The impact of corporate rebranding on brand equity and firm performance

Abstract

Rebranding has become a very important strategic tool for companies wanting to succeed in this evercompetitive business world using the principles of rebranding. Companies may occasionally discover that they may have to re-position the brand because customers change preferences and new competitors enter the market. Moreover, a strong brand enhances positive evaluations of a product’s quality, maintains a high level of product awareness, and provides a consistent image or brand personality. To keep up with fierce competition, companies may seek to transform their business due to changing business directions or adding extra business units. The main purpose of this study was therefore, to investigate the influence of rebranding on brand equity and firm performance. This study was quantitative in nature. Data were collected from 372 respondents using anonymously completed questionnaires. Research scales were operationalised on the basis of previous work. Proper modifications were made in order to fit the research context and purpose. “Rebranding” measure used five-item scales; “Store Layout” used a five item scale measure; “Franchising” used three item measure, “Brand Equity”; “ Perceived Quality “, “Brand Associations and Attributes” and “Firm Performance” all used a five item scale measure while “an customer experience ” used a six item scale measure. All measurement items were measure on a five-point Likert-type scale that was anchored by 1=strongly agree to 5= strongly disagree to express degree of agreement. The seven posited hypotheses were empirically tested. The results supported three hypotheses in a significant way and rejected four hypotheses. Important to note about the study findings is the fact that rebranding has no effect on the firm’s brand equity although brand equity has an influence on the firm’s performance. Notably too, the relationship between customer experience and firm performance is robust. This finding indicates that brand equity can have a strong influence without the influence of rebranding. A major implication for this study is that rebranding is a risky operation that needs to be carefully managed. Corresponding author: Eugine Tafadzwa Maziriri Email addresses for the corresponding author: eugine.maziriri@gmail.com First submission received: 7th October 2018 Revised submission received: 30th January 2019 Accepted: 2nd April 2019 1.0 Introduction In today’s day and time, tremendous emphasis is placed on moving from line branding to corporate branding. The management approach for corporate branding needs to be better appreciated as it differs from line branding (Harris & Chernatony, 2001). The need for rebranding has become an important marketing and strategic tool for corporations wanting to succeed in this ever-competitive business world (Moisescu & Vu, 2011). Re-positioning a brand occurs when customer preference changes arise, and new competitors enter the market. Having a strong brand enhances positive evaluations of a product’s quality, maintains a high level of product awareness, and provides a consistent image or brand personality (Petburikul, 2009). Revitalising and repositioning a brand though progressive modification of the brand proposition in a total aesthetic experience, can be considered an expected undertaking of brand Journal of Business and Retail Management Research (JBRMR), Vol. 13 Issue 4 July 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 94 management in response to changing market conditions. This paper focuses on the phenomenon of rebranding, as evidenced by a change of store image, and its influence on brand equity and business performance. It sets out to understand the drivers of the firm performance phenomenon and to analyse the impact of rebranding strategies on corporate equity and performance of an SME within the fast food industry in South Africa. The activities of SME enterprises in South Africa are of fundamental importance for the promotion of economic growth, job creation and poverty alleviation. In South Africa, it is estimated that 91% of the formal business entities are SME’s. These contribute 52 to 57 % of the GDP and 61% to employment (Abor & Quartey, 2010). Previous authors have researched on the fast food industry in various contexts by focusing on corporate social responsibility (Schrempf, 2014); media character branding (Dixon, Niven, Scully & Wakefield, 2017) and effect of social media advertisements on brand equity (Hanaysha, 2016). Premised on the identified research gap, the current study seeks to investigate the influence of rebranding strategies on brand equity and firm performance in South Africa’s fast food industry. Above all, the current study is expected to make academic and practical contributions to the existing branding literature and practice of rebranding in developing countries, particularly in South Africa. Research context The growth of SME’s (small to medium enterprises) in a highly competitive, low margin market, coupled with continuously increasing raw costs and fuel costs, is proving to be a challenge with which many businesses are faced (Lee et al., 2016). The SME is simply unable to compete in a market that is dominated by well-established high-volume manufacturers. The general South African consumer is brand driven, price conscious, as well as quality and service orientated. The South African food industry specifically, is a mine field where the consumer is spoilt for choice. If the SME does not tick all the boxes, they simply cease to exist and hence the reason for failure is due to the inability and inexperience of the owners (Standard Bank, 2014). The SME under current study specialises in savory snacks. Being a family owned business and remotely managed operation consisting of 54 retail stores, poses many hurdles. Uniformity and consistency in corporate identity, in-store day-to-day retail management, poor customer service, lack of mentorship, KPI analysis and training and inconsistencies in quality are issues which are resulting in the degradation of the overall brand equity and retardation of the brand’s performance (Lee et al., 2016). However, this can be remedied through universal rebranding; franchising; setting and evaluating of the key performance indicators; soliciting the service of mystery shopper to assess service level and internal customer motivation. The food outlet under study is fully funded and solely grown by its own internal retail net profit pool. Due to high fuel cost constraints and poor retail management, it is simply not economically viable to distribute products to all its outlets across the country. Furthermore, landlords in the mainstream retail sector simply do not want to carry the risk of having to lease out their retail space to marginally established SME’s. These factors impact on the firm’s market share. In the light of the above, this study seeks to determine if the rebranding efforts have improved firm performance. 1.1. Conceptual model and hypothesis development A conceptual model describes the relationship between variables investigated in the study (Maziriri and Chuchu, 2017; Maziriri, Mapuranga & Madinga, 2018). In order to empirically test the interrelationships between store layout and franchising on rebranding; perceived quality and brand association and attributes on brand equity, customer experience and firm performance, a conceptual model is developed, premised on the reviewed marketing and particularly, brand management literature. In this conceptualised model, firm performance is the single outcome variable. Figure 1 illustrates this conceptualised research model. The hypothesised relationships between the research constructs is subsequently discussed. Journal of Business and Retail Management Research (JBRMR), Vol. 13 Issue 4 July 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 95 Figure 1: Conceptual Framework This section derives hypotheses from the conceptual framework shown in Figure 1. This article argues that store layout and franchising influence customers’ perception about a rebranded firm with which they deal, leading them to associate their perceptions with the brands they intend to purchase, thus developing brand equity, resulting in positive firm performance. 1.2. Store Layout and Rebranding Store layout is considered a fundamental factor that drives consumer movement and purchase reaction (Ghosh et al., 2010). Currently, companies tend to focus on creating a reverberating store image instead of evolving the image of products. The emblematic, observed expression of the way consumers “picture” or “visualise” a store, is by the store image (Saraswat, et al., 2010). Once the customers experience and adopt the image, there is a clear reason to understand that once the consumers are likely to feel comfortable, consumers will begin to accept the store which is in sync with their lifestyle, purchase the items that reflect their taste and necessities of what they wish to eat, wear, give to others, and furnish their homes with (Saraswat, et al., 2010). Therefore, store image provides value-added benefits to the consumers. Layout is an important factor in rebranding as it influences both the customer experience and the speed of shopping (Ghosh et al., 2010). Based on the literature, the relationship between store layout and rebranding is hypothesised as follows: H1: Change in store layout has a positive influence on rebranding. 2.2 Rebranding and franchising The need for rebranding has become an important marketing and strategic tool for corporations wanting to succeed in this endlessly competitive business world (Moisescu &Vu, 2011). With regards to the literature on brand management, rebranding strategies have received limited academic attention (Plewa, et al., 2011). Rebranding is a marketing transformation practice that can be defined and characterised in different ways (Plewa, et al