Saving Face by Making Meaning: The Negative Effects of Brand Communities' Self-serving Response to Brand Extensions

Jill  Avery

Other Unpublished Work | 2010

Saving Face by Making Meaning: The Negative Effects of Brand Communities' Self-serving Response to Brand Extensions

Abstract

An ethnographic study of a brand community following the launch of the Porsche Cayenne SUV finds that brand extensions can negatively affect the value of their parent brands. By studying the collective response to brand extensions of existing consumers and by substituting a culturally situated and socialized view of consumers, I expose negative feedback effects which have been previously undervalued in existing branding theories. By tracing the processes by which brand extensions are dialectically negotiated in a brand community, I show that negative brand effects stem from consumers' self-serving meaning-making activities. The research highlights three discourses in which consumers debate the legitimacy of users of the brand extension, the brand extension itself, and the post-extension parent brand. These discourses shift the locus of the brand's identity meanings within the brand hierarchy rendering the brand extension and the parent brand less attractive as identity markers and reducing brand equity.

Keywords: marketing; Brands; brands and branding; brand management; brand positioning; Brand equity; internet; social media; Customers; Customer Focus and Relationships; Customer Satisfaction; Marketing; Brands and Branding; Marketing Strategy; Auto Industry;

Language: English

Format: Print

Citation:

Avery, Jill. "Saving Face by Making Meaning: The Negative Effects of Brand Communities' Self-serving Response to Brand Extensions." (Invited for resubmission at the Journal of Consumer Research.)

Marketers have long appreciated the value and power of storytelling. Stories fill brands with resonant and relevant meaning and empower brands to serve as critical elements in the lives of consumers. Mastering the art of brand storytelling is an increasingly important part of managing brands in the contemporary brandscape, as today, we live in a world filled with an ever-expanding panoply of physical and virtual media spaces and places within which to create and tell stories with and to our consumers. This technical note outlines how and why consumers respond to brand stories, illuminates the four elements that make up good stories, discusses the use of archetypal plots and characters and other storytelling appeals, and provides guidance and a template for creating resonant, relevant, authentic, and differentiated brand stories.

Brian Perkins, chief architect of the $6 billion Budweiser brand, was excited about 2018, in which the company would launch Budweiser into several new markets in Africa and Latin America. He was feeling the pressure to finalize a global brand strategy that would define Budweiser’s value proposition and guide its development and execution around the world. The problem was that Budweiser actually had two distinct brand realities that differed across geographies and that often interfered with each other. He worried whether the company could keep selling a premium brand proposition abroad as the brand’s less premium reputation faced challenges at home in the U.S., and whether he needed to force a monolithic global brand strategy everywhere or allow for local market customization. Could Budweiser simultaneously accommodate two or more brand realities?

Case | HBS Case Collection | April 2019 (Revised October 2020)

Kraft Heinz: The $8 Billion Brand Write-Down

Jill Avery

On Friday, February 22, 2019, following an unexpected and disappointing earnings report, The Kraft Heinz Company’s stock price fell 27%, wiping out $16 billion in market value. CEO Bernardo Hees had announced that the company had taken a $15.4 billion asset write-down, that the company would be cutting its annual dividend from $2.50 to $1.60 and that it was under SEC investigation for accounting irregularities related to its procurement process. $8.3 billion of the asset write-down was related to a loss in value of the firm’s intangible assets, specifically its Kraft and Oscar Mayer brands. As Kraft Heinz looked ahead to the future, it was time to recalibrate its brand management strategies. With $50 billion in brand assets remaining on its balance sheet, effectively managing its brands going forward was critical to avoiding another brand asset write-down and to regaining the $8 billion brand value the company had just lost. Was Kraft Heinz's brand asset write-down the beginning of the end of the market dominance of "Big Food" brands across the board or was it idiosyncratic and a result of the firm's brand management resources, capabilities, and strategies?

Keywords: brand management; Brand Value; Brand equity; marketing ROI; brand storytelling; Intangible assets; brand valuation; Marketing; Marketing Strategy; Brands and Branding; Management; Corporate Strategy; Consumer Behavior; Food; Marketing Communications; Advertising; Private Equity; Consumer Products Industry; Food and Beverage Industry; United States; North America;

Citation:

Avery, Jill. "Kraft Heinz: The $8 Billion Brand Write-Down." Harvard Business School Case 519-076, April 2019. (Revised October 2020.) View Details

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Saving Face by Making Meaning: The Negative Effects of Brand Communities' Self-serving Response to Brand Extensions

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