27.10.2012 г.

Symbolic attributes and brand transgression



The foundation, on which the implications of the paper “Effectiveness of corporate responses to brand crises: The role of crisis type and response strategies” are built, is that brand crisis types differ by brands benefits, which are functional and symbolic. Furthermore, it is claimed that poor performance on functional attributes is more detrimental to satisfaction (performance-based crises) than poor performance on symbolic attributes (values-based crises), according to Mittal et al. I disagree with this argument because the impact of the crisis is a function of the relevance of the crisis to the brand’s equity key associations, as stated in the paper “Brand crises: The roles of brand familiarity and crisis relevance in determining the impact on brand evaluations”. So, if the key association with the brand is a symbolic one, it is more important than the functional one and determines the impact of the crisis. Here the example with Porsche can be adduced as a proof, since it is associated with symbolic attributes and if there is a huge relevance (mediation effect) of the crisis with them the transgression on equity will be significant. Moreover, brand positioning on lifestyle /symbolic attributes/ can prevent a brand from crisis and be safer than functional positioning. And that is the example with beverage, which when positioned on purity is at higher risk than on lifestyle. This reaffirms my statement that symbolic benefits impacted by values-based crisis should not be underestimated and are not less important than functional ones affected by performance-based crises, therefore the response strategies to these kinds of crises should be also be revised.
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16.10.2012 г.

How investors perceive brand quality



One of the main implications of the paper “The impact of brand quality in shareholder wealth” is that investors view unanticipated increases in brand quality less favorably if accompanied by decreases in current-period earnings because it is a signal that a firm does not have the resources to maintain and enhance its brand quality. This argument is questionable because most consumers vary on the use of price and brand name when evaluating the various dimensions of quality, as stated in the paper “Price and brand name as indicators of quality dimensions for consumer durables”.  For instance, when assessing a product for which performance is an important dimension to people the correlation between price and perceived quality is not strong. So, consumers have high perceived brand quality but it doesn’t pay off with the same extent in the price they are prone to pay. In other words, people perceive high the quality of the product but the company cannot exert high price of them. However, the firm maintains a high quality and has the resources to maintain it which contradicts the point of view of investors in this situation, who view it less favorably. This fact proves that investors are wrong in this case, because they look at quality form an overall standpoint and not considering the multi dimensions it has.
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