How customers assess rebranding strategy : the impact of perceived brand image similarity and loyalty before rebranding

Abstract

Rebranding has become a popular topic to both practitioners and researchers in the past few decades. When learning from some failure cases of rebranding like British Airways, retaining loyal customers could be one of the keys to the success of rebranding as these customers always show supports to the brand. To date, empirical research on the impacts of customers' characteristics on their acceptance towards rebranding of their favorite brands is still limited. There have been only a handful of qualitative studies from the managerial perspective. To fill the gap this study attempted to investigate how existing customers evaluate rebranding strategies as a result of brand aging using a quantitative approach. The objectives of this study were 1) to examine the influence of customers' perceived brand loyalty status before rebranding on their attitudes towards rebranding strategies; 2) to investigate the moderating role of brand image similarities before and after rebranding perceived by customers in order to understand how it could affect their rebranding attitudes with different levels of perceived loyalty towards the initial brand; and 3) to associate brand perceptions with behavioral intentions after rebranding. Brand perceptions were measured in terms of brand association, brand attitude and brand image. This research included both the qualitative and quantitative studies. Two focus group discussions were first conducted in order to obtain customers' views and feelings on rebranding. The quantitative study was conducted in a real business setting through investigating a Hong Kong retail brand which had undergone rebranding strategy in the year of 2007. Data were collected from existing customers of that brand by using street intercept survey and 548 valid cases were used for testing the hypotheses in this study. The findings suggest that there is a negative relationship between customers' perceived loyalty towards the initial brand and their attitudes towards the rebranding process of that brand. Furthermore, brand perceptions are found to be a full mediator between attitudes towards the rebranding and behavioral intentions of customers. The findings also reveal that perceived brand image similarity moderates the influence of perceived loyalty toward the initial brand on customers' perceptions to the renovated brand. As one of a few empirical studies on rebranding strategies using customer sample and a real rebranding case, this study has laid a solid foundation for future research on this area. By understanding what variables in the customer level can influence customers' attitudes towards rebranding strategies; marketers should be better able to develop more effective strategies to increase existing customers' acceptability of rebranding.