Audi Haus –A Brand Extension

A study in brand development and implementation of a proposed brand

extension

Ryan Barrass (1508134) Jordan Parkinson (15096680) Jack Nutter (15066381) Harvey Blundell (15101269)Brand Management – Assignment 2

Contents1.0 – Introduction:................................................................................................................... 3

2.0 – Summary Analysis............................................................................................................3

3.0 – Brand Extension Rationale...............................................................................................3

4.0 – Brand Extension...............................................................................................................5

Research...............................................................................................................................5

Products............................................................................................................................... 6

Strapline...............................................................................................................................6

Name....................................................................................................................................6

Marketing.............................................................................................................................7

Logo......................................................................................................................................7

Retail.................................................................................................................................... 7

5.0 – Summary.........................................................................................................................8

References............................................................................................................................... 9

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'1.0 – Introduction:

Brand extensions has been implemented as a growth strategy by a range of companies with the intention of ‘extending the original brand name into a new sector’ (De Chernatony and McDonald, 2003: 357).The purpose of this report is to produce a proposal for the design and implementations of the creative elements of the Audi brand extension Audi Haus.

The Audi Haus brand extension proposed is for Audi to begin producing home appliances such as washing machines and toasters. This would be a viable brand extension due to Audi’s brand associations with build quality, innovation and reliability, being easily transferred to home appliances.

2.0 – Summary Analysis (Audi, No Date). Audi is an Automobile company that was founded in 1932. The company was formed by the joining of four companies hence the four rings present in their iconic logo. Audi has strong roots with motorsport, and was one of the first companies to utilise All Wheel Drive or “Quattro” systems in a production car. (Forbes, 2016) The company is currently listed as one of the most valuable brands in the world.

Audi’s Current position in the Automotive industry is currently very strong with one of their key aims within the marketplace being “delivering profitable and sustainable growth” (Audi 2016). This essentially means that Audi consider profitability as something that is developed over a period as appose to a ‘get rich quick scheme’.

In relation to market share Audi currently possess (Miller, 2016) 6.42% share of the UK automotive industry maintaining this and improving steadily on this year on year. Currently the brand image of Audi is one of sophistication and quality amongst other things. The company have developed a reputation for quality and concise engineering throughout recent years creating a loyal brand following. Using the National Readership Survey Social Grading framework Audi’s key consumer segment is the ABC1 segment. (NRS, No Date)

ABC1 segment consists of professionals in administrative and managerial roles, this segment makes up 54% of the population in the UK.

3.0 – Brand Extension RationaleThe Brand Extension proposed is Audi Haus, The planned extension is for Audi to begin producing luxury home appliances. Brand extensions are the use of “an established brand name to introduce a new product" (Keller 2003, p. 577). By using Audi as a parent brand, it allows for the organisation to venture into this new market without having high expenditure or risk associated with start-up organisations. This is since Audi have prior credibility and people have pre-conceived associations with the brand this could be through tangible or intangible elements or values of the brand see (Fig 1).

Because of these elements and values, Audi already have an extremely strong core brand to develop an extension. The reason this is the Brand Extension has been chosen is that in despite of the fact that Cars and Home Appliances may seem considerably different; in most cases, many people consider both to be high involvement purchases; this is because of not only the initial capital at steak, but also the need for high reliability associated with both products. Based on this rationale, the brand extension of Audi Haus has a high chance of being successful. Especially through leveraging the reliability of Audi Cars as a brand value (Dapena, 2015). Audi ranked as number 3 on the report by CNN Money for the top ten most reliable cars of 2015.

Because of Audi’s current outstanding reputation within the automobile industry, and a large existing loyal following (primarily consisting of ABC1s or families), this will allow for

both brand evangelists, and the normal consumer to personally invest more into the brand that is Audi. Audi Haus as an extension takes utilitarian objects such as toasters and washing machines, and enhances them by transferring Audi brand values to these otherwise nondescript items. Contemporary designs, and modern technology, whilst simultaneously maintaining impeccable quality and reliability. This would appeal to the segment of the market that already own an Audi vehicle and who are already well aware of the associated brand values, while also introducing a whole new market segment to these positive brand attributes.

In developing a luxury product, many concerns arise regarding pricing strategies. On one hand, you have the brand loyalists to Audi, this segment of the market who one would assume will pay a higher price for the product; on the other, we have the rest of the market A consumer who it is assumed is aware of Audi and their values, but does not own an Audi vehicle. Because of the associations of quality and innovation (alongside price) with the current Audi brand, we would have to opt for a premium pricing strategy. It is a consideration that many customers may be reluctant to pay an initially high price for a completely different product than Audi are used to developing, possibly resulting in quality concerns for some. However, due to Audi’s current tangible and intangible values, the demand for a product of this kind could potentially be extremely high. It is however essential when pricing this product for consideration to be taken to avoid alienating the average consumer with a high priced product offering, despite the associated functional aspects.

In assessing the viability of the market for the extension, considerations of market segmentation must be made. Audi Haus is targeted at the ABC1 group. Since ABC1 Makes up 54% of the UK population, this allows for the market to be very lucrative in theory. Currently no other direct competitors to Audi e.g. – BMW or Mercedes produce their own comprehensive range of home appliances. This leaves the market void in relation to extending support or affiliation to an automotive brand into the home. This idea of extending people’s ability to support a brand is something which is proven to be successful; Audi have even themselves created brand extensions e.g. Audi suitcases and luggage. !""##$%&'()**+'

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4.0 – Brand Extension

ResearchThrough conducting the web-based survey, we asked participants to list the different household appliances which they have purchased over the past 24 months. This question showed the most bought items amongst participants of the questionnaire were microwave

which 8 consumers had bought, kettle with 7 people buying over the last 24 months. Other popular items included; steam cleaner, coffee machine and toaster.

When we had initially set about work on the project, we felt it would be beneficial to base the Audi Haus product range around what consumers are purchasing, as essentially, these products are popular amongst consumers.

In terms of developing these products further, the conducted market research focussed on premium household appliance brands and products consumers were most likely to buy. This was beneficial as it gave an indication as to what product features that needed to be included in the products designed for Audi Haus to fit with the parent brand current image of being known for build quality, innovation and reliability. Through conducting market research and ensuring our products were of a higher specification than competitors, we could produce a pricing strategy for Audi Haus by which will premium based as Brassington and Pettitt (2013: 259) states ’a product perceived as better than the competition will have a higher upper threshold than one perceived as poor value’.

When creating a strapline for any brand there are a few things to remember if you want it to stick. As Wheeler (2013:25) said a strapline can be the centerpiece of a marketing strategy. Some of the characteristics to consider would be, making the strapline unique and different fromthe competition. We believe that ‘Entwefen Von Perfektion’ (Designing Perfection) meets this criteria. Within Wheeler’s theory there are certain strategies to consider, such as whether the strapline is either imperative, descriptive, superlative, proactive or specific. We again believe that our strapline is descriptive of the service, as the english translation is Designing Perfection. As a group we decided that it was important for us to use the parent brand's heritage (German) so they have their strapline in german. We thought it was important to do this, so existing customers of the parent brand would make the link between the two brands without too much thought.A brand name is one of the most important aspects of a brands identity. A brand's name is the only thing the majority of customers will actually remember, so it is imperative to get this right. As Wheeler (2006) said a brand's architecture should be taken into consideration. As a group we decided when naming our brand extension we would go down the route of a sub-brand/ subsidiary. We wanted to use the parent brand in our name, so we decided to sit down and

brainstorm, before finally coming up with Audi Haus. We believe this name would work as it is pronounced the same in both languages, so this would avoid confusion. VanAuken (2005) also said that a name with two or more words in is less memorable. Wheeler (2013) claimed that effective names had some specific qualities such as the name is meaningful, distinctive positive and visual, As a group we believe that Audi haus meets this criteria as the name uses the word ‘haus’ which is german for house which also means homeProductsThrough conducting the web-based survey, we asked participants to list the different household appliances which they have purchased over the past 24 months. This question showed the most bought items amongst participants of the questionnaire were microwave which 8 consumers had bought, kettle with 7 people buying over the last 24 months. Other popular items included; steam cleaner, coffee machine and toaster.

When we had initially set about work on the project, we felt it would be beneficial to base the Audi Haus product range around what consumers are purchasing, as essentially, these products are popular amongst consumers.

In terms of developing these products further, we conducted market research into the brands consumers were most likely to buy from as stated in our online survey and other premium household appliance brands were offering as part of their products. This was beneficial as it gave an indication as to what product features that needed to be included in the products designed for Audi Haus to fit with the parent brand current image of being known for build quality, innovation and reliability.

Through conducting market research and ensuring our products were of a higher specification than competitors, we were able to produce a pricing strategy for Audi Haus by which will premium based as Brassington and Pettitt (2013: 259) states ’a product perceived as better than the competition will have a higher upper threshold than one perceived as poor value’.

StraplineWhen creating a strapline for any brand there are a few things to remember if you want it to stick. As Wheeler (2013:25) said a strapline can be the centre of a marketing strategy. Some of the characteristics to consider would be, making the strapline unique and different from the competition. We believe that ‘Entwefen Von Perfektion’ (Designing Perfection) meets this criteria. Within Wheeler’s theory there are certain strategies to consider, such as whether the strapline is either imperative, descriptive, superlative, proactive or specific. We again believe that our strapline is descriptive of the service, as the English translation is Designing Perfection. As a group we decided that it was important for us to use the parent brand's heritage (German) so they have their strapline in German. We thought it was important to do this, so existing customers of the parent brand would make the link between the two brands without too much thought.

NameA brand name is one of the most important aspects of a brands identity. A brand's name is the only thing the majority of customers will actually remember, so it is imperative to get this right. As Wheeler (2006) said a brand's architecture should be taken into consideration. As a group we decided when naming our brand extension we would go down the route of a sub-brand/ subsidiary. We wanted to use the parent brand in our name, so we decided to sit down and brainstorm, before finally coming up with Audi Haus. We believe this name would work as it is pronounced the same in both languages, so this would avoid confusion. VanAuken (2005) also said that a name with two or more words in is less memorable. Wheeler (2013) claimed that effective names had some specific qualities such as the name is meaningful, distinctive positive and visual, As a group we believe that Audi Haus meets this criteria as the name uses the word ‘haus’ which is German for house which also means home.

MarketingThe marketing for Audi Haus predominately focuses on traditional media such as print and television however, the campaign does incorporate social elements.

Through the poster campaign, Audi Haus would be to release outdoor print advertisements in cities where we proposed to open retail stores, one week prior to announcing the concept of Audi Haus. Producing the print campaign one week prior is crucial to consumer curiosity around the extension as Stafford and Faber (2005:194) state ‘if the time gap is too long consumers may not be motivated to elaborate’.

The images used for the print advertisements are all linking to the products Audi Haus would release, for example, the image of clothes on the washing line a representation to the Audi Haus SMART washing machine.

Once Audi Haus has been announced to the public, a television advert for the Audi Haus Solo Coffee Machine will run on all major channels during prime time slots to make consumers aware of the products features such as the smartphone app being used to work the coffee machine from another location. The advert will feature a celebrity endorsement, which it is suggested by Pringle (2004: 77) ‘the choice of a celebrity as being best for it is one of the more important decisions that will ever be taken for the brand’.

Through research into a range of celebrities, it was decided Pierce Brosnan would be an excellent celebrity endorser for Audi Haus as he represents the ideal man, the sort that consumers aspire to be like.

LogoA good logo is essential in creating positive brand equity and awareness (van Grinsven and Das, 2014). By using design elements that already exist within the “scheme” of Audi’s design ethos, we create a higher perceived similarity between the parent and the extension which leads to higher brand extension success (Ma et al., 2008). The use of the Audi rings in the logo in both the black and white versions create the coherent link between the brand, and help transfer the positive brand equity to that of the extension. The link, and extreme similarity between the extension logo within the colour, and design, enhances the chance of

success and how they perceive the extension in their long-term memory (Shang et al., 2017).

RetailThe retail distribution is particular important in launching a luxury product such as this one. Ref. Because of the size of the potential market, the base models of the products would be stocked in various electrical goods retailers, alongside this, due to the luxury nature and the higher price point of the goods themselves, alongside this they will also be on display and available for purchase in their own showroom-esque stores, both mirroring the Auto aspect of the business and mirroring the immense success of Apple stores as a luxury goods retailer (Bhasin, 2017). Stores will have a minimalist product display style, similar to the car show room. Stores will also be full service (Brassington et al., 2010), with attendants available to assist with customer service, sales, and delivery queries. Stores will be located in high-street high foot traffic areas Staff will be dressed in smart casual clothes with a black Audi polo shirt and smart shoes in order to reflect the associated brand values of the brand and the Extension

5.0 – SummaryIn summary, the proposed brand extension, backed up by expanded propositions regarding the logo, marketing material, retail elements, and the products themselves all expand on the idea of Audi home appliances and make it a viable business opportunity for the parent brand.

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Bhasin, K. (2017) The Secrets Of The Apple Store's Success. Business Insider. [Online] [Accessed on 27 March 2017] http://www.businessinsider.com/apple-store-secrets-2013-1?IR=T.

Brassington, F., Pettitt, S. and McMillan, K. (2010) Principles of marketing. 1st ed. Harlow: Financial Times Prentice Hall.

Brassington, F., Pettitt, S. and McMillan, K. (2010) Principles of marketing. 1st ed. Harlow: Financial Times Prentice Hall.

Chapman, (2017) Advertising. Slideshare.net. [Online] [Accessed on 29 March 2017] https://www.slideshare.net/idlehans/advertising-12879421.

Darvill, J. (2017) RATINGS! Latest viewing figures for Coronation Street, EastEnders, Emmerdale. TellyMix. [Online] [Accessed on 29 March 2017] http://www.tellymix.co.uk/ratings/305276-ratings-latest-2017-viewing-figures-coronation-street-eastenders-emmerdale.html.

De Chernatony, L., McDonald, M. and Wallace, E. (2003) Creating powerful brands in consumer, service and industrial markets. 1st ed. Oxford: Elsevier/Butterworth-Heinemann.

Kolowich, L. (2017) 22 Companies With Really Catchy Slogans & Brand Taglines. Blog.hubspot.com. [Online] [Accessed on 29 March 2017] https://blog.hubspot.com/blog/tabid/6307/bid/33535/10-companies-that-totally-nailed-their-taglines.aspx#sm.00132zrs1apdcnu10zk1d35njip05.

Ma, Q., Wang, X., Shu, L. and Dai, S. (2008) 'P300 and categorization in brand extension'. Neuroscience Letters, 431(1) pp.57-61.

Mintel, (2017) UK Car Review - February. Mintel.

Olesen, J. (2017) Color Meanings - Learn about Colors and Symbolism. Color-Meanings.com. [Online] [Accessed on 29 March 2017] http://www.color-meanings.com/.

Pringle, H. (2004) Celebrity sells. 1st ed. Chichester: Wiley.

Shang, Q., Pei, G., Dai, S. and Wang, X. (2017) 'Logo Effects on Brand Extension Evaluations from the Electrophysiological Perspective'. Frontiers in Neuroscience, 11.

Stafford, M. and Faber, R. (2005) Advertising, promotion, and new media. 1st ed. Armonk, NY: M.E. Sharpe.

van Grinsven, B. and Das, E. (2014) 'Logo design in marketing communications: Brand logo complexity moderates exposure effects on brand recognition and brand attitude'. Journal of Marketing Communications, 22(3) pp.256-270.

What’s in a strapline?. (2017) Cambridge Network. [Online] [Accessed on 29 March 2017] https://www.cambridgenetwork.co.uk/news/whats-in-a-strapline/.

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