Brand extensions are one of the most popular strategies for many firms to leverage brand equity (Monga & John, 2010; Tom, Kelly & Ravi, 2012). Zara as one of the world’s most successful fast fashion brand (FFB) retailers has applied brand extension into its brand development. The purpose of this report is to examine the brand extensions strategy of Zara which include these areas: the marketing objectives of brand extension, the relationship between competitive advantage of Zara and the brand extension strategy, the model and concept of evaluate customers’ attitude towards FFB extensions to judge whether the company is suitable to adopt brand extension strategy, apply the model into Zara’s three proposed extensions and the strengths and weaknesses of this strategy.
Brand extension can be defined as ‘the use of an established brand name on a new brand within the same broad market or product category’ by Jobber (2007) and as stated by Choi, et al (2010) a typical definition is ‘the use of an established brand name to enter new product categories or classes’. As brand equity contribute to an increase of share value of the intangible assets of the company (Madden, Frank & Susan, 2006). Brand extension is a key tool to enhance brand equity (Susan, Hang & Mary, 2012). Therefore, the objectives of implementing brand extension are enhancing the brand equity value, increasing sales and enhancing the consumers’ image of the brand values by increased communication (Jobber, 2007).
Competitive advantages of Zara
According to the founder of Inditex, Amancio Ortega indicated that the aim of Zara is ’to democratise fashion by offering the latest fashion in medium quality at affordable prices’. The competitive advantages of Zara which differentiate from other competitors are the turnaround time and the feedback information from store (Lopez & Fan, 2009). Zara can finish designing, manufacturing, delivering a new clothing within four weeks and display a new garment in two weeks (Economist, 2005). Managers of Zara need to contact with the store to discover the demand of customers in daily basis and its advanced technology enables this company to quick response to customers’ changing demand. The time factor and feedback from store clarified that Zara is a customer oriented company. Therefore, customers’ attitude towards brand extension is vital for Zara to make the decision.
Model and concept
Consumers’ perspective towards brand extension can be influenced by perceived fit, perceived quality, self-image, brand loyalty and involvement (Hansen and Hem, 2004). Brand extension fit as a determinant of a successful brand extension (Hem and Iversen, 2003) can be defined as perceived similarity and relevance with the parent brand (Broniarcyk & Alba, 1994). Aaker and Keller (1990) found that perceived fit can be evaluated by two areas: product concept consistency and product feature similarity. Park, et al (1991) expounded that people who had a higher brand concept association with the extended category would give relevant connection to the existing main brand. Martin, Stewart and Matta (2005) demonstrated that as long as the brand concept is highly consistent, even if the extended product category is different from the existing product, the two products can be regarded as ‘fit’. Thus, brand concept consistency is a key factor to test the extended product to be fit or not. As for the similarity, Aaker and Keller (1990) stated that there are three aspects of product features similarity between extended product and the parent brand product need to be investigated: complementarity (can be used together with original product), substitutability (can replace the original product) and transferability (manufacturing skills overlaps). The Consumer evaluation process model for fast fashion brand extensions is displayed as below.
(Source from Choi, et al, 2010)
Apply model into Zara...