Thursday, October 15, 2009

Association in disparate brands

A V Raghu Vamshi, K Raghunandan, IMT Ghaziabad

A Computer brand ties up with a prestigious Car brand. A Mobile Phone brand ties up with another prestigious Car brand. An Electronic equipment maker ties up with a prestigious Bike brand.

Stymied? Mystified? Welcome to the world of ‘Association in Disparate Brands’. The recent news of ‘Toshiba’ releasing its ‘Satellite U500’ laptop with ‘Ducati’ endorsing it has once again taken the focus on to the world of branding where one brand endorses another brand which is unrelated.

‘Association in Disparate Brands’ is not a novel concept. It has been there for a few years now. If one can recollect the associations between ‘Acer’ and ‘Ferrari’ or ‘Asus’ and ‘Lamborghini’ or ‘Fly’ and ‘Hummer’, the concept becomes more lucid. ‘Acer’ happened to be the official IT supplier for ‘Ferrari’ across the world. So, it saw an opportunity to increase the level of its products and had released a unique notebook which was endorsed by ‘Ferrari’ that targeted CXO’s and multimedia enthusiasts. ‘Asus’ had followed suit by associating itself with ‘Lamborghini’. A year ago, ‘Meridian Mobile’, a mobile phone brand had purchased a merchandising license from ‘General Motors’ to use the ‘Hummer’ brand on its ‘Fly’ range of mobile phones.

Some of these are once small companies and they have grown big in the minds of consumers by associating themselves with disparate brands.

So, why do brands need to associate themselves with others brands that are unrelated? What are the benefits that a brand reaps by associating itself with other brands? Are consumers ready to buy products just because they are getting endorsed by brands with higher level of brand equity?

People who are brand conscious are more likely to use specifically those brands that satisfy their
social and esteem needs. For satisfying their social needs, people might use brands to project themselves as someone who is in coherence with the latest fashion trends and who other people can identify with, and they satisfy their esteem needs when other people perceive them as someone who have high status. This is the cardinal reason why high class brands present in the world over survive and are able to command a price premium from consumers. This is also the main principle behind the strategy of ‘Association in Disparate Brands’. Companies are trying to elevate the level of their products by associating their brands with those brands that are perceived to have high level of brand equity. This holds true in the ‘Acer-Ferrari’ case. In the year 2004, ‘Acer’ was perceived as a company that was capable of producing good quality laptops but lacked the luster and prestige of a truly high class international brand. ‘Acer’, in a clever strategic move, elevated the class of its laptops by associating them with one of the most prestigious car brands. This step prompted another company ‘Asus’ to follow suit by tying up with another popular luxury automobile brand ‘Lamborghini’.

If a company attempts to leverage the brand equity of another company which is unrelated or more specifically, a product of another company which is unrelated, by associating with it, then the company needs to make sure that the core values of the brand to which it is getting associated, matches with the product that it is offering. The ‘Acer-Ferrari’ combination is a case in point. What was unique about the laptop launched by ‘Acer’ was that it was branded with the ‘Ferrari’ symbol and dressed in three layers of original patented red ‘Ferrari’ paint. Even the start-up tone of the laptop imitated the hum and accelerating of a ‘Ferrari’. ‘Acer’ has also gone in for a line extension by releasing a slew of laptops under the name of ‘Acer Ferrari’. Following suit, ‘Asus’ had gone ahead and tied up with ‘Lamborghini’, which is again one of the most popular automobile brands. It has released a notebook under the brand name of VX and then it has also gone in for a line extension by releasing a slew of laptops under this brand. What is unique about these laptops is that they are designed just the way the hood of ‘Lamborghini Reventon’ looks and similar to what ‘Acer Ferrari’ offered, these laptops were branded with the ‘Lamborghini’ symbol. Each laptop of VX brand boasts of high technology features, just like the ‘Lamborghini Reventon’ has, that take computing to the next level. Now what is common in both the cases of ‘Acer’ and ‘Asus’ is that the laptops offered the performance that was expected from them and additionally had been endorsed by brands with a high level of equity. The laptops had transplanted the core value of design from the automobile brands. Both the laptops were able to charge premiums from the consumers and because of the premium pricing, consumers considered them as Luxury Goods. These had become Giffen Goods. For ‘Fly Hummer’, it wasn’t the case. ‘Fly Hummer’ mobile phones were launched in colours that were used on the ‘Hummer’ vehicles. The phone also had decent design and construction and was loaded with ‘Hummer’ wallpapers and ring tones to give a complete experience to the customer. But, the ‘Hummer’ brand is known for its robustness and that core value was not transplanted to the product. In addition to this, the phone’s Keypad, User Interface and Music Player did not stand up to the expectations of customers and the phone was also not charging any premium. So, due to the distortion of expectations that the customers held, the phone hasn’t been able to cut ice with them.

This leads us to the fact that in ‘Association in Disparate Brands’, each and every company which wants its products endorsed by other unrelated brands of higher equity make sure that the core values of brands, with higher level of equity, are successfully transplanted to the products being endorsed as they are attempting to differentiate themselves based on other brands’ equity. This is a kind of win-win situation for both the companies as the brand with higher level of brand equity will enhance its brand visibility and the brand with lower level of brand equity will elevate its status in the minds of consumers.

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