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25/10/14] The value of brand relationships in creative industries Bazaki, Eirini Purpose of Paper The purpose of this study is to develop a theoretical framework that captures the effect of relational elements in creative industries. In particular, this paper takes the example of the fashion industry and examines the effect of relational elements on consumers’ evaluations of luxury fashion brand extensions.

The topic of consumer brand relationships is of critical importance to marketers across different sectors of the economy and all over the world. Keller (2014) describes consumerbrand relationships in terms of the emotional intensity of the relationship and the level of activity it requires from the consumer.

Although luxury fashion brands hold a significant market value of the luxury fashion industry (Tungate 2012), many luxury brands a not making significant profits (Chevalier and Mazzalovo 2008). The globalization of the fashion industry has increased consumers choice set and lead to fierce brand completion among the luxury brands. To effectively differentiate and compete in a global environment many luxury brands used high-status brand names (Choo et al., 2012). However, this branding strategy has become less effective in today’s luxury market as the customer seeks to engage with brand in at emotional level (Kapferer and Bastien 2009). Emotional involvement with the brand creates facilitates purchase decisions and creates an exclusive customer brand consumption experience (Brun et al., 2008).

A product may convey both functional and socio-psychological benefits to the consumer.

Whereas the functional benefits are important for luxury and non-luxury products (Valtin 2005), a luxury product may be better at conveying the socio-psychological benefits than a non-luxury product. Vigneron and Johnson 1999 categorize the socio-psychological benefits into interpersonal which are directed outwards (e.g., prestige value, uniqueness value and affiliation value) and personal benefits, which are directed inwards (e.g., emotional value).

The hedonic value of a brand refers to the emotional benefits a brand conveys and is proposed to be a major driver of extendibility of luxury brands (Hadtvedt and Patrick 2009). Bhat and Reddy (2001) found that brand affect for prestige brands positively influences affect towards the extension.

Design/methodology/approach Drawing on a systematic literature review in fashion management and luxury brand management, a conceptual model was created to addressing the importance of brand relationships when extending fashion luxury brands.

The current research selected two constructs from the brand extension literature and examined their influence on consumer evaluations of luxury fashion brand extension. More specifically, perceptions of fit have been at the core of the conceptual frameworks of almost all studies in the field of brand extension; perceived quality is the second most well researched construct.

Both constructs constitute the heart of Aaker and Keller’s (1990) principal model in understanding consumer behaviour towards extension products. The present study extends their model to include relational and co-creative elements and provide an improved understanding of extension acceptance under the paradigm of service dominant (S-D) logic.

The study includes the relational and co-creative elements as potential antecedents to the extension acceptance, due to the increase in popularity of the S-D logic and relational approach during the postmodern era and the lack of categorisation theory to account for connative (co-creative) and affective (relational) elements. The importance of this gap is brought to our attention by a stream of researchers who have recently started to experiment with the effects of other relational elements such as brand likeness (Yeung and Wyer 2005), brand attachment (Fedorikhin et al. 2008), brand trust (Reast 2005), and consumer emotions towards the brand (Park et al. 2002). In addition, theories from consumer behaviour raise the importance of the connative and affective part of the mind in consumer decision making (Agarwal and Malhotra 2005; Grimm 2005). The present research aims to make a valuable contribution to this developing area of research, by providing a more holistic conceptual framework that takes into consideration constructs that represent different parts of the brain function in evaluating luxury brand extensions.

Perceived Fit Research on brand extensions has considered “perceptions of fit” as a major consideration when attempting to extend (Grime 2001). The idea of perceived fit is achieved “when the consumer accepts the new product as logical and would expect it from the brand” (Tauber1988, p.28).

Admittedly, perceptions of fit is more researched in category than line extension literature, because of variations in physical similarity. Grime et al. (2002) fundamental article in line extensions argued that it is not the type of extension (category or line but the type of fit that matters. In support to this argument research has highlighted brand (line) extensions asymmetric effects of fit across different types of extensions (Heath, DelVecchio and McCarthy 2011). Indeed, it should not matter whether an extension is categorised as category or line extension, since it is the overall level of perceived fit that will affect its evaluation (Nijseen 1999; Grime et al. 2002).

Thus, it is proposed that:

P1 Perceived fit directly affects consumers evaluations of luxury brand extensions.

Perceived Brand Quality In addition to perceived fit, which is indicated as being important by almost all existing research work, there are numerous other studies which indicate a prominent role for the perceived quality of the brand (e.g., Sunde and Brodie 1993; Nijseen and Hartman 1994;

Bottomley and Doyle 1996). Zeithaml (1988) defines perceived brand quality as consumers’ perceptions over the superiority and excellence of the brand compared to its competitors. Zeithaml (1988) concludes that perceived brand quality represents a higher level of abstraction than a specific attribute of the product. Once the product is recognized as a member of a category, the consumer will immediately activate cognitive judgments; and if the brand is associated with high quality, the consumer’s memory rehearsal about the new product will centre on pleasant thoughts in relation to its expected value. As one’s perceptions of quality towards the original brand increase, trust of the new product and satisfaction will also increase. It seems logical to suggest, if the brand is associated with high quality, the extension will benefit, whereas if it is associated with inferior quality, the extension would be harmed (Aaker and Keller 1990; Boush and Loken 1991).

Nevertheless, there is conflicting evidence on whether high quality perceptions of the core brand increase consumer evaluations of an extension (due to the transfer of positive quality associations from the core brand to the extension). For example, while Bottomley and Doyle (1996) found support for a direct effect of core brand quality, Aaker and Keller (1990) provided evidence to suggest that there was no direct link from the perceived quality of the core brand to the extension evaluations. In any event, using core brand quality to predict extension and core brand evaluation may not be sufficient when used in isolation (Aaker and Keller 1990).).

There are also different views as to how core brand quality will affect the relationship between fit and consumer evaluations. Aaker and Keller (1990) found that good fit and high quality were necessary for favourable consumer evaluations. Similarly, Park and Kim(2001) also found the effect of original brand quality to be significant on the extension, provided that there is also congruence between the extension and the original brand.

In contrast, Keller and Aaker (1992) suggest that the higher the level of quality, the lower the impact of fit on consumer evaluations; in other words, a high quality brand should be able to extend further from its product category/image than a lower quality brand (Grime et al.

2002). This happens as beliefs about the perceived quality of the brand will transmit to the extension, if consumers observe a fit between the brand and the extension (Fiske and Pavelchak 1986; Rothbart and Lewis 1988). From another point of view, in a relatively recent study conducted by Völckner and Sattler (2006), which included fifteen important factors for extensions, the concept of perceived brand quality was not found to have any significant effect on extension acceptance. However, none of the studies discussed above was conducted

in the luxury sector. Thus, it can be proposed that:

P2 Perceived brand quality moderates perceptions of fit effect on consumer evaluations of luxury brand extension acceptance.

Customer to Brand Relationship Customer to brand relationship is a critical construct in the marketing literature as it describes the bond between the customers and the brand. Emotional attachment has been found to predict purchase behaviour (Park et al., 2010). Therefore, it is argued that a stronger customer to brand- relationship is likely to affect customer’s emotional dependency to the brand. As customers become more emotionally dependent by the brand their perceptions of fit between

the parent brand and the extension are likely to be influenced. Thus, it is proposed that:

P3 Customer to brand-relationship moderates the effect of perceived fit on consumers’ evaluations of luxury brand extensions.

Online Brand Communities The wide expansion of Web 2.0 technologies has enhanced and facilitated the communication between luxury brands and their consumers as well as the communication between luxury brand consumers themselves, who gather together in the form of online communities to share their brand experiences. Online brand communities are social systems and communication channels through which information about new products is transmitted, brand communities have the potential to influence members’ adoption behaviour by selectively exposing them to information about new products. Online brand communities are hence perceived by managers as a powerful instrument to influence customers’ behaviour. Brogi, Calabrese, Campisi, Capece, Costa and Di Pillo 2013 have found a positive relationship between spontaneous online brand communities and luxury fashion brand loyalty. Brand loyal customers are found to have positive behavioural intentions towards brand extensions (Hem and Iversen 2003).

Thus, it is proposed that:

P4 Online brand communities moderate the effect of perceived fit on consumers’ evaluations of luxury brand extensions.

Co-Creation of Value Web 2.0 participation based technologies allow users to interact instantly with the brand and other consumers creating value for the brand. The brand is viewed as a shared entity. Brogi, Calabrese, Campisi, Capece, Costa and Di Pillo 2013 have found that community generated content, as a form of co-creation can increase loyalty behaviours for luxury fashion brands.

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