The purpose of this report is to examine the brand extensions strategy of Zara which include these areas: the marketing objectives of brand extension, the relationship between competitive advantage of Zara and the brand extension strategy, the model and concept of evaluate customers’ attitude towards FFB extensions to judge whether the company is suitable to adopt brand extension strategy, apply the model into Zara’s three proposed extensions and the strengths and weaknesses of this strategy. Marketing Objectives
Brand extension can be defined as ‘the use of an established brand name on a new brand within the same broad market or product category’ by Jobber (2007) and as stated by Choi, et al (2010) a typical definition is ‘the use of an established brand name to enter new product categories or classes’. As brand equity contribute to an increase of share value of the intangible assets of the company (Madden, Frank & Susan, 2006).
Brand extension is a key tool to enhance brand equity (Susan, Hang & Mary, 2012).
Therefore, the objectives of implementing brand extension are enhancing the brand equity value, increasing sales and enhancing the consumers’ image of the brand values by increased communication (Jobber, 2007).
Competitive advantages of Zara According to the founder of Inditex, Amancio Ortega indicated that the aim of Zara is ’to democratise fashion by offering the latest fashion in medium quality at affordable prices’. The competitive advantages of Zara which differentiate from other competitors are the turnaround time and the feedback information from store (Lopez & Fan, 2009).
The Research paper on Brand Extension 2
Brand extension as a growth strategy has been employed in many companies and has increased its popularity in the recent decades. It also has gained a lot of attention from academic field. The use of established brand names to enter new product categories or classes is defined as brand extension (Keller and Aaker, 1992). Brands are important and are becoming more crucial for a company to survival ...
Zara can finish designing, manufacturing, delivering a new clothing within four weeks and display a new garment in two weeks (Economist, 2005).
Managers of Zara need to contact with the store to discover the demand of customers in daily basis and its advanced technology enables this company to quick response to customers’ changing demand. The time factor and feedback from store clarified that Zara is a customer oriented company. Therefore, customers’ attitude towards brand extension is vital for Zara to make the decision.
Model and concept Consumers’ perspective towards brand extension can be influenced by perceived fit, perceived quality, self-image, brand loyalty and involvement (Hansen and Hem, 2004).
Brand extension fit as a determinant of a successful brand extension (Hem and Iversen, 2003) can be defined as perceived similarity and relevance with the parent brand (Broniarcyk & Alba, 1994).
Aaker and Keller (1990) found that perceived fit can be evaluated by two areas: product concept consistency and product feature similarity.
Park, et al (1991) expounded that people who had a higher brand concept association with the extended category would give relevant connection to the existing main brand. Martin, Stewart and Matta (2005) demonstrated that as long as the brand concept is highly consistent, even if the extended product category is different from the existing product, the two products can be regarded as ‘fit’. Thus, brand concept consistency is a key factor to test the extended product to be fit or not.
As for the similarity, Aaker and Keller (1990) stated that there are three aspects of product features similarity between extended product and the parent brand product need to be investigated: complementarity (can be used together with original product), substitutability (can replace the original product) and transferability (manufacturing skills overlaps).
The Term Paper on Consumer Behaviour – Product Line Extension
Created by two avid surfers, Billabong is a brand designed by surfers, for surfers. In 1973, Billabong offered little more than a small range of surf wear: mainly surfboards and board shorts. But today, Billabong is a brand that encompasses the Australian surf culture by offering products that cater not only for the surfer inside many of us, but for fashion and lifestyle needs. 1.2 CURRENT TARGET ...
The Consumer evaluation process model for fast fashion brand extensions is displayed as below. (Source from Choi, et al, 2010) Apply model into Zara
The research carried out by Choi, et al (2010) which is considering three brand extensions of Zara: Zara music, Zara Moda (higher-end ladies’ wear) and Zara sports. To evaluate the attitude of consumers towards the brand extension of Zara, product concept consistency and product feature similarity can be adopted. In the research it has been shown that consumers’ attitudes towards Zara Music and Zara Moda are highly affected by the brand concept consistency while consumers’ attitude towards the FFB extension of Zara Sports are more affected by transferability aspect of similarity.
Nevertheless, one aspect need to be mentioned, self-image has less influence on consumers’ attitudes towards FFB extension since people buy Zara concerned more about style and design of the product may not consider if the extension brand match their image (Choi, et al, 2010).
The most significant factor that influenced customers’ attitudes towards brand extension of Zara is the perceived quality. Another aspect has been indicated by Swaminathan (2003), the degree of loyalty with the parent brand will affect consumer’s buying behaviour towards extended product.
Therefore, according to the response of the consumers, in order to achieve a successful brand extension strategy, Zara as a FFB may need to focus more on increasing the brand loyalty and developing the quality of product and service. Strengths and weaknesses The awareness of the core brand reduces the advertising and other marketing costs (Jobber, 2007; Keller, 1993).
Brand extension of a well known brand can reduce the risk of purchase on some distributors and consumers. The utilisation of the parent brand name raises customers’ intention to buy the new brand.
Furthermore, implementing brand extension strategy can increase consumer’s perception of brand values and thus raise the sales of the core brand (Jobber, 2007).
However, unexpected negative performance of the brand extension may influence the core brand’s reputation. The sales of parent brand may be diluted by the extended brand (Jobber, 2007; Keller, 1993).
The Term Paper on Consumer Attitudes Towards Counterfeit Products
Counterfeit products and materials are knock-off, bootleg, pirated or other illegally produced materials that are produced and sold in violation of the Intellectual Property Rights (IPRs) of others or in a manner that fraudulently represent their quality or origin (Porteus, 2002). Despite the various anti-counterfeit efforts of multinationals and international trade organizations, counterfeiting ...
Last but not least, the encouragement of using brand extension strategy may lead to less focus on true innovation (Jobber, 2007).
Conclusion Brand extension strategy can be adopted in Zara.
Zara as a customer-oriented company, need to pay more attention to the customers’ attitude towards extension. Brand extension fit, perceived quality and brand loyalty may need to be considered more carefully while self image do not necessarily be taken into account in a FFB company. Although the advantages of brand extension are evident, the brand managers need to analysis their own brand’s situation, should be aware of the risks of implementing this strategy and may need to attempt to thinking in an innovated way instead of concentrate on minor brand modifications.
