Emerging New Luxury Brands Marketing Essay

Published Date: 23 Mar 2015

Let us imagine that we have gone back a decade in time. There is a woman in some part of the world flipping through the pages of a high-fashion magazine. The minute she opens the magazine she is bombarded by images of luxury goods. Luxury brand names like Versace, Chanel, Gucci and Christian Louboutin shout out to her. All she desires is to own at least one piece from these luxury fashion goods. Unfortunately, the woman earns a middling income and can only dream about owning a Versace dress or a pair of Christian Louboutin shoes. Luckily for her, in 2004 Hennes & Mauritz (H&M) came up with a brilliant collaboration which made all her dreams come true.

For a long time access to luxury fashion goods had been limited to the elite classes. Since the 1990s there has been a boom in the luxury market because as times progressed traditional luxury brands such as Christian Dior started facing competition from emerging new luxury brands like Jimmy Choo. These new luxury brands brought in new branding and positioning strategies (Truong et al., 2009). The result of these strategies was the materialisation of 'masstige brands'. Even though masstige brands are priced lower than super premium or traditional luxury brands, they still hold a place above conventional products and enjoy a high level of prestige (Silverstein et al, 2005).

In order to tackle competition faced from these masstige brands, certain traditional luxury brands took an unconventional step. In June 2004 Hennes & Mauritz (hereafter referred to as H&M) announced that they would be releasing a limited edition collection designed by none other than Karl Lagerfeld, chief designer of Chanel (H&M, 2004). With this step, H&M began a fresh trend of 'co-branding' in the fashion industry between high-street and luxury fashion brands. Since then H&M have undergone an annual collaboration project with some of the biggest names of luxury fashion, the latest being French label, Maison Martin Margiela. With H&M making continuous headlines in the fashion industry for its collaborations with luxury fashion brands, the need to study the science of co-branding, especially in fashion, is becoming vital. Thus, this dissertation aims at exploring and investigating the term 'co-branding' and the role it plays between high-street fashion and luxury fashion brands. As H&M are the contemporary of this trend in the fashion industry, the issues discussed in this dissertation will be mainly based on them.

1.1 Company Profile

Company name

H & M Hennes and Mauritz AB

Industry

Retailing

Sub Industry

Fashion (clothing, accessories)

Headquarters

Stockholm, Sweden

Employees

94,000

Key People

Founder: Erling Persson

Chairman: Stefan Persson

CEO/Managing Director: Karl-Johan Perrson

Table : Company Profile of Hennes & Mauritz (H&M, 2012a)H & M Hennes and Mauritz AB is a Swedish retail company, functioning in the clothing industry. The company is known for designing fast fashion i.e. chic styles at cheap prices. The first store was opened in Sweden in 1947 under the name 'Hennes', selling only women's clothing. In 1968 the company bought Mauritz Widsforss, a hunting and fishing equipments store, changing the company name to Hennes & Mauritz. This was also the year the company started selling men's and children's clothing. Today, H&M have branched out into five independent brands which are globally recognised - H&M, COS, Monki, Weekday and Cheap Monday. Besides clothing, today the company also offers footwear, accessories, cosmetics and furniture. As of 2012, the company operates around 2600 stores across 44 countries. H&M's top two competitors are Spanish fashion group Inditex (who own Zara and Bershka) and American retail giant The Gap, Inc. From 2004 H&M started collaborating with some of the biggest names in the luxury fashion industry, a tradition they have since followed every year. Besides H&M's annual collaboration with some of the biggest luxury fashion houses, the company also has a long-standing tradition of getting together with super models and popular music artists to either design or be the faces of their seasonal collections and campaigns.

1.2 Problem Definition and Purpose

Co-branding is a relatively new concept in the field of marketing. The concept has been in practice for only the past few decades and the collaborations have often yielded mixed results. Co-branding has taken place in all sectors and industries from tobacco to automobile to retail to film-making to consumer goods. Co-branding is a moderately new term in the business vocabulary which is used to describe integrated marketing activities involving two or more brands (Blackett, Boad, 1999). It is important to analyse and understand the practice of co-branding as it has been gaining recognition in the recent years and can have a considerable impact on the future of branding. More and more consumer product manufacturers are becoming interested in co-branding strategies as it is a means to gain more exposure in the marketplace, fight competition and threats innovatively and at the same time share expensive promotional costs with a partner (Spethmann, Benezra, 1994). Co-branding gives companies a great opportunity to create something new, while sharing costs, and also provides them with an opportunity to present consumers with a market they may have not explored before. Besides undergoing classical brand extensions and other brand alliance strategies (like advertising alliances and dual branding), co-branding is a strategy which presents a brand an added method to differentiate themselves in a competitive environment (Helmig et al., 2008).

While co-branding in other sectors has returned mediocre results, co-branding in fashion has generally been extremely well appreciated. American discount retailer, Target, has often collaborated with designers such as Jason Wu, Issac Mizrahi and Neiman Markus, offering their designs for a slightly higher price than Target's usual rate. These attempts have been very well received by the mass consumers. H&M, especially, have a high success rate when it comes to this business practice. More than 1000 people entered New York's Fifth Avenue store in the first hour when Karl Lagerfeld, Chanel's haute couture and ready-to-wear chief designer, created pieces for H&M (de Chernatony et al., 2011). Another example would be the success of H&M and American designer Stella McCartney coming together. Queues were reported outside several H&M stores all across the world, forming from the night before the collection was launched (Okonkwo, 2007).

However, as successful as H&M's attempts at co-branding have been, this practice of luxury brands and high-street brands coming together has lead to a lot of debate and even criticism. According to the critiques, co-branding often hampers with the company's original brand equity and confuses the consumer. Although the names of the brands that come together are familiar to the consumer, the actual co-branded product is completely new. Thus, unable to make out what to think of the new product, the consumer makes a judgement based on the known brand names involved (Washburn et al., 2000). There have also been questions raised regarding the effect of co-branding on the image of one or both of the parent brands. Some critiques believe that co-branding hampers the reputation of highly ranked brands.

There have been sufficient works as well as research conducted on co-branding which are available to us. Considerable research has been conducted on co-branding in the retail sector. However, there has not been much detailed research on co-branding specifically between high-street fashion brands and luxury fashion brands. There are questions still left unanswered in this particular area. Therefore, this dissertation aims to investigate and study the practice of co-branding in this particular field and hopes to give a better understanding of this phenomenon.

1.3 Research Objectives

Taking into account the purpose of this dissertation, the main research objective that this study will try to answer is:

Exploring and understanding co-branding between high-street and luxury fashion brands.

In order to help present relevant answers for this dissertation, the main research objective can be further divided into the following sub-objectives:

To understand why co-branding occurs between high-street fashion brands and luxury fashion brands

To analyse the perception of consumers regarding co-branding in the fashion industry

To analyse the effect of such a collaboration on the brand image and reputation of both parties involved

To understand whether co-branding between a high-street and a luxury brand can yield successful results

1.4 Relevance of the Research

The following section provides a justification about the relevancy of this study. Arguments for both, academic and practical, relevance are discussed.

1.4.1 Academic Relevance

This dissertation surely has academic relevance in today's time. In order to study co-branding in the fashion industry, this study has merged various branches of marketing. Brand alliances, brand equity, brand leverage and consumer behaviour are combined and discussed together to help understand the phenomenon of co-branding. Although there is significant work already done on co-branding, only a few discuss the area in which co-branding has gained the most success - fashion. Thus, this dissertation tries to give a clear and more detailed explanation of why and how co-branding in fashion occurs and the effects it has on the consumer.

1.4.2 Practical Relevance

The practical relevance of this dissertation is also of significance. Co-branding is being frequently used as a strategy to stand out in a crowded market place (Dieleman, 2010). By understanding the science of co-branding, not just for general understanding, but especially for the fashion industry, more retail clothing brands can partake in it. By studying consumers' perception towards the collaboration of high-street and luxury fashion brands, managers can decide on whether or not creating a co-branding strategy is the right approach for them. Managers can also have a better appreciation of the effects of co-branding on their brand equity and brand reputation.

1.5 Limitations

As mentioned in the company profile, H&M have also collaborated with popular music artists like Madonna and Kylie Minogue to conceptualise and be the faces of limited edition lines and collections. Also, the fast-fashion company has collaborated with Finnish textile company, Marimekko, in the past to use their fabric designs on their products (Wettergren, 2010). These celebrities and companies are also brands in their own; however, this dissertation will not be discussing them. Only H&M's collaborations with luxury fashion brands will be taken into account. Thus, this dissertation only examines the relationship of a high-street and luxury brand, and not between other categories of brands.

This dissertation does not discuss the process of co-branding between H&M and the luxury brands, but the motive and effects of the collaborations. The questions this dissertation tries to answer are why co-branding occurs and what are the possible outcomes of it. How co-branding occurs is a question this study does not venture into. Also, this dissertation does not go too deeply into the marketing activities of the co-branded products and retail collections. Thus, answers to these questions will not be available in this study.

1.6 Structure

The following section of this dissertation talks about existing concepts, theories and research conducted that led to the formation of this study's research question. The section is a review of existing literature as well as a presentation of the theoretical framework. Concepts such as brand management, co-branding, fashion marketing, co-branding strategies, fashion strategies and so on will be discussed. The third chapter talks about the methodology selected to conduct this research. The chapter talks about the justification of choosing the research method as well as the possible limitations of the same. Chapter four represents the findings of this research as well as gives a discussion for each of the findings. This chapter evaluates the relevant research findings for each of the research sub-objectives. The final chapter of this dissertation presents a general discussion of the entire study, highlighting the key areas and important research findings. At the end of the dissertation is a list of references; sources which helped with the research of this study as well as sources one can look into for the purpose of further reading.

2. Literature Review

2.1 The Concept of Branding

Branding building is an important concept in the science of marketing and several definitions of this concept exist. The official definition of branding given to us by the American Marketing Association is that a brand is "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors." This means that even though a product or service may satisfy the same need as another, a brand provides it with an element which differentiates it from other products or services of the same kind (Kotler, Keller, 2011). The process of brand building is imperative for almost all companies, products and services because building successful brands promises future income stream and profit. Brands help build consumer loyalty which means that consumers will keep coming back to buy the brands and will support them even during crisis situations (de Chernatony et al., 2011).

However, the profile of the consumer is changing from what it used to be. The market place is getting more and more crowded with the constant addition of new products and services. Not only does this mean that there is a lot of fierce competition, but also today's consumer has a lot more choice than from a decade ago. Thus, it is extremely necessary to make one's brand stand out. This is where the concept of brand management comes in. Appropriate and effective practise of brand management can lend a hand in leveraging a brand, which leads to the making of a successful brand. The concept of brand management was created by Procter & Gamble's Neil McElroy (Harvard Business School, 2000). Effective brand management can lead to high brand equity. Brand equity is the additional value which products and services are seen to have, besides the functional value that they possess. This value is measured on the basis of what consumers feel and think about the brand as well as the market share and profitability that the brand enjoys (Keller, 2008; Aaker and Joachimsthaler, 2000; Aaker, 1996; Aaker, 1991). Proper practice of brand management can also do wonders for the brand image. Brand image is impression of the brand's personality (real or imaginary) that has been developed in the consumer's mind (Business Dictionary).

Various techniques can be applied under brand management in order to leverage a brand. One of these techniques is brand extension. Brand extension is a marketing strategy wherein a company uses a brand name which already exists in order to penetrate into a new, different product category than which it is established in (Swaminathan, 2003). A somewhat new development has been formed from brand extension in recent decades which is known as the process of co-branding.

2.2 Co-Branding

Co-branding is a brand leveraging technique where two or more brands, each having significant recognition in the eyes of the consumer, co-operatively come together to create "a single unique product" while retaining the names of all the brands involved (Blackett and Russell, 1999; Leuthesser et al., 2003). This term is also referred to as 'brand alliance' and 'composite branding'. Co-branding provides marketers with the choice of opting for a short-term alliance, thus making it an attractive opportunity. It is not necessary for co-branding to be a long-term affair, as along other benefits, marketers are mainly looking for a quick sales boost (Spethmann and Benezra, 1994)

As discussed by Nunes et al. (2003), co-branding can be divided into four different types. They are as following:

Promotional/sponsorship co-branding - Here a company co-brands by being a part of an event's activities so as to link its image to that particular event in the mind of the consumer.

Example: Conseco 'the official financial services provider' of NASCAR

Ingredient co-branding - In this type there is a primary brand, which acts as an important component of the secondary brand.

Example: Sony Vaio laptop with an Intel microprocessor

Value chain co-branding - Here two or more companies come together in order to create a brand new experience for the consumer to increase differentiation. It can be further divided into three types:

Product-service co-branding - Yahoo! and SBC Communications coming together to form SBC Global Networks

Supplier retailer co-branding - Architect Michael Grave creating a line of co-branded products specially for American retailer, Target

Alliance co-branding - Airline alliances such as Star Alliance and SkyTeam

Innovation based co-branding - In this type two or more companies come together in order to present a brand new product or offering, to increase customer value as well as corporate value.

Example: Boating shoe manufacturer Sperry Top-Sider collaborating with New Balance to create an 'athletic boat shoe'

It is a known fact that brands play an important role in influencing culture in consumer societies. They not only satisfy one's utilitarian needs, but also serve some hedonic purpose. It is not in the power of the marketer to create the hedonic value that the brands hold. It is only the consumer who is in control of the feelings and meanings associated with a particular brand. Thus, it is safe to say that a part of the brand's equity is in hands of the consumers. Thus, the reason marketers decide on a co-branding strategy is to not only access the utilitarian benefit which a certain brand offers, but also to generate the hedonic value which the association with that brand would bring. There is a transfer of status, imagery and reputation of one brand to the other. Co-branding also reduces costs, as the R&D, production and marketing expenses get shared between the parent brands. Thus, co-branding is a quick way of improving all the aspects of marketing related issues (Askegaard and Bengtsson, 2005; Nunes et al., 2003).

There are also risks and disadvantages to co-branding. There is the risk of dilution, where a brand loses meaning for a consumer because of the co-branded product. There is a chance of a co-branding strategy resulting in a potential competitor. This happened when IMB partnered with Microsoft to develop DOS. Microsoft then had very low brand equity, but today they are a giant in the computer world. There is also the risk of devaluation. When aligning with a low valued brand, a high value brand may lose its reputation in front of the consumers. Co-branding may also limit a brand's market reach as they might be targeting the same consumer group with the new product as well (Nunes et al., 2003; Leuthesser et al., 2003).

Many theories and research have been conducted on brand alliances and their possible spillover effects. One of the first ones was by Simonin and Ruth (1998). A study was conducted by them to evaluate the change in the attitude of consumers due to the spillover effects of co-branding. The results of that study have matched the results of many other newer studies conducted on brand alliances. Baumgarth (2004) created a brand alliance study, based on Simonin and Ruth's study. The results of the study matched with the hypotheses presented by Simonin and Ruth. Baumgarth's model added improvements by giving importance not only to the brand fit, but also to the prior attitudes consumers have towards the brands. In a study conducted by James et al. (2006), it was found that the personalities of the two brands involved have an impact on the perception of the consumers towards the co-branded product. Bouten et al. (2011) too conducted a study, basing it on the Simonin and Ruth paper. The result of their study was that a perfect fit of both, the brand image as well as the existing products of the parent brands is required for a successful brand alliance.

As brand alliances started getting popular, researchers started concentrating on the term 'co-branding'. Abratt and Motlana (2002) devised a five-step brand transition process for companies who wanted to undertake co-branding. The process stresses on the importance of understanding consumer perception as well as the fit of the brands involved. The same result was seen in the strategic framework for co-branding created by Leuthessar et al. (2003) which would help marketers assess co-branding opportunities in order to leverage their brands. On the basis of this framework, possible co-branding can be assessed by the nature of the parent brands as well as their target audiences. Co-branding was slowly starting to be seen as an important marketing strategy. As a result of this, an ontology based co-branding strategy system, called OnCob, was created by Chang (2008). This system helps marketers and brand managers research the co-branding phenomenon based on the concepts of aim, category and effect. Co-branding was further researched by Chang (2009) to present a roadmap and guide for companies wanting to co-brand. Different industries were discussed wherein some results were successful, while some were a complete failure. Also, a co-branding matrix was presented, which gives researchers a better understanding of this emerging science.

The effects of co-branding on brand equity were studied by Washburn et al. (2000). The research results showed that co-branding is a win-win situation for both the brands involved, irrespective of their perceived brand value. When a high equity brand is paired with another high equity brand, the final co-branded product is perceived to have high value as well. Also, Washburn et al. found that in the case of a low equity-high equity brand pairing, it is the brand with a lower value that benefits the most from the co-branding, and although the positive effects might be less for the higher valued brand, co-branding does not have any negative effects on it. Motion et al. (2003) conducted a research on corporate co-branding and its effect on corporate brand equity. The research was conducted by studying the sponsorship of rugby team, All Blacks, by Adidas. The result of the study was that co-branding has a positive effect on the corporate brand equity, however as concluded by other studies, it is important that the parent brands have a common vision and similar brand values. Besharat (2010) undertook a study combining the strategies of co-branding and brand extension. A comparison between co-branding and brand extensions with respect to brand equity was carried out. The final result of the study matched the results of many previous studies i.e. the success of a co-branding strategy depends on the existing brand value of the parent brands. However, there was no significant difference between consumer perception of co-branded products or brand extensions. As long as the consumers saw a fit between the new products and the brand, they accept the new product positively.

A research was conducted by Thompson and Strutton (2012) to find out the effects of co-branding when one of the parent brand co-brands into a product category where it does not exist. However, the analysis showed that such an alliance is not likely to be successful. For a co-branding strategy to be successful, it is important for consumers to perceive a high level of fit between the brands involved. Another finding is that if a low value brand collaborates with a brand that is perceived highly in the eyes of the consumers, the co-branded product is likely to be viewed favourably. Thus, the brand fit plays an extremely important role in the success or failure of co-branding strategies.

Erevelles et al. (2008) conducted a study on ingredient co-branding in the B2B sector, an area which does not have much research done. The finding of the research is that ingredient co-branding occurs in B2B sector usually when there is a threat of entry from a more fiscally rich competitor. Thus, brands get into an ingredient co-branding strategy to block out this competition. Besides this, the secondary brand also has monetary benefits as the ingredient supplier provides their component at a reduced cost.

Askegaard and Bengtsson (2005) proposed the importance of cultural meaning in co-branding. Compared to the conventional approach to co-branding, their paper provides us with a new perspective. They suggested that each brand characterises certain symbolic and cultural meanings to the consumers, ones that may not be visible to us directly. The cultural meanings of the parent brands have a heavy influence on the meaning that the co-branded product represents. However, the interpretations provided by Askegaard and Bengtsson are far too imaginative and descriptive. No matter how creatively brand managers develop cultural meaning for a co-branded product, at the end it is only the consumer whose interpretation of brand image and meaning count.

2.3 Fashion

2.3.1 Luxury Fashion

Luxury brands consist of those products and services which are generally associated with the affluent and the elite class. The luxury fashion industry is a global multi-billion dollar sector. Hundreds of brands are a part of this industry, some of them being Louis Vuitton, Chanel and Prada. Besides being valuable, luxury brands are some of the most influential in the world. For luxury goods, branding plays an extremely important role and is the core competence. This sector places high importance on branding and marketing strategy development by the use of human emotions and psychology (Okonkwo, 2007)

Tynan et al. (2010) sought out to address the nature of the value of luxury brands and how value can be co-created. Instead of taking the more common managerial perspective, they took into account the perspective of the consumer. They developed a theoretical framework and researched case studies to find out what types of value consumers look for in luxury branded goods. The result was that although a utilitarian value was a must for all luxury goods, it was the hedonistic or symbolic value which acted as drivers for the purchase of a luxury good and was seen as the differentiating factor by the consumers.

Reddy et al. (2009) studied the prospect of brand extensions for a luxury brand. In order to do so, they fashioned a 'Premium Adgency Grid', which "measured the extent to which a particular brand extension matches up to the values embodied by the core brand". The luxury brands were divided into the four quadrants of the grid - Star Brand, Aspiring Star Brand, Waning Star and Dying Star. With the help of this grid, marketers could measure their luxury brand's brand adgency and then consider expansion opportunities and the possible risks.

A framework was created by Moore and Fionda (2009) illustrating the various dimensions of the luxury brand to guide its marketing in the fashion sector. Their model identified nine key components which were deemed important for the creation of a luxury brand. Each of the nine components included sub-categories, which according to them, must be consistent for the successful creation of the brand. All of these components must be managed simultaneously for the creation and maintenance of a successful luxury fashion brand position. Thus, the Moore and Fionda model states that the management of a luxury brand should be consistent and coherent. However, the case companies in this research were all British and thus, the results are geographically and culturally narrow. A cross-cultural investigation would have provided a firmer insight in the marketing of luxury fashion brands.

A five-factor model and brand luxury scale was designed by Vigneron and Johnson (2004) to provide luxury product marketers with an instrument to measure the amount of luxury a certain brand contains. According to Vigneron and Johnson, luxury is contained in brands in a matter of degree. Some brands have a very high level of luxury, while some very low. The brand-luxury scale helps measure the level on luxury in a given brand. The research found that luxury is a multidimensional factor and this can be proved by the five-factor model. These dimensions can be established and monitored by using the brand luxury scale in order to create a lasting luxury brand. However, Miller and Mills (2012) argue that more than anything else, it is the perception of brand leadership that counts. In order to attain clarity on the subject of luxury brand marketing, they developed a conceptual model - the Brand Luxury Model (BML). This findings of this model state that trendy, up-to-date and visionary brands and perceived to be more luxurious than brands that try to be unique, imaginative or original. The BML also showed that consumers perceive a match between themselves and the image of the luxury brand user's with psychological or symbolic value. This finding is in sync with the research carried out by Liu et al. (2012)

Liu et al. (2012) explored the effect that the various concepts of self-congruity theory have on the consumer. Self congruity theory was developed by Sirgy (1986), which refers to the likeliness of a potential consumer to psychologically compare themselves with other objects and stimuli (brands in this case). This theory has been widely used to understand brand purchase behaviour (Sirgy, 1986). The three concepts studied by Liu et al. are Brand Personality Congruity, Brand User Imagery Congruity and Brand Usage Imagery Congruity. The relationship of these three types of self-congruity to the customer attitude and loyalty toward a luxury brand are studied in this paper. The study focuses on two brands - CK and Chanel - to understand the effect of a potential consumer's self congruity in the purchasing of luxury brands. The study found that Brand User Imagery Congruity and Brand Usage Imagery Congruity are much stronger predictors of attitude and loyalty than Brand Personality Congruity in either of the brands. It was found that the consumer's own self-image and perception of a typical user's image as well as usage imagery play an important role in a consumer's purchase intention and attitude towards a brand. The findings of this study were similar to the previous claims made by Sirgy et al. (1997), Liu et al. (2008) and Sotiropoulos (2003).

2.3.2 High-Street Fashion

High-street fashion describes the clothing retailers who cater to the mass-market. These retailers design and sell clothes which are affordable and are used for mass-consumption. The brands either have independent stores, franchises or are a part of chain stores. As the high-street fashion market started getting crowded with the introduction of more and more brands, competition started running high. In order to combat this competition, many of the high-street brands started the concept of 'fast-fashion'. These are brands like Zara, H&M and Mango who create affordable, trendy and disposable items to cater to the consumers' demands. Fast-fashion gives brands a competitive edge as they turn the latest runway designs to chic disposable clothes that the mass-market can afford (Tungate, 2008; Hines and Bruce; 2001).

Following the success of fast fashion, Cachon and Swinney (2011) developed a modelling framework to identify the key aspects of fast fashion i.e. enhanced design and quick response. The model showed that fast-fashion has an extremely quick impact on the purchase decision of consumers. Thus, there are consumers who are quickly and willingly purchasing high-street fashion goods. With the clientele of high-street brands increasing, the study of the perception of these brands became important. Willems et al. (2012) conducted a study on the impression consumers form based on another's fashion store patronage. The purpose of the study was to find out if people associate the personality of the brand with the personality of that brand's purchaser. Patronage of luxury as well as high-street brands was studied and it was concluded that not only does a high ranking brand like Armani contribute to consumer identity, but also a high-street brand like Zara does the same. Thus, brand image management should be given importance by high-street brands and not only high-flying luxury brands.

Besides traditional luxury fashion brands and high-street fashion brands, a new category of 'new luxury brands' surfaced out in the early 90s. Truong et al. (2009) provided an empirical evidence of the existence of masstige positioning strategies for new luxury brands. The research studied two new luxury brands. The findings are that both the brands studied are perceived, by the consumers, to be closer in prestige to the level of traditional luxury brands, even though the prices of the new luxury brands are much closer to those of the high-street/fast-fashion brands. This masstige strategy led the traditional luxury brands (and some new luxury brands) to form fashion collaborations. A study on the collaboration strategies of fashion companies was conducted by Chun and Niehm (2010). They wanted to identify the types of collaborations that occur in the apparel companies and give an overall statement on the collaborations. It was found out that luxury brands and mass brands are the two areas where collaboration is frequently performed. Although the two collaborating brands tend to have differences, the overall results show that there are more mutual benefits involved. They also found out that the product/design was given the most importance in the outcome of the collaboration.

Based on all the literature reviewed it can be seen that there is sufficient work written on co-branding, luxury fashion and fast-fashion individually. Not only that, there are many smaller concepts linked to them that have been thoroughly researched too. However, there are not many empirical or theoretical researches conducted on the combination of the three concepts. The effect of co-branding in fashion does not seem to be deeply delved into. Thus, this dissertation aims to bridge that gap and present a relevant study of co-branding between high street and luxury fashion brands.

3. Research Methodology and Limitations

3.1 The Methodology

Research for this dissertation has been carried out with the help of the secondary research data already available. Secondary data is made up of sources of data and other information which is collected by others, usually for an objective other than the problem at hand, and is archived in some form. The sources of secondary information are government reports, industry studies as well as textbooks and journal articles found in libraries and databases. Secondary research is usually conducted before the beginning of any sort of primary research. Advantages of this research method are that it is a relatively economical method, being an inexpensive way of collecting data. This method is also time-saving and quick, as often the sources are found archived in a certain location. Relevant secondary data can provide new and unique insights to the research problem at hand. However, there are certain disadvantages to this method as well. As most of the secondary research already conducted is for a problem different than the one at hand, there are issues of accuracy and relevancy that one might face. The prior research might not be relevant to the research being conducted or might not be sufficient for it. Primary research might be necessary to gain full insight on certain issues. There is also the possibility of the data being outdated (Stewart, Kamins, 1992; Malhotra, David, 2007).

This dissertation has collected and summarised data which already exists in the industry regarding co-branding, especially in the retail sector. Co-branding has been extremely popularised in the last decade and considerable amount of research has been done on this subject.

3.2 Why Secondary Research?

Co-branding can be analysed either through primary research or secondary research. Ideally, primary research for this study would make use of interviews with top managers of high-street fashion brands as well as luxury fashion brands and questionnaires distributed among the consumers. However, due to restrictions placed on available employees of relevant companies, there has been some difficulty to conduct primary research. Unfortunately, senior employees and management have not been available for an interview.

That would leave us with the option of taking into account just the views and opinions of the consumers. However, simply conducting primary research with the consumers would not be sufficient. It would not justify this study because this study investigates the overall need and effect of co-branding, taking into account both, the two parties involved, as well as the consumer perception towards the practice.

In order to not present a half-view dissertation, this research study is entirely based on the recent literature concerning co-branding. Since several studies exist, the available sources are deemed to be sufficient. Although there is not much research conducted to the use of co-branding solely in the fashion industry, considerable research is available on the use of co-branding in other retail sectors. These conducted researches have principles and theories which can be applied to the fashion industry as well.

3.3 Secondary Research Data Sources

The secondary data for this study has mainly sourced from textbooks and academic literature based on branding techniques by widely recognized authors like Tom Blackett, Bob Boad, Leslie de Chernatony and David Aaker. These authors are known to be the gurus of branding and brand management and have written notable works on the subjects, especially on co-branding. Other academic textbooks based on the basic principles of marketing and consumer behaviour have also been used to investigate this dissertation. Besides these, textbooks concerning the fashion industry and fashion trends have also been looked into.

Besides the use of textbooks and academic literature, web-based articles and publications have also been sourced out. Marketing journals, brand management journals, consumer marketing journals and fashion journals are sought and thoroughly read. Databases are laden with academic articles regarding co-branding, brand alliances and consumer behaviour. These articles are of tremendous importance to this study.

When it comes to the fashion industry, it is one of the most fast-changing industries out there. Not only fashion trends, but also the marketing trends in this industry are rapidly changing every day. Thus, newspapers and magazines play a very important role as they are the most recent source of information and thus, they too have been utilized.

Another important segment here is the fashion blogging community who play a very important role in the influence of fashion on the mass market. Not only do the consumers consider them influential, but so do the fashion brands themselves. Therefore, the opinion of fashion bloggers is imperative to be considered. These fashion blogs have also been read and reviewed in order to support the academic and industrial research.

3.4 Limitations

As mentioned above, this dissertation does not collect any form of primary data. This study does not take into account the direct views and opinions of fashion brands and their consumers, but bases the analysis and findings on the secondary research that has already been conducted in this study's field. Thus, the dissertation does not go into as much of the details of co-branding in the fashion industry as the author would have liked, especially when reporting the perception of consumers towards this practice. However, in spite of these limitations, this dissertation has tried to give an accurate account of the proposed research objective.

To conclude, all of the findings and results from the above mentioned sources have been carefully analysed to come to a meaningful and coherent conclusion on the influence and acceptance of co-branding in the fashion industry. The findings of this research can provide an insight into the rising popularity of retail co-branding and more importantly, whether or not it is best suited for the fashion industry as well. This study is an outlook into the phenomenon of fashion co-branding which is rapidly gaining popularity. However, the research outcome is in no way meant to be definitive as it has taken into consideration only secondary research sources due to non-availability and unresponsiveness of the senior employees of the relevant industries.

4. H&M and Co-Branding

This section is an analysis of the research objectives based on the example of H&M co-branding with various luxury brands. The analysis is conducted by the use of secondary research sources, most of which are discussed in the literature review. Textbooks, journal articles, theses, newspaper articles and magazine articles have been analysed in order to present the research findings.

4.1 H&M's Co-Branding History

Since 2004 H&M has had an annual tradition of collaborating with guest designers to create limited edition collections for the Swedish retail brand. These guest designers are some of the biggest names in luxury fashion, known for their expertise in haute couture, avant-garde and prêt-a-porter designs.http://www.thestylecolumnblog.com/wp-content/uploads/2011/12/smhm.jpeghttp://www.thestylecolumnblog.com/wp-content/uploads/2011/12/karl-lagerfeld1.jpg

http://www.thestylecolumnblog.com/wp-content/uploads/2011/12/lanvin-comp-hires.jpghttp://www.thestylecolumnblog.com/wp-content/uploads/2011/12/matthew-williamson.jpg

Figure 1: (Clockwise) Karl Lagerfeld, Stella McCartney, Lanvin and Matthew Williamson for H&M (The Style Column, 2011)

H&M's first collaboration was with German fashion designer and creative director for Chanel and Fendi, Karl Lagerfeld, for H&M's autumn 2004 season. The collection, called 'Karl Lagerfeld for H&M' consisted of 30 pieces designed by Karl Lagerfeld and was reported to be sold out within half a day of release all over USA and Europe (H&M, 2004; WWD 2004). The next collaboration was in 2005 with English designer, Stella McCartney. Called 'Stella McCartney for H&M', the 40 piece one-time collection was designed exclusively for women's wear and released in only 400 H&M stores around the globe. The designs were based on previous collections by Stella McCartney (H&M, 2005a; H&M, 2005b).

Dutch duo, Viktor & Rolf, was the third to come into collaboration with H&M for their autumn 2006 collection. The collection was called 'Struck by Love' and was made up of 35 pieces for women's wear, including a wedding dress, and 25 pieces for men's wear (H&M, 2006a; H&M, 2006b). The fourth collaboration H&M partook in was with Roberto Cavalli, Italian luxury fashion giant. 'Roberto Cavalli at H&M' was a 20 pieces men's wear and 25 pieces women's wear party collection featuring Cavalli's signature animal prints. Like the previous guest designer collections, this collection too was limited edition and sold in only 200 stores (H&M, 2007a; H&M 2007b). The next collaboration was in 2008 with Japanese fashion label Comme de Garçons. The label's head designer, Rei Kawakubo, designed an exclusive collection for H&M featuring women's wear, men's wear, children's wear and accessories. This collaboration also marked the opening of H&M's first store in Tokyo, Japan (H&M, 2008a; H&M, 2008b).

Seeing the successful consumer response, from 2009 onwards H&M decided to undergo a collaboration project twice in a year. The first collaboration that year was with English designer, Matthew Williamson. Matthew Williamson designed not one, but two collections - one for spring and the other for summer which were released separately (H&M, 2009a). The second collaboration that year was with London based couture shoe designer, Jimmy Choo. An exclusive collection of casual to party shoes, bags and accessories for both women and men was released in autumn 2009 in a limited number of H&M stores (H&M, 2009b). The end of 2009 also saw H&M collaborating with French designer, Sonia Rykiel. A first of its kind, a lingerie and related accessories collection was released for Christmas 2009. Not only was this collection available at H&M stores, but also at Sonia Rykiel boutiques around the world. Sonia Rykiel also designed a knit-wear collection for H&M for spring 2010 (H&M, 2009c).

Autumn 2010 saw the collaboration between H&M and French design house, Lanvin. Lanvin's artistic director, Alber Elbaz had in the past stated that he would never do a mass-market collection; however he was intrigued by the concept of H&M doing luxury fashion (H&M, 2010). Another grand collaboration was seen in 2011, when Versace created a limited edition autumn collection for H&M. The collection was designed by Versace's creative director, Donatella Versace. The pieces were reminiscences of Versace's previous works (H&M, 2011a). Italian designer brand, Marni was seen to be collaborating with H&M for spring 2012. A collection feature Marni's signature prints and pieces was design by the label's founder, Consuelo Castoglion. The collection was for both, women's wear as well as men's wear (H&M, 2011b). The latest collaboration that H&M has undergone is with French design house, Maison Martin Margiela. The exclusive collection is touted to be released in autumn/winter 2012 and will feature clothing and accessories for women and men (H&M, 2012b).

Based on H&M's co-branding history, questions arise as to why luxury brands choose to co-brand with a high-street retail brand like H&M? What are the effects of such collaborations and how to the consumers perceive them? Is this a successful branding strategy? Answers to these questions will be discussed in the following sub-sections.

4.2 Motive for Co-Branding

Before evaluating any other question, it is important to understand why H&M undertook a co-branding strategy and also, why do luxury brands keep coming to H&M to co-brand?

According to the four types of co-branding provided by Nunes et al. (2003), the type that fits H&M's co-branding strategy best is value chain co-branding. As explained by Nunes et al., value chain co-branding occurs when the parent brands come together to offer an entirely new experience to the consumer. This type of co-branding usually occurs to generate a new level of customer value as well as differentiation. Today's consumers are not satisfied sitting in the fashion sector (luxury or mass fashion) that they have been allotted. A shift has been seen in consumer preference where the same consumer who would be willing to shell out thousands of pounds for a Chanel bag would not mind purchasing a £30 Topshop dress to go with it.

Sensing this shift in consumer fashion, H&M and Karl Lagerfeld decided to offer a product which has both, the design and brand name of a luxury brand as well as the affordability of a high-street brand. Thus, luxury brands could show that they too could cater to a mass audience, attracting a new customer base in the long run, and H&M could make an image transfer from just another fast-fashion brand to a quality 'massluxe' brand (Tungate, 2008).

As reported by Melanie Rickey (2004), the latest figures showed that there was a reduction in the profit generated by luxury brands; however high-street brands were enjoying a jump in profit by at least 10%. The post-9/11 economic crisis saw luxury brand consumers tightening their pockets and looking for more economical alternatives. Also high-street brands were appointing their own teams of in-house designers who were producing runway designs and quality products. Consumers still desired luxury goods, but if a high-street brand was offering something special and of good quality at the right price, consumers started seeing more sense in purchasing a quality high-street garment than an exorbitantly priced luxury garment.

While luxury brands were facing competition from high-street brands, high-street brands had started facing competition from 'value outlets' like TK Maxx and Primark and the emerging supermarket fashion brands. The supermarket fashion brands are available at an extremely cheap price and are slowly creeping towards the styles and designs offered by high-street brands. Asda's brand, George, and Tesco's Cherokee and Florence & Fred had begun selling more clothes than even Marks & Spencers (Tungate, 2008). Thus, it became necessary for high-street brands to differentiate their image from these 'value for money' supermarket fashion brands.

As a result of this scenario, it became necessary for both, high-street brands and luxury brands to adapt a new marketing strategy. This led to H&M contacting Karl Lagerfeld with an offer to design an exclusive limited-edition line of clothing for H&M. The collection was a smashing success and was sold out globally within hours. Not only did this collaboration give H&M an added advantage compared to other high-street brands, but also begun the transformation of H&M's brand image. For Karl Lagerfeld the advantages were of exposing his brand and communicating to a sector of the audience he had never explored before. The benefit for both the brands was the sharing of production and promotion costs as well as the publicity this short-term co-branding alliance brought with it (Blackett and Boad, 1999).

Seeing the consumer response and publicity that the 'Karl Lagerfeld for H&M' collaboration created, soon other luxury brands that H&M approached were eagerly getting into co-branding strategies with the Swedish retail giant. Their collaborations with H&M were short-term and for a one-off collection. Thus, the luxury brands did not have to completely extend downwards towards a masstige strategy, but could target a new consumer group at the same time. This helped in expanding their customer base as well as increasing visibility and awareness (Ginman et al., 2010).

4.3 Consumer Response and Perception towards the Co-Branding

Both, H&M as well as the luxury brands, are trying to expand their customer base as well as satisfy the demanding needs of the mass consumer for a new experience. However, what truly are the perceptions of the consumers towards the practice of H&M co-branding with various luxury brands?

Several studies conducted on brand alliances and their spillover effects can be applied to the example of H&M and co-branding. One of the first studies conducted by Simonin and Ruth (1998) stated that brand alliances definitely have spillover effects on the brand attitudes of the consumers. Thus, it is extremely important for the parent brands to have a good fit. Baumgarth (2004) expanded Simonin and Ruth's study and the research revealed that not only consumer's perception to the brand fit, but also the consumer's prior attitude towards both the brands involved should be taken into consideration. Another thing to keep in mind is the consumer's perceptions of the personalities of both the brands involved. If consumers see a fit in the brand personalities of the parent brands, the co-branded product is likely to be success (James et al, 2006).

Taking these studies in mind, it is important that the consumers see a match between the brand fit and brand personality of H&M and the collaborating luxury brands. It is also important to consider what existing attitude the consumers have towards both, H&M and the luxury brands. If the parent brands have a common strategic purpose and clear synchronisation towards the co-branded product, the target audience perceives the product with a positive outlook. As long as the target audience sees the convergence of the brand messages and joint benefit, the reaction is favourable towards to the product (Okonkwo, 2007).

H&M's collaboration with the luxury brand designers are not only limited edition and one-off collections, but also they are available in only a limited number of H&M stores around the world. This increases the exclusivity of the 'for H&M' designer collections. In a research conducted by Wettergren (2010) it was found that H&M's regular customers see this annual collaboration as a yearly treat and look forward to it every year. Throngs of people have been reported to queue outside H&M stores hours before they open on the day the collections are released. Almost all of the collections are known to be sold-out within hours of release. Thus, some consumers complain that these collections are not very accessible and many of them cannot get their hands on even one item. However, a research conducted by Ginman et al. (2010) argues that not all consumers see this collaboration in a good light. Some consumers who prefer luxury brands to high-street opine that by catering to the mass audience, luxury brands are becoming more accessible which in turns makes them less exclusive.

As reported in The Daily Mail, the latest two collaborations of H&M with Versace and Marni respectively saw a frenzy of shoppers all around the world swarming into stores. People are known to make mass purchases and then sell the limited edition clothes on ebay.com at a much, much higher price. In order to stop this practice, H&M released a rule that only one item of a certain design can be bought by one customer. Hundreds of people queue outside H&M stores as early as the night before of the launch. In order to handle such a huge crowd of people, they are divided into groups and are given a ten-minute time slot per group to shop. Even with these management techniques, the 'Versace for H&M' collection was sold out in flat 30 minutes. The 'Marni for H&M' collection turned out to be H&M's most successful collaboration project. When asked some of the shoppers why they have been queuing since the night before when the collections are sold online on H&M's website as well, the response was that in the past, as thousands attempt to log on and shop, the website had completely crashed down and by the time it was up, everything was sold out there as well (Arthurs, 2011; Arthurs, 2012).

Thus, looking at the above example it is safe to say that the consumers are attracted towards to annual collaboration strategy of H&M. A fit is likely to be seen between H&M and the luxury brand it chooses to co-brand with for consumers to go absolutely ballistic each year for the limited edition collections, at least when it comes to the mass consumers. In the research conducted by Ginman et al. (2010) it was found that barring a few, most of the luxury brand users too saw the these collaborations favourably. The reasoning was that the luxury brands are not extending into the mass market permanently, but merely designing a one-time collection for H&M. The luxury brand designers were just giving their touch to the garments designed for H&M and not creating a completely new entity. Thus, like Alber Elbaz said, it was more of H&M doing luxury than Lanvin doing mass market (H&M, 2010).

4.4 Effects of the Co-Branding

In the previous section it was seen that the consumers' response and perception towards H&M's co-branding strategy with luxury brands is majorly seen to be positive and welcoming. However, one must look into the overall effects this strategy had on H&M and the luxury fashion brands, taking the brand into perspective.

Many mass consumers were not aware of most luxury brands until they started collaborating with high-street brands. It was only when they read a name before 'for H&M' that many of the mass consumers learn the existence of that luxury brand. This has been proved in Ginman et al.'s (2010) and Wettergren's (2010) research. When asked about the awareness of certain luxury brands, it was found that the least awareness was shown in the consumers who shopped at the mass market only. They only recognised the brands if they had previously collaborated with H&M. Thus, by collaborating with H&M, the luxury brands increased their brand visibility as well as awareness. Most of the luxury brands have partaken in brand extensions. Even if the mass consumer cannot afford to buy a garment from these luxury brands, they can save up to afford something from the cosmetics or accessories extensions of the luxury brands.

Next, the effect of co-branding on the brand equity of H&M and the luxury brands is looked into. Luxury brands are generally seen to have higher equity than the equity possessed by H&M. However, there is no reduction in the brand equity of the luxury brands by being paired with H&M. This has been proved in the previous section where it was found out that consumer perception of luxury brands does not get affected as the collaboration with H&M is just one-off. In fact, co-branding is a win-win situation for both the brands involved. According to Washburn et al. (2000) in co-branding it is always the brand which has the lower (comparatively) equity that benefits the most by being paired with a high equity brand. Thus, H&M enjoys the status of being in collaboration with various luxury brands, which leads to an increase in overall brand equity. At the same time, the luxury brands retain the status and equity that they always possessed. Co-branding is also seen to have an effect on the corporate brand of H&M and the luxury brands. In a study by Motion et al. (2003), it was proved that by collaborating with a brand valued and respected by the consumers, there can be a rise in the corporate brand equity as well.

With the increase in brand awareness and brand equity, not only was there an effect on the brands themselves, but also their consumers. Since high-street brands like H&M started coming into the limelight, consumers started making perceptions about H&M's customers. Depending on the brand patronage, perceptions are made about the customer. Thus, co-branding with luxury brands has led to need for additional attention and importance towards brand management for H&M (Willems et al., 2012). Also, based on the Self congruity theories by Sirgy (1986) and Liu et al. (2012), brand management after a co-branding strategy becomes even more important. Self congruity is when a consumer psychologically compares themselves to brands. Since the 'for H&M' products are not entirely the luxury brands' or H&M's, when self congruity occurs for the co-branded product, the comparison might transfer to the parent brands i.e H&M and the luxury brand. Thus, H&M as well as the luxury brands must work hard to maintain and/or improve their brand image accordingly.

After years of co-branding with various luxury brands, H&M is now rumoured to be launching its own luxury label '& Other Stories' in a chain of luxury stores owned by them. With the success of co-branding, H&M realised the consumers' increasing need for massluxe products. Also, by their constant collaboration with luxury brands, H&M are able to differentiate themselves from other high-street brands and have slowly transferred their brand image from just another high-street to a massluxe brand (Milligan, 2012). Thus, another effect of constant co-branding in the right direction is brand identity change as well as brand extension.

4.5 Overall Success and Possible Risk

This section deals with the success as well as risk that a co-branding strategy in the fashion industry brings. According to the real life examples discussed in the previous sections of H&M and the luxury brands it co-brands with as well as the 'Pros and Cons of Co-Branding' (Labbrand, 2011; table 2) we can establish the factors of success and the possible risk of co-branding.

Pros

Cons

Luxury Brands

High media exposure

Expanded and new customer base

Increased sales volume

Could harm brand image and dilute brand equity

Negative experience associated with partner brand might transfer

Fast Fashion Brands

High media exposure

Increases sales revenue

Differentiation from other fast fashion brands

Brand positioning more premium

Could confuse consumers and dilute brand equity (especially brand knowledge)

Table : Pros and Cons of Co-branding (Labbrand, 2011)

A co-branding strategy, especially between H&M and a reputed luxury brand like Marni, Lanvin, etc is bound to attract a lot of attention. H&M's unique co-branding strategy was controversial and immediately caught the attention of the world (Okonkwo, 2007). On top of that, each of H&M's collaborations has received a phenomenal response from the consumers. Thus, with every new collaboration, the media coverage received towards the co-branded collection was massive. Both, H&M and the luxury brands basked in this media exposure.

The co-branded collections for H&M, no matter which the luxury brand is, is known to be sold-out worldwide within a few hours to a half a day maximum. Therefore, co-branding can be called a dependent method to obtain a quick sales boost. As the profits of the co-branded products are shared by the parent brands, H&M as well as the luxury brands obtain an increase in sales, covering all the production and promotion costs as well.

An advantage for the luxury brands that shines through this co-branding strategy is that the customer base of these brands is being expanded. Mass consumers who were previously not aware of the luxury brands now recognise them. Also, a new 'massluxe' target audience is introduced to them, who can purchase the more affordable brand extensions of the luxury brands.

Whereas, for the high-street brand i.e. H&M the advantage is that by undertaking annual collaborative strategies, H&M is differentiating itself from the competition faced from other high-street brands like Zara and Topshop. By constantly appearing besides names like Versace, Jimmy Choo and Roberto Cavalli H&M created a distinction between itself and the other high-street brands. By doing so, H&M also created a shift in its brand image over the years. Instead of a shocking brand extension, H&M can now create a gradual, well planned extension into the luxury brand category.

Overall, the practice of co-branding between H&M and the various luxury brands has garnered positive response and effects. However, as the critiques would say, there are certain risks involved in this strategy too.

There is always the fear that being paired with the mass market can affect the brand image of the luxury brands. This can have a negative impact on the brand equity. Some even see the luxury brands as sell-outs for collaborating with H&M. Muiccia Prada has insisted, such a collaboration is something she would never do as the co-branded designs are just copies of the luxury brand's previous collections (Milligan, 2011).

Another risk that comes along between H&M and luxury brands co-branding is a negative experience. Although the 'Karl Lagerfeld' for H&M was one of H&M's most successful collaborations, Karl Lagerfeld was not too happy with how things were handled. He accused H&M for 'snobbery' for producing only an extremely limited