are intermediaries and consumers unfamiliarity with the product.
Following some useful articles will be proposed for a better understanding of the issue.
A very interesting one which moves in brand extensions field is “Extending the brand: controllable drivers of feedback effects” by Montaner and Pina (2009). This paper seeks to analyse the influence of three variables: communication policy, brand breadth and extension-brand fit. The results show that brand extensions far from the current markets damage the brand associations, although the use of advertising focused on the new product can reduce this negative effect. Moreover, feedback effects are less negative when the brand has not been over-extended in the past. The results suggest how to manage the launching of brand extensions in order to protect the extended brand image. It shows what kind of advertising is more appropriate for marketing extensions as well as role of brand breadth and perceived fit.
moreover, Buil, de Chernatony and Hem with “Brand extension strategies: perceived fit, brand type, and culture influences” (2009) examined the impact of perceived fit, brand type and country’s culture on the consumers’ attitude towards brand extensions and on the parent brand equity. Brand extensions with high fit receive more favourable consumer evaluations and decrease the negative feedback effects of extensions on parent brand equity. Results also reveal that parent brand equity dilution is higher when the brand used to launch the extension has high equity. Finally, this study reveals that the country where an extension takes place may condition its results, mainly due to cultural differences. Managers should launch extensions with high perceived fit. In addition, greater effort is needed to extend high equity brands, due to their greater dilution. Finally, managers need to understand that consumer evaluations and feedback effects of the same brand extensions can vary due to cultural differences between consumers. Therefore, standardised brand extension strategies should be carefully considered.
II. Brand Loyalty
II. 1 Main Features and Articles
Since retaining an existing consumer is often more profitable than finding a new one and dealing with economic downturn is more and more difficult, brand loyalty is becoming an important objective for Marketers, as long as it has direct impact on long-term sustainability of a brand. There are several advantages, indeed Brand Loyalty: reduces marketing costs, attracts new consumers and increases brand awareness thanks to word of mouth, reduces the sensitiveness to price and gives the Company more time to respond to Competitors’ new challenges.
The simpler definition for brand loyalty is the “repeated purchase” factor, but we should take into account several variables in order to understand this issue. High brand loyalty could be identified in the case of high purchase frequency, high penetration rate, when the price is higher than average in the category, when it refers to a leader brand. In addition to this, brand loyalty starts with the product in an initial stage and meet the brand in a mature stage (Torres-Moraga, Vasquez-Parraga, Zamora-Gonzalez 2008), it means that satisfaction is very important too, and it is used as a predictor of future consumer purchase. Recent studies consider the contextual factors able to impact the degree of brand loyalty and the purchase decision (Shukla 2009), because they in turn influences self image, lifestyle and consumption pattern. Furthermore, several models have been created in order to identify how likely a customer switches to another brand as the one named Aaker’s Brand Loyalty Pyramid which measures 5 kinds of behaviours in the loyalty scale or the Hofmeyr & Rice Brand conversion model, which segments the Market on the basis of two variable: Consumer’s Attitude and Behaviour. Very interesting for my research is Kapferer’s Brand Loyalty model, which introduces as dimension of brand loyalty the trial of brand extensions next to brand presence and single product repeated purchase.
Some articles will be mentioned in order to enter better in the topic.
“Customer satisfaction and loyalty: start with the product, culminate with the brand” written by Torres-Moraga, Vasquez-Parraga and Zamora-Gonzalez (2008) enhances that studies on customer satisfaction and loyalty have focused on brand rather than product. It is not that brand is not important, but the process of loving a brand starts with a product. Customers appreciate products by themselves, independent of the brand, as shown in their pursuit of satisfaction and development of loyalty. Such appreciation seems to be prominent regarding innovative products when compared to traditional products. Their results show that the relationship satisfaction-loyalty is significantly present when evaluating products alone and has a weaker presence than when evaluating brand alone. The relationship satisfaction-loyalty is also present when evaluating product and brand combined, indicating that there is an intermediate position between product and brand. There are practical consequences of applying the typology and examining the findings, the relationship satisfaction-loyalty starts with the product, includes the product-brand, and culminates with the brand.
This study introduces a typology underscoring the pursuit of satisfaction and development of loyalty in three conditions of product presence versus brand presence, that is, product alone, brand alone, and product and brand combined.
Moreover, “Impact of contextual factors, brand loyalty and brand switching on purchase decisions” by Paurav Shukl (2009) starts from the concept the consumer culture in recent times has evolved into one of the most powerful ingredients shaping individuals and societies. Although the behavioural intentions and purchase decisions related models continue to dominate research and managerial practice, a deeper look indicates that most studies do not take the complete picture in account and study parts of the above mentioned phenomena. Furthermore, consumers operate in a dynamic and ever-changing environment which in itself demands a re-examination of their behavioural intentions and purchase decision influences from time to time. The findings suggest that contextual factors have the strongest influence on purchase decisions as long as thy influence the brand loyalty and switching behaviour.
III. To what extent Brand Extensions might increase Brand Loyalty?
The TOD’S case
III.1 A quick look to the Luxury Market
The luxury industry is experiencing unprecedented upheaval. During the last five years a new environment has demanded a real reinvention, so that
Improve Customer Service Quality With Encounters Of The Third Kind
What makes a company successful over the long, long term? What characterizes the service relationship between companies and customers who do business together for decades, even generations?
How can your company stay close to your customers even as times change, technologies change and expectations continually rise?
What can you do to improve customer service quality and ensure your company’s future offers are relevant and valuable in the market?
One powerful step forward that will improve customer service quality is to explore your customers’ future needs and interests by cultivating Service Encounters of The Third Kind. In these unique encounters, your precious and loyal relationships for the future are built by your words and actions – today. You can improve customer service quality over the long haul by thinking proactively.
Let’s start by looking closely at Service Encounters of the First and Second Kinds and how they improve customer service quality.
Service Encounters Of The First Kind
In Service Encounters of the First Kind, your company approaches the customer with the most basic of all customer service questions: “What do you want (or need)?”
Your customer replies with equal simplicity, “I want your product X, by time and date Y, at your listed price Z.”
Your company’s priority and service focus should now be clear: Get the customer’s order right, and get it right the first time to improve customer quality!
Campaigns to accomplish this objective are widespread and easy to spot. “Do It Right!”, “Zero Defects” and “Six Sigma Quality” are all examples of slogans companies use to focus their workers on getting the basics right, first time, every time to improve customer service quality.
In this kind of encounter, breakdowns in service delivery are bad news since they don’t improve customer service quality. They are to be identified, analyzed, solved and, most of all, eliminated to improve customer service quality. The service system must be streamlined and standardized in every possible way to improve customer service quality.
Companies that consistently succeed in this undertaking (delivering X by Y at Z price) earn their reputations in the market as steady and reliable suppliers. This leads, as it should, to customer satisfaction and will improve customer service quality.
Training in these organizations is focused on product knowledge, technical skills, thoroughness, accuracy and adhering to proven procedures to improve customer service quality.
Marketing consists of powerful efforts to push proven products in the market. The customer is “sold to.”
Looking into the management mindset of these first kind organizations, we usually find a keen interest in cutting costs, increasing volume and decreasing cycle-time.
This need for speed is important: Competitors are often closing in with similar products, faster delivery and even lower prices. In this kind of competitive situation, profit margins are paper-thin and companies thrive only through continual increases in volume.
So far so good. But if we look into the staff mindset of such an organization, we find a different way of thinking altogether that doesn’t help improve customer service quality. Frontline service employees, focused on getting it right the first time, trained to carefully follow all procedures, and encouraged by management to achieve more and more results in less and less time, find themselves answering the phone, opening the mail or meeting the next customer in person thinking to themselves, “I hope this customer isn’t a pain in the neck!”
After all, customers with questions and unusual requests generally take more time, lead to more errors and can result in a general slowing down of the whole system.
No wonder so many customer requests for anything out of the ordinary are met with the retort: “We don’t do it that way” or “That’s not how our procedures work here.”
Service Encounters Of The Second Kind
In Service Encounters of the Second Kind, your company approaches the customer with a question that goes beyond standard offers of X product at Y time and Z price. Instead of the basic “What do you want,” your service representatives now pose a more inviting question: “How do you want it?”
Faced with such an open-ended question, the customer naturally replies, “I want it the way I want it. I want it special. I want it my way!”
Your company’s service focus must change if you are to deliver what your customer wants just the way your customer wants it. Special products, unique combinations, odd-hour deliveries, different schedules for pricing or payment – all are new challenges for your service team to understand and accomplish to improve customer service quality.
In Service Encounters of the Second Kind, breakdowns in the service delivery system are to be expected at first – and then overcome to improve customer service quality. Responsiveness and flexibility become your prime objectives to improve customer service quality. The organization focuses on being adaptable, accommodating and open to changing requests that improve customer service quality and satisfaction.
Your service system improves, not through vigorous efforts to standardize but through your willingness and commitment to customize to improve customer service quality!
Companies that succeed in this challenging undertaking (giving their customers what they want, when and where they want it and just the way they want it) earn their reputations in the market as quick, responsive and open to ongoing change. In short, they understand how to improve customer service quality.
When a company is recognized for welcoming and fulfil-ling unique customer requests, the result is not only customer satisfaction, but a well-deserved and valuable reputation for customer delight.
In these responsive second kind organizations, training programs include active listening, creative problem-solving, and attitude-building activities to improve customer service quality. Staff learn how to find a “yes” for the customer rather than rolling out the standard “no.”
Marketing isn’t a broadside of mass advertising. Rather, it’s a selection of specially modified programs gently pushing customized products to key segments of the market. Clients aren’t “sold to” here, they are served to improve customer service quality.
In the staff and management mindset of these organizations, we find a shared and sincere commitment to “bend over backwards” for the client to improve customer service quality.
For example, one adapting company proclaims, “We’ll go out of our way for you!” But this catchy phrase reveals the remnants of a first-kind encounter company being forced into second-kind levels of service. Here management is essentially saying: “We still have our way.
But don’t worry, we’ll go out of our way just for you.”
You can see this contrast in the advertising of two fast food restaurant chains. A&W features large posters that read: “You’ll love our way!” (That’s Service Encounters of the First Kind.)
Compare this with the slogan and jingle for Burger King: “Have it your way!” (That’s Service Encounters of the Second Kind.)
At which establishment will you feel more comfortable saying, “Two chicken burgers, please. One with extra ketchup and no pickles, and one cooked rare, hold the onions and two packs of mustard on the side?”
Burger King goes even further with its follow-up campaign: “Sometimes You’ve Just Gotta Break the Rules.” That’s a direct invitation to highly customized Service Encounters of the Second Kind: “Have it your way.”
Service Encounters Of The Third Kind
In Service Encounters of the Third Kind, your company welcomes the customer in a manner completely different from the standardized “What do you want?” or customized “How do you want it?”
In a Service Encounter of the Third Kind, your company looks to the customer with interest and patience, and asks the somewhat unlikely question: “What do you want to become?”
Most customers, if they are given an opportunity to reflect on this very open-ended question, realize that they are, in fact, still a bit uncertain about the future and will reply, “Actually we’re not entirely sure yet.” And then, availing themselves of the sincerity and interest you have shown, might add, “Could we talk about it together?”
Your question, and their response, opens the door to a very different and collaborative conversation: a Service Encounter of the Third Kind, which can work over the long haul to really improve customer service quality.
Your company’s focus shifts again as you enter into a new dialogue with customers, seeking to understand and add value to their plans and possibilities for the future to improve customer service quality. These conversations, held in a mood of mutual discovery, are concerned with much more than just meeting a customer’s existing business requirements. By exploring scenarios and possibilities, you and your customers work together to resolve breakdowns that might emerge only in the future and you improve customer service quality as a result.
For example, innovative financial service companies in Japan consistently ask their customers, “What do you want to become?” And customers consistently answer, “I want to become a homeowner, and I want to pass the home on to my children.”
But housing prices in Japan have climbed beyond the average customer’s reach. What was the jointly planned and innovative solution to improve customer service quality? Mortgages with payment terms spanning two generations – and customer relationships that endure beyond a lifetime. Talk about a measure to improve
Employee Engagement and Employee Satisfaction ? How to Drive Business Performance Higher
Importance of Employee Engagement and Employee Satisfaction
Your employees have a wealth of information about what it is like to work at your company, and what your customers are telling them about your company and your competitors.
Your employees also have considerable knowledge about what can be done to improve your company’s productivity, quality, customer service, customer satisfaction, customer loyalty, growth and profit, and what can be done to improve your risk profile.
Equally important, your employees know how satisfied or dissatisfied they are working at your company. They also know how engaged they are and what can be done to increase their level of engagement.
While most companies are aware of the need to take action and make improvements to become more competitive, they often miss important hidden actions that can really make a difference for customers, employees and the bottom line. That’s where employee surveys come in, uncovering the hidden information, suggestions and insight you need from across your organization.
Highly satisfied employees are more engaged in their jobs, their productivity is higher and they do more to generate profit for your company. While company financials and other “hard data” measurements are important for assessing your company’s/organization’s performance, they are missing important information, insight and perceptions that can only be gathered by directly asking your employees. Employee engagement surveys and employee satisfaction surveys are the best, most cost-effective way to gather comprehensive information accurately from a large portion of your employees about how satisfied and how engaged they are, and what needs to be done to increase employee satisfaction and engagement.
Definition of Employee Engagement
An organization’s employees are engaged when employees at all levels of the organization are fully committed, involved and enthusiastic about their jobs and their organizations.
• Engaged employees are willing, able and actually do contribute to company success.
• Engaged employees regularly go the extra mile, putting effort into their work above and beyond what is expected of them. They willingly and eagerly work extra hours and focus their inspiration, energy, intelligence, skills and experience to achieve success for themselves and their organization.
• Engaged employees thrive when they are working in a positive, supportive corporate culture. Their inspiration, energy and enthusiasm in turn enhance the corporate culture.
How Engaged are your employees? How do you know?
How many of your employees are disengaged, how many are somewhat engaged and how many are highly engaged? Assessing employee engagement levels and then taking action to shift disengaged and somewhat engaged employees up the curve will significantly increase employee and company performance. Employee engagement surveys / employee satisfaction surveys measure employee satisfaction and engagement levels and provide actionable information for driving employee engagement to significantly higher levels.
Employee Engagement Surveys or Employee Satisfaction Surveys? Which is the right survey approach for your organization?
The best approach for companies and other types of organizations is to conduct surveys that include both employee engagement and employee satisfaction issues. It is possible for employees to be satisfied but not engaged, and it is also possible for employees to be engaged but not satisfied.
Surveys that include a wide range of questions about both employee satisfaction and employee engagement gather comprehensive information, opinions, perceptions and insight for assessing employee satisfaction and engagement. Dual-focused surveys identify shortfalls in employee satisfaction and employee engagement levels, and the reasons for the shortfalls. The surveys also generate extensive information, insight and suggestions for diagnosing problems across your organization and for taking action to address shortfalls in employee engagement and employee satisfaction.
So to answer the question, should you conduct an employee engagement survey or should you conduct an employee satisfaction survey, you should conduct a survey that focuses on both employee engagement and employee satisfaction.
Characteristics of Engaged Employees
Engaged employees exhibit many of the following characteristics, enabling them to achieve significantly higher personal performance levels than disengaged employees:
1. Achieve consistently high levels of performance 2. High energy and enthusiasm 3. Committed to customers and exceeding customer expectations 4. Understand the desired outcomes of their job/role 5. Professionally and emotionally committed to their job and whatever they do 6. Expect and perceive a direct connection between their effort and reward received 7. Initiate problem-solving, challenge things that need to be changed 8. Innovate and strive for process and product excellence and efficiency 9. Focused on achieving goals, committed to completing tasks and assignments 10. Expect and enjoy autonomy and the ability to make decisions when needed to do their job 11. Initiate and participate in special projects and positive things to act on 12. Expand what they do and build on it 13. Committed to the company, their group and role 14. Proactive building of supportive relationships 15. Would recommend their company, products and services 16. Attention to details 17. Typically prefer complex, challenging work (as they perceive complexity and job challenge) 18. Communicate willingly and effectively with employees at all levels 19. More likely to identify risks and take appropriate risks 20. Committed to and demonstrate personal and professional improvement 21. Proactive conflict resolution 22. They get things done!
Performance Metrics of Employee Satisfaction Surveys, Employee Engagement Surveys and Employee Opinion Surveys
Employee Satisfaction Surveys and Employee Engagement Surveys should be customized to meet your organization’s special needs. The surveys should include sections and questions that gather information, perceptions and insight about both employee engagement and employee satisfaction issues. Following are some of the measurements included in Employee Satisfaction Surveys and Employee Engagement Surveys:
1. Having resources needed to do the job 2. Confidence in management’s ability to lead the company 3. Clarity and effectiveness of communications within and across organizational units 4. Management’s availability and openness to upward communications 5. Teamwork effectiveness 6. Demonstrating integrity 7. Encouragement for innovation 8. Consideration given to ideas and suggestions 9. Empowerment to make decisions 10. Commitment and effectiveness of diversity initiatives 11. Maintaining balance between work and personal life 12. Respect for and from manager/supervisor manager 13. Manager understanding what motivates employees 14. Fair treatment from manager/supervisor 15. Recognition from manager/supervisor 16. Commitment to quality excellence and customer service 17. Communication of performance expectations 18. Performance evaluation and feedback effectiveness 19. Effectiveness of training and mentoring 20. Effectiveness of recruiting, hiring and on-boarding processes 21. Opportunities for development and growth 22. Satisfaction with career prospects within the company 23. Satisfaction with compensation and benefits 24. Commitment to work at the company for the foreseeable future 25. Pride in working for the organization 26. Understanding of the company’s direction, mission, vision and values 27. Willingness to recommend the company as a good place to work
Benefits of Employee Satisfaction Surveys, Employee Engagement Surveys and Employee Opinion Surveys
Employee satisfaction surveys and employee engagement surveys generate significant bottom-line benefits and a very strong payback when action is taken based on the survey findings. The survey benefits include:
1. Increase employee engagement and performance 2. Increase employee satisfaction, employee loyalty and employee productivity 3. Identify hidden problems, opportunities and possible solutions 4. Create a roadmap for making breakthrough improvements 5. Focus managers’ energies on areas with the highest priority and the largest payback 6. Execute more effectively 7. Identify internal communications problems, a significant cause of dissatisfaction and poor performance 8. Strengthen the culture of collaboration and change 9. Reduce costly employee turnover 10. Enhance your “employer of choice” reputation 11. Avoid costly abuse law suits 12. Facilitate innovation and smart risk-taking 13. Reduce the People Performance Gap, the costly gap in performance between the most and least effective people performing each job in your company
Summary – Achieving Significant Gains in Employee and Business Performance
Companies and other types of organizations have a very significant opportunity to increase their bottom-line performance by increasing employee satisfaction and employee engagement. Conducting surveys that focus on both employee satisfaction and employee engagement and then taking action based on the survey findings is a highly effective way to achieve significantly higher
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