"Impact of Co-Branding on Brand Equity and Luxury Perception (A Short Version)" by Eun Hee Ko and James J. Kellaris, University of Cincinnati 2007AbstractThere are little facts about the role of the co-branding in brand perception when two brandshave partnership until now. Our study tested consumers’ perception toward co-brandedproducts in terms of brand equity and luxury perception. The results showed that luxuryperception of a necessity good’s brand partnered with a luxury brand increases. Brand equityof a necessity good’s brand doesn’t change after the pairing whereas luxury perception of aluxury brand participating in co-branding strategy with a necessity good’s brand decreasesafter the alliance.IntroductionCo-branding is an increasingly popular strategy a marketer uses in attempting to transfer thepositive association with partner brands. The purposes of co-branding strategy can be diversedepending on a company’s situation, but in general the philosophy behind co-branding is toattain advanced market share, increase the revenue streams, and improve competitiveadvantages through customer awareness (Chang, 2009). Recent study (Bouten, Snelders, andHultink, 2011) investigated that consumers’ perception toward a new product with twobrands and found out that consumers prefer a new co-branded product that can be clearlyassociated with one of the brands in the partnership so that it can be categorizedunambiguously. The paper is organized into two studies. The first study explores consumers’perceptions’ toward a co-branded product and measures the perceptions using a brand equityscale and a luxury perception scale. The second study further explores the differencesbetween two distinct cultural spheres. The experimental survey will test how consumersperceive a co-branded product, when a necessity good’s brand has partnership with a luxurygood’s. The expectation is that consumers perceive that a co-branded product has higherbrand equity and luxury perception than a necessity product due to its pairing with a luxury
product.MethodsParticipantsThere were 405 participants participating from American and S. Korea. 207 participants inAmerica were recruited in undergraduate classes at University of Cincinnati Business Schooland given extra credits as reparation for their participation. 198 participants in S. Korea wererecruited through the most popular social media, Cyworld, and were paid cyber moneyvalued at $5.00.ProceduresThe present study used an experimental questionnaire including an imaginary scenario, wheretwo brands have partnership, where one band is a necessity good and the other is a luxurygood. Participants were first instructed to read the scenario and then asked to answer to thequestions regarding how they perceive the partnered brands. Respondents were also askedhow they perceive each of the brands participating in the paring before and after the pairing.Two measurements scales were used to assess consumers’ perception, one is brand equityscale by Yoo and Donthu (2001) and the other is luxury perception scale by Vigneron andJohnson (2004).HypothesesH1: Low-equity brands partnered with high-equity brands will have higher brand-equityratings than prior to the paring.H2: Low-luxury perception brands partnered with high-luxury perception brands will havehigher luxury perception ratings than prior to paring.H3: The brand alliance between high-equity brands and low-equity brands will not affect thebrand equity of the brands which have low brand equity.H4: The brand alliance between high-equity brands and low-equity brands will not affect thebrand equity of the brands which have high-brand equity.H5: The brand alliance between high-luxury perception brands and low-luxury perceptionsbrands will not affect the luxury perception of the brands which have low luxury perception.
H6: The brand alliance between high luxury perception brands and low luxury perceptionbrands will not affect the luxury-perception of the brands which have high luxury perception.ResultsStudy 1 – General Analysis(i) H1 - Brand Equity: Samsung vs. Samsung partnered with Porsche (Table 1)Analysis results showed that Samsung brand partnered with Porsche has higher brandawareness than Samsung brand (t = - 3.076, p < .05), whereas Samsung brand partnered withPorsche has lower brand loyalty than Samsung (t = 7.862, p < .05). In addition, Samsungbrand partnered with Porsche has higher perceived quality than Samsung but it is notstatistically significant enough (t = -0.394, p > .05).(ii) H2 – Luxury Perception: Samsung vs. Samsung partnered with Porsche (Table 2)Both luxury perception 1 (t = -4.375, p < .05) and luxury perception 2 (t = - 9.222, p < .05)are higher in Samsung brand partnered with Porsche than in Samsung. Therefore, it can besaid that Samsung brand partnered with Porsche has higher luxury perception rating thanprior to the paring. Table 1. Brand Equity: Samsung vs. Samsung + Porsche Table 2. Luxury Perception Samsung vs. Samsung + Porsche Group N Mean S.D. p Group N Mea S.D. t-value p t - value n Perceived Control group 103 5.44 1.10 -0.394 0.694 Luxury Control Group 102 3.84 1.64 -4.375 0.00 quality Perception 0*** Samsung+ 111 5.50 1.23 1 Porsche Samsung + 110 4.80 1.54 Awareness Control Group 100 3.77 1.69 -3.076 0.002 Porsche ** Luxury Control Group 98 4.09 1.06 -9.222 0.00 Samsung+ 111 4.49 1.74 Perception 0*** Porsche 2 Samsung + 107 5.43 1.01 Loyalty Control Group 95 5.58 1.33 7.862 0.000 Porsche *** Samsung+ 109 3.81 1.87 * Porsche p<0.05 ** p<0.05 *** p<0.05 * p<0.05 ** p<0.05 *** p<0.05(iii) H3 - Brand equity of Samsung after the paring (Table 3)The results revealed that Samsung’s perceived quality (t = 1.166, p> .05), brand awareness (t= -0.403, p>.05), and brand loyalty (t = 1.901, p>.05) do not change after the brand pairingwith Porsche.(iv) H4 - Brand equity of Porsche after the pairing (Table 4)
Perceived quality (t = 2.431, p < .05) and brand awareness (t = 2.572, p<.05) of Porsche have declined after the brand participated to the brand alliance with Samsung. On the other hands, it turned out that its brand loyalty (t = -1.271, p>.05) does not change after the pairing.Table 3. Brand Equity of Samsung after the pairing Table 4. Brand Equity of Porsche after the pairing group N Mean Standard t-value p group N Mean Standard t-value p Deviation DeviationPerceived Control 103 5.44 1.10 1.166 0.245 Perceived Control 99 6.40 1.09 2.431 0.016*Quality Group Quality Group Samsung 103 5.24 1.34 Samsung 97 5.99 1.26 + + Porsche PorscheBrand Control 100 3.77 1.69 -0.403 0.687 Brand Control 98 5.66 1.42 2.572 0.011*Awareness Group Awareness Purpose Samsung 102 3.85 1.40 Samsung 96 5.05 1.81 + + Porsche PorscheBrand Control 95 5.58 1.33 1.901 0.059 Brand Control 98 3.65 1.88 -1.271 0.205Loyalty Group Loyalty Purpose Samsung 103 5.19 1.53 Samsung 96 3.99 1.84 + + Porsche Porsche* p<0.05 ** p<0.05 *** p<0.05 * p<0.05 ** p<0.05 *** p<0.05 (v) H5 – Luxury perception of Samsung after the pairing (Table 5) It is discovered that there is not a significant difference between the Samsung’s luxury perception 1 (t = - 1.880, p> .05) and luxury perception 2 (t = -0.727, p>.05) measured by control group and the ones measured by the group who was exposed to the brand alliance scenario. (vi) H6 – Luxury perception of Porsche after the pairing (Table 6) The analysis showed that Porsche’s luxury perception 1 (t = 2.733, p< .05) and luxury perception 2 (t = 2.568, p<.05) have declined after the brand alliance with Samsung.Table 5. Luxury perception of Samsung after the pairing Table 6. Luxury perception of Porsche after the pairing group N Mean Standard t- p group N Mean Standard t-value p Deviation value Deviation Luxury Control 102 3.84 1.64 - 0.061 Luxury Control 94 5.87 1.21 2.733 0.007** Perception 1 Group 1.880 Perception 1 Group Samsung + 102 4.26 1.52 Samsung + 97 5.29 1.69 Porsche Porsche Luxury Control 98 4.09 1.06 - 0.468 Luxury Control 97 6.35 0.73 2.568 0.011* Perception 2 Group 0.727 Perception 2 Group Samsung + 102 4.21 1.27 Samsung + 95 5.97 1.24 Porsche Porsche * p<0.05 ** p<0.05 *** p<0.05 * p<0.05 ** p<0.05 *** p<0.05
Study 2 – Cross-cultural analysis(i) Brand equity: Samsung vs. Samsung partnered with Porsche: America vs. S. Korea(Table 7)The results said that Korean consumers perceived that Samsung brand has a higher qualityrather than Samsung brand partnered with Porsche (t = 2.181, p <.05), whereas Americanconsumers perceived the partnered brand has a higher quality than Samsung (t = -3.257, p<.05). In case of brand awareness, Korean consumers showed lower awareness of Samsungpartnered with Porsche than Samsung but the difference is not significant enough (t = 1.261,p>.05). On the other hands, American consumers showed higher awareness of the partneredbrand rather than Samsung brand (t = -7.225, p<.05). Lastly, brand loyalty of Samsungbecame significantly lower after the brand alliance in the results both from Korean consumers(t = -8.268, p<.05) and from American consumers (t = 2.787, p <.05). Table 7. Brand equity: S. Korea vs. U.S. Variables Groups S. Korea U.S. Mean S.D. Mean S.D. Perceived Quality Control group 5.64 0.93 5.15 1.27 Samsung + Porsche 5.20 1.30 5.93 0.97 t-value 2.181 -3.257 p 0.031* 0.002** Brand Awareness Control group 4.39 1.47 2.90 1.60 Samsung + Porsche 4.02 1.83 5.19 1.36 t-value 1.261 -7.225 p 0.210 0.000*** Brand Loyalty Control group 6.01 0.98 4.99 1.53 Samsung + Porsche 3.65 2.05 4.05 1.55 t-value 8.268 2.787 p 0.000*** 0.007** Perceived Quality Brand Awareness Brand Loyalty
Figure 1. Brand equity: S. Korea vs. U.S.(ii) Luxury Perception: Samsung vs. Samsung partnered with Porsche: America vs. S. Korea(Table 8)Korean consumers perceived that Samsung partnered with Porsche has higher luxuryperception 1 than Samsung does, but the difference is not significant (t = -0.136, p>.05),while American consumers perceived that the partnered brand is more luxurious rather thanSamsung in terms of their luxury perception 1 (t = -6.829, p<.05). In case of luxuryperception 2, both Korean consumers (t = -4.644, p<.05) and American consumers (t = -9.602,p<.05) perceived that it is significantly higher in the partnered brand than in Samsung. Table 8. Luxury Perception: S. Korea vs. U.S. Variables Groups S. Korea U.S. Mean S.D. Mean S.D. Luxury Control group 4.42 1.38 3.05 1.65 Perception1 Samsung + Porsche 4.45 1.52 5.32 1.44 t-value -0.136 -6.829 p 0.892 0.000*** Luxury Control group 4.50 0.82 3.51 1.10 Perception 2 Samsung + Porsche 5.31 1.08 5.60 0.89 t-value -4.644 -9.602 p 0.000*** 0.000*** Luxury Perception 1 Luxury Perception 2
Figure 2. Luxury perception: S. Korea vs. U.S.Discussion/ ConclusionSeveral themes have emerged from the data collected, but the clearest ones are three. First,luxury perception of a necessity good’s brand partnered with a luxury brand increases (H2).Second, brand equity of a necessity good’s brand doesn’t change after the pairing (H3). Third,luxury perception of a luxury brand participating in co-branding strategy with a necessitygood’s brand decreases after the alliance (H6). The other results are rather unclear. Forexample, the change of brand equity of the brand created through co-branding strategy israther controversial, because the three elements consisting of brand equity, which areperceived quality, brand awareness, and brand loyalty, showed different results in theirchanges of brand equity (H1). In addition, the results from cross-cultural analyses are alsorather contentious, since the differences between Americans’ perception and S. Koreans’ oneare not transparent. For instance, Americans and S. Koreans show different luxuryperceptions toward each of the elements (luxury perception 1 and luxury perception 2) beingcomposed of luxury perception (Cross-cultural analysis of H2). This study has severalimportant practical and theoretical implications. The most important one, however, is thatwhen marketers want to enhance a general brand to a luxury brand, co-branding with anexisting luxury brand can be an effective strategy.
References Chang, W.L. (2009) Roadmap of Co-branding Positions and Strategies. The Journal of AmerAmerican Academy of Business, 15(1). (Bouten, Snelders, and Hultink, 2011)Yoo and Donthu (2001) and the other is luxury perception scale by Vigneron and Johnson(2004)