Brand and the added value of the company

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Frame of references

This chapter presents to the reader the main theory about brand, strategies, features of the fashion industry and shows the current dynamics of Swedish and Russian fashion retail industry. The chapter bases on works of authors, who are famous for their studies connected with following themes.

Brand advantages

Now there are a lot of different articles and books about branding and brand strategies (Xie, 2012). The real brand arises at the time when it has the power to impact on the market (Mathur, 2008). And the bigger the impact, the stronger the brand. However, there are two approaches to understanding what a brand is. Lawyers that deal with intellectual property issues focus only on the upper shell of the brand – logotype and name. However, in brand management, the brand is characterized by all sides, revealing all its properties and features (Kapferer, 2012). In the Oxford dictionary of marketing the brand described as a combination of different aspects that make the company unique (Doyle, 2011).
One of the most interesting things in case of branding is that the brand gives various advantages not only to the company but also to all stakeholders around it. Thus, Mathur (2008) divides them into two main groups: ‘’primary’’ and ‘’secondary’’ stakeholders.

Brand and the added value of the company

Kerin and Sethuraman (1998) also write about the link between brand and performances of the capital. They say that a brand can bring not just a popularity to the company, but also bring more money to the company’s budget, increasing the added value almost on 7% (Kerin & Sethuraman, 1998). It was mentioned above, that a strong brand makes a company more attractive to investors. In addition, many companies enter into a license agreement with the owners of well-known brands to generate additional revenue. It will give the possibility to create some products with symbols of popular brands, for example, t-shirts with different logos. Thus, licensing increase the sales volume almost on 25% for branded company and also for partner company (Evplanov, 2016).

Brand typology

Before you create a brand, you must first determine its type. This is one of the core steps because all further actions related to the brand will depend on its type. Each type has its characteristics, pros, cons and conditions.

 Main types of brands

There are many different typologies of the brand and each author defines his or her own criteria, which splits the brand into types. The table below introduced two basic and most common ways of brand division, created by Aaker (1996) and Laforet and Sounders (1994).
Aaker’s brand typology (1996) introduces a brand identity. It is the way how the brand developer and all the people perceive it. The brand identity is a strategic concept of the personalities of the brand, its outward expression. It reflects the unique characteristics of the brand, which can motivate a consumer to buy branded products. Besides, the brand identity is an essential element of motivational vertical brand management, which form the model and the image of the brand (Lapferer, 1992). It is, therefore, crucial to understanding which of the identity factors the brand will have. Many authors believe that highlighting this aspect at the initial stage of brand creation will help to develop the best branding strategy, especially when building a strong brand and elevating it to the international market (Aaker & Joachimsthaler, 2000; Kapferer, 2012).
The typology, introduced by Laforest and Sounders (1994) defines the future branding strategy. In this case, what type will be the brand depends on what strategy the company wants to adhere in the future. In real life, the brands that belong exclusively to one of these three types are rarely found. Each form has its own advantages and disadvantages. Often, the selection and development of appropriate branding strategies for the company largely depend on the type and nature of the business, the industry in which it operates, social and economic environment and perceptions of customers (Kotler & Pfoertsch, 2006).
Another, very popular classifications are presented in the book ‘Marketing Management: A contemporary perspective’ written by Christian Homburg, Sabine Kuester and Harley Krohmer (2009). Authors have combined the most popular criteria of all existing categorizations, which gave a comprehensive understanding of what are the brands and what the difference between them.
All the above brands can be defined to the segment of premium brands, which can be characterized by high requirements to quality of the product, its appearance, presentation in the stores and information support of sales (Han, Nunes & Dreze, 2010).

 The most popular types of brands in fashion industry

Most often, companies in the fashion industry choose corporate branding as the primary focus of the company. According to Xie and Boggs (2006) corporate brand is a ‘monolithic brand name’, which embodies all goods of the company to all stakeholders. It includes one common mission for all the company and for all employees, which makes the company more competitive. Moreover, some authors, such as Abratt and Kleyn (2011) believe, that corporate brand includes four main features such as visual identity, brand promise, brand personality and brand communication.
Besides this type of brand, the fashion industry is full of a big amount of luxury (premium) brands such as: ‘Dolche&Gabbana’, ‘Chanel’, ‘Versace’, ‘Prada’, ‘Gucci’ and so on. In addition, in most of cases luxury brands bear the name of its creator (designer) and therefore can relate to ‘signatured brands’. Not so long ago in the fashion industry the most popular were companies with ‘one-firm branding’, which means, that company produces just fashionable clothes, including shoes and accessories. But nowadays, in the era of huge global brands, a lot of companies tries to be competitive and to expand the product line to continue with ‘house branding’ (McColl & Moore, 2011). Thus, companies decide to create their own perfumes, household goods and sometimes furniture. The perfect example is ‘Zara’ – ‘Zara Home’ and ‘H&M’ – ‘H&M Home’.

 International branding strategies

Brand management is the process of creating a uniqueness of the brand. It includes the name creation, design, and creation of advertising. However, these elements, though vital, are not the only one. Brand management consideration exclusively from the viewpoint of these aspects significantly reduces the life cycle of the brand as any surface membrane tends to lose its appeal over time. That is why if the company plans to use the brand as a strategic tool, it should carry out a huge number of different events including market analysis and planning of the brand, its properties and characteristics (Kotler & Pfoertsch, 2006). In order to develop a holistic brand, the strategy must take into account all levels of marketing management and involve all departments of the company (De Chernatony & McDonald, 1998). A properly chosen effective national and later international branding strategy helps consistently to identify the key strengths of the brand. Thus, the company can focus on these benefits and attract the right target audience faster (Kotler & Pfoertsch, 2006).
Some authors define three main international brand strategies, which are based on different brand typology: brand reach, brand positioning and brand architecture (Homburg, Quester & Krohmer, 2009). The first strategy is based on the ultimate goal of the company: Do they want to reach a specific market (local, national, international or global) or they want to concentrate on specific producing process (for example environmentally friendly production) or, maybe, the company’s goal is to create a cooperation with another brand (co-branding) (Oeppen & Jamal, 2014).
The second strategy based on three aspects:
• ‘brand core’ (Homburg, Quester & Krohmer, 2009). Some scientists call it ‘brand identity’ (Kapferer, 2012; Aaker & Biel, 2009). The author of the book ‘Marketing Management: A Contemporary Perspective’ describe it like a short expression (Homburg, Quester & Krohmer, 2009). The example is ‘Nike’ company with a slogan ‘Just do it’.
• ‘brand benefits’: the main idea of this strategy is to concentrate on things, which will be very useful not for the company, but for the consumers. The company should find something special, that will be very appreciated by buyers (Homburg, Quester & Krohmer, 2009). The example can be Volvo company. The central benefit of their buyers is the high safety standards.
• ‘brand personality’ (Homburg, Quester & Krohmer, 2009). It correlates with a brand personal characteristics such as name, logo and so on. Brand personality helps a customer to recognize the brand and associate products or company with this brand (Ambler, 1997).
The third strategy is absorbing and includes a lot of various aspects (Homburg, Quester & Krohmer, 2009). Nowadays, a lot of attention is paid to brand architecture creation (Strebinger, 2014). The reason is that there are a lot of large firms, which own not just one brand, but multiple brands. The example is Procter & Gamble company. Knowledge about how to built an effective brand architecture are extremely important because a company, which have a big amount of various brands need to control it and to combine all these brands into a single system (Strebinger, 2014).
The creation of international branding strategies includes a full analysis of the desired entry market, but also the planning of all activities of the company both outside and inside. There is a need to determine how the firm will manage the brand in different markets and who is going to watch that process. In addition, it is very important to determine whether an international brand will differ from the parent brand or not, will the new brand, reinforcing the parent brand, increasing profit, or just mislead customers with confusing (Douglas, Craig & Nijsse, 2001).

Brand architecture

In order to understand how the launch of the brand in the international market will affect the parent brand and how to achieve success in this process, there is a need to study and understand the principles of brand architecture. It plays a crucial role in international brand developing and makes the integration of company’s strategy with international market easier (Douglas, Craig & Nijsse, 2001).
Steps to establish international branding strategy starts with the consideration of all possible strategies and identify the main principles and aspects of how to use the brand in the international market effectively. In addition, the company must determine how the brand should be extended and which of the international operations will be organized (Douglas, Craig & Nijsse, 2001). Thus, in the classical theory brand architecture is divided into the ‘Branded House’ and ‘House of Brands’ (Aaker & Joachimsthaler, 2000). The example of ‘Branded House’ can be such brands as Samsung, LG, Sony. These companies use the main brand for all products, and it represents the whole company. ‘House of Brands’ represents such type of brand architecture, where every product lives under its own name and has its own positioning. The example is Unilever. The Aaker’s model of brand architecture called ‘brand relationship spectrum’ includes a large number of hybrid forms. In addition, it simultaneously represents the portfolio of all brands. Moreover, Kotler and Pfoertsch (2006) write, that this ‘brand relationship spectrum’ intersects with three main levels of strategic branding, which have been described above in the typology of brands: corporate brands, mixed and brand dominant. ‘Branded house’ corresponds to the corporate strategy of the brand (master brand, parent brand, umbrella, or product brand), and the ‘house of brands’ strategy individual (product) brand (Kotler & Pfoertsch, 2006). The decision on whether the company to adopt a house of brands or branded house will affect the further development of the brand and its strategies in the international market (Singh, 2012).

1. Introduction
1.1 Background
1.2 Problem discussion
1.3 Problem
1.4 Purpose
1.5 Research questions
1.6 Definitions
1.7 Limitations
2. Frame of references
2.1 Brand advantages
2.1.1 Brand and the added value of the company
2.2 Brand typology
2.2.1 Main types of brands
2.2.2. The most popular types of brands in fashion industry
2.3 International branding strategies
2.4 Strong brand creation
2.5 Features of strong international brand creation in fashion industry
2.6 The dynamics of Swedish fashion industry
2.7 The dynamics of Russian fashion industry
3. Method
3.1 Research philosophy
3.2. Deductive and inductive reasoning
3.3 Qualitative and quantitative research
3.4 Data collection
3.5 Data analysis
3.6 Method evaluation
4. Empirical findings and analysis
4.1 Interviews findings
4.2 Interview analysis
4.3 Survey findings and analysis
5. Conclusion
5.1 Basic conclusions
5.2 Differences, features and similarities of international branding strategies: Russia and Sweden
5.3. Possible opportunities for branding strategies development: Russia and Sweden .. 46
6. Contribution
6.1 Contributions to the theory and practice
6.2 Recommendations for future research
7. References
8. Appendix
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