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European Journal of Marketing

Leveraging the corporate brand: The importance of corporate brand


innovativeness and brand architecture
Tim Oliver Brexendorf, Kevin Lane Keller,
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EJM
51,9/10 Leveraging the corporate brand
The importance of corporate brand
innovativeness and brand architecture
Tim Oliver Brexendorf
1530 WHU – Otto Beisheim School of Management, Duesseldorf, Germany, and
Received 7 July 2017 Kevin Lane Keller
Accepted 10 July 2017
Dartmouth College, Tuck School of Business, Hanover, New Hampshire, USA
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Abstract
Purpose – Most research on branding highlights the role of associations for a single brand. Many firms,
however, have multiple brands and/or different versions of one brand. The latter is largely the case for many
corporate brands. This paper aims to broaden the understanding of corporate brand associations and their
transfer within the firm’s brand and product portfolio. In particular, this paper also examines the concept of
corporate brand innovativeness and the influence of brand architecture as supportive and restrictive
boundary conditions for its transfer.
Design/methodology/approach – This conceptual paper explains the nature, benefits and challenges of
corporate brand innovativeness within the context of a firm’s brand architecture. On the basis of a literature
review, the authors provide an overview of the domain and derive avenues for future research.
Findings – Research and practice have not fully realised the importance of corporate brand images for
supporting a firms’ product portfolio. In particular, (corporate) marketing managers need to consider the
potential value of favourable perceptions of corporate brand innovativeness across products and the
moderating role of brand architecture.
Research limitations/implications – More empirical research is needed to understand the reciprocal
relationship and transfer between corporate and product brand associations and equity.
Practical implications – A corporate marketing perspective allows firms to use corporate brand
associations to support products and services for that brand. This paper discusses perceived corporate brand
innovativeness as one particularly important corporate brand association.
Originality/value – The authors discuss the use of corporate brand associations under the consideration
of brand architectures and boundaries and draw on several research streams in the brand management
literature. Much of the branding and innovation literature centres on the product level; research on corporate
brand innovativeness has been relatively neglected.

Keywords Innovativeness, Corporate branding, Brand architecture, Brand portfolio,


Brand boundaries, Corporate associations
Paper type Conceptual paper

Introduction
Over the past decade, an important marketing trend has emerged towards greater emphasis
on corporate marketing (Balmer and Greyser, 2006; Balmer, 2009, 2011), corporate brands
European Journal of Marketing
(Balmer 1995, 2001a, 2013; Keller, 2000) and corporate dominant branding structures
Vol. 51 No. 9/10, 2017
pp. 1530-1551
(Balmer and Gray, 2003; Lei et al., 2008; Laforet, 2015). This trend has been manifested in
© Emerald Publishing Limited many different ways and in academic circles by the publication of notable special issues
0309-0566
DOI 10.1108/EJM-07-2017-0445 devoted to the topics of corporate marketing and corporate branding within the European
Journal of Marketing (e.g. Volume 46, Number 7/8; Volume 46, Number 5) and the Journal of Leveraging the
Brand Management (e.g. Volume 19, Number 3; Volume 20, Number 9). corporate
The greater emphasis on corporate-level marketing is underpinned by an organisation-
wide focus and orientation (Webster, 1992; Balmer and Greyser, 2006) that appreciates the
brand
value of an institutional focus in marketing (Balmer, 2011). The corporate brand becomes an
expression of the corporate strategic intent (Urde, 1999) and aligns brand activities with a
more coherent strategic framework (Kernstock and Brexendorf, 2009). Therefore, the explicit
and additional focus on corporate brand-level matters has provided new perspectives to 1531
firms and has opened up a wide range of marketing opportunities for them. A number of
reasons might explain this top-down, mono-brand emphasis, but certainly one is a belief in
the effectiveness and efficiency of creating a strong corporate brand to benefit all the
different types of products sold by the firm using the corporate brand. All indications are
that this increased focus on corporate branding will persist in the future.
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The greater emphasis on corporate branding underscores the importance of


understanding the branding strategy adopted by a firm and the linkages between different
levels of a multi-tier brand. A corporate-level perspective of brands complements and
provides benefits to the product and service-level perspective of brands (Balmer, 2011). It
integrates different levels of brands and allows comparisons of the commonalities and
differences between these distinct levels (Balmer and Gray 2003; Balmer, 2012b). The
corporate brand as a distinct identity (Balmer, 2010, 2012a) requires an alignment with all
other related brand identities (Balmer, 2010). Firms can have brand architectures with
multiple identities and multiple facets where the corporate brand more or less embraces and
contributes to the product brands (Balmer, 2001b; Brexendorf and Kernstock, 2007; Keller,
2014). The brand architecture – the hierarchal structure as to how the firms’ products and
services are branded – can provide valuable assistance in understanding the transfer of
different corporate image associations from the corporate brand to any sub-brands and
products in its portfolio and any reciprocal feedback effects from them.
In corporate branding, the societal role of corporate brands in terms of their social
responsibility and credibility associations has gained a lot attention in recent years (Balmer,
2012a). This is understandable because one important consideration of corporate brands –
as compared to product brands – is its broader stakeholder audience which is covered
within the CSR perspective on corporate brands. Like product brands, however, corporate
brands also have distinct, direct value for customers. To customers, the corporate brand also
provides trust and expertise that is earned, cultivated and nurtured through the activities
accrued in the past and present. In particular, with virtually all firms seeking to grow their
brands through new product development and the introduction of brand extensions, one
potentially important corporate brand association is perceived brand innovativeness
(Brexendorf et al., 2015). How valuable are perceptions of innovativeness for a corporate
brand? How are these perceptions formed? Under what conditions are these perceptions
most helpful to the firm?
The aim of this article is to discuss the nature, benefits and challenges for image transfer
of associations such as corporate brand innovativeness between a corporate brand and
associated sub-brands and products in its portfolio. We seek to contribute to the nascent
literature on multi-tier brands and consider how corporate brands can be managed in terms
of their innovativeness. After briefly reviewing brand architecture strategy, we reinforce the
importance of corporate brand associations and introduce the concept of corporate brand
innovativeness. We then discuss the role of brand boundaries and elasticity. We close our
discussion with potential areas for future research with respect to the three main areas
discussed. Note that as regards corporate brand associations, although there are multiple
EJM constituencies, we focus our discussion on corporate brand innovativeness and brand
51,9/10 architectures with respect to consumers and customers, either as individuals or
organizations.

Brand architecture
Firms rarely use one brand for all of their different products and services. Instead, they often
1532 use multiple brands, with different brands used for different products, as well as multiple
brands combined in different ways for any one product, i.e. as sub-brands. A brand architecture
strategy defines the number and nature of common and distinctive brand elements (i.e. names,
logos, symbols, etc.) used across the firm’s products, revealing their explicit ordering. It
suggests which brand elements a firm should apply across new and existing products and
services, clarifying the similarities and dissimilarities between the entities involved (Douglas
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et al., 2001; Keller, 2014; Strebinger, 2014).


Brand architecture is a vital part of a firm’s marketing strategy, as it is the means by
which firms help consumers understand its products and services and organise them in their
minds. Internally, it clarifies where a firm can go and how it can get there (Keller, 2014). As a
result, a brand architecture strategy establishes both the brand’s breadth or boundaries and
its depth or complexity. Which different products or services should share the same brand
name? How many variations of that brand name should be used?
These are complex questions and one of the major marketing challenges for many firms
is designing and implementing a brand architecture strategy that maximises brand equity
and ensures long-term financial prosperity and growth (Keller, 2014). A well-implemented
brand architecture strategy helps to organise brands and their offerings in the best possible
way to maximise leverage, synergy, flow and clarity (Aaker, 2004a). Fostering appropriate
brand relatedness as part of the brand architecture strategy to increase efficiency through a
positive transfer of belief and brand equity is, therefore, an important management
imperative (Lei et al., 2008).

Elements of brand architecture


Two important tools in developing brand architecture strategies are brand portfolios and
brand hierarchies. A brand portfolio is the set of all brands and brand lines that a particular
firm offers for sale to buyers (Keller, 2012). A brand portfolio approach emphasises the
relationship among different brands and brand lines in the portfolio – i.e. their independence
or interdependence. It further underlines that the overall value of a brand portfolio is not
strictly equal to the addition of the individual brands due to their potentially synergistic or
competing effects. A brand hierarchy is a useful means of portraying a firm’s branding
strategy for any one particular brand and brand line. A brand hierarchy displays all
products associated with a brand, as well as other brands used in combination as sub-
brands to help brand those various products. Keller (2000, 2013) outlines four levels to a
brand hierarchy, including corporate brands, family brands, individual brands and modifier.
In terms of brand hierarchies, the corporate or company brand is the highest level brand
of any organisation and refers to the legal entity by which the organisation was formed[1].
Corporate brands, however, are much more than that. As noted above, corporate branding
has gained in importance in marketing in recent years as firms seek to streamline their
branding strategies for efficiency and effectiveness. Accordingly, corporate marketing
activities are actions and programmes that companies initiate and that are identified with the
corporate brand as opposed to any particular individual product or service brand (Keller and
Aaker, 1998).
Benefits and costs of corporate branding Leveraging the
Due to increased mergers and acquisitions, adaptation to and development of new markets corporate
and categories and the need to serve fragmented customer needs, firms have constantly
extended and stretched their brands over time (Meyvis and Janiszewski, 2004; Varadarajan
brand
et al., 2006). In situations where complex and diverse product portfolios are present, strong
corporate brands can provide direction and support. Besides the challenge in managing
complex product portfolios, it is becoming more and more difficult to credibly build and
maintain brand differentiation (Hatch and Schultz, 2003). Establishing and embedding a 1533
corporate brand image that elicits distinct associations in the minds of key constituents has
the potential to differentiate the corporate brand as well as produce a “trickle down” effect to
create differentiation at the product and service brand level too.
Corporate brands, as the highest level of the brand hierarchy, can potentially endorse a
wide range of products and services, to varying degrees and can benefit from the reciprocal
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equity transfer across all levels. Corporate brands can act as an umbrella brand to confer
equity to its product portfolio but also, in turn, potentially benefit from feedback effects from
product and services at lower levels of the brand hierarchy to enhance its own corporate
brand equity (Balmer, 1995; Lei et al., 2008). By its nature, a product brand is defined largely
by what it does, whereas a corporate brand is defined as much by whom it is as by what it
does (Keller and Richey, 2006). As such, there is a strong potential for mutual enrichment of
both corporate and product brands.
For all these reasons and more, corporate branding offers these valuable marketing
benefits to firms:
 Focus: Marketing resources and efforts can be directed towards a single brand.
 Simplicity: Less brands to manage internally and externally.
 Efficiency: Brand image and equity can be effectively leveraged across multiple products.
 Reinforcement: Can more easily benefit from positive feedback for any new or old
products.

These benefits come at a cost too, as these advantages go hand-in-hand with potential
disadvantages. For example, positive feedback and possible reinforcement from its products
or sub-brands may be offset by negative feedback and possible dilution at the same time.
Formally, corporate branding may suffer from these undesirable costs:
 Lack of specificity: The unique opportunities and challenges for specific products
may be overlooked or ignored.
 Blurred meaning: By being associated with so many products, the corporate brand
may lack specific meaning.
 Dilution effects: The negative effects of any crisis or problem with one particular
problem may spread more easily across products for the corporate brand.
 Lost opportunities: There are fewer opportunities to create potentially beneficial new
brands.

Next, we delve more deeply into factors affecting the transfer of associations between the
corporate brand and its products, focusing on corporate brand innovativeness in particular.

Relationship of corporate brands to product brands


In defining and implementing a coherent brand architecture strategy, an important question
is how equity transfers (both positive and negative) from the corporate brand to all its
EJM individual products and services and sub-brands – and vice versa. Past research suggests
51,9/10 that the type of branding strategy that a firm adopts influences the equity transfer between
the corporate brand and any product or sub-brands (Muzellec and Lambkin, 2009).
Madrigal (2000) suggests that the perceived fit between the corporate and the product
brand positively influences the effect of corporate brand associations. In their study, Sheinin
and Biehal (1999) report that corporate ability associations influence product attitudes only
1534 when the corporate brand is more dominantly visible and shown in a product advertisement.
In a further research study, Milberg, Park and McCarthy (1997) show that the (main) effect
of fit on the evaluation of product brand extensions is smaller when both the parent brand
and sub-brand are shown than when only the parent brand is shown. Berens et al. (2005)
show that corporate brand dominance determines the degree to which associations with the
firm’s corporate ability influence product attitudes, as well as the nature of the moderating
effects of fit and involvement.
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In short, when the corporate brand is dominantly visible, corporate brand associations
appear to be highly salient cues that influence product evaluations, relatively independent of
perceived fit and product involvement. In contrast, when the corporate brand is not
dominantly visible, consumers use corporate brand associations only as a means to increase
the reliability of their product evaluation. In this case, corporate brand associations
influence product evaluations only when involvement is high, but not when involvement is
low. These results suggests that the process of brand image transfer is different when the
corporate brand is dominantly visible than when the parent brand is not dominantly visible
(Berens et al., 2005).

Corporate brand innovativeness


Despite the relevance of the interrelationship between the corporate brand associations and
associations of all products and sub-brands at lower levels of the corporate brand hierarchy,
surprisingly little is known about their interplay. Findings that empirically demonstrate the
mechanisms through which corporate associations like innovativeness affect product-level
responses are especially lacking (Biehal and Sheinin, 2001). We next consider some basic
aspects of corporate brand images before examining how perceptions of corporate brand
innovativeness can operate.

Corporate brand images


Strong corporate brands express themselves in terms of who they are and what they are
about. They provide a means to transcend and extend the associations evoked by individual
products and services (Balmer, 1995; Keller, 2000; Balmer and Greyser, 2006). To establish a
strongly rooted brand image, a corporate brand needs to evoke strong, favourable and
unique associations, e.g. as related to the brands and products offered (e.g. corporate ability),
the manner by which they treat their customers (e.g. corporate trust), or with respect to
societal issues (e.g. corporate social responsibility) (Aaker and Keller, 1990; Keller, 1993;
Brown and Dacin, 1997; Dacin and Brown, 2002).
In general, corporate brands encompass a wider and mostly different range of
associations than product brands (Keller, 2013). Corporate brands are more likely to evoke
associations to common products and their shared attributes or benefits; people and
relationships; programmes and values; and corporate credibility. Moreover, corporate
brands typically have a set of “personality traits” that is broader and differently composed
than the set of personality traits for a typical product brand. All of these different kinds of
associations can affect how corporate brands operate in the marketplace.
Because of the meaning that it accumulates, the corporate brand can serve as a cue for Leveraging the
triggering image perceptions and can function as a shorthand device that signals a certain corporate
level of information (de Ruyter and Wetzels, 2000). For corporate brands, these associations
are generally based on more than one category of products and on more than one source of
brand
information. The variety in sources can lead to more elaborate and confidently held
impressions than those which are obtained from knowledge about individual products
(Balmer, 1995; Keller, 2000; Hatch and Schultz, 2003; Berens et al., 2005; Balmer, 2012b).
Further research also shows that consumers draw inferences about missing product 1535
information from existing corporate brand associations (Dick et al., 1990).
In some seminal early research, Brown and Dacin (1997) reported that corporate
associations (i.e. corporate ability and corporate social responsibility) directly impacted the
company evaluation and new product responses. Biehal and Sheinin (1998) further showed
that a corporate ability message transferred more to the product portfolio for the corporate
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brand than a corporate social responsibility message. Keller and Aaker (1998) extended this
finding and showed that corporate marketing activity related to product innovation
produced more favourable evaluations for a corporate brand extension than corporate
marketing activities related to either the environment or the community (see also Gürhan-
Canli and Batra, 2004). Collectively, these research studies suggest the importance of
corporate brand innovativeness, a topic we turn to next.

Corporate brand innovativeness in theory and practice


Unlike Hurley and Hult (1998), who conceptualise innovativeness as an internal capability
and aspect of the organisational culture that precedes innovation, we define corporate brand
innovativeness as a firm’s reputation in providing novel and useful solutions for its
constituents. It can be distinguished from product innovativeness which can be
characterised more concretely by the degree of novelty associated with particular products
in terms of their functionality, features and benefits (Lee and O’Connor, 2003).
Corporate brand innovativeness is more about how a firm’s constituents perceive it as
being able to reliably develop and provide unique and rewarding product and service
solutions (see also Keller and Aaker, 1998). These associations pertain to the firms’ R&D
ability and investments and its efforts and capabilities of consistently producing and
offering new and innovative products. Being perceived as innovative is also seen in part as
being modern and up-to-date (Keller, 2000; Gürhan-Canli and Batra, 2004; Henard and Dacin,
2010).
Innovativeness can serve as an important corporate ability association (Brown and
Dacin, 1997; Keller, 2000; Biehal and Sheinin, 2001; Kamins and Alpert, 2004). Especially in
new and emerging markets, a prevailing image priority has been the degree to which a
company is perceived to be innovative (Aaker and Keller, 1990; Shankar et al., 1998). Not
surprisingly, therefore, in practice, many brands use innovativeness as part of their
corporate brand personality and image and in their brand positioning and claims (Keller,
2000; Brexendorf et al., 2015).
Some corporate brands explicitly communicate innovation-related imagery at the
corporate brand level (e.g. 3M, Dyson, GE, GlaxoSmithKline, Hewlett-Packard and
Michelin); others are perceived as innovative because of the adopted business model
and/or the (sub-)category they serve (e.g. Tesla). 3M, for example, highlights its
competence in research, technology and innovation to all its constituencies with its
corporate slogan “Science. Applied to Life”. Hewlett-Packard does the same with
“Invent”. Michelin’s drive for innovation, the intention to remain the most innovative
company in its sector and the search for new technologies are at the centre of Michelin’s
EJM strategy to improve mobility for people through “A Better Way Forward”. The Dutch
51,9/10 technology company Philips underscores the relationship between its brand, corporate
innovativeness and their customers with their claim “Innovation and You”. Clearly,
many corporate marketers believe that a perception of corporate brand innovativeness
is valuable in practice.

1536
The effects of corporate brand innovativeness
The extent to which a corporate brand is distinguished by innovativeness can be a key
determinant for differentiation and marketplace success (Henard and Dacin, 2010;
Wood and Hoeffler, 2013). Innovativeness as a corporate brand association, however, is
vulnerable to competitors’ desires to follow and surpass the firm on this dimension
(Mick and Fournier, 1998; Keller, 2000). If more and more corporations follow suit and
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the firm is perceived as comparatively less innovative and loses its innovative appeal,
stakeholders will be less likely to rely on any information conveyed about the corporate
brand being innovative (Gürhan-Canli and Batra, 2004). Consequently, the decreased
perception of brand innovativeness will lower the favourability and value of this image
dimension.
Nevertheless, if a firm can maintain a perception of innovativeness for its corporate
brand, the rewards are many. Research has shown that customers evaluate service
extensions by providers with an innovative late mover image more favourably than service
extensions by companies with a pioneer image (de Ruyter and Wetzels, 2000). There is also
evidence that innovative firms are perceived more favourably than non-innovative firms in
terms of credibility and expertise (Golder and Tellis, 1993), as well as perceived quality and
purchase likelihood (Aaker and Keller, 1990).
Corporate expertise and innovativeness associations also exert a positive influence
on consumers’ evaluations of the innovativeness of a new product (Brown and Dacin,
1997; Hatch and Schultz, 2001), especially when consumers perceive high risk in the
product purchase (Gürhan-Canli and Batra, 2004). In their seminal research, Barone and
Jewell (2013) show that brands that are perceived as innovative earn “innovation credit”
that allows firms to use marketing strategies that deviate or violate commonly used
category norms. Perceived innovativeness may therefore serve as a critical point-of-
difference or point-of-parity for corporate brands (Keller, 2000; Gürhan-Canli and Batra,
2004).
Innovativeness associations are able to temper negative associations in the firm’s quality
perception (Heath et al., 2011). Beyond this, corporate ability associations can be used as a
“backup” or “reinforcer” that may enhance consumer confidence in product judgments.
Innovativeness can therefore be an important value driver for the firms’ product portfolio.
Yet, it must be recognised that it is a difficult task to achieve a reputation for innovation
(Aaker, 2004b).
In how far corporate ability associations like innovativeness can positively transfer on all
brand levels is constrained by the strength of the corporate brand image to begin with
(Hauser et al., 2006) and the brand architecture strategy adopted, as discussed next.

Brand architecture strategies


Two important tools in developing brand architecture strategies are brand portfolios and
brand hierarchies.
Brand portfolios Leveraging the
Brand portfolios can be characterised by two key dimensions (Morgan and Rego, 2009; see corporate
also Lei et al., 2008):
brand
(1) Scope: Number of different markets and market segments targeted by the brands
in the firm’s brand portfolio.
(2) Relationship: The extent to which brands in the firm’s brand portfolio are similar or
different and compete with or support one another. Although multiple brands may 1537
be used in one category to improve market coverage, this also may lead to
competition between certain brands. At the same time, some brands may be
complimentary and support one another. The positioning of the brands is a key
determinant of competitive dynamics within the brand portfolio.
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Both dimensions can positively or negatively influence the meaning transfer of


corporate brand innovativeness. However, little is known in how far different forms of
these dimensions and their interaction enable positive corporate image spillover effects.
Besides the existing brand portfolio, brand hierarchies can support or impede
association transfer.

Brand architecture typologies


A well-designed brand architecture strategy performs two main important functions:
(1) it builds brand awareness by communicating differences and similarities between
the products of a brand and
(2) facilitates and enhances the brand image by maximising the transfer of equity
from and to the parent brand (Keller, 2012).

The latter consideration is especially important here. A compelling brand architecture


strategy provides clarity for consumers, as well as synergy and leverage for the relevant
brands (Aaker and Joachimsthaler, 2000; Keller, 2014).
In the branding literature, various conceptualisations and typologies of brand
architecture strategies have been proposed. They are distinctive in the different types of
brand strategies included within the continuum of corporate brand-dominant and product
brand-dominant structures (Laforet and Saunders, 1994; Keller and Aaker, 1998; Balmer and
Gray, 2003; Keller, 2013; Strebinger, 2014). The main branding strategies can be seen as
spanning a continuum, with a “branded house” at one end, where the corporate brand
extends across all entities in the portfolio (e.g. GE, Virgin), a “house of brands” at the other
end, where corporate brand and product brands are distinct (e.g. Procter & Gamble and
Tide) and “mixed branding” in the middle that covers all other hybrid alternatives (e.g.
Courtyard by Marriott) (Laforet and Saunders, 1994; Rao et al., 2004). Research has
characterised other aspects of a firm’s branding strategy. For example, Balmer and Gray
(2003, also discussed in Balmer, 2012b) outline a broader brand architecture and typology
that also takes alliances, franchises and multi-organisation brands into account.
The corporate brand image – as the sum of associations that the firms’ constituents have
in their memory linked to the company or corporation – is especially important when the
corporate brand plays a prominent role in the brand strategy adopted by the firm. Like a
cone of light can illuminate a room, a strong corporate brand has the potential to strengthen
and enrich all products and sub-brands within its product portfolio. Importantly, a firm’s
brand architecture determines the salience or visibility of the corporate brand and facilitates
or impedes the transfer of corporate associations like innovativeness (Aaker and Keller,
EJM 1990; Keller, 2014; Brexendorf et al., 2015). It is a particularly important determinant through
51,9/10 which corporate ability associations like innovativeness influence customer product
evaluations.

Corporate brand dominance


Recently, many companies that traditionally have used a house of brands or product brand-
1538 dominant strategy have been stepping up the visibility of their corporate brand to try to
foster a positive association transfer and synergy between their corporate and their product
brands, e.g. consumer packed goods (CPG) firms such as Procter & Gamble, Nestlé and
Unilever. With these CPG firms, however, by using the corporate brand only as an endorser
and not having it formally a part of the product brands in any way, there is likely to be fairly
limited flow of equity back and forth. The corporate brand may just not be salient and
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meaningful enough, not to mention that these product brands are often fairly strong as it is
(e.g. Pampers for Procter & Gamble or Dove for Unilever). It will be interesting to see,
however, whether over time as consumers learn more about the corporate ties of various
products and about the corporate brands themselves, more value may be extracted from
these relationships.
Corporate and product brands can differ in the relational linking between associations:
 Valence of associations: Corporate and product brands can differ in the inherent
favourability of associations. Corporate brands may not be perceived at the same
level of innovativeness in all their product categories. While BMW may be
perceived as more innovative than Suzuki in the car category, it may be the other
way around for the motorcycle category (see also Shams et al., 2015). It might also
be the case that the corporate brand is seen more favourable than specific product
brands and lines under their umbrella.
 Directionality of associations: Corporate brand associations might exert an influence
on the product brands and vice versa. It can be assumed that corporate brand
innovativeness and product brand innovativeness exercise a mutual, self-
reinforcing influence on each other. More complete innovativeness associations that
cover product brand as well as corporate brand innovativeness associations may
lead to a stronger salience of innovativeness of both corporate and product brand.
However, little is known about the bi-directional innovativeness transfer between
corporate and product brands. More research in this respect is needed.
 Alignability of associations: Corporate brand associations (e.g. innovativeness) and
product brand associations can be aligned and support each other (e.g.
innovativeness and revolutionary product and packaging design) and can be
unaligned and contradict each other (e.g. innovativeness vs decades-old, traditional
product formulations). Especially, the extent to which strong corporate brand
innovativeness associations give “innovation credit” to line extensions that can be
characterised as incremental innovations, is of huge interest for corporate practice.

In any case, if a corporate brand is linked to products across diverse categories, some of its
strongest associations are likely to be those intangible attributes, abstract benefits or
attitudes that span some or all of the different product categories (Keller, 2013). More
abstract corporate brand associations like innovativeness might allow a transfer across a
broad range of product categories regardless of the particular products housed under the
corporate brand (Meyvis and Janiszewski, 2004).
Brand boundaries Leveraging the
The brand architecture strategy adopted by a firm plays a critical role in defining brand corporate
boundaries (Keller, 2012; Brexendorf et al., 2015). A brand boundary can be defined as the
scope and limit of a brand in terms of the nature of different product or service categories for
brand
which consumers would find appropriate for the brand and grant “permission” for it to
enter. Formally, brand permission occurs when consumers or customers grant consent for
certain activities without any adverse effects on the brand. It relies on the openness of a
brand’s customers to, in effect, grant a permit for offering new products and services and to
1539
engage in novel brand initiatives.
Brand permission is determined by many factors: social norms (e.g. cultural norms,
consumer community norms), consumer characteristics (e.g. scepticism), brand-consumer
relationship norms (e.g. commitment, trust), brand-specific norms (e.g. brand identity, brand
heritage, brand experience) and the conducted activities of the brand over time (Meyvis and
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Dhar, 2008). As consumers grant permission or not, they assess the appropriateness of the
brand initiatives by comparing the brand’s initiatives with automatically activated norms.
Little is known about how consumers combine these different factors, however, to evaluate
the appropriateness of brand activities.
The boundaries of a brand are not immutable. They are malleable, elastic and
continuously determined. In many ways, brands can be interpreted as flexible and dynamic
entities that unite and allocate products and services as elements under its umbrella (Sujan,
1985; Aaker and Keller, 1990; Boush, 1993), thus defining and building its own boundaries
within a certain market space. At the same time, differentiating characteristics or
associations of a brand and its products and services build and create a clear and well-
defined perceptual “boundary” of the differences and uniqueness of the brand with respect
to competitive brands in the mind of the consumer (Day et al., 1979; Sujan and Bettman,
1989).
Given the continuous expansion – as well deletion – strategy that many brands pursue,
consumers constantly need to mentally “assess” the boundaries of the brand. The perceived
boundaries of the brand in the minds of the consumer and its elasticity over time help to
determine the brand’s potential for growth through line and category extensions.
Understanding the boundaries and the elasticity of its brands is thus of tremendous
importance for all brand marketers. The brand’s boundaries may also facilitate or impede
the reciprocal transfer of innovativeness associations between the corporate brand and its
product brands. Strong innovativeness associations of consumers towards the corporate
brand may dissolve the boundaries of product brands and may keep product brands more
elastic that are closely connected and linked with the corporate brand.

Brand elasticity
Brands require elasticity and flexibility as well as the ability to adapt to contemporary
changes in the environment. A brand’s elasticity and stretchability is an important
determinant for new product introductions and the success of brand’s growth (Aaker and
Keller, 1990; Ahluwalia, 2008). The brands’ boundaries as well as the categories in which
they are present are fluid, in permanent flux and subject to constant recalibration.
Consumers update what they think about a brand and its associated boundaries. If product
variants change dynamically within a brand line, they alter the boundaries of the brand and
the category structure and, as a result, the relationship of the brand to the consumer.
Moreover, when new products or product lines (as members of a category) become accepted
as part of a brand family, the brand-knowledge structure is broadened and the brand family
EJM becomes more likely to accept additional members (Boush and Loken, 1991; Dacin and
51,9/10 Smith, 1994; Sheinin and Schmitt, 1994).
When new product or product lines do not fit into the existing knowledge structure, the
consumer may create a new mental category to accommodate the brand extension (Martínez
et al., 2009). Existing research argues that the introduction of additional products to the
brand family may also dilute the strength of a brand (Keller and Aaker, 1992; John et al.,
1540 1998). Continuous and extensive changes in the product line may, on the one hand,
apparently weaken the brand schema but, on the other hand, strengthen the strategic
position of the brand by laying the foundations for all subsequent extension (DelVecchio,
2000). However, continuous and unmeaningful (product) line extensions and deletions
without in-depth consideration of their overall impact on the consumer and the brand may
harm the brand. The perceived meaningfulness of changes within the product line changes
is important for the consumer evaluation of line extension (Quelch and Kenny, 1994;
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Andrews and Low, 1998).


The brand elasticity may also influence the corporate brand association transfer on
product brands. Previous research, however, highlights that some brands are perceived as
more elastic than others. This perceived elasticity is jointly influenced by the characteristic
of the brand and the consumer. For example, consumers that use a holistic style of thinking
(instead of an analytic style) perceive brands that are positioned as more abstract as more
elastic (Monga and John, 2010).

Effects of brand boundaries


Consumers regularly construct and use categorical representations to understand, classify and
interpret information about brands and products and to make related judgments and choices
(Joiner and Loken, 1998). Brand boundaries play an important role in helping consumers better
understand what the brand stands for and gives them a clearly designated mental space for the
brand. Brand boundaries provide a sense of structure that dictates where respective objects
belong and how they are represented within that mental space (Cutright, 2012; Cutright et al.,
2013). Assimilation processes occur when new products are assigned to brands and brands to
the brand portfolio and the corporate brand (Wänke et al., 1998).
Once a new product is accepted to the product portfolio for a brand, inductive inferences
can be drawn. It is assumed that wider categories allow for the inclusion of a broader range
of products than narrow categories (Boush and Loken, 1991; Wänke et al., 1998). Beyond
this, brands with varied product category associations developed through past extensions
have been shown to be especially extendible (Dacin and Smith, 1994; Keller and Aaker, 1992;
Sheinin and Schmitt, 1994). For consumers, the perception of a brand category is malleable,
depending on a variety of individual and contextual factors that can change their category
perceptions (Ülkümen et al., 2010; Cutright et al., 2013).
A key issue is the relationship and the salience between the higher-level corporate brand
and the lower-level product/service brands or sub-brands in the brand hierarchy. The
corporate brand can either have a complementary (corporate brand: innovativeness/product
brand: up-to-date), similar (corporate brand: innovativeness/product brand: innovativeness)
or dissimilar (corporate brand innovativeness/product brand: traditional) trait to the product
(or service) brand. Both corporate and product brands can also vary in their dominance of
salience.

Brand boundary formation


All brands in the portfolio have boundaries (Keller, 2012). From a socio-cognitive
perspective, the brand’s boundaries are built in a self-correcting system of transactions and
shared knowledge structures between the brand, its activities and the market, especially its Leveraging the
constituents (see also Rosa et al., 1999). Although the parent brand knowledge structures are corporate
fairly resistant to change (Keller and Sood, 2001), the perceived brand boundaries may be
continuously adjusted and updated by consumers. The boundary of each brand perceived
brand
by its consumers is determined and influenced by the
 (sub-)categories in which the brand operates;
 brand hierarchy that gives all products and sub-brands a specific structure and 1541
order,
 brand breadth as the products and services the brand embraces and unites; and
 brand and market activities like own and competitive positioning and actions.

(Sub-)categories. Although the perceptual boundaries between product categories are often
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not well defined (Vishwanathan and Childers, 1999), a primary source of meaning for any
brand are the categories (e.g. snacks) and the subcategories (e.g. cereal bars, cookies, potato
chips) for the product sold under that brand. Categories are socially constructed partitions
that divide market space into groupings that are perceived by consumers as similar along
certain dimensions. Consumers can erect conceptual boundaries between product categories
that help to make sense of incomplete and imperfect market cues. Consumers hold product
category representations at multiple abstraction levels as cognitive orderings (Rosa et al.,
1999; Vishwanathan and Childers, 1999).
A category (or sub-category) can further evoke specific associations in the mind of the
consumer (Levy, 1986). Batra and Homer (2004) find that expensive cookies were rated as
“sophisticated and classy”, whereas potato chips were seen as “fun”. Some brands also serve
as cues, exemplars or prototypes for a specific (sub-)category which increases the strength
and frequency of associations between the brand name and the (sub-)category.
A study of Joiner and Loken (1998) showed that consumers often generalised the
possession of an attribute from a specific category (like Sony televisions) to a more general
category (all Sony products) more readily than they generalised the attribute from the
specific category (Sony televisions) to another specific category (Sony bicycles). The effect
was greater the more the specific extension category was typical of the general category
(Sony cameras are more typical than Sony bicycles).
The category (or sub-category) might even also influence consumer perceptions of
corporate brand innovativeness, especially when firms are predominantly involved in one
category (Batra, Lenk and Wedel, 2010). Tesla, for example, is currently perceived as
innovative because they form and create the category of premium electric vehicles.
Innovativeness for a corporate brand in the car industry may also have other connotations
than for a corporate brand that produces soft drinks. Besides the categories, the brand
serves, its boundaries are influenced by the brand hierarchy a firm adopts.
Brand hierarchy. A study of Sood and Keller (2012) suggests that sub-branding supports
both enhancement of extension evaluations and protection of the parent brand from
negative feedback effects. Even corporate brands have boundaries, however and should not
be extended to all product brands (Keller, 2000; Keller, 2013). Some firms avoid an
endorsement of their corporate brand for selected business units and brands to constrain the
transfer of specific corporate brand associations (e.g. Henkel with Schwarzkopf, Mars with
Pedigree). Firms also often introduce or buy new brands that aim to target a niche or offer
differentiation with respect to the core brand to appeal to a different market segment and
cover a larger area of the market (Keller, 2013). The brand hierarchy supports or restricts –
as discussed before – the innovativeness transfer. It further determines the value of
EJM innovations (Rao et al., 2004). The brand hierarchy is strongly related and influenced by the
51,9/10 brand breadth.
Brand breadth. Brand breadth refers to the number and perceived variability of products
and product types represented by a brand and the strength of association between the brand
and the products it represents (Boush and Loken, 1991; Dawar, 1996). Brands embrace and
unite many products and act as “product coordinators” (Rahinel and Redden, 2013) or
1542 “brand categories” (Boush and Loken, 1991). The boundaries of a brand are strongly
influenced by the products and services it keeps and the relationship between them. Brands
become more powerful when they cover interrelated products and services (e.g. Apple).
The interrelationship and interconnectedness between the products may support a
positive transfer of innovativeness from corporate to the product brand level and vice versa.
Brands are frequently extended to several products, some more “distant” than others. Keller
and Aaker (1992) demonstrate that distance from existing products is a factor determining
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the evaluation of extension products. Results of a study by Dawar and Anderson (1994)
suggest that multiple extensions of a brand must also consider the appropriate order and
direction of product introductions to enhance consumer acceptance. The brand breadth
determines the boundaries of a brand as a result of the typicality of all brand and line
extensions.
With regard to its breadth, narrow and broad brands can be differentiated. While narrow
brands are those with extension products very similar to existing products (typical
extensions), broad brands result from extensions dissimilar to current products (atypical
extensions) (Boush and Loken, 1991). Red Bull may be perceived as a narrow brand if the
main product type is energy drink, whereas Yamaha may be perceived as a broad brand
that includes many product categories like pianos, electronics, motorcycles and other
product types. If brands offer products in several product categories, some products may be
more representative and important for the brand than others. For example, customers of
Yamaha may be familiar with pianos, but not with motorcycles and vice versa.
Existing research has shown that a brand that operates in diverse product categories has
certain advantages in extending the brand over brands that is sold in only one product
category (Boush and Loken, 1991; Meyvis and Janiszewski, 2004). Narrow brands benefit
over broad brands when introducing line extensions within the same category of expertise
but are limited by the brand’s extendibility to other product categories. Narrow brands will
have more accessible associations that include the product category than broad brands for
whom product category associations are more diffuse and weaker (Boush and Loken, 1991;
Meyvis and Janiszewski, 2004).
Dominance as the strength of the directional association between the parent category and
the branded product, as well as relatedness as the closeness of the brand’s parent category to
the target categories of possible extension, play an important role in defining the brand’s
boundaries (Herr et al., 1996). Learning new associations for brand extensions is easier (vs
more difficult) for brands that are strongly (vs weakly) category dominant and for target
categories that are closely (vs distantly) related to the brand’s parent category (Herr et al.,
1996).
The products the brand embraces may differ in their nature and strength of associations
to the brand (Dawar, 1996). Research has found that concrete attribute associations may not
transfer as easy and broadly to extension categories as more abstract associations (Monga
and John, 2010; Meyvis and Janiszewski, 2004; van Osselaer and Alba, 2003; Hagtvedt and
Patrick, 2009). More abstract associations like innovativeness, on the other hand, may be
more relevant across a wide set of categories because of their intangible nature. For
example, Aaker and Keller (1990) also showed that the Vuarnet brand had a remarkable
ability to transfer to a disparate set of product categories, such as sportswear, watches, Leveraging the
wallets and even skis. In these cases, complementarity may have led consumers to infer that corporate
the extension would have the “stylish” attribute associated with the Vuarnet name and they
valued such an association in the different contexts.
brand
Although existing research assumes that abstract associations are more extendible,
abstract associations do not always transfer easily. Bridges, Keller and Sood (2000) who
examined the relative transferability of product-related brand information when it was
represented either as an abstract brand association or as a concrete brand association 1543
found that the two types of brand images extended equally well into a dissimilar product
category – handbags. However, Morrin (1999) found that exposure to a brand extension
increased accessibility of the parent brand, with the increase being less for typical than
atypical brands in the category. When the brand extension has a good fit for the brand
category, it increases the parent brand accessibility further, relative to when the brand
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extension has a poor fit.


Brand and market activities. A variety of branding and marketing activities can be
conducted to define and strengthen a brand (see for example Keller and Lehmann, 2006).
Own, competitor and partner actions as well as industry and environmental conditions
influence how consumer think and feel about a brand (Keller and Lehmann, 2006). As such,
not only company-controlled but also externally driven branding activities may define
boundaries and determine the limits of each brand. Especially the activities related to things,
places, people and other brands may influence the perception and the boundaries of a brand
(Keller, 2003).
Different forms of innovations may also influence the boundaries of the brand and its
personality. Hirschman (1982) differentiates between technological and symbolic
innovations. These may have a different impact on the formation of brand boundaries.
While technological innovations are focused on the product’s tangible features and the key
functionalities of the products, symbolic innovations communicate a new social meaning
and redefine what a product means for a customer (Verganti, 2008). The focus of innovation
research and innovative activities in firms heavily rely on the technological perspective of
innovations. However, many firms could benefit from using symbolic innovations.
Corporate brands can create overarching values and implement activities that have the
ability to transfer from the corporate level to the product level. These can have the potential
to carburize the boundaries of the brand but also to expand its boundaries.

Future research directions


As reviewed above, academic research has covered a number of different issues that has
advanced our understanding of the interplay between corporate and product brands and the
equity transfer between the corporate brand and products or sub-brands at lower levels of
the brand hierarchy. Along those lines, research has provided some initial results and basic
guidelines that offer some suggestive guidance for the effective management of corporate
brands and associations to considerations like innovativeness. Nevertheless, a number of
priorities exist which should be fertile areas for research for years to come (Dacin and
Brown, 2002). As related to the previously discussed areas, we highlight four potential
directions that might guide further research in these domains.

Corporate brand management and marketing


Although research on corporate brand management needs to consider and cover all respective
stakeholders of the brand, further research is especially needed to the role and relevance of
corporate brands for customers (Balmer, 2012a). Beyond this, little is known about the internal
EJM decision-making process as to how firms align their corporate brand with all respective lower
51,9/10 levels of brands. How do firms make corporate brand management decisions? What
assumptions do firms make about consumers and customers and how they will behave? How
does that affect their actual corporate brand marketing programmes and activities? Future
conceptual work and empirical investigation may discover the intertwined relationship
between the corporate level and the product/service level of brands (Balmer et al., 2013).
1544  In what ways do firms believe consumers and customers see corporate brands
differently from product brands, if at all?
 How do firms believe consumer or customer perceptions of products differ
depending on whether the corporate brand is implicitly linked to the product as an
endorser vs explicitly linked as a formal sub-brand?
 How can firms ensure that the right corporate brand associations are able to
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transfer readily to product brands and be more salient during customer decision-
making?
 How do firms align internal and external concerns in developing their corporate and
product brand strategies?
 How do firms balance different constituent interests in developing their corporate
branding strategies and marketing programmes and activities?

Corporate brand innovativeness


Little specifically is known about how corporate brand innovativeness affects the equity of
individual brands and products and how individual product and brand equities build up and
strengthen perceptions of corporate brand innovativeness. We suggest some preliminary
avenues for additional research on possible ways to elicit and strengthen corporate brand
associations like innovativeness (Keller and Lehmann, 2006):
 What are viable ways to enhance perceptions of corporate brand innovativeness?
 Are strategic partnerships with universities, R&D providers, suppliers or other
innovative firms’ viable ways for firms to strengthen the innovativeness
perceptions?
 How far does a fit between corporate brand and product innovativeness influence
the constituents’ responses towards corporate and product brands?
 Do different constituents of the corporate brand (e.g. customers, employees,
stakeholders) respond differently to corporate brand innovativeness?

Brand architecture and corporate brand dominance


Brand relatedness enables positive and negative spillover effects (Lei et al., 2008). More
research is further needed in the area of brand architecture and hierarchy management with
respect to corporate brand concerns. Little is known about how dynamic changes in the
brand architecture of firms impact the consumer perceptions of the specific brands at
different levels of the hierarchy. Future research directions could address the following
important questions, based on the findings of existing research:
 Under what conditions can corporate brand associations confer equity most
effectively to products or sub-brands underneath the corporate brand in the
hierarchy?
 How far do the number of brands, the number of brand levels within the brand Leveraging the
hierarchy, number of segments in which they are marketed and degree of intra- corporate
product or sub-brand portfolio competition influence this equity transfer?
brand
 How does this transfer vary with the role of the product categories covered by the
corporate brand and the brand architecture strategy adopted by the firm? Which
activities facilitate a positive transfer of associations across all levels?
 How can we measure the reciprocal flow between corporate and product brand 1545
associations and equity?

Brand boundaries and brand elasticity


Understanding the boundaries of brands, their dynamic changes over time and their
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elasticity is a crucially important area within the field of strategic brand management.
Future studies could consider and merge research on brand boundaries, elasticity,
permission and architecture. Further research could investigate the following
directions:
 What would happen to the corporate brand and products and sub-brands in the
hierarchy if the boundaries of the corporate brand were extended or narrowed or if
selected products or sub-brands were deleted or added?
 What degree of distance or closeness between the product and sub-brands is needed
to enable the best possible positive equity transfer or to avoid negative equity
transfer? Are asymmetric effects possible? Is it possible to develop a brand
architecture where the upside from positive image transfer from the corporate brand
far outweighs possible negative feedback from any one product or sub-brand?
 How do dynamic changes at the corporate brand level influence evaluations at lower
levels of the brand hierarchy over time? How do consumers update their perceptions
or impressions of specific products or sub-brands for the corporate brand?

We believe that each of these four areas of proposed future research directions and their
interrelated study create exciting opportunities in this important field of inquiry. As
corporate branding is increasingly being applied in multi-brand level settings, branding
research necessarily needs to take a broader perspective and obtain a greater
understanding of how equity transfers to and from the different brand levels. To broaden
the horizon of branding research, carefully consideration of the boundaries and elasticity
of the corporate brand and different product brand levels should deepen our
understanding of how individuals perceive firms and the products they produce. The
transfer of association from the corporate brand to the product or sub-brand level is a
continuous challenge for corporate marketing managers. Neglecting the impact of
corporate brand associations on all brand levels and the design and implementation of a
compelling brand architecture strategy will clearly inhibit or even prevent the
development of a successful brand strategy.

Note
1. For simplicity, we refer to corporate and company brands interchangeably, recognising that
consumers may not necessarily draw a distinction between the two or know that corporations
may subsume multiple companies.
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Further reading
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enhancement”, Journal of Marketing Research, Vol. 35 No. 4, pp. 464-473.
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stretches”, Journal of Marketing, Vol. 63 No. 1, pp. 88-101.
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About the authors 1551


Tim Oliver Brexendorf is a Professor of Marketing and Director of the Henkel Center for Consumer
Goods (HCCG) at WHU – Otto Beisheim School of Management. He obtained his PhD from the
University of St. Gallen, Switzerland. Since 2012, he has been Co-Editor-in-Chief of the Journal of
Brand Management. His work has been published in the Journal of the Academy of Marketing
Science, Journal of Business Research, Journal of Product & Brand Management, Corporate
Reputation Review and Journal of Brand Management, among others. Tim Oliver Brexendorf is the
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corresponding author and can be contacted at: tim.brexendorf@whu.edu


Kevin Lane Keller is the E. B. Osborn Professor of Marketing at the Tuck School of Business at
Dartmouth College. His academic resume includes degrees from Cornell, Duke and Carnegie-Mellon
Universities, award-winning research and faculty positions at Berkeley, Stanford and UNC. His
textbook, Strategic Brand Management, has been adopted at top business schools and leading firms
around the world. He is also the co-author with Philip Kotler of the all-time best selling introductory
marketing textbook, Marketing Management. From 1 July 2013 to 1 July 2015, he served as Executive
Director at the Marketing Science Institute.

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