Saturday, August 30, 2014

Brand funda : Elasticity of Brand

Article Review : What Makes Brands Elastic? The Influence of Brand Concept and Styles of Thinking on Brand Extension Evaluation Journal of Marketing Vol. 74 (May 2010), 80–92 ( Link)

 In this very deeply research article the authors examine why some brands are more elastic than others. Here the authors describe elasticity as the ability of the brand to extend to other categories
  • Research suggest that brand extension success depend very much on the extension fit.That is whether the extensions fit the perception of consumers about the parent brand.
  • The more elastic the brand is when the brand is able to extend itself to distant categories.
  • Early research suggest that the brand's elasticity is dependent on the parent brand's characteristics.If the brand is positioned on prestige, then it is more elastic and can be extended to multiple categories.
  • Functionally positioned brands are less elastic 
This article tries to expand the existing research by saying that while brand's characteristics are important in determining its elasticity, the consumer's style of thinking is also very important determinant in the brand's elasticity. Consumer's thinking styles are classified into Holistic thinking style and Analytical thinking style.

Analytical thinkers focus more on attributes and categories to draw inferences and judgements while holistic thinkers focus on broader connections ( contexts, relationships) between objects. According to the study, brands which have a positioning based on prestige usually have a abstract message which can be transported to multiple categories. Functional brands are at a disadvantage since the functional attributes cannot be moved effectively to distant categories.
The response by the analytical and holistic thinkers to the extension are also significant. Holistic thinkers are able to connect between parent brand and extensions while analytical thinkers will find it difficult to relate parent brand and extensions if they are functionally different.

The study finds that the brand's elasticity is jointly determined by the parent brand's positioning ( prestige vs funtional )  and consumer's style of thinking ( holistic vs analytical)
For prestige brands, analytical and holistic thinkers has similar  response to brand extensions while for functional brands, holistic thinkers had a favorable response towards extensions. The probable reasons can be that when evaluating extensions of functional brands, analytical thinkers focused on functional attributed and their similarities and often found dissimilarities.Another important finding is that prestige brands encouraged holistic thinking in both type of consumers. 

The study also suggest that brand can encourage holistic thinking in consumers through brand architecture. Sub-brands can be used to increase elasticity of functional brands for analytical thinkers.Brands can also bridge the gap for analytical thinkers by elaborate communication about the extension. Marketers has to match the message to the consumer's style of thinking which can make distant extensions receive favorable responses from analytical thinkers.

The article has lot of significance to marketing practice. While conventional marketing wisdom suggest the brands should not extend too far from parent brand, in practice, this may not be possible.The article gives direction for marketers endeavoring such extensions.It is important that marketers understand the consumer characteristics and its impact on the responses to extensions. Prestige brands are difficult to create but it has its advantages when it comes to brand extensions.