Luxury for the Masses

uxury for the asses L M A Study of the H&M Luxury Collaborations with Focus on the Images of the Luxury Designer Brands UPPSALA UNIVERSITY Department of Business Studies Bachelor Thesis Date: March 2010 Authors: Carole Ginman Charlotte Lundell Catherine Turek Supervisor: Nazeem Seyed-Mohamed L uxury for the M asses “The media is constantly redefining what luxury is. Luxury can be a dirty sock if dressed up the right way” Zac Posen 1 Luxury for the Masses Executive Summary A strong brand is important for all companies; however, it is imperative for the success of a luxury fashion house as the image is one of its core assets. As strategic alliances are increasing in popularity the effect they have on how customers look at the partner brands is both interesting for the general person, but also – and more importantly – vital knowledge for companies pondering such a strategic move. The major focus of this study is to answer the question of how luxury designers’ collaborations with high street retailer Hennes & Mauritz affect how consumers perceive the luxury designer brand’s image. Theories on both brand extensions and co-branding have been compared to both qualitative and quantitative research conducted for the purpose of this investigation. This comparison has been made by using a model depicting the relationships between the collaborating brands. Through both acquiring a broad scope using the survey and deeper thoughts through focus group interviews the authors were able to gain a more holistic view of how people regard the luxury designer brands. The factors mainly investigated were those of change in awareness and change in purchase behaviour or intention, as they would be indicative of how people felt toward the luxury designer brands. The result of the investigation showed that the general perception of the luxury designer brands after the collaborations was positive with consumers in all segments. The collaboration did not cause a significant backlash on the regular luxury consumers, as the majority of this consumer segment also stated that they were not bothered by the collaborations. The collaborations could be seen as successful for the luxury designer brands as they managed to garner a lot of attention from new consumer groups, whilst at the same time managing to retain their regular customers. The reason found for not having had a negative impact on the brand was the way in which the collaborations were performed. That the brands had chosen a suitable partner where the perceived fit was great; that the associations with the collaboration and the partner brand did not infringe on the associations with the luxury designer brand; and the time frame of the collaboration, all meant that the consumers generally did not lose confidence in the luxury designer brands. Key Words: Brand Image, Brand Extensions, Co-Branding, Consumer Behaviour, Luxury Designer Brands, H&M 2 L uxury for the M asses Sammanfattning Ett starkt varumärke är viktigt för alla företag; särskilt viktigt är det för lyxföretag inom mode då varumärke och image är essentiellt för dess framgång. Det faktum att strategiska företagsallianser blir allt mer vanligt förekommande ökar intresset för dess effekter på konsumenters uppfattning av respektive samarbetspartner. Detta är intressant, inte enbart generellt sett, utan också och kanske mer uppenbart, för företag som funderar på en sådan strategi. Det huvudsakliga syftet med följande studie är att undersöka hur samarbeten mellan lyxföretag inom mode och lågpriskedjan Hennes & Mauritz påverkar hur konsumenterna ser på lyxföretagens varumärken. Teorier som behandlar både brand extensions och co-branding har applicerats på både kvalitativ och kvantitativ data genomförd speciellt för denna studies syfte. Den kvantitativa undersökningen har givit denna studie en bred bas medan djupgående kommentarer från fokusgrupperna har försett författarna med en mer övergripande bild av hur konsumenter uppfattar lyxvarumärkena. Förändring i medvetenhet och köpvana, eller avsikt att köpa, är de faktorer som främst undersökts då dessa anses vara indikationer på konsumenters attityder gentemot lyxföretagens varumärken. Den generella uppfattningen av lyxföretagens varumärken efter samarbetet med Hennes & Mauritz var positivt inom alla kundsegment. Att samarbetet skulle kunnat slå negativt mot lyxföretagen – med hänsyn till hur de skulle mottas av lyxkonsumenterna – inträffade aldrig i en större utsträckning då majoriteten av detta segment uttryckte att samarbetet inte förändrade deras uppfattning. Samarbetena kan från företagens sida ses som framgångsrika då de lyckats väcka uppmärksamhet bland nya konsumenter samtidigt som de lyckats behålla sina lojala kunder. Den främsta anledningen till varför samarbetet inte har haft någon större negativ effekt på lyxföretagens varumärken är tack vare dess utformning och utförande. Att lyxföretagen allierat sig med Hennes & Mauritz – som matchar lyxföretagens image bra –har gjort att associationerna till samarbetet, och H&M, inte har stött sig med associationerna gentemot lyxvarumärket i sig. Generellt var alla konsumenter även överens om att samarbetenas korta tidsperiod var ytterligare en orsak till att de inte förlorade förtroende för lyxföretagen. 3 Luxury for the Masses PREFACE The authors have a strong interest for brand management and for the creation of strong brands. Further, they are greatly fascinated by luxury and the concept of image. The idea of combining these interests and fascinations led to the project of investigating how luxury brands – usually with strong brand images – can maintain this image when collaborating with a company who has a completely different brand identity. Researching this topic and exploring the phenomenon of brand extension and co-branding – as means of financial growth and strengthening brand image – in relation to luxury brands, allowed the authors to combine and deepen their knowledge of two of their greatest areas of interest. Carole Ginman, Charlotte Lundell & Catherine Turek Uppsala, March 2010 ©We, Carole Ginman, Charlotte Lundell and Catherine Turek, declare that the text and work presented in this Bachelor thesis is original and that no sources other than those mentioned in the text and its references have been used in creating this study. The copyright of the Bachelor thesis rests with the authors. The authors are responsible for all of its contents. University of Uppsala is only responsible for the educational coaching and beyond that cannot be held responsible for the content. 4 L uxury for the M asses Contents 1. Challenges of the Changing Face of Luxury ......................................................................................................... 7 1.1 Aim and Research Question ............................................................................................................................. 9 1.2 Limitations to the Research Question............................................................................................................. 9 1.3 Outline................................................................................................................................................................10 2. Luxury Defined .......................................................................................................................................................10 3. What’s in a Brand? ..................................................................................................................................................10 3.1 The Value of a Brand .......................................................................................................................................10 3.2 The Importance of Congruence between Brand Identity and Brand Image ..........................................12 3.3 Consumer Behaviour, Brand Image and Luxury Brands ...........................................................................12 4. Growth and Expansion of the Luxury Brand ....................................................................................................14 4.1 Brand extensions ..............................................................................................................................................15 4.1.1 A hot topic but not a new concept ........................................................................................................15 4.1.2 Extension and the diffusion of brands ..................................................................................................15 4.1.3 Brand extensions implemented successfully ........................................................................................15 4.1.4 Evaluation of brand extensions ..............................................................................................................16 4.1.5 Masstige ......................................................................................................................................................16 4.2 Co-branding.......................................................................................................................................................16 4.3 The H&M Luxury Collaborations Categorized ...........................................................................................18 5. Method ......................................................................................................................................................................20 5.1 Choice of theory ...............................................................................................................................................21

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