Running Head: STRATEGIC BRAND AMBIGUITY, THE GATEWAY TO PERCEIVED PRODUCT FIT? A BRAND EXTENSION STUDY Strategic Brand Ambiguity, the Gateway to Perceived Product fit? A Brand Extension Study Graduate School of Communication Master’s program Communication Science Melissa das Dores Student number 10617442 Supervisor Dr. Daan Muntinga Date of completion: 29-01-2016 STRATEGIC BRAND AMBIGUITY, THE WAY TO PERCEIVED FIT AND TO BRAND EXTENSION SUCCES? Abstract An experiment was conducted exploring the effects of strategic brand ambiguity, the use of intended multiplicity in brand meaning. It is hypothesized that strategic brand ambiguity leads to an increase in perceived fit of brand extensions through the activation and integration of multiple brand associations. In addition, the moderating effects of brand familiarity and the individual difference variable, the self-construal are examined. Results showed strategic brand ambiguity did not predict number of brand associations nor did brand ambiguity predict the number of products perceived to fit. Strategic brand ambiguity- brand associations- brand familiarity- Self-construal 1 STRATEGIC BRAND AMBIGUITY, THE WAY TO PERCEIVED FIT AND TO BRAND EXTENSION SUCCES? Introduction For fast moving consumer goods the launch of brand extensions are an integral part of business (Sing et al 2012). This approach represents one of the most frequently employed branding strategies (Aaker & Keller, 1990; Kim & Yoon 2013). This is due to brand extensions generating financial, distributional and promotional benefits as well as increasing parent brand equity. Unfortunately, the failure rate of brand extensions in many fast moving industries is high: a recent report showed that in 2012, only four percent of consumer packaged goods met the AC Nielsen requirements for innovation breakthrough (ACNielsen, 2014). Therefore, knowledge about the factors that lead to the success or failure of a brand extension is limited (Besharat, 2010). One factor that has been shown to drive consumer acceptance and positive evaluation of brand extensions, is perceived fit of the extension with the parent brand. Perceived fit can be evaluated in terms of product category and attributes. For instance, a high in category fit extension is Heinz Mayonnaise. A different product from ketchup however complementary within the condiments category. Whereas, Heinz pasta sauce can be perceived to fit based on a similar attribute, the ingredient product. Research has demonstrated that for high perceived fit products, brand extensions receive more positive evaluations and less perceived consumer risk. This is due to the leveraging of the existing brand equity to the new product launch. In addition, the brand extension may benefit from a spillover of the parent brand associations and positioning. For instance, a perception of quality which transfers to the new product prior to product trial (Martinez & Pina, 2010). In brand extension research, it is commonly accepted that the relatedness of associations with the parent brand is the key driver of successfully extending a parent brand in a new category (Pitta & Katsanis, 1995; Kim & Yoon, 2013). A recent proposed strategy to increase the likelihood of association relatedness is purposeful polysemy. In the context of 2 STRATEGIC BRAND AMBIGUITY, THE WAY TO PERCEIVED FIT AND TO BRAND EXTENSION SUCCES? advertising, purposeful polysemy is the occurrence of at least two distinct interpretations for the same advertising message across audiences, time or situations (Puntoni, Schroeder, & Ritson 2010). According to Puntoni and colleagues (2010), advertisers can strategically implement polysemy as a positioning tool to highlight a broader range of features of the brand in an efficient and compact manner. In practice purposeful polysemy identifies by a level of abstraction in branding. Over time, polysemy with a positioning goal, as of now defined as strategic brand ambiguity, should lead to the strengthening and integration of multiple brand associations (Puntoni et al., 2010). However, this relationship has not been empirically tested. It is important for brand owners to identify and understand the impact of purposeful polysemy on brand associations. This is because, it is argued that purposeful polysemy effectively allows brand associations to expand to a more abstract and flexible associative network. Therefore, advertisers could use brand ambiguity strategically to (over time) direct and perhaps morph their brands. In addition, the ties within the network are strengthened. Therefore, creating clear building blocks for a strong brand. Strategic brand ambiguity could serve as a means to integrating multiple associations to the existing associative network. Therefore, allowing brands to anticipate for upcoming brand extensions. Positively influencing brand extension acceptance through the activation of fitting brand associations prior to the brand extension. However, whether brand ambiguity has these hypothesized effects has not been researched so far. Literature provides limited evidence in support of the proposition that brand ambiguity leads to an increase in the number of brand associations (Warlaumont, 1995) and in addition an increase in interpretations of respective advertisements (Ketelaar, van Ginsbergen, Bosman & Beentjes, 2008). Therefore, this study will investigate the effects of strategic brand 3 STRATEGIC BRAND AMBIGUITY, THE WAY TO PERCEIVED FIT AND TO BRAND EXTENSION SUCCES? ambiguity on brand associations and hypothesizes a positive effect on the perceived fit of brand extensions. As ambiguous ads give less guidance towards the intended meaning consumer knowledge is necessary in order to “fix the puzzle” (Ketelaar, et al., 2008; Puntoni, Schroeder & Ritson, 2010). More specifically consumers should have a minimal familiarity with the brand in order for an ambiguous ad to not generate frustration due to a lack of understanding but have a positive effect instead (Warlaumont, 1995; Ketelaar et al., 2008). For familiar brands moderately consistent messages and therefore also ambiguous and flexible ads not only improve awareness but also expand their network of associations, generate favorable responses and brand attitudes (Delgado-Ballester, Navarro & Sicilia, 2012). Therefore, this study proposes that the positive effect of brand ambiguity on perceived fit is moderated by brand familiarity as an existing brand schema is necessary for ambiguity to strengthen and expand brand associations. Lastly the individual difference variable self-construal is examined as a moderating effect. The interdependent self-construal has the ability to find relationships between stimulus materials and hence has a better response towards the perceived fit of brand extensions and the likelihood of its acceptance (Ahluwalia, 2008). For high interdependent consumers ambiguous brand communication could therefore be more easily interpreted and positively enhance the direct effect of brand ambiguity on perceived fit. Theoretical Background Openness in Advertising In order to discuss strategic brand ambiguity one has to grasp the broader concept of advertising openness and how this is discussed in literature. Advertising openness can be viewed as a broader umbrella concept and refers to the extent to which advertisements are 4 STRATEGIC BRAND AMBIGUITY, THE WAY TO PERCEIVED FIT AND TO BRAND EXTENSION SUCCES? open to interpretation and therefore give less to no guidance towards the intended meaning of the advertiser (Ketelaar, et al., 2008). Classic branding theory emphasizes clear-cut, straight forward ad messaging in order for the consumer to understand and interpret the intended message (Kotler & Armstrong, 2010; Delgado-Ballester, Navarro & Sicilia, 2012). Moreover, repetition of simple and clear selling propositions is said to enhance memory structures and therefore positively influence the higher order awareness measures and in turn influence sales (Sharp, 2010). However, for open ads there is a certain expectation that consumers are motivated enough and enjoy to figure out the intended “hidden message” (Ketelaar, et al., 2008). The use of openness in advertising has shown to be a growing phenomenon, multiple studies showed that across various product categories, the use of openness has increased (Warlaumont, 1995; Phillips & McQuarrie , 2002; Ketelaar, et al., 2008). Openness in advertising can be signaled through the use of prominent visuals and lack of verbal support and or ad copy (Warlaumont, 1995; Ketelaar, et al., 2008). The advertisements include visual style figures and sometimes only the brand name is given in absence of a product depiction. Openness may be for different reasons namely ads can be abstract, ambiguous, have an implicit meaning or include metaphors or other rhetorical figures (Ketelaar, et al. 2008). Hypotheses have been formulated on the effects of openness in advertising on consumer responses. One perspective is that consumers might find it difficult to interpret the ads, are lazy and do not want to invest efforts in interpreting advertising or do not enjoy fixing the puzzle. Therefore openness may lead to frustration or irritation and hence an undesired interpretation may be made or no interpretation at al (Miller & Mazis, 1971; Ketelaar et al, 2008; Ketelaar, Van Gisbergen, Bosman & Beentjes, 2010). The opposite perspective is that openness is viewed as moderately incongruent and therefore more attention is expected due to incongruence resolving with the result of more elaboration