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Brand Extension in the Music Industry

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Brand Extension in the Music Industry Brand Extension in the Music Industry An investigation on how In Flames can create passive revenue streams Master of Science Thesis in the Management and Economics of Innovation Programme JOHAN HENRIKSSON ANDREAS NORDSJÖ Department of Technology Management and Economics Division of Innovation Engineering and Management CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden, 2012 Report No. E 2012:101 MASTER’S THESIS E 2012:101 Brand Extension in the Music Industry An investigation on how In Flames can create passive revenue streams JOHAN HENRIKSSON ANDREAS NORDSJÖ Tutor, Chalmers: Jonas Hjerpe Department of Technology Management and Economics Division of Industrial Engineering and Management CHALMERS UNIVERSITY OF TECHNOLOGY Göteborg, Sweden 2012 Brand Extension in the Music Industry Henriksson & Nordsjö © Henriksson & Nordsjö, 2012 Master’s Thesis E 2012:101 Department of Technology Management and Economics Division of Industrial Engineering and Management Chalmers University of Technology SE-412 96 Göteborg, Sweden Telephone: + 46 (0)31-772 1000 Chalmers Reproservice Göteborg, Sweden 2012 Abstract The development of the music industry has not surpassed anyone; streaming music has replaced record sales to a large extent and this is affecting the way artists and bands turn their songs into profits. Even though the downward trend has turned, artists and bands still render less revenue today in relation to before from selling their music. This has led to more extensive touring schedules and, for some bands and artists, enlarged product portfolios that nowadays also include beverages, perfumes and other seemingly disconnected products. This thesis was conducted in collaboration with one of Sweden’s largest musical exports, In Flames, and the aim was two-folded. The first aim was to explore how In Flames can extend their brand in order to generate new passive revenue streams. The second aim was to add to the academic research within the area of brand extension in the music industry, an area sparsely covered in previous research. In parallel, mapping of brand extension success factors, brand dilution mitigation strategies, the In Flames brand, In Flames main customer segments and In Flames assets and capabilities were conducted. Research methods such as semi-structured interviews, content analysis, focus groups and a survey among others were used to collect data. Source and method triangulation were implemented to validate the quality of the data and the result. The result of the initial investigation was used as input into the brand extension idea generation, evaluation, selection and implementation stage. Using four main sources to tap ideas from, 56 non-ICT brand extension ideas were generated. All identified ideas were intended to satisfy a certain need within at least one of the identified three fan segments. Identified ideas went through an idea evaluation screening based on a stage-gate process that involved four main steps. The screening model used revealed that a fashion collaboration between In Flames and a fashion brand has the greatest potential relative the identified success factors. A guideline for the implementation phase, in form of a business model canvas, is proposed and is intended to cover all critical areas that need to be considered. The findings of this thesis conclude that many success factors identified in literature (perceived fit, marketing support, and high quality extensions) are also valid in the context of In Flames’ situation. However, the authors also propose uniqueness and a credible background story as particularly important in the context of brand extensions in the music industry. These findings are considered additions to the academic research within the sparsely covered field of brand extensions in the music industry. Table of contents 1. Introduction ......................................................................................................................................... 1 1.1 Background ................................................................................................................................... 1 1.1.1 In Flames ................................................................................................................................. 1 1.2 Purpose .......................................................................................................................................... 2 1.2.1 Research questions................................................................................................................. 2 1.3 Two parallel theses ........................................................................................................................ 2 1.4 Delimitations ................................................................................................................................. 3 1.5 Report structure ............................................................................................................................ 3 2. Previous research ................................................................................................................................ 4 2.1 What is a brand?............................................................................................................................ 4 2.2 Definition of Brand Extension ....................................................................................................... 5 2.2.1 Eight types of brand extensions ............................................................................................. 5 2.3 Brand management strategies ...................................................................................................... 6 2.4 Brand Extension goals ................................................................................................................... 7 2.5 Previous research analysis ............................................................................................................. 8 3. Methodology and theory................................................................................................................... 10 3.1 Research strategy and design ...................................................................................................... 10 3.1.1 Work process ........................................................................................................................ 10 3.2 Methodology - Brand extension success factors and brand dilution mitigation strategies ........ 13 3.3 Methodology and theory - Brand audit ....................................................................................... 14 3.3.1 Theory – Brand audit ............................................................................................................ 14 3.3.2 Methodology – Brand audit ................................................................................................. 15 3.4 Methodology and theory - Assets and capabilities ..................................................................... 18 3.4.1 Theory - Assets and capabilities ........................................................................................... 18 3.4.2 Methodology - Assets and capabilities ................................................................................. 19 3.5 Methodology - Identification of brand extension opportunities ................................................ 20 3.6 Methodology and theory - Idea evaluation and selection .......................................................... 21 3.6.1 Theory – Idea evaluation and selection ............................................................................... 21 3.6.2 Methodology - Idea evaluation and selection ...................................................................... 22 3.7 Methodology and theory - Creating implementation plan ......................................................... 22 3.7.1 Theory – Creating implementation plan .............................................................................. 23 3.7.2 Methodology - Creating implementation plan ..................................................................... 24 3.8 Overview and summary of research methods used.................................................................... 24 3.9 Reliability and validity ................................................................................................................. 25 4. Brand extension success factors and brand dilution mitigation strategies ...................................... 27 4.1 Literature sources – Brand extension success factors and brand dilution mitigation strategies 27 4.1.1 Differences between conventional industry brands and emotionally driven industry brands ....................................................................................................................................................... 27 4.1.2 Brand extension success factors .......................................................................................... 28 4.1.4 Brand dilution mitigation strategies ..................................................................................... 30 4.2 Empirical data - Brand extension success factors and brand dilution mitigation strategies ...... 31 4.2.1 Differences between conventional industry brands and music industry brands................. 32 4.2.2 Brand extension success factors .......................................................................................... 32 4.2.3 Brand dilution mitigation strategies ....................................................................................
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