Luxury for the Masses: A Study of the H&M Luxury Collaborations with Focus on the Images of the Luxury Designer Brands

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UPPSALA UNIVERSITY Department of Business Studies

Bachelor Thesis

Date: March 2010 Authors:

Carole Ginman Charlotte Lundell

Catherine Turek Supervisor:

Nazeem Seyed-Mohamed

L uxury for the M ^asses

A Study of the H&M Luxury Collaborations with Focus

on the Images of the Luxury Designer Brands

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“The media is constantly redefining what luxury is. Luxury can

be a dirty sock if dressed up the right way” Zac Posen

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Executive Summary

A strong brand is important for all companies; however, it is imperative for the success of a luxury fashion house as the image is one of its core assets. As strategic alliances are increasing in popularity the effect they have on how customers look at the partner brands is both interesting for the general person, but also – and more importantly – vital knowledge for companies pondering such a strategic move. The major focus of this study is to answer the question of how luxury designers’ collaborations with high street retailer Hennes & Mauritz affect how consumers perceive the luxury designer brand’s image.

Theories on both brand extensions and co-branding have been compared to both qualitative and quantitative research conducted for the purpose of this investigation. This comparison has been made by using a model depicting the relationships between the collaborating brands.

Through both acquiring a broad scope using the survey and deeper thoughts through focus group interviews the authors were able to gain a more holistic view of how people regard the luxury designer brands. The factors mainly investigated were those of change in awareness and change in purchase behaviour or intention, as they would be indicative of how people felt toward the luxury designer brands.

The result of the investigation showed that the general perception of the luxury designer brands after the collaborations was positive with consumers in all segments. The collaboration did not cause a significant backlash on the regular luxury consumers, as the majority of this consumer segment also stated that they were not bothered by the collaborations.

The collaborations could be seen as successful for the luxury designer brands as they managed to garner a lot of attention from new consumer groups, whilst at the same time managing to retain their regular customers. The reason found for not having had a negative impact on the brand was the way in which the collaborations were performed. That the brands had chosen a suitable partner where the perceived fit was great; that the associations with the collaboration and the partner brand did not infringe on the associations with the luxury designer brand; and the time frame of the collaboration, all meant that the consumers generally did not lose confidence in the luxury designer brands.

Key Words: Brand Image, Brand Extensions, Co-Branding, Consumer Behaviour, Luxury Designer Brands, H&M

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Sammanfattning

Ett starkt varumärke är viktigt för alla företag; särskilt viktigt är det för lyxföretag inom mode då varumärke och image är essentiellt för dess framgång. Det faktum att strategiska företagsallianser blir allt mer vanligt förekommande ökar intresset för dess effekter på konsumenters uppfattning av respektive samarbetspartner. Detta är intressant, inte enbart generellt sett, utan också och kanske mer uppenbart, för företag som funderar på en sådan strategi. Det huvudsakliga syftet med följande studie är att undersöka hur samarbeten mellan lyxföretag inom mode och lågpriskedjan Hennes & Mauritz påverkar hur konsumenterna ser på lyxföretagens varumärken.

Teorier som behandlar både brand extensions och co-branding har applicerats på både kvalitativ och kvantitativ data genomförd speciellt för denna studies syfte. Den kvantitativa undersökningen har givit denna studie en bred bas medan djupgående kommentarer från fokusgrupperna har försett författarna med en mer övergripande bild av hur konsumenter uppfattar lyxvarumärkena. Förändring i medvetenhet och köpvana, eller avsikt att köpa, är de faktorer som främst undersökts då dessa anses vara indikationer på konsumenters attityder gentemot lyxföretagens varumärken.

Den generella uppfattningen av lyxföretagens varumärken efter samarbetet med Hennes & Mauritz var positivt inom alla kundsegment.

Att samarbetet skulle kunnat slå negativt mot lyxföretagen – med hänsyn till hur de skulle mottas av lyxkonsumenterna – inträffade aldrig i en större utsträckning då majoriteten av detta segment uttryckte att samarbetet inte förändrade deras uppfattning.

Samarbetena kan från företagens sida ses som framgångsrika då de lyckats väcka uppmärksamhet bland nya konsumenter samtidigt som de lyckats behålla sina lojala kunder. Den främsta anledningen till varför samarbetet inte har haft någon större negativ effekt på lyxföretagens varumärken är tack vare dess utformning och utförande. Att lyxföretagen allierat sig med Hennes & Mauritz – som matchar lyxföretagens image bra –har gjort att associationerna till samarbetet, och H&M, inte har stött sig med associationerna gentemot lyxvarumärket i sig. Generellt var alla konsumenter även överens om att samarbetenas korta tidsperiod var ytterligare en orsak till att de inte förlorade förtroende för lyxföretagen.

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PREFACE

The authors have a strong interest for brand management and for the creation of strong brands.

Further, they are greatly fascinated by luxury and the concept of image.

The idea of combining these interests and fascinations led to the project of investigating how luxury brands – usually with strong brand images – can maintain this image when collaborating with a company who has a completely different brand identity.

Researching this topic and exploring the phenomenon of brand extension and co-branding – as means of financial growth and strengthening brand image – in relation to luxury brands, allowed the authors to combine and deepen their knowledge of two of their greatest areas of interest.

Carole Ginman, Charlotte Lundell & Catherine Turek Uppsala, March 2010

©We, Carole Ginman, Charlotte Lundell and Catherine Turek, declare that the text and work presented in this Bachelor thesis is original and that no sources other than those mentioned in the text and its references have been used in creating this study.

The copyright of the Bachelor thesis rests with the authors. The authors are responsible for all of its contents. University of Uppsala is only responsible for the educational coaching and beyond that cannot be held responsible for the content.

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1. Challenges of the Changing Face of Luxury

Luxury houses – and other companies alike – aim to increase their profits, and part of doing that is through growing. Growth, however, becomes a rather problematic issue when the company caters to a very slim segment such as the luxury market. However, times are a-changing in the luxury industry. The concept of luxury is shifting and is no longer as precise as it used to be. The luxury segment has become broader in recent years – ‘traditional luxury’ houses such as Chanel are now competing with ‘new luxury’ brands such as Jimmy Choo, and the evolution of the luxury segment has resulted in a wider span of what is now considered luxury (Truong, McColl and Kitchen, 2009).

With this upsurge of ‘new luxury’ brands it is becoming increasingly important for luxury companies to differentiate themselves. From this, luxury brands are to a higher extent using new strategic moves, such as brand extensions and co-branding, to make sure that they stand out from the crowd to establish their brand in the minds of consumers. Extending their brand into more lines or diversifying into other categories, creating a wider potential customer base, is thus a way of managing this problem of increased competition. Further, it is a necessary evolution for brands through time, as a way for them to adapt to the current market climate (Kapferer, 2004:

171). However, not all luxury brands find creating a separate sub-brand a viable option, but instead embark on other similar projects of adapting to the market.

The annual Hennes & Mauritz (H&M) luxury designer collaboration is such a project.

Whereas luxury brands sometimes are reluctant to spend a lot of resources on starting a new permanent line or a long-term project with another company, a short-term collaboration with a well known retailer such as H&M is a new and alternative way for luxury brands to generate attention. The H&M luxury collaborations constitute a strategic way for firms to extend into new segments through a partner brand (Uggla, 2005: 10), a way for two brands to create a unique product (Leuthesser, Kohli and Suri, 2003). This kind of co-branding is more complex and has become increasingly popular with ‘new luxury’ brands in recent years, and designers as diverse as well-known Karl Lagerfeld in 2004 to fairly unknown Comme des Garçons in 2008, have created collections in collaboration with H&M (H&M, 2004) (H&M, 2008).

The reason for this evolution and these new strategies amongst the luxury brands is that people, despite the current economic climate, are ‘trading up’. They are substituting some of their ordinary goods with luxury items (Darlington, 2004). This democratisation of what has traditionally been described as ‘top-of-the-range’ products constitutes a new market, somewhere in limbo between luxury and high street (the mass retailers competing for the same customers as

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H&M). It is a market with consumers who previously were reluctant to buy expensive products but that now have the opportunity to do so. This ‘limbo-land’, sometimes referred to as masstige, is proof of the increased importance people place on image and luxury. Thus, it offers vast opportunities and is important for marketers to understand (Truong, McColl and Kitchen, 2009) (Darlington, 2004). (Parment, 2006: 16)

Luxury evokes feelings of uniqueness and exclusivity, and is characterised by products of high quality, controlled distribution and premium pricing (Okonkwo, 2009). The brand management strategies used by luxury managers are different from the strategies used by managers of more mainstream brands. This as it is important for luxury brands to strictly maintain the consistency between perceived prestige and price premiums and thus preserve their brand’s exclusivity. The desire factor of something – the want – is far more crucial for luxury brands than for high street or commodity brands. (Stegemann, 2006) Consequently, brand management is highly central to luxury companies. With this in mind, the democratisation of luxury begs the question - at what stage does a brand become attainable to so many people that it no longer represents luxury? At what point is the consistency between perceived prestige and price premiums affecting the want negatively? (Nueno and Quelch, 1998)

When a luxury good is found everywhere it loses its exclusivity and becomes ordinary.

Making a luxury brand attainable to the masses – through brand extension, co-branding or in other ways – may diminish the brand’s attractiveness to the regular customers of luxury (Pitt et al., 2009). Consumers buy brands that they identify with, but if the brand changes it may, crudely put, cause an identity crisis for the customer, and perhaps lead to him or her abandoning it for another more stable brand that they can identify with. Luxury companies thus face a dilemma as they try to deliver growth without compromising their brand’s promise and exclusivity (O'Donnell, 2009).

“Tailing couture labels to the high street is tricky. It can open up a lucrative new market – or kill a brand.”

(Hoesa, 2008)

Whereas research has been conducted upon the effects on parent brands in growth strategies, the results have varied. Some claim that luxury brands ‘lose their prestigious character when over diffused’ (Dubois and Paternault, 1995), whilst others maintain that the parent brands’

equity is unaffected or even improved when a collaborative brand is introduced (Washburn, Till and Priluck, 2000). Some research has been done focusing on H&M in the co-branding practice,

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9 however, there have been fewer articles published as to the impact on the luxury partner brands.

The inconclusive results regarding the impact on parent brand image and the effects on the luxury brands is what interested the authors to write this paper. What are the objectives of the collaborations for the luxury designer brands? What trade-offs were made and how has the collaboration impacted how consumers view the brand? Do, for example, regular consumers of luxury goods feel cheated when products that they have bought at a high premium price become available to the masses for chump change under the same brand name? These are questions that will be discussed in this essay.

1.1 Aim and Research Question

This study focuses on the brand image of a luxury designer brand, in relation to its collaboration with H&M – in the H&M luxury collaborations. It investigates how the consumers’ perceptions of the luxury designer brands’ respective images changes through a collaboration with high street retailer H&M, and by the associations connected to H&M and the collaboration itself. How do consumers feel about the luxury designer brand – is it still seen as luxurious or has the collaboration altered how consumers view it? This leads the authors to pose the question that is central to this paper.

How does a collaboration with high street retailer H&M affect consumer perception of the luxury designer brand’s image?

1.2 Limitations to the Research Question

This paper will deal exclusively with the impact that the H&M luxury collaborations have had on the luxury designer brands’ respective images, and thus not focus on how the H&M brand has fared. While the H&M collaboration is a communications device for the luxury designer brands in raising awareness and extending their reach, it is a relatively innovative and unconventional strategy. The authors will not focus on how the H&M luxury collaborations – as communications and marketing strategies – have been implemented, but will solely research the collaborations’ effects on consumer perception of the luxury designer brands.

Also, the empirical research will be conducted in Sweden and conclusions will hence not be generalised to incorporate all countries in which the collaboration collections have been sold, but will solely account for the Swedish market. However, as the method used for sampling the data collection was haphazard sampling, the answers from the respondents could prove to be skewed. The authors are thus careful not to draw rash conclusions based on those results.

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1.3 Outline

The paper will begin with a brief definition of luxury, followed by a review of the concepts of brand equity, brand identity and image, as well as consumer behaviour. Brand equity describes what the value of a brand is, whereas the section on identity and image discusses the difference between the concepts and the importance that there is congruence between them. Consumer behaviour will explain the reasons for why people buy certain things in general and luxury in particular.

Following this the growth strategies of brand extension and co-branding are explained, including risks and opportunities with such moves. Thereafter the H&M luxury collaborations are categorised in terms of which aspects of the growth theories are relevant to the collaborations.

In the next section the methodology of the study is described, including motivations for choice of theory as well as how the empirical research was conducted. Also explained under this heading is how the empirical data will be used in answering the research question. Subsequently the empirical data will be presented and then analysed, before a conclusion is presented.

2. Luxury Defined

Luxury is defined by something expensive and extravagant that is hard to obtain; an indulgence rather than a necessity (Corbellini and Saviolo, 2009: 19), and such items are known to provide consumers with extra pleasure compared to ordinary products, aiming to not only be functional but to flatter all senses at once (Stegemann, 2006). A definition of luxury and its six characteristics has been identified; excellent quality; very high price; scarcity and uniqueness;

appealing aesthetics and polysensuality; ancestral heritage and personal history; and lastly the fact that luxury is excessive sometimes bordering on unnecessary. In other words, luxury is, in its traditional meaning something beautiful and appealing that is not available to everyone, either because of financial barriers or because it is made in a limited number. (Laurent, Dubois and Czellar, 2001)

3. What’s in a Brand?

3.1 The Value of a Brand

It is difficult to counter arguments as to the importance of brands; without some kind of recognition of a company, what would consumers have to identify their products with? What would differentiate the company from the countless number of competitors? A brand is the intangible values associated with a product that differentiates it from other similar items and

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BRAND EQUITY

Brand Loyaly

Brand Awareness

Other Proprietary Brand Assets

Reduced marketing costs Trade leverage

Anchor to other associations Familiarity

Brand to be considered Reason to buy

Differentiation Price

Extensions

Help process/retrieve information

Create positive attitude Extensions

Competitive Advantage Perceived

Quality

Brand Association

s

makes consumers choose this particular one in favour of the other selection (Ueltschy and Laroche, 2004). What differentiates a product from a similar product produced by another company is the value added by the brand, which is referred to as brand equity (Ueltschy and Laroche, 2004). Aaker defines it as follows:

“Brand equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers.”

(Aaker, 2002: 8)

These assets include the brand name awareness, to what extent customers are loyal to the brand, its perceived quality, and the associations that can be drawn to the brand (Aaker, 2002: 8).

These are depicted in the figure below.

Figure 1 – Adapted from Aaker (2002)

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The degree to which each asset, brand loyalty, brand awareness, perceived quality, brand association and other proprietary brand assets, is important to the brand varies, and depends on what values it sees as most integral to their company. The process of branding thus incorporates developing and building the reputation of a brand name through a balancing act with the assets, enhancing the brand’s strong suits whereas trying to improve any eventual shortages in the asset categories. (Aaker, 2002: 8)

3.2 The Importance of Congruence between Brand Identity and Brand Image

Brand image is essentially how the consumers perceive the brand identity. Whereas this might sound rather complicated, the simple way of explaining it is through stating that the brand identity is how the company sees itself, how it specifies its purpose, meaning and its self-image. The image is how the consumers receive and interpret this message. Everything from the products that the company produces, the people that are associated with the brand, the places where the brand is seen and the communications it uses are all signals upon which consumers create an image of what the company is. A common misconception when it comes to these two concepts is that they are one and the same. However, as has just been shown, identity should be clearly formed within the company and emanate through all channels the company chooses to utilise, whereas the signals are there for consumers to freely create an image of how they perceive the company.

Consequentially, it is imperative for the company that the brand’s assets are managed in such a way that the image that consumers construe is in line with the company’s perception of itself.

(Kapferer, 2004: 98-99)

The brand image is an important resource as it gauges how consumers feel about a company, and hence also the likelihood of them purchasing its products. The brand itself can contribute to gaining a competitive advantage. Image has a lot to do with brand equity, as it is the combined result of how consumers react to how companies manage their assets. As previously mentioned, the importance of each asset varies between different companies. For this particular investigation, all of the assets of brand equity will be investigated, but each to a varying extent.

(Stegemann, 2006)

3.3 Consumer Behaviour, Brand Image and Luxury Brands

Consumers purchase luxury goods for their symbolic value (Grubb and Grathwohl, 1967) and to satisfy their hedonic needs (Solomon, 2007: 79). Abraham Maslow has developed a framework for how people categorize their needs, from the most basic needs such as food and water to the need to satisfy their ego and their self (Solomon, 2007: 82-83). As an example, before aiming to

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13 satisfy the need for, for instance, a new car, people need to ensure that they have a safe place to stay. In other words, even though consumers may want something self-fulfilling they make sure that they have covered their basic needs first before pursuing the wants. Maslow’s hierarchy of needs ranges from psychological, safety, and belongingness to ego needs and the need for self- actualisation. Central to this study, belongingness needs signifies the sense of seeking love and affection and acceptance by others, whereas ego needs relate to the fact that people want things that are somehow prestigious and can show status and accomplishment (Solomon, 2007: 126- 127).

Consumer behaviour is thus in part related to the consumer’s self-concept, which represents a principal value around which the consumer lives. The self-concept is how the person sees him- or herself and is something that he or she constantly works to maintain and make more valuable, which also makes it something that the consumer wants to protect (Grubb and Grathwohl, 1967). In the current materialistic society, people are placing an increasing amount of value in their possessions and satisfying the ego needs described by Maslow. Hence, consuming luxury goods is a way to increase the value of the self in regards to a person’s surroundings. This kind of status consumption is evident in all parts of society; both the wealthy and people with less means are attracted by status symbols and seek to purchase such brands (O'Cass and McEwen, 2004).

As mentioned earlier, the perceived brand image of a company influences a consumer’s decision to purchase a product from a certain brand (Nueno and Quelch, 1998). Image is perhaps more important for luxury brands than for other sorts of brands, as it – with all its intangible components – is an implicit part of the luxury product (Kapferer and Bastien, 2009: 116). These intangibles, connected to the brand name, are key to the luxury brands’ profitability (Kapferer and Bastien, 2009: 120). The luxury brand provides consumers with a self-concept and sets itself apart from other brands, not only through the high price, but also with culturally accepted attributes that make it acceptable as a social stratifier (Kapferer and Bastien, 2009: 117) (Nueno and Quelch, 1998). The brand image conveys information of the owner’s identity; consumers of luxury do not only purchase an item, but also an image – in essence, they purchase a statement (Kapferer and Bastien, 2009: 120).

‘Luxury is access to a dream’. (Kapferer and Bastien, 2009: 128) This dream is based on two factors: awareness and purchase. Speaking of the former, the luxury brand must be known and recognised in order to be desired. For instance, there are numerous young designers who may not be highly desired as consumers are not aware of their existence (Dubois and Paternault, 1995). Regarding the latter, the other factor influencing the dream is the number of wearers of

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the brand in relation to the number of aware consumers. Too many people purchasing and owning the brand leads to brand diffusion, effectively killing the dream by eliminating the brand’s exclusivity and social status. If the brand seems attainable to the masses it loses in exclusivity, which provides less incentive for customers to purchase it to strengthen the self-concept.

(Kapferer and Bastien, 2009: 129)

A luxury brand is differentiated from other regular brands through the inspiring and aspirational aspects that characterise luxury (Kapferer and Bastien, 2009: 127). Despite this relatively confining stipulation there is nothing saying that there is no room for change within the luxury dream. The luxury brand must also be allowed to develop along with the market and not be hindered from reinventing and renewing itself. In other words, the luxury brand must ensure that it maintains traditional customers while at the same time focus on attracting new customers and making sure that it does not become obsolete in the current market climate. In fact, brands on the luxury market have most often grown by moving out of their original field (Kapferer and Bastien, 2009: 137). A popular strategy or marketing approach to maintain the brand’s status while still attracting new customers is through the more frequently seen collaborations between luxury brands and a high street fashion brand. While these collaborations create awareness they also incorporate the threat of the brand becoming too widespread. Brand ubiquity must be dealt with in order for the brand not to lose its lustre and attractiveness, or dilute the image upon which the luxury brand is so heavily dependent (Berthon et al., 2009).

4. Growth and Expansion of the Luxury Brand

The focus on brands and their intangible values has increased as consumers have become more interested in the signals that the products they purchase convey – as a means to differentiate themselves and express their identity and lifestyle (Parment, 2006: 16). At the same time and partly due to this, the demand for luxury goods and services has increased. Apart from the dip of the previous years due to the financial crisis, the global luxury industry has grown at a pace of nearly 15 percent since 2003 (Cavender and Rein, 2009) (Cheong and Phau, 2003). Over the past decade luxury has been the fastest growing market in many countries world-wide, the explanation to this growth is based on the changes in consumer behaviour, trends and tastes (Cavender and Rein, 2009).

However, luxury brands are not only growing within their original consumer base, they are now internationalizing their brands as well as broadening their appeal to target other segments (Cheong and Phau, 2003). Brand extensions and co-branding are both strategies used for widening a brand’s reach and therefore relevant for this study, and are discussed below.

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4.1 Brand extensions

4.1.1 A hot topic but not a new concept

Brand extension is not a new concept; it is at the core of the luxury brand model, and a result of companies striving for growth and profitability on mature markets. They are strategic moves where businesses stretch beyond their original comfort zone and partake in new activities under the same brand name. Most companies, even ones that were reluctant initially, have engaged in brand extensions today (Kapferer, 2008: 295). The research on brand extension has partly focused on the consumers’ perception of brand extensions – would the extension concept be appealing to them? Another area of research is whether or not the brand equity would be diluted by an extension through the extension’s failure to preserve the ‘brand contract’ (Kapferer, 2008:

317).

4.1.2 Extension and the diffusion of brands

Brands can extend vertically in two directions, either upwards (toward higher price and quality) or downwards (toward lower price and quality) (Pitta and Prevel Katsanis, 1995). Downward extension – diffusion brands – aspire to create a connection with the luxurious parent brand, whilst the same time as providing other segments with more economical alternatives to satisfy their desire toward status consumption (Aaker and Keller, 1990) (Cheong and Phau, 2003).

Stretching a brand downwards always incorporates the risk of a negative impact on the brand image, weakening it and simultaneously making it less exclusive (Parment, 2006: 177).

4.1.3 Brand extensions implemented successfully

There are several factors impacting whether a brand extension will be successful or not, out of which the most frequently discussed are quality and perceived fit. How consumers view an extension is influenced by the quality of the original brand and the perceived fit of the new extension. (Kapferer, 2004: 258)

Whereas Kapferer (2008) states that it is unwise to attempt a brand extension if the parent brand does not have a reputation of quality, perceived fit is perhaps most important (Martinez, Polo and de Chernatony, 2008) (Kapferer, 2008: 320). The fit is a measurement of the psychological gap between the extension and the brand’s typical product (Kim and Roedder John, 2008). This fit can, for instance, be based on whether the product is in the same product category as the parent brand or if it is intended to complement other products under the brand (Cheong and Phau, 2003). Another dimension of fit appropriate for the present research is that of brand image fit; explained as the similarity between the image of the parent brand and its extension (Grime, Diamantopoulos and Smith, 2002). Cheung et. al. (2003) state that ‘consumers respond more favourably if they are able to perceive a fit between the extension and the parent brand’.

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4.1.4 Evaluation of brand extensions

When extending a brand, companies face the risk of diluting the brand image. The brand image is, as mentioned previously, one of the luxury brand’s core assets. Thus, an extension leading to a possible change in consumers’ beliefs and associations with the brand makes such an action especially hazardous for luxury brands (Kapferer, 2004: 264-265). To prevent a breach in the brand contract, caution must be paid to the attributes and feelings associated with the extended product (Kapferer, 2008: 317) (Cheong and Phau, 2003) (Martinez, Polo and de Chernatony, 2008).

These risks must, however, be weighed against the opportunities that a broader customer base would compose. The decision of stretching the brand or not must be based on a long term vision. This becomes an issue as no study can anticipate the future and because it is dependent on how successful a company is in implementing the extension. (Parment, 2006: 179) Therefore, arguments that brand extensions are either always good or always bad are oversimplifications of a complex concept that is dependent on context. In other words, there are both risks and opportunities associated with brand extension, and these depend on the situation. (Buday, 1989) 4.1.5 Masstige

A new area of research within brand extension is that of masstige, the term that describes downward luxury extensions. It is viewed as an innovative strategy to position a prestige brand with a broad appeal without diluting the brand (Truong, McColl and Kitchen, 2009). Truong et.

al. (2009) mean that brands adopting a stance between luxury and high street fashion can be classified as masstige, whereas other authors argue that masstige is a phenomenon by which luxury and designers collaborate with high street stores while still maintaining their usual business (Andal-Ancion, Coyle and French, 2010). One can say that masstige is an attempt to offer prestigious brands at relatively low prices. Masstige has grown out of the trend of trading-up, where consumers switch some of their purchases from normal products to something more exclusive (Darlington, 2004) (Silverstein and Fiske, 2003).

4.2 Co-branding

Whereas brand extensions involve developing new products or new lines under the same parent brand, co-branding joins two separate well-known brands together for a unique, collaborative project (Leuthesser, Kohli and Suri, 2003) (Ueltschy and Laroche, 2004). Brand extensions imply a transfer of meaning of a brand from one category to another, while a brand alliance combines and elaborates associations from the collaborating brands with the associations derived from the collaboration (Uggla, 2004). Strategic alliances between brands have become increasingly popular

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17 as they offer an innovative way of boosting effectiveness of the marketing spend, as well as enhancing the speed of the cash flows and ultimately creating shareholder value (Uggla, 2004).

They are seen as a way to gain a competitive edge over other companies, and recognise that the public’s knowledge of an alliance can be added value (Kapferer, 2004: 92). Uggla (2004) states that the ‘essence of co-branding is that both partners gain access to the other’s customer base’.

As previously mentioned there are obviously financial incentives, but it may also be a way for partner brands to extend downstream into new categories, creating depth to its brand personality (Uggla, 2004).

There are several ways in which strategic brand alliances may be formed; however, the most prominent are through ingredient co-branding or composite co-branding (Uggla, 2005) (Aaker, 2002: 298-299). Ingredient co-branding refers to collaborations in which one brand is an additive to an already existing brand (Aaker, 2002: 298), such as adding Daim into a McFlurry ice cream at McDonalds. Composite co-branding, however, is a more symmetrical way of merging brands as it divides both the burden of production and the reward more equally between the collaborating brands (Uggla, 2005: 9) (Aaker, 2002: 299). These two constitute the highest levels of shared value creation in co-branding, whereas co-branding for reach and awareness – where a brand increases awareness by gaining access to the partner’s customer base – generates the lowest level of value (Leuthesser, Kohli and Suri, 2003) (Uggla, 2004). However, all the mentioned ways of collaborating involve leveraging a brand to another (Uggla, 2004).

When a brand links to a partner, the knowledge a customer has of the brand changes.

The brand image that consumers form is now built upon several factors rather than just the original brand, including the collaboration and the partner brand. (Uggla, 2004) Co-branding actually places some important characteristics, such as image, in the hands of the partner brand (Leuthesser, Kohli and Suri, 2003), which makes it a risky move as the original brand is partly relinquishing control over its identity. Therefore it is important to ally with a strong reputable brand, rather than a company with a less than satisfactory one, simply to enter a certain category or market (Uggla, 2004). In general, brands with a low recognisability benefit from co-branding, which makes co-branding an alternative for entry into a particular market in which the brand previously has not been present (Baumgarth, 2004). Furthermore, well respected and powerful brands have relatively little to lose as high equity brands are seemingly unaffected by co-branding with low equity brands (Leuthesser, Kohli and Suri, 2003).

As in brand extension research, co-branding also focuses on the importance of the perceived fit of the parent brands in the collaboration (Leuthesser, Kohli and Suri, 2003) (Uggla, 2004) (Aaker and Keller, 1990) (Grime, Diamantopoulos and Smith, 2002) (Czellar, 2003). Uggla

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(2004) states that ‘fit refers to the psychological congruency between two brands’, and claims that the success of a co-branding endeavour relies on the fit between the two parent companies, as well as the fit between the parent companies and the new product. Thus it is imperative for the success of the co-branding project that the fit between the partnering parties is deemed positive.

If two incompatible brands collaborate it can lead to disaster for one or maybe both brands, as the respective brand identities may erode and in turn result in confused positioning (Uggla, 2004).

Perceptions of a collaborative product may have secondary effects on the parent brands, called ‘spill over effects’, although not to the same extent that line or brand extensions would as they are more intricately connected to the brand (Leuthesser, Kohli and Suri, 2003) (Votolato and Unnava, 2006). Thus, there is a risk that the associations toward the collaboration affect how consumers view the parent brands. Also, the associations of the parent brands can inadvertently have implications on their partner’s respective image. Moreover, there is a considerable risk that the associations of a previous partner of one of the brands could affect the new partner (Uggla, 2004).

4.3 The H&M Luxury Collaborations Categorized

The H&M luxury collaborations between the high street retailer and various luxury designer brands is a peculiar case of strategic brand alliance, as they are not a typical case of brand extension, nor a typical case of co-branding. Although they include elements pertaining to these theories, the collaborations are short term projects whilst both brand extensions and composite branding are long term projects; thus the collaborations are seemingly something other than a simple a mix of these strategies (Leuthesser, Kohli and Suri, 2003).

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Figure 2 Association Model

This model describes where the H&M luxury collaborations are situated on the map of possible growth opportunities, and works as a point of reference for understanding the nature of the collaborations and how they influence the brands’ respective images.

H&M LUXURY COLLABORATION

CO-BRANDING

between the Luxury Designer Brand and H&M

CONSUMER PERCEPTION

(Primary research – focus groups and survey)

Based on the variables; opinion (awareness and associations towards the H&M Luxury Collaborations), behaviour (consumers’ intentions to purchase

from the collaborations) and attribute (information regarding the consumer him- or herself)

BRAND IMAGE

of the Luxury Designer Brand

DOWNWARD BRAND EXTENSION

(Masstige)

of the Luxury Designer Brand

Research on the collaborations’

effects on consumers’ perception of the luxury designer brands in

collaboration with H&M

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The luxury designer brand can extend upwards (to higher price and quality) or downwards (to lower price and quality), engaging in the market of masstige as Truong et. al. (2009) define it. The model depicts that in the case of the H&M luxury collaborations the luxury designer brands select to aim downwards towards the masses. However, the H&M luxury collaborations do not entirely fit under this heading, as they are short term, and because two brands combine together to create the collection. That is why another area of growth needs to be taken into account – co-branding. In the previous section, the concept of co-branding was used to describe how two brands join together to produce a unique product. Again, this is usually a long term approach and the H&M luxury collaborations are ‘one-offs’, typically a single collection. With this in mind, and as there is no known previous categorisation of the relationship between these variables, the model presented in this paper combines theory from both the extension and co-branding literature. It places the H&M luxury collaborations in their own separate category related to both the previously mentioned theories. Thus, the collaboration is, as depicted in the model, a result of the luxury brand stretching downwards and jointly with another brand – in this particular study H&M – developing a new line.

Since this study aims to investigate how these particular strategic alliances influence the consumers’ perception of the luxury designer brands, research on how the collaborations have affected the consumers’ perceptions of the brands is conducted through a survey and six focus groups. This research is based on three variables – opinion, behaviour and attribute – through which consumer perception of the luxury designer brands’ respective images is appreciated.

5. Method

Three types of data variables were taken into account in order to operationalise the research question – opinion, behaviour and attribute (Saunders, Lewis and Thornhill, 2009: 368). Opinion refers to how people feel about something, their opinions and attitudes towards the luxury designer brands, H&M and the collaboration itself; behavioural variables describe how people act in relation to the posed question and these are based on consumers’ awareness, associations and intentions to purchase from the H&M luxury collaborations and the luxury designer brand – before and after the collaborations; and attribute refer to the respondents’ characteristics, such as if they regularly buy mass-market or luxury clothing items, or a mixture of both (Saunders, Lewis and Thornhill, 2009: 368). Perception is a rather complex concept to measure; rather, it must be appreciated in reference to a solid base of information. Together, the above presented variables enable such an appreciation of the perception the consumers have of the luxury designer brands.

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5.1 Choice of theory

At this stage it might be worth repeating the purpose of the investigation, which is to see how collaborations with high street retailers affect consumer perception of the luxury designer brand.

The authors have continuously reflected over their ideas and the literature researched throughout the study to make the topic more precise. This has meant that the different stages in the literature research were revised spirally, thus offering insight in what information was indeed relevant for the topic (Saunders, Lewis and Thornhill, 2009: 60). As previously explained, in the search for appropriate literature to approach the topic investigated in this study, the authors found that there were no theories explicitly applicable to the question. The theories found only partly defined the luxury designer collaborations with H&M – the theories could be applied to the case but there was no single concept that singlehandedly explained the phenomenon. Thus, parts of different theories providing a good base for analysis were combined to construct a new framework, from which the authors could examine the collaborations and put them in a context.

A broad range of literature and academic articles regarding luxury in general, brand image, consumer behaviour et cetera, have been examined in order to gain an understanding of the nature of the collaborations and their purpose, an understanding of how luxury on the one hand and high street fashion on the other is perceived, and how these collaborations could possibly affect the luxury designer brands’ respective images. While all the acquired information has not been cited in the study, it has constituted a sound base for the authors, and thus both read and referenced articles are included in the bibliography. Several articles in this area of research reference each other which in turn lead the authors’ to use some more extensively than others.

Further, case specific information was secured through contact with Maria Gemzell who is in charge of the collaborations at H&M through an email interview (see appendix II for acquired information). This information gave the authors a deeper understanding of the nature of the collaborations and will be presented below to illustrate the case. The abundance of information enabled the authors to evaluate what was most relevant and valuable for the topic, and these were chosen to approach the study efficiently. (Saunders, Lewis and Thornhill, 2009: 349-351)

While numerous articles have been useful during the research process, one of the authors whose work has been greatly influential for the purpose of this investigation is Jean-Nöel Kapferer, who has both written books and published several articles regarding the concept of luxury brand management. He has investigated the nature of luxury brands and the factors that distinguish them from other brands, as well as discussed the topic of extending the luxury brand.

The importance of brand image is something that he underlines in his work and is something that the authors find important for the current research question. Kapferer’s seemingly extensive

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knowledge within the area of luxury brand management makes his work a reliable point of reference.

However, whereas this has been an excellent base upon which to begin, the topic studied in this paper is more complex than simply ‘luxury brand extensions’ and ‘luxury brand management’ which is why also, in particular Henrik Uggla’s, research on co-branding has affected the course of the investigation. He delved into the realm of brand associations and the spill-over effect of partner brands upon each other, although not explicitly for luxury brands. His model for a brand association base has been greatly influential in the authors constructing the model applied to the particular circumstances of the H&M luxury collaborations.

Also of critical importance to the investigation is the research on consumer behaviour, as the research question asks how consumer perception is affected by the collaboration. Obviously there are two parts to the question, one – how do consumers react when a brand stretches downwards, and two – how do they feel when the brand allies with another brand? These topics are greatly embedded in psychology research, which is why the authors have chosen to look deeper into the area of the self and construction of a self-image, as well as considering the consumer needs as described by Maslow.

Using these concepts enables the authors to investigate the research question, whether collaborations with high street retailers affect consumers’ perception of the original luxury designer brand. The complexity of luxury brands is described by the theory on luxury designer brand management, and is, combined with the theories on brand growth, a cornerstone of the collaborations between high and low. To analyse the perception of the luxury designer brand image is another concept that is important for the study and how it is valued by consumers, which leads to the significant role of consumer behaviour. How will consumers react to the collaborations? Will the luxury designer brand still constitute a consumer need on Maslow’s ego level or has it become sullied by its association with H&M?

5.2 Choice of method for research

To get an accurate appreciation of how consumers perceive brand image the authors have decided to conduct both qualitative and quantitative primary research, through focus groups and a survey respectively, so to get a wide grasp of the consumers’ thoughts on the luxury brands. As the subject of this study is relatively innovative there are no known previous investigations, and hence not anything to compare it to, which is why the authors have had to rely solely on their own research. Therefore it has been imperative to do as much and as wide research as possible under this limited period of time, for which reason the authors chose to not only to use focus

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23 groups but to complement their qualitative research with a survey. The qualitative research will in the analysis provide depth to the answers, whereas the quantitative data offers valuable information that will be relied upon for the broader scope. An account of the process of both the quantitative and the qualitative follows below.

5.2.1 Qualitative Research Process

The primary method for data collection was through focus groups. Focus group research is in essence group based interviews in which the researcher is intended to moderate a group discussion rather than participate actively him- or herself (Omni Institute, 2010). This method was chosen due to the ability to get deeper and more developed answers from participants as to their views on luxury brands and the implication its association with H&M has on brand image.

The number of focus groups used for the qualitative study, and the constitution of these, was planned in order to obtain a higher degree of more complete answers from different individuals.

In all, there were five focus groups assembled with regard to age, as the authors believed that it would be easier for the participants to have a deeper and more interactive discussion if they were not intimidated by others in the group. As there were financial and also manpower constraints, it was decided that the focus groups should be relatively small, consisting of five to six participants in each, and that each session would last only an hour. (Saunders, Lewis and Thornhill, 2009: 342) Within these groups there was a mix of gender and income level. Divided according to age, the five focus groups covered:

Group Age Group (years old) Number of Participants

1 <20 5

2 20-25 6

3 20-30 7

4 30-40 5

5 >50 6

For each focus groups one of the authors acted as moderator whilst the other two were assigned the task of taking notes. The moderator was in charge of leading the discussion without actively interfering, equipped with a number of pre-prepared questions, acting in accordance with guidelines of conducting focus groups. However, not interfering in the discussion has been an ethical dilemma when conversation stalled. This was solved through introducing new topics or, albeit not ideal, conjuring examples with which participants could relate. (Saunders, Lewis and Thornhill, 2009: 343-347)

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The topics intended for discussion were initially made to match the questions in the quantitative research; however, with the focus groups there is the possibility to inquire more about associations to both luxury and the collaborations, as well as to H&M. Also, topics that the moderator introduced included ‘who buys, and why do people buy luxury’, with a focus on consumer behaviour. Without asking leading questions (so as to not bias the result) the participants were in the end of each focus group led to answer whether or not they believed that the luxury designer brands’ association to H&M had impacted their image. (The general topics for the discussion can be found in appendix III).

5.2.2 Quantitative Research Process

The quantitative research consisted of a questionnaire, and the purpose for this was to collect and cover a wide range of consumers’ perception and attitudes towards luxury, brand image and the luxury designer collections for H&M. In constructing the survey the three types of data variables that were mentioned above were taken into account – opinion, behaviour and attribute (Saunders, Lewis and Thornhill, 2009: 368). Both open questions, in which respondents could write their own answers, and closed questions were used. The closed questions were designed such that the respondents could answer by choosing from mutually exclusive categories covering all possible responses (Saunders, Lewis and Thornhill, 2009: 378).

An important issue when creating the questionnaire was to make it approachable, with an easy flow and a logical order to the questions to make it easy for respondents to complete.

Filtering questions are questions that eliminates part of the responding population through asking, for example, ‘have you bought luxury items’ followed by ‘if yes, please state why.’ These were used in order to only obtain answers from respondents that could actually provide insightful information. The layout of the survey was created with respect to the topic of the study and the respondents alike, making it attractive, encouraging and not too long (Saunders, Lewis and Thornhill, 2009: 307). The first section of the survey treats the general questions of age, gender and income, followed by questions regarding the respondent’s relationship to fashion to give the authors a general idea of how high on the hierarchy of needs consumers placed fashion. Part three included questions about H&M and the H&M luxury collaborations in order to see whether the general goal of the companies’ project had succeeded and whether it had affected consumers’

relationship to the luxury designer brands. (See appendix IV for complete survey)

The method used to obtain respondents was haphazard (or convenience) sampling and the final survey was distributed through a social networking website. The collection of replies continued until the required sample size had been reached (Saunders, Lewis and Thornhill, 2009:

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25 241); in this case 379 respondents, which is considered both representative and accurate in regard to the total population (Saunders, Lewis and Thornhill, 2009: 219).

5.2.3 Limitations to the primary research

Regarding the focus groups, the authors are aware that there is a slightly larger number of young participants compared to the other age groups, which could skew the results. However, this may prove to be beneficial for the study as these consumers constitute the luxury designer brands’

future client base and is why their opinions would be valuable knowledge for luxury designer brands contemplating a collaboration.

In the survey, while filtering questions were used in order to obtain replies from the right respondents to the right questions, the results showed that these were not fully successful. Some respondents proved to answer questions that they, through their response to the filter questions, should not have. This has been taken into account in the analysis of the information. Further, in retrospect the exclusion of an indecisive alternative may have caused some respondents to submit unrepresentative answers. (Saunders, Lewis and Thornhill, 2009: 219)

Also, the authors are aware that convenience sampling is prone to provide results that are sometimes biased and that generalisations made upon such results are likely to be flawed (Saunders, Lewis and Thornhill, 2009: 241). However, the technique and sample size chosen were deemed acceptable due to the time constraints of the investigation as well as the financial resources available at the authors’ disposal (Saunders, Lewis and Thornhill, 2009: 243).

5.3 Using the acquired information

For the analysis, the survey questions were used as a basis for getting an overview of the consumers; the general age, income and gender, as well as how much value they place in fashion.

Also, answers to chosen survey questions were cross-referenced in order to gain a deeper understanding of which consumers behaved in which way. A key variable upon which a large part of the analysis is based is what kind of fashion people purchase, thus dividing consumers into segments based on their purchase behaviour (mass-market consumers, luxury consumers as well as a group who buys both). This provides the authors with insightful information on the behaviour of each segment in connection to the collaborations, which in turn enables a more thorough discussion on the effects that the strategic alliances have had on how consumers view the luxury designer brands. More importantly, it shows which consumers view the brands in what way; providing information to the authors as well as prospective allies of H&M on how different consumer groups react to such projects.

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Looking at how different consumer segments – luxury and mass customers respectively, as well as the customers of both – perceive the collaborations, gives the analysis more depth and allows for a deeper understanding. It is essential to learn both what traditional consumers of the luxury designer brand think – in preventing alienation of this segment – as well as how other consumers see the brands, as they are the future potential customers. Analysing the consumers both as a general mass prevents information of how the respective segments feel about the issue, which makes it more difficult to make an accurate judgement.

Other key issues approached by the quantitative research are those of whether the collaborations have affected awareness of the luxury designer brands, and if this has impacted their purchase behaviour. Knowing about people’s purchase behaviour is telling of their opinion and perception of a brand as people assumedly buy things that appeal to them and not the other way around. Which consumers segments were aware or unaware of the luxury designer brands prior to the collaboration? Of these, for which segments was the level of awareness changed?

And, which consumers developed an intention to purchase from the collaborations or the original lines of the luxury designer brands? Posing these questions presents an idea of the consumers’ relationships and feelings toward the collaboration, and through that also the luxury designer brands. This leads in to how their perceptions of the collaborations (and also the perception of the partner brand) impact the image of the luxury designer brands.

The results from the focus groups generated another type of answers compared to the response from the quantitative research. Whereas the survey respondents were asked to answer closed questions easy to cross reference, the focus groups gave more reasoned answers where they could elaborate more on their thoughts. Thus, while the results of the survey describes the situation and can be analysed using the relevant theory, the ideas uttered in the qualitative research also enabled a discussion as to why things were the way they were. Using both quantitative and qualitative data thus gave the research a more comprehensive approach, which could be utilised to answer both if perception had been change, but also why the result turned out the way it had.

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6. Research

This section displays the results of the primary research from the focus groups and the survey.

6.1 Objectives with the Collaborations

According to Maria Gemzell the objective with the H&M luxury collaborations, for H&M and the luxury designer brands respectively, is to offer exclusive fashion at a good price and to reach new consumer groups. The collaboration creates a new marketing channel for the luxury designer brands and thus increases awareness of the brand with H&M’s customer base.

Criteria for choosing a guest designer includes looking at designers who could emphasize the trend that H&M wants to highlight for the season in question, but also not to pick a designer that is too similar to one of the previous collaborators.

6.2 Focus Group Interviews 6.2.1 Associations with H&M

When asked about their feelings toward H&M, the interviewees were quite unanimous in their response that the retailer connotes something that is popular, that they have a wide selection of clothes and styles ranging from basic clothing to more fashionable trends. One participant noted that ‘H&M is succeeding in attracting all kinds of customers without putting others off’. H&M clothes are perceived as inexpensive and attainable for everyone, enabling consumers to renew their wardrobe regularly. Some participants had doubts regarding the quality of H&M clothes,

‘Divided (H&Ms youth line) has bad quality products’ and ‘you don’t buy your fancy clothes at H&M’, however, most participants were in consensus that the quality has vastly improved in later years.

6.2.2 Luxury – What is it and who buys it?

The participants identified several characteristics of luxury; out of which high price was rather indicative of the level of exclusivity. One interviewee responded by saying that ‘Chanel, Stella McCartney, they are luxury whereas (Swedish brands) Acne and Dagmar are not. Luxury are the really big brands’, thus separating some rather expensive – for the regular person – stores from her perception of luxury designer brands. The participants agreed that luxury comes in limited editions, ensuring that it is not available for everyone. One person also said that ‘luxury is not the actual product, but the things around the product – for example, the service and the store’.

Most participants also expect nicer materials and a high level of quality, however, one interviewee noted that ‘you buy luxury for your self-image – you don’t consider quality’, and another person added that ‘you like the brand more than the product, you like what the brand

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symbolises’. According to the participants, reasons for buying luxury revolve around ‘making a statement’, or ‘fitting in with a typical crowd’. Another point made by one interviewee was that ‘if you have a lot of money you would buy more expensive things’.

6.2.3 Views on Collaborations between H&M and Luxury Brands

Several people pointed to the fact that the collaborations ‘generate a lot of publicity’, and

‘increases awareness and strengthens the luxury partner, for example, Stella McCartney’, while another reiterates that ‘the probability of going out to look at the luxury designer’s original line is higher after the collaboration’. The collaborations were in general received positively by the participants in the focus groups, who considered it a ‘fun project’ and thought it was positive for the general public. However, some also questioned whether it was equally positive for the regular purchasers of the luxury brand, because ‘the brand itself matters a lot to them’.

While some interviewees stated that ‘you lose confidence in the luxury brand if it pursues a collaborative line with H&M’ others were of the opinion that ‘the image of the brand has not changed after the collaboration since it is not representative of the luxury brand’s main line’. This was agreed upon by most of the participants, that there is a distinguishable difference between the collection designed specifically for H&M and the brands’ respective original collections:

‘there’s a difference between buying Viktor & Rolf and buying Viktor & Rolf for H&M’. They state that the collaborative lines are ‘not luxury, but still a bit of the designer’, and that they are more the ‘designer’s interpretation of H&M’, thus not giving them the ‘same feeling wearing collaborative clothes rather than the real luxury line’.

An important factor for the majority of the participants seemed to be that the collaborations were solitary collections. Many stated that the fact that it was a ‘limited edition collection over a short period of time’ gave the collaboration more of a promotional value, creating the hype that surrounds the collections every year. A lengthier collaboration would diminish these effects and subsequently harm the brand image. Also, the choice of partner was a factor brought up by several of the interviewees. They claimed that if a luxury brand collaborated with another high street store than H&M (mentioned examples were Swedish retailers Lindex or KappAhl) the luxury designer brand’s image might be affected in a more negative way. The choice of partner is important for the luxury designer brands if they choose to ally with another brand. In the words of one participant, ‘H&M is definitely not luxury, but the retailer’s fashionable and increasingly trendy image makes it a good match to the luxury designer brands. It is interesting to see these collaborations – where two strong, successful brands and creators of fashion from two different ‘levels’ are combined into one collection’. The topic of whether the