Effects of the co-branding strategy in the luxury industry on Chinese consumers

Master's Thesis, 2014

47 Pages, Grade: A

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Table of Contents

1. Introduction

2. Theoretical Framework: Literature Review

3. Hypotheses Development and Research Model of the study
3.1. Hypotheses Development
3.2. Research Model - Conceptual framework

4. Methodology and Data collection
4.1. Research Design
4.2. Research strategy: Data collection methodology
4.2.1. Qualitative data
4.2.2. Quantitative data
4.3. Data collected
4.3.1. Means used to collect quantitative data and answers rate
4.3.2. First collected sample
4.3.3. The final studied sample
4.4. Variables and measures
4.4.1. Methods for the Analyses

5. Findings
5.1. Analyses of the results: Hypotheses tests
5.2. Answering the hypotheses: Summary
5.3. Discussions

6. Managerial implications
6.1. How managers should understand the co-branding strategy?
6.1.1. The improvement of the brand image
6.1.2. Tend to offer an added value to the Chinese consumer
6.1.3. Create the exclusivity: the aim of each co-branding strategy
6.2.1. Leverage effects and brand recognitions: be aware of the partner’s brand image
6.3. Co-branding between Western luxury brands and Chinese ones: be aware of the short term and
long term visions
6.3.1. Understand the Chinese perception towards local brands
6.3.2. but keep an eye on the increase of Chinese luxury brands worldwide

7. The limitations and contributions of the research
7.1. Pointing out some limitations
7.2. Contributions of the research
7.2.1. Theoretical contributions
7.2.2. Practical contributions
7.3. Suggestions for future research

8. Conclusion



In the luxury industry, the use of co-branding as a marketing strategy becomes more and more important and gives rise to a wide range of questions. This brand strategy is all-pervasive in Western countries but remains an innovative and new phenomenon in China. To this respect, the aim of the research is to investigate the reactions of Chinese consumers towards luxury co-branded product. It focuses on the impact co-branding could have on the brand image and on the Chinese people’s brand perception, as factors influencing the luxury goods consumption.

The study also identifies the keys of a successful luxury co-branding strategy in China. For the purpose of the investigations, the impact of co-branding on Chinese consumers was measured by using both quantitative and qualitative research. A survey permitted to have a direct access to how Chinese luxury shoppers will react to co-branding strategy and it will influence or not their consumption of luxury goods. Experts’ interviews were able to reach a wider view of the feasibility of co-branding within the Chinese luxury market.

The findings of the research show that the co-branding strategy in the Chinese luxury industry will be positively accepted by Chinese consumers, as an innovative and trendy product introduction. The results also bring insightful knowledge about the Chinese consumers’ perception towards co-branding strategies, identifying two times landscapes: the short and long terms effects. The research emphasized on the importance of the brands fitting to perform a successful co- branding in China. It also explains the reasons why using collaboration with Chinese luxury brands will not be a perfect choice at the moment, but will be successful in the upcoming years.

The contributions of the study go beyond the theoretical and the managerial sides. The study gives new explanations to scholars about the co-branding strategy and its impacts on the brand image but it also helps managers from the luxury industry to have access to insightful brand management ideas. The originality of the study lies on the fact that co-branding in China is a new phenomenon and it is even true in the luxury industry. The investigation also opens new paths for further research in the area of co-branding strategies, consumers’ behaviors and brand image management in China.

Key Words: Co-branding strategy, Luxury brand management, Luxury Industry in China Brand image, Brand management strategy, Chinese Consumer Behavior

1. Introduction

The luxury world is an exciting marketing and managerial issue as this industry constantly uses innovations. Each year, a new idea, a new product or a new strategy is invented by marketing managers of major luxury groups, to differentiate their products from their competitors. The major goal is to create a change in order to attract new customers and boost sales. Moreover, when thinking about luxury, what comes out is that luxury is not only a product or a service but it is more about a lifestyle. This, includes the fact that it defines an identity, a way of life, a culture, sometimes a philosophy of life too. Thus, luxury is now a sociological concept and goes beyond the know-how and product quality. Luxury companies must understand their customers to adapt their brand strategies and expansions. Taking this into account, in a business and management way, it means that companies always face challenges for the luxury brand management. To this respect, strategic collaborations between brands have become very common marketing practices. Brand alliances are profitable for companies and often come up with innovative outputs. More precisely, the co-branding strategy, defined by Park (1996) as the collaboration between two or more brands in order to create a new product/ service, is no longer a new phenomenon. But it remains a powerful strategy full of future resources and surprises. Luxury co-branding strategies have been gaining steam in the past few years, especially because of the current economic conditions which favor cost-effective marketing solutions. The conditions of success of this kind of strategic alliances are based on crucial choices such as the partner brand, the relevance and the originality of the offer proposed to final customers. Co-branding in the luxury industry became relevant with collaborations such as Breitling/Bentley, Tiffany&Co/Swarovski or H&M with some famous designers as Versace, Sonia Rykiel or Givenchy. Actually, the Chinese Eldorado attracts all the desires. With its million of millionaires, its amazing cities, and especially its rapid expansion with a possible luxury market counting for $27 billion in 2015 (20% of the world market), China represents in 2014, a new path for luxury brands. Despite the global economic crisis and its impacts, China’s customers’ consumption is still growing (even if we notice a slowdown in 2013). Chinese consumers seek to experience the luxury brand, to feel as unique with the luxury product. The country is experiencing a steady rise in popularity of luxury goods and the motivation to get a higher status while consuming luxury products is increasing too. Consequently, China definitely presents great opportunities for luxury players to develop their brand strategies all across the country. As companies need to be aware of the hurdles to come into the Chinese market - especially the luxury market - will co-branding be a good solution to enter the market? Will co- branding work in China and why? It is only in recent years that companies realized that the real value of a company was in the consumers’ brands perception. Thus, how co-branding will be received by Chinese consumers? Will the luxury brand image change after doing co-branding strategies? How can co-branding strengthen the brand value? Does the choice of the partner influence the Chinese consumers’ brand perception and purchase?

2. Theoretical Framework: Literature Review

What is co - branding?


Co-branding is defined as the collaboration between two or more brands in order to create a new product/ service. (Park et al.,1996). In their study, the authors developed the fact that co-branding permits to leverage brand value. Co-branding is part of strategic alliances and cooperation between brands. Many definitions are used in the literature but all of them refer to the same idea of pairing brands within a market context, creating a unique new product. Through the creation of a new product, the co-branding strategy implies a long term relation whereas brand alliances thought as promotional association are short term strategies. Helmig B., Leeflang P., Huber J-A., (2008) analyzed and defined the co - branding strategies as being long term brand cooperations. Literature and research showed that there exist many different kinds of brand cooperation and alliances. It is crucial to understand those differences before analyzing further the co - branding concept and applying it to the luxury industry. According to Helmig B., Leeflang P., Huber J-A., (2008), brand strategies can be divided in five different strategies. First, the product bundling aims to create a "package offer" presenting to customers different products of different brands but within the same offer. Advertising alliances or joint promotions linked brands on events or partnerships, but do not linked brand on a new product. The dual branding is quite well-known too in people's mind as it refers to the use of a common store location for two brands. (Example of a fast food brand store within a supermarket brand). Those presented here differ from co - branding strategy as there is no simultaneous branding on one unique product. Those strategies are often misunderstood and people are generally, thinking that they are same as co - branding. Finally, the last strategy is the brand extension. Brand extension strategy has been well studied by many scholars and there exists a bulk of research about it. (Keller K., Aaker D.1993). To the authors, the brand extension is defined as the extension of a brand in a new product category. For example, when a company is known for it perfumes and when the brand decides to extend to suits, clothes and apparels. (E.g.: Hugo Boss). First, it seems that the brand extension differs from co - branding as far as the definition is concerned. But what it is interesting is that co - branding and brand extension are completely equals strategies when, in the case of a brand extension, a new product is launch being branded by two brands in the same time. (Keller K., Aaker D.1993)

-Why using co - branding?

Brands need to innovate to keep their position and image in customers’ mind. An innovating way, becoming more and more popular, is to do strategic alliances with other brands. Such alliances can be a good financial opportunity generating speed cash flow as well as a marketing strategy adding value to a brand image. (Kapferer, 2004) According to Aaker (2002), the co-branding is the most symmetrical way for brands strategies to merge brands. For example, researchers studied the only existing case of co-branding in China. Denizci Guillet B., Tasci D.A, (2012) analyzed the successful strategies of gathering companies’ co-branding brands such as Pizza Hut with Marriott or Starbucks with Starwood. The reason of the success is that co-branding equally divides burden into the two brands and establish equilibrium between the brands. It is a mean of generating a higher level of value creation. Co-branding is interesting because it offers the opportunity, for both partners, to have access to the partner’s customers. (Aaker, 2002). Moreover, co - branding permits to reduce costs while introducing a new product (Leuthesser, 2003). It allows companies to launch a new product through existing and well established brands. In 2000, Till and Priluck stated that the use of co - branding strategy to launch a new product on a targeted market is a way to reduce risks for the brands. The idea is that customers who already have a strong relationship and knowledge about a brand will tend to trust the new product. Many scholars (Hubr and Leeflang, 2008; Leuthesser, 2003; Uggla, 2004, Denizci Guillet B., Tasci D.A, 2012) showed that having a pre- established relation with a brand before the co - branding strategy, the consumers are keener to have a better perception of the new co - branded product launch by this same brand. Co-branding is directly linked to the brand image and it seems that co-branding implies to leverage a brand to another. Uggla (2004) explained that the brand image changes after a co - branding. In consumers’ mind, the co - branded brand image is now linked to the partner brand.

-How to do co-branding and how to manage the brand image?

Many scholars studied this issue of brands fittings for co - branding. Thompson K. and Strutton D (2012), explained that the fit between two brands can be defined as the “congruity” between the brands. The key of a co-branding success clearly relies on this fit between the brands. The co - branded product also plays a role in the fit (as a psychological effect on consumers’ brand perception) as it has to be in tune with the two brands guiding lines. The idea of the perception of the co-branding by consumers is crucial as it will determine the acceptance of the co - branded new product and the success or not of the marketing strategy. Research showed that brand fit perception influence the purchase intention (Thompson K. and Strutton D, 2012). Moreover, the authors demonstrated that it is necessary that the fit between the two brands has a positive relation and influence for both sides. If this compatibility is not established and the co-branding is done, it could have strong negative consequences such as the erosion of brand identities and confusions in the brands ‘positioning. (Thompson K. and Strutton D, 2012). A confused positioning will also have a negative impact on consumers’ brand image. Academic research (Kapferer 2004) showed that the brand image - defined as the perception of the brand the consumers has in his mind - is the main way to know how customers feel toward the brand. Knowing how customers react to a brand is the key for companies to adapt their strategies. As Kapferer (2004) mentioned, it is crucial for companies that their brands are managed in a way that consumers’ brand images and associations fit with companies’ values. Everything relies on the customers' evaluation of the co - branded product. A negative effect will have a significant impact on the brand image and create negative associations. So, there exists a risk toward how the consumers perceive the brand association.

Therefore, as Zhou (2009) explained, the main objective for companies doing co-branding is to choose a brand with a stronger brand image to ally with. But what is the consequence for strong brands with a high image in doing strategic alliances with a “lower” brand? Studies demonstrated that high equity brands are not affected by collaboration with a lower brand because of their long term established image within consumers’ mind. (Zhou, 2009). To understand co-branding and its effects, it is important to have a closer look to the shoppers’ brand perception. Dawar and Lei’s studies (2009) showed that if a customer has positive associations with a brand, the consumer will be likely to have good relationship with this same brand. The same goes for the contrary. This relationship, negative or positive, will strongly influence the purchase of the brand’s product. Research papers of Aaker (2002) and Keller (2009) proved the fact that consumers usually use associations and experiences with the products to judge a brand. From this brand perception, they can choose if they want to rely and trust a brand or not. To this respect, a well - establish brand in people’s mind will directly influence consumers to buy the product of this same brand. Many scholars such as Zhou (2009) showed that if a consumer has a good knowledge about a brand, the co-branding will have a positive effect on the customer’s intention to buy the new product. This idea is a key element to keep in mind. It permits to understand the relationship between co- branding and brand knowledge.

Will co - branding work in the luxury industry?

-Defining luxury

Before being an industry, a profession or a trade, the luxury is a passion and a culture that each person who is interesting in it has to understand. The luxury is often considered as being the child of the industrial the consumer society. But many people forget that its bases remain on people and their feelings. To define what luxury is, it is also necessary to understand the deep psychological and social forces that created the luxury industry. Luxury is defined by Kapferer (2008) as having a sense of exclusivity, and is characterized by high quality products, a controlled distribution as well as premium pricing. A luxury brand is characterized by a symbolic value, a social imaginary which differentiates it from other brands. The luxury brand satisfies symbolic needs: it involves a strong imagination and willingness to buy, remains very consistent in all its components, vehicles affirmed values and shares with consumers ethics and aesthetics. From those elements, it appears that the dimension of dream is also associated with luxury. (Danziger, 2005)

The ultimate goal for companies, and that which economically speaking works the best, is to continually create new. The aim is to innovate highlighting all the criteria that make this product being a luxury one: product, service and brand image and perception. The mission of luxury companies is always to invent, reinvent, move forward, surprise and innovate, choose the paths less borrowing, to create a unique and enviable product. According to Danziger (2004), luxury goods were accustomed to be associated with an elite, untouchable, linked with very high prices barriers to purchase. Today, this phenomenon is different. The very concept of luxury product has changed.

In the traditional definition of luxury (Allères , 1997) , luxury items should be rare and unique and therefore they must have a limited distribution. But now, most of the brands have global distributions systems with joint productions chains. The value of a luxury product sometimes remains lying on the product and brand’s image. The more a product is unavailable, the more the desire to get it is high. It is this inaccessibility that builds the interest of a luxury good. (Kapferer J.N and Bastien V., 2008). But how a luxury product is considered if a luxury brand export, reproduce, distribute massively? Will the product lose its uniqueness? Will it lose its quality of being a luxury good? Will the luxury item risk to lose its essence through the massification and commoditization? Is the risk of a lack of prestige possible? Preserving the exclusivity of a luxury brand seems essential. The answers to those questions lie in the luxury brand management. Luxury brands have realized that to avoid these pitfalls, they should understand that the willingness to purchase is the most important variable in the luxury industry. The brand and the perception that consumers have of the product are crucial. Therefore, the luxury brand management is a central element for corporate strategies. The goal is to always move forward, always innovate and keep standing out of the crowd.

-Luxury brand management

Nowadays, when exploring and studying the luxury market, it appears that the idea of luxury brand and product is shifting (Visconti, 2010). What is now perceived as luxury is becoming wider and wider (Heine, 2012). When traditional luxury brands (such as Dior) were considered as purely and traditionally luxury, these same brands are now facing up new competitors perceived as new luxury brands (such as Celine). It is becoming crucial for luxury brands to find solutions to differentiate and to offer innovative and original products. Innovation is the main way to stay connected and to be in tune with the market drivers and market expectations. In order to do this, brands usually opt for strategic alliances and partnerships to focus on different new strategic moves.

Kapferer (2009) thought that brands new strategies are becoming a necessity for companies to compete with the increasingly competitive market. Currently, co-branding between luxury brands is becoming more and more popular. This allows luxury brands to create new limited range products and to attempt to go out from the crowd. But luxury brands have to be careful as their strategies have to differ from the “mass brands”. Focusing on the brand exclusivity is always the main point that a brand manager working in the luxury industry has to bear in mind. Chevalier, M., Mazzalovo, G., 2008). The uniqueness of a luxury good is one of the key elements of the image of a luxury brand. A luxury brand image is damaged into consumers ‘mind when the brand is linked with the mass-market. In fact, customers are attracted by luxury brands products because of the exclusivity and the brand prestige. In the luxury industry, the purchase desire is strongly driven by the brand image and identity (O’Donnell, 2009). The bases of a luxury brand are the exclusivity and the prestige that it reflects. The brands which will invest earlier in new strategies to reinforce their brand image will have the best position on the luxury market in case of an upswing within the industry. The perception of the brand is a key element for luxury brand. And that is much more crucial than for mainstream brands. From this respect, the brand management is an extremely important part in the luxury industry and each strategy has to be clearly defined and though in order to be successful. Luxury brand companies have to find the perfect balance to implement new strategies while keeping the authenticity and the engagement on the brand exclusivity and on the brand’s promise. According to Dubois and Duquesne, (1993), the major risk for luxury brand will be to fall in the massification. If the luxury brand becomes accessible to everyone, it will lose its character of exclusivity and the products will not be focused on the elite anymore.

In the co-branding definition part, we pointed out the Zhou’s study (2009), showing the fact that a equity brand will not be impacted by an alliance with a lower brand, thanks to its pre established strong brand image in consumers’ mind. Nonetheless, this is not applicable for the luxury industry. As explained before, luxury brands always have to find solution to leverage their brand image by looking to the top of the exclusivity. Within the luxury industry, if a highly recognized brand decides to collaborate with a lower brand by doing co -branding, the strategy will be very risky. (Chevalier, M., Mazzalovo, G., 2008) The risk is to see the higher known brand ‘image degraded by the lowest one in people’s mind. Customers might be confused and could not understand the brand position. This would have dangerous effects for the highest brand. From this, it seems clear that the success of a co-branding relies on the coherent choice of the partner.

And in China, will co - branding fit with Chinese luxury market?

-The Chinese luxury market

Luxury goods are expected to experience an impressive growth over the upcoming years in China. This will be mainly fuelled by the rise of the high net worth individuals as well as middle-classes. The ongoing urbanization and the increase of incomes will also benefit the Chinese luxury industry. With strong open door policies, a two-digit economic growth over the past five years and a increasingly opening to Western culture, China is becoming the new Eldorado for luxury brands. Even if experts project that a slowdown could be registered in the 2014-2015 year because of the increase of overseas luxury goods consumption because of higher taxes in China, the country remains THE place to be to do business in the luxury industry. Nowadays, the appreciation, the desire, as well as the purchase of luxury products, are well established in Chinese people’s mind. Despite of the current economic crisis and its impacts, China’s luxury industry is following to grow, while consumption in the Western world is decreasing. According to the KMPG study (2013), the Chinese luxury market is expected to increase by 18% annually from 2011 to 2015. This is to be directly linked to the huge growth of the number “Chinese new rich”. The number of wealthy Chinese (namely with a personal capital of more than 10 million RMB) increase by almost 10% each year. Chinese individuals with more than RMB10 million (equivalent to USD1.6 million) broke through the 1 million step for the first time in 2012, reaching a record of 1,020,000 individuals, an increase of 6.3% over the previous year, according to R. Hoogewerf, founder of the

Hurun Report ( luxury magazine which publishes China’s annual rich list). “China is also home to 63,500 super-rich, defined as individuals with RMB 100 million (equivalent to USD16 million), an increase of 5.8% from that of last year.” This group of consumers always has a huge appetite for luxury products, having the biggest expenditures in the luxury industry in China. But the industry is also led by the burgeoning Chinese middle class (McKinsey & Company 2012). The number of Chinese high-income/middle class households is expected to grow from 180 million in 2012 to 365 million in 2030. The luxury industry in China is at the introduction/growth industry development stage. Everything can be done in China to attract new consumers as the market is new and the tendency to buy luxury products is also new in Chinese people’s minds. Analyzing the Chinese consumers’ behaviors towards luxury goods is an important aspect to better understand the opportunities that have luxury brands in China.

-Chinese consumer’s behaviors’ towards luxury goods (Behaviors, Brand perception)

Many scholars such as Dubois and Duquesne (1993) or Lu (2010) defined concepts to understand consumers’ attitudes towards luxury brands. From their research, a general luxury consumer behavior can be built. According to Ngai J., Cho E. (2012), the purchase of a luxury good is directly linked with the identity that this luxury good reflects. In China, the social recognition of luxury brands is a crucial criterion. In its research, Lu (2010) showed that the Chinese culture values with Chinese’s people motivations in buying luxury goods. Chinese luxury shoppers see the brand and the action of buying a luxury brand as a mean to show off their success, their rank and position. Kim and Zhang (2013), highlighted this influence of Chinese social values on the purchase of luxury goods. They showed that Chinese consumers are looking for a higher status by capturing an image reflecting an elevation of their current position. It is a way to show that they are able to afford those goods, they tend to become important and to show to their entire network that they are successful. (Hackley C, 2011). Chinese luxury shoppers want to make statements about their personal success and tend to link their values/personality with the brands’ meanings. This is to be directly linked with the reputation of the brand. And in China, the brand’s image is becoming an increasing important criterion in the luxury purchase action (Lu, 2010). As examples, recognized fashionable, chic and elegant brands such as Louis Vuitton, Chanel, Cartier, Porsche or Ferrari enjoy a positive brand image in China. (Zhang B., Kim J-H., 2013). In China, luxury brand have to do impressive efforts to cultivate the consumer’s feeling of being unique and privileged. (Lu, 2010). Luxury brands in China will have to reinforce their relevance. The main objective is to perfectly know what customers absolutely need and why do they buy this brand more than another. To succeed in Chinese consumers’ heart and to appeal luxury lovers, luxury brands will have to launch specific product to keep the interest of Chinese luxury consumers. (Zhang B., Kim J-H., 2013). And those new brand strategies will have to target a new group of consumers in China. Another important point about Chinese luxury consumers, is that they are really young compared to Western luxury customers (Ngai J., Cho E.2012). The main luxury consumers in China are between

20 and 30 years old. They represent more than 300 million people. And figures are expected to grow further in the upcoming years. (Atsmon et al., 2011). This is an interesting point as Chinese young consumers are more and more sensitive to innovation; they travel more, discover new cultures and tend to bring back to China new ideas about new consumption trends. (KMPG Study 2013).

Through the literature review, various reasons were shown to explain why co-branding is a beneficial and interesting strategy for brand management. Yet, beyond the research done of the impact that co-branding can have on consumers’ as well as on the brand image, not much is researched on the feasibility of co-branding in China. Moreover, as the cultural background of China is much more different from the Western one and as consumers’ behavior is different too, will co-branding have the same impacts on Chinese consumers? Will co-branding be as much benefic as in Western countries? What will be the criterion of success in China?

So what is new? What is the point of this investigation? In fact, in order to see what is new in this subject, the reader has to consider the following topics: co-branding / luxury industry / China / Chinese consumers. From this, he/she will point out that the literature review missed a research field: linking those ideas together. The ambition of the paper is to explain how co-branding will be accepted in China, with a special focus on co-branding in the luxury industry and the Chinese consumers’ perception. The interesting thing is to measure how co-branding in the luxury industry might strengthen the Chinese shoppers’ brand perception and increase their willingness to buy. In order to get answers to those questions, hypotheses were proposed and a research model was built in the next part of the report.

3. Hypotheses Development and Research Model of the study

3.1. Hypotheses Development

In light of the literature review and the theoretical background, it appears that co-branding is a well-known strategy for brand management. Nonetheless, co-branding in the luxury industry is quite new in Western countries, so this strategy is even newer in China. It was shown by many academics and professional from the marketing field that the strategy of co-branding is a win-win formula. If firms get advantages (financial performances or better brand image), consumers are not indifferent. In Europe particularly, alliances between brands through co-branding strategies were resounding successes. A good example to consider is the co-branding of Nike teaming up with Apple to create the Nike + (Music and recording mileage for running session). In the luxury industry also, consumers have reacted very positively to created co-branding strategies, with the very famous - and often studied - example of the brand association of H & M with luxury brands or fashion designers such as Lanvin or Sonia Rykiel. Overall, co-branding is a strategy that is positively accepted by consumers. As demonstrated above, the co-branding strategy in China is a new phenomenon and few Chinese people know the concept. However, the luxury industry in China is constantly changing. The growth that it represents is huge. And the same goes for the growing attraction for Chinese luxury goods from the West but also the massive development of Chinese luxury brands. It is on this attractive and growing interest of Chinese consumers, that the research paper is focused on. It is from the analysis of Chinese people’s behaviors to luxury goods that the hypotheses proposed in this report are based on. The first hypothesis formulated connects the three subjects that are co-branding in the luxury industry, acceptance and behavior of Chinese consumers. Through this, it should be assumed that co-branding strategies in the luxury industry in China will be positively accepted by Chinese consumers.

Hypothesis 1: Co-branding in the luxury industry will be positively accepted by Chinese consumers

Returning to Thompson K. (2012) and Strutton D.‘s theory of brand, developed in the literature review, it appears that the strategy of co-branding can enhance the brand image if the brands alliance has been properly thought and managed. The impact of a co-branding strategy will be positive on one of the two brands involved or even both. Then, everything depends on the kind of the chosen partnership. As seen in the first part of the report, the research issue implies to think the co-branding in the luxury management as a particular brand management. It requires differentiated brand management and luxury brand management. The management of luxury brands is thorny and tricky because what make a product being a luxury product are mostly the image and the quality of the brand. Assuming that the brand is a key element in China's consumption of luxury goods, the assumption made is that the co-branding in the luxury industry will positively affect the brand image China. The effect will be positive and reinforce the image reflected by the brand. So, the second assumption of our study is to consider a positive effect of co-branding on the brand image of luxury brands involved in the strategic process.

Hypothesis 2: Co-branding will benefit to luxury companies’ brand image in China

This hypothesis needs to be developed in order to be more precise. If co-branding will benefit to luxury companies’ brand image in China, it worth to analyze what kind of co-branding will work to improve the image. As described in the literature review, the main reason why a co-branding can succeed is the equal division of burdens between the brands, establishing equilibrium. While making a co-branding strategy, the brand puts a part of it identity in its partner’s hand. What is the consequence if the partner has a lower brand image? Park S.B (2009) explained that co-branding could imply a spill-over effect. This means that the partner with a lower brand image will have a negative effect on its other partner. Consumers will then create negative associations around the co- branding association and co-branded product. Finally, the brand with a higher brand image level will result to be clearly affected by the brand association. If this occurs, the co-branding strategy is a failure, at least, for the brand with high brand image. Taking the issue from the opposite way, this means that potentially, if a brand is associated with another one with a higher level of brand image, it will help the company to improve its own image. A co-branding strategy between a lower company’s brand image and a higher company’s brand image will have a positive impact on the lower company’s brand image.

Hypothesis 2a: Co-branding will have a positive impact on the company’s brand image if the chosen partner has a higher brand image level

In China, Chinese consumers tend to purchase Western luxury products in order to show their ability to buy international famous luxury brands. Nonetheless, Chinese people have a strong country proud and always tend to help national companies to develop and prosper. The “China pride” is an increasing phenomenon and the impressive development of Chinese luxury brands is the best example. Shang Xia, Chow Tai Fook or Li & Fung are examples of important Chinese brands rapidly growing into the luxury industry. From this, it seems that Chinese consumers will spontaneously tend to buy Chinese luxury brands. But how will be their reaction when having a co- branded product between a Western and Chinese luxury brands? Taking into account that the business integration and adaptation is really important in China, the interest of Western companies to make strategic alliances with a Chinese luxury brand could be well perceived. It seems that a Western brand being willing and wanting to make an alliance such as co-branding with a Chinese luxury brand could be positively accepted by Chinese consumers. This is a way, for the Western companies, to integrate China into their strategy. It could have a great impact on Chinese consumers as they will consider that the Chinese brand is solid enough (as regards of finance, knowledge, know-how, quality, image, etc.) to be a goody partner for the Western luxury brand. Making co-branding strategy with a partner is a way to control the competitors, by having a contract linking the two brands. This means that big luxury names from the West fear about the increasing new Chinese luxury brands development. It could appear that a co-branding between a Western company and a Chinese one will be positively perceived by consumers. Making effort to be integrated into the Chinese market, the Western brand will gather the benefit and will improve its brand image.

Hypothesis 2b: In China, co-branding will benefit to a Western luxury company’s brand image if the chosen partner is a Chinese luxury brand

Following this, the point is that co-branding will be positively seen by Chinese consumers and this strategy will improve the brand image. But what will be the concrete impact that co-branding will have on Chinese shoppers? The idea of Zhou (2009) about brand knowledge was very interesting and deserved a closer look. He said that having a prior knowledge of a brand, influences the way how a consumer may react after that the brand changes its strategy. From this, it becomes interesting to look at the issue of recognition and knowledge of a brand. It seems logical that a consumer will not be affected by a branding strategy if he/she has no clue about the brand involved.

However, if he/she knows previously one or both brands involved in a co-branding strategy, it may be right to assume that it will be most affected. Something will then change in his/her brand perception. Researches on branding, which were previously done by academic teachers, prove that each strategy adopted by a brand has a direct impact on the "followers" of the latter. Therefore, having assumed in the previous hypothesis that co-branding will have a positive effect on the brand image of luxury goods in China, it should be right to think that the impact of such a strategy on a Chinese consumer knowing beforehand the brand(s) will also be positive. The knowledge of a brand plays a moderating role between the co-branding strategy and the perception of one or both of the brand(s) involved in the brand strategy.

Hypothesis 3: Co-branding has a positive impact on Chinese consumers if the consumers previously know minimum one of the brands involved in the co-branding

It was shown in the literature review that the luxury industry is constantly changing in Europe and China. The idea is even truer in China, where brands try to attract more and more consumers through innovative projects and strategies. So, everything is focused on the image that a brand reflects to the clients and thus, the perception that Chinese consumers would have of luxury brands. There is therefore a constant dual interactions game between image / brand perception and end- consumers. This interaction in particular has key stakes which are the consumption and the act of purchase. A consumer may have a very good perception of a particular brand, venerating it, worshiping it, but without buying it. (for a lack of money, of desire or a lack of need) Thus, it is at this burning point (what makes the consumption act) where the important concern of the fourth hypothesis is based on. Assuming that co-branding will be a winning strategy in China, the brand will be enhanced, as well as the perception of the customers, is it nevertheless possible to deduce directly that it will certainly have a positive impact on the Chinese consumption of luxury goods? Nothing is less certain. But it is an excellent question to be further analyzed to see if having a good brand perception will influence positively or not your purchasing act. Therefore, the fourth hypothesis aims to think that a better perception of the brand will positively influence the consumption of luxury goods in China.

Hypothesis 4: Chinese people’s brand perception positively affects the consumption of luxury goods in China

3.2. Research Model - Conceptual framework

From the development of the hypotheses, the construction of a theoretical model can be created. The final research model presented below shows the key relationships, influences and interactions between variables. It drafts an easy understanding of the implications between co-branding strategy, Chinese consumers’ brand perception and Chinese luxury goods consumption. As the research issue is based on the co-branding strategy, this variable is independent but could have impacts and effects on the Chinese luxury consumption. From the theoretical background, it can be assumed that the Chinese people’s brands perception plays a mediator role between the co-branding strategy and the luxury consumption while the brand knowledge plays a moderating role in the brand perception process. Moreover, it is obvious to always take into account the general Chinese environment in this model, such as the demography, the economic growth, the increase of new rich, the booming luxury industry in China, the Chinese luxury shoppers’ behaviors, etc.

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Variables influencing the process but not surveyed during the research

4. Methodology and Data collection

4.1. Research Design

The method of data collection was done by web-based questionnaires and face to face interviews. The data collected from the questionnaires was expressed by using scales. This method permitted to have quantitative data and to better measure the results. From this, it was easier and more accurate to test the developed hypotheses with statistical tools and to see correlation between variables. A second method of using qualitative data was used. Experts interviews were conducted before and meanwhile the quantitative research period. This permitted to clarify hypothesis, develop new ideas and understand respondents’ answers. (Confronting experts’ opinions with consumers) The experts were managers from the luxury industry in China. The research was made of many steps to collect different kind of data, in order to cross check the information and come up with interesting and useful insights.

4.2. Research strategy: Data collection methodology

4.2.1. Qualitative data

An important part of the primary research was based on qualitative data. Those data were collected through experts’ interviews with top managers working in luxury companies in China. The interviews were conducted during the three steps of the research. Before starting the investigations, meeting experts permitted to have deeper understandings of the question, to develop the hypotheses and also to have a wider opinion on other issues than could be relevantly linked to the research focus. Then, they were key elements to confront with the answers of the survey (from Chinese consumers.). Experts’ interviews are generally used to thoroughly understand experts’ opinions on a specific issue (Bjerke 2003). This method allows getting beneficial information on complex issues. Coupled with a quantitative survey, it permits to attain deeper knowledge on the research question and to further analyze and understand respondents’ attitudes and believe (Denscombe 1998). Finally, some interviews were conducted at the end of the survey. They aimed to cross check opinions and information collected. At the end of the study, all the experts who gave an interview were contacted again in order to have their opinion on the results and to draw, with some of us, some conclusions, managerial implications and new ideas on the Chinese luxury market.

The qualitative interviews were conducted in face to face, by emails or on the phone. Managers answered questions about the co-branding phenomenon in general, and then question focusing on China’s luxury market. They mainly gave their on this issue, their trends feelings, their opinion on the criterions of success, etc.). The aim was not to select random experts but to focus on luxury experts, Chinese or not, doing business or wanting to do business in China. All the industry backgrounds dealing with the luxury one were considered: consulting, yachting, press, fashion, horology, etc.

4.2.2. Quantitative data

The primary research step was based on quantitative data. This was the main part of the research process. As the issue is directly linked with the final consumers, asking Chinese shoppers their opinions was the only way to get accurate insights about the effect that co-branding could have on their luxury consumption. The survey was developed through self-administered questionnaires. This method is useful to measure consumers' and professionals 'opinions. When starting the survey, the targeted people were Chinese luxury shoppers but also potential luxury consumers. The latter were defined as all people having had an experience with a luxury product even if they do not frequently purchase them. (Defined previously as a good filling the following characteristics: very high price, excellent quality, uniqueness, aesthetic and sometimes unnecessary) Any limitation of age, profession or revenue had been done, in order to have a maximum of answers from Chinese people. In this same purpose, the questionnaire was both in English and Chinese. This was the easiest way to attract more potential respondents. The aim of the quantitative research was to have at least 100 usable answers. The objective was a research paper based on 200 answers. The survey period lasted one month.

-How to collect data: means used during the survey

The questionnaire was distributed through Chinese social network such as WeChat or QQ. But the main part of the survey was done by interviewing people on the street. In order to target the “right” people, interviewing them in strategic places was important. Famous and luxury brands malls were chosen. The whole survey was web-answered questionnaire and the answers were managed automatically. The “traditional way” of doing market research was also used: the face to face interviews, asking live questions to respondents: asking people on their way out of luxury shops in Shanghai, asking Chinese sellers working in luxury shops in China to spread out the survey to their clients and gave the questionnaires to luxury shops managers too.

To create a buzz around the survey, a QR Code, or flash code was created. The study claims to be an innovative one, so it must provide some new ways of doing research too. Moreover, this fitted perfectly with the Chinese market and with Chinese consumers behaviors. (as Chinese people are really keen of doing things with their mobile phone) The respondent just had to scan the code and had the questionnaire directly on their mobile. They could easily answer the survey on their way back home or whatever, without having the feeling of “losing their time” answering questionnaires. This method could be used as an answer to the lack of time that many respondents could put forward.

-What questions were included in the questionnaire?

The questionnaire was composed of well oriented closed/open questions. The open questions helped to give additional information. But any focus had been done on those questions as the answers rate was really low. The main part of the questionnaire was based on closed questions, asking people to rate their opinion. The interviewees were asked to enter their degree of agreement on a statement. The questionnaire was composed of four parts: a general one (filter question, age, gender, income, etc.), one focusing on their knowledge about co-branding inserting the definition of the concept too, one focusing on their opinion towards co-branding (concept, influence on the brand image, influence on the perception), one dealing with influence that co-branding could have on their consumption and the last part about the best strategy to adopt in China.

4.3. Data collected

4.3.1. Means used to collect quantitative data and answers rate

The survey period lasted 52 days. The answers rate was not the one expected before starting the survey period. The difficulties for Chinese people to answer this kind of questionnaire were shown up. Most of Chinese consumers explained that they had no time to participate to the survey. They were mainly constantly busy or did not want to participate to the study. From this angle, the survey was difficult to conduct. One of the main reasons of the unexpected answers rates was directly linked with the length of the questionnaire. Nonetheless, it remained that people who totally and carefully answered it were focused and took time to think about each answer. This is to say that they answered with a great transparency and thinking about their answer. This could be considered as a good way to evaluate the validity of the collected data. Face to face interviews were efficient but time consuming compared to self-administrated questionnaires. The answers rate for the e- questionnaires is mostly due to the fact that flyers and QR Code (in which respondent could scan the link directly on their smartphone) were distributed in the places selected for face to face interviews. When people answered that they did not have time, they received a flyer to propose them to fill up the questionnaire when they will find time. Respondents of the e-survey are also targeted people from the luxury shopping places quoted above. The answer rate for the luxury hotels and restaurants is higher than for shopping places. The reason is because interviewees were keener to participate to the survey as they were resting and having time while luxury shoppers were running and rushing in malls. Moreover, the interviewees in shopping malls were clients but also sellers from luxury brands. They were really interesting targets as they knew the luxury products very well and also knew their potential clients ‘consumption trends. Their opinions were very insightful too. Concerning the qualitative data, three interviews were conducted with experts in the Chinese luxury industry. The collected data come from different kinds of firms: well known consulting firms, publishing companies specialized in the luxury industry and editing magazines in China and luxury brands. The authors mainly talked to experts asking them their opinion about the researched issue and dealing with the Chinese luxury in general. In total 3 formal interviews had been conducted but about 5 others were informal discussions. Those informal discussions could not be referenced in the scientific method process but they for sure helped to come up to insightful reflections and conclusions. They were also a way to get the opinions of experts working in the heart of the subject and comparing them to the answered gathered from the survey. Analyzing the possible differentiation of opinions between professionals and final clients was interesting, and was mainly used for the managerial implications. (Cf. Managerial implications part).

4.3.2. First collected sample

As explained in the previous pages, the first aim was to tend to have a minimum of 100 answers (in order to be able to draw insightful conclusions and implications) but an ideal score of 200 answers. The survey was closed with a number of answers reaching 142 answers. The results remains satisfying because the objective was reached, but it could have been better to have a wider sample in order to get more opinion on the studied issue. With hindsight, the weak answers rate might certainly be linked to a too detailed questionnaire. The questionnaire was a little too long and complicated to direct consumers. Chinese customers had to take time and to think about the questions before answering. That is for sure one of the key reason of the first collect sample size.

4.3.3. The final studied sample

-Descriptive statistics

The final studied sample was 134 answers (n=134). All the respondents are Chinese. 63% of them live in Shanghai and 16% in Beijing. People from Hong Kong, Xi’an, Qingdao, Shenzhen, Chengdu, Wuhan, Suzhou or Wenzhou also answered the survey. An interesting balance on the respondents ‘gender was reached with 43% of men and 57% of women. The majority of the interviewees are between 26 and 35 years old (39%). 24% of respondents are between 18 and 25 years old, 16% are between 36 and 45 years old, 11% between 46 and 55 years old and 10% of them are between 56 and 65 years old. With this great age repartition, the survey included the whole Chinese population regardless a specific age group, which was very insightful. It showed that people from 18 to 65 years old are interested in the luxury industry. Moreover, in the survey, 82% of the participants have already used or bought a luxury product against 18% who are just aware of the definition of a luxury good but willing to become new consumer. Among this group of future new consumers, respondents were mainly students with no significant revenues. The repartition of the revenues was also really spread. Despite of the people with no incomes, 10% of respondents earn between 3,000 to 6,000RMB/month, 16% earn between 6,001 to 10,000RMB/month, 14% earn between 10,001 to 14,000RMB/month, 13% earn between 14,001 to 18,000000RMB/month, 12% earn between 18,001 to 21,000RMB/month, 5% earn between 21,001 to 25,000RMB/month, 6% earn between 25,001 to 50,000RMB/month and 1% of the respondents earn more than 50,000RMB/month. Following the repartition of the salaries, the work occupations were also very diverse. What made it interesting for the study purpose was that 25% of the participants work in the luxury field. This means that they have excellent knowledge of the studied industry. Luxury sellers (cars - Maserati, Mercedes, Bentley -, jewelry, watch, real estate, designer clothes), yacht broker, marketing director, marketing assistant, public relation manager, sales representative, hotel manager, travel agent, advertisement publisher, magazine editor, politician, novel writer, dentist, surgeon, engineer (IT, cars, softwares), accountant, consultant, bar tender, business owner/entrepreneur and teachers (university) are examples of the respondents’ work activities. Knowing the main characteristics and information about the respondents, it was also important to know their degree of knowledge regarding co-branding. Indeed, this information was a key element to follow the study of the results and understand them. When asking the participants if they have an idea about what co-branding is, 14% of them answered that they have a clear and detailed definition of co-branding and know precisely what we were talking about. 54% of respondents know the co-branding strategy concept but not that much, they are interested in learning more. 31% of them have an unclear idea of what co-branding is, even if they heard about it in the past. Finally, only 1% of the interviewees have absolutely no idea about co-branding strategy. The final sample of the research survey was diverse and representative of the Chinese luxury consumption as it included Chinese rich clients as well as new consumers accessing to market and taking new opportunities to buy luxury brands products. Before analyzing the results of the survey, it was important to explain in details the selected methodology to study and interpret them.

4.4. Variables and measures

4.4.1. Methods for the Analyses

Regarding the methodology, a descriptive analysis was first used. This method allowed describing the data collected and helped to simplify the wide amount of data through a sensible and efficient way. Then, an inferential analysis was used. The method permitted to further analyze the data by using statistical linear models through the software SPSS, such as ANOVA, T-test and Regression/Correlation analysis. Those methods were ways to draw conclusions applicable to check the validity of the hypotheses and to come up with management implications. The following part will describe in detail the method used all along the research and data analyses. Given the data provided by the survey, the statistical tests methodologies used were complicated. Indeed, as described previously, the questionnaire was fully made of data based on the Likert rating scale (descriptive statistics). It means that all the data collected were coded with 1, 2, 3, 4 or 5 rates. No other figures were in the database table. From this assessment, it appeared that the only way to analyze the data was to focus on the mean. As the Likert scale is usually based on 1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree, 5 = strongly agree, the method was to use the degree “3” as the tested value. Indeed, all the tests done to analyze the results were done using t-value= 3. The comparison of the mean, namely, the comparison of the results regarding the value 3, permitted to measure the significance level of interaction effect for the tests. As being a mean value within the Likert scale, the t-value used was a way to see if the studied data differed or not from the population mean value. In other words, it permitted to compare the data using a certain point, in order to evaluate them with a “neutral” critical midpoint.

between the variables. Indeed, the Significance levels of the data were very important for the study, both for the one sample t-test and for the regression analysis. For the significance test, the p-value represented the probability of “having a test result at least as high as the one of observed for the hypothesis, assuming that the null hypothesis H0 is true”. The analysis was based on four levels of P-value significance: non-significant: “Sig.(P) > 0.05”, one asterisk “Sig. (P) <0,05”, two asterisks: “Sig. (P) <0,01”, and three asterisks: “Sig. (P) <0,001”. From those tests, the hypothesis H0 was rejected or accepted with a certain degree of significance. The method used in the survey consisted in rejecting H0 if the P-value was less than 0,05. If no significant difference (P > 0.05), the null hypothesis was confirmed. The tests followed a Student’s t distribution when the hypothesis H0 was supported. All the hypotheses tested in the research used this method of significance level. Thus, the null hypothesis was the same used for each test:

H0: µ= µ0 “There is no significant difference with the t-value.” (With μ0= t-value=3)

H1*: μ≠ μ0 (μ> μ0 or μ< μ0) “There is a significant difference with the t-value.”

the research) and µ represents the population mean of the studied sample.

To test the hypotheses H1, H2a, H2b, H3, the ANOVA model with a one sample t-test was used.

For this method, a significant P-value suggested that at least one group mean was significantly different from the others. Thus, it permitted to justify the level of dependence between the studied variables and to explain the relationships found. It was from this significance test that the general hypotheses were tested, accepted or rejected. (from the significance of interaction effect)To test the last hypothesis (H4), a regression was used. This method was appropriate to valid/invalid the forth hypothesis. It permitted to describe and assess the relationships and correlations between one variable H4X - the Chinese people’s brand perception, and variables H4Y - The Chinese luxury consumption, short and long terms. The Y variables referred to two different purchasing time periods, asked in the survey. The short term referred to the willingness of Chinese people to buy a co-branded product directly after its launch (“buy it now”). The long term data referred to the intention to buy the co-branded product when the co-branding strategy will be developed in China, namely within 3 to 5 years (“buy it later”). Besides the variables, the regression method used controlling tolls in order to make the effect linking the two variables more powerful. It also aimed to better understand the relation between co-branding, consumer’s perception and consumption, according to control variables. Indeed, the age, the gender or the co-branding knowledge of the participants were used as controlling tools. The age and the gender are commonly used for such statistic methods. The consumer’s co-brand knowledge was interesting to study as it could have an impact on the consumption: at first sight, it seemed that a consumer having absolutely no idea about what co-branding is, will not be naturally inclined to buy a co-branded product. That was what the regression method aimed to analyze. To do the regression analysis, the control variables were coded. Each of them was associated with a controlling number as followed: Gender: Female=1, Male=0; Age: 18-25=1, 26-35=2, 36-45=3, 46-55=4, 56-65=5, >65=6 and Co-branding knowledge: “Absolutely”=4, “Yes, a little”=3, “Not really”=2, “Not at all”=1. Moreover, to support the hypothesis, the calculation of the linear correlation coefficient was also used. It permitted to analyze the association between the selected variables. As the studied variables were normally distributed, the method used the “Pearson’s product-moment correlation coefficient”. From this, the analyses permitted to understand the potential link between co-branding and consumption. Added to this, for the forth hypothesis, two different models were used for the regression. The model 1 included the control variables only (Age, Gender, Co-branding knowledge). The model 2 added the independent variable H4 X Chinese’s people Brand Perception. This permitted to see the difference of influence with or without the Chinese’s people brand perception. It was a way to define the role of the brand perception on the luxury goods consumption.

5. Findings

5.1. Analyses of the results: Hypotheses tests

Tests for Hypothesis H1:

Table 5.1.a. Test hypothesis H1 - One sample Statistics

One-Sample Statistics

H0: µ= µ0 “There is no significant difference with the t-value.” (With μ0= t-value = 3)

H1*: μ≠ μ0 (μ> μ0 or μ< μ0) “There is a significant difference with the t-value.”

In order to test the validity of the first hypothesis “Co - branding in the luxury industry will be positively accepted by Chinese consumers”, the ANOVA One-sample Statistics tests were used. As described in the previous part (cf. measurements), the analysis was based on a mean comparison with the t-value 3. The value 3 represented the critical point to interpret the data. If the sample population mean was higher than 3, this meant that the population mainly answered positive effects. In contrary, an answer less than 3 represented a negative effect on the studied variable. The analysis of the data started with the definition of the test hypotheses, as followed:

The used data referred to the item “Co-branding will be well received by Chinese consumers”, presented in the survey. From this, the aim was to demonstrate the positive acceptance of co- branding strategies in the luxury industry in China, by Chinese consumers. The sample population mean for H1 is µ= 3, 83. As μ≠ μ0, H0 is rejected and H1* is supported. There exists a significant difference with the t-value. µ> µ0 as 3, 83 > 3. The findings show that Chinese consumers answered that they will accept co-branding strategies in China. The effect that co-branding will have on Chinese shoppers will be positive. Moreover, the significance level for H1 is Sig. = 0,000*** (P < 0.0001). It means that the mean is highly (the four asterisks) significantly higher than 3. Thus, there will be a strong positive reception of co-branding strategies in China. But a question remains. Would female and male consumers accept this new strategy in the same way? Is there a difference of acceptance controlled by the gender variable? After data analyses, the tables (Table 5.1.b. Test hypothesis H1 - Descriptive variable using Gender control, p35) show that women (µ= 3, 97) will be keener to co-branding strategies compared to men (µ= 3, 63). acceptance., the general hypothesis H1 is supported

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Table 5.1.b. Test hypothesis H1 - Descriptive variable using Gender control

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Tests for Hypothesis H2:

-Tests for Hypothesis H2a:

The H2a hypothesis was “Co - branding will have a positive impact on the company’s brand image if the chosen partner has a higher brand image level”. In order to test it, two items were selected from the questionnaire: “Imagine that two luxury companies A and B decide to launch a cobranded product. If the brand B has a lower brand image than brand A, your willingness to buy a product from the brand A will be better/higher” and “If the brand B has a better image than brand A, your willingness to buy the brand A will better/higher”. Thus, to test the validity of the hypothesis, three different tests were done, using the One-Sample test mean comparison. For the three tests, the null hypothesis and H1* were also used as followed:

H0: µ= µ0 “There is no significant difference with the t-value.” (With μ0= t-value = 3)

H1*: μ≠ μ0 (μ> μ0 or μ< μ0) “There is a significant difference with the t-value.”

The first test measured the impact that a partner brand with a lower brand image will have on its partner. The results tables show that µ= 2, 03. So, µ< µ0 as 2,03 < 3. The null hypothesis is rejected and it appears that there is a significant difference with the t-value 3. As µ< µ0, it means that the Chinese interviewees mainly answered that a co-branding strategy with a lower brand image partner will have a negative impact on the other partner. All the criterions on the results tables show negative figures. Moreover, this statement is highly supported as the significance level for this test was 0,000*** (very high significance level). Thus, a brand with a lower image will impact negatively the other brand involved in the co-branding strategy.

The second test measured the impact that a partner brand with a better brand image will have on its partner. As showed in the results µ= 3,97 (3,97 > 3, µ> µ0). From this, the null hypothesis is rejected and the alternative one accepted. There exists a significant difference with the t-value. The effect of a better brand is strongly positive and this is proved by the high significance level (Sig. 0,000***). Finally, the last test was a paired samples test. It permitted to compare the means when a partner has a higher brand image and when a partner has a lower brand image. The tables of the results compared the two situations (better/lower brand). The mean of the paired differences is negative. This could be explained by the fact that the test measured a comparison between two variables and not a defined sample. The comparison is here negative: this figure explains the fact that there exists a significant difference between the two situations. The difference between µlower= 2,03 and µbetter = 3,97 is clear. Moreover the significance level is also really high with a Sig. 0,000***. The impact of a better brand image on its partner is significantly different from the impact of a lower brand. Indeed, the first one has a positive influence when the other one has a negative effect. This proves that choosing a partner with a higher brand image is significantly better than choosing one with a lower brand image. At the end, all the tests validate the test of having a high significant level. Having as result Sig < 0, 05, the hypothesis H2a is supported.

-Tests for Hypothesis H2b

The H2b hypothesis was “In China, co - branding will benefit to a Western luxury company’s brand image if the chosen partner is a Chinese luxury brand”. To test this hypothesis, the data used were taken from the items “Your perception of a cobranded product will change if the cobranding is done with a Chinese brand” and “In China, will a Western brand being associated with a Chinese brand see its brand image improved?” The first test aimed to know if there will be a change in Chinese people’s brand perception if a Western brand collaborates with a Chinese one. The results are obvious as µ= 3, 58 (Table p40). µ> µ0 and Sig. 0,000***. From this, it appears that there is a significant agreement on the fact that the brand perception will change when doing co-branding with a Chinese partner. But the main question is to know if this change will be positive or negative. The results presented in the Table show that mean equaling 2,19. (µ= 2, 19). From this, the data is: µ< µ0, µ<3. H0 is rejected and H1* is supported: there is a significant difference with the t-value. The studied sample population’s mean is lower than 3. This means that if a Western brand will do a co-branding strategy with a Chinese brand, according to Chinese consumers, the brand image of the Western one will be negatively affected. This is showed by the negative coefficients presented in the tables. (t= -9,262, Mean Difference= - 0,806) For a co-branding strategy, the results show that Chinese brands will have negative effects on Western luxury brands. This argument is also supported by a high significance level of 0,000***. Thus, the effect is significantly negative. Finally, as the findings demonstrate that the effect will be negative and as the hypothesis H2b though the relationship between Chinese and Western brands positively, it remains that the hypothesis H2b is not supported. From the results of H2a and H2b, the global hypothesis H2 (“Co - branding will benefit to luxury companies’ brand image in China”) cannot be fully supported (because of the influence of the rejection of H2b). The hypothesis H2 is partially supported. Indeed, the co-branding will benefit to luxury companies’ brand image in China according to specific conditions and criterions developed by the hypotheses H2a and H2b. The choice of the partner is the key element for a potential benefit on the brand image.

Table 5.1.c. Tests hypothesis H2a - One-Sample & Paired Samples Statistics

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Table 5.1.d. Tests hypothesis H2b - One-Sample Statistics

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-Tests for Hypothesis H3:

The hypothesis H3 argued that the co - branding strategy will have a positive impact on Chinese consumers if the consumers previously know minimum one of the brands involved in the co- branding. In order to test it, three items presented in the survey were used: “You will be more interested in a cobranding strategy if you know the two brands involved”, “Co - branding has a positive impact on Chinese consumers if the consumers previously know minimum one of the brands involved in the co - branding” and “Knowing the brands involved has a direct impact on the perception of the brands after the cobranding strategy”. From those items, three different One- sample tests were done, using the same null hypothesis/ alternative as the previous tests. The first test measured the impact that a co-branding strategy will have on Chinese consumers’ brands perception when they know the two brands involved in the strategy. The results presented on the Table show that the mean is µ= 3, 96. As 3, 96 >3, µ> µ0. H0 is unsupported and there is a significant difference with the t-value 3. Actually, this figure is higher than the critical point 3. It means that if Chinese consumers know the two brands involved during a co-branding operation, they will have a higher interest on the co-branded product and the impact of the strategy will positively affect the two brands perception. This relationship is strongly significant, as explained by the high significance level of 0,000***. Knowing that, the aim of the second test was to measure the impact that a co-branding strategy will have on Chinese consumers’ brands perception when they know only one of the two brands involved in the co-branding strategy. It will also aim to see if there is a significant difference between knowing just one brand or the two brands involved. In the Table 5.1.e. (p42), it appears that µ= 3, 83. Thus, comparing to the mean of the sample “knowledge of the two brands”, the impact is a little lower but remains positive. The difference between the two criterions is very high. Indeed, for the test of the sample “knowledge of only one brand”, the null hypothesis was also rejected as μ> μ0. This implies that even if the Chinese consumers know only one of the brands, the brand perception will be positively affected. The relationship between the variable is strongly supported has the significant level is also 0,000***. For the last test measuring the effect of the brand knowledge on the Chinese people‘s brand perception regarding a co-branding strategy, results also rejected H0. Indeed, the findings are: µ= 3, 81, µ> µ0, µ> 3. With a Sig. = 0,000***, the relationship between knowledge of the brands involved in the co-branding strategy and brands perception is demonstrated to be strongly significant. This proved that there is a link between the two variables and this link has a positive impact on the Chinese shoppers’ brands perception. The 3 tests validated the hypotheses with a high significance level. Finally, the global hypothesis was supported with a significance level lower than 0,05. (Sig. < 0,05). The hypothesis H3 is then supported.

Table 5.1.e. Tests hypothesis H3 - One-Sample Statistics with three tests hypotheses

Test when knowing the two brands involved in the co-branding strategy

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-Tests for Hypothesis H4:

The hypothesis H4 assumed that the Chinese people’s brand perception positively affects the consumption of luxury goods in China. To test this hypothesis, three items taken from the survey were used: “When a luxury co-branded product will be launched in China, I would like to be the first buying it” (short term effect), “I would like to buy this product but more likely with 3 to 5 years, when it will be known”(long term effect), and “the brand perception impacts the consumption”. For this part, a linear regression/correlation was used, in order to measure the importance of the relationship between brand perception and consumption. The first important analysis starts with the general descriptive statistics and correlation coefficients. In the results table, the control variables (Age, Gender, Co-branding knowledge) were coded, as explained in the methodology part. When looking at the correlation coefficients, it appears that there are no real significant relationships between the variables. Nonetheless, it is interesting to see that the Chinese people’s brand perception can be correlated with the gender (0,213), and that the Chinese Consumption (long term) is correlated with the Short term (0,448) and the Chinese people’s brand perception (0,224). It is this distinction between short term and long term that is important during those tests. Then, a two regressions were used (short term/ long term), including two different models: Model 1(referring to the test including the control variables only) and Model 2 (referring to the test including the control variables and the independent variable: the Chinese people’s brand perception.). The first regression for the short term effect shows that there is a low degree of correlation between the variables (R1=0,178, R2=0,183). The model 1 shows that the consumption is not directly affected by the control variables. Indeed, for the age, the gender and the co-branding knowledge, the significance level is respectively Sig. 0,508, Sig. 0,778 and Sig. 0,054. In this simulation, the co-branding knowledge does not play an important role on the intention to buy a co- branded product but still has a significant difference with the two other variables. The model 2 including the Chinese people’s brand perception variable confirmed that the age (Sig. 0,508), the gender (Sig. 0,704) or the co-branding knowledge (Sig. 0,059), do not have direct significant impact on the luxury consumption in China. Moreover, it also appears that the relationship between the Chinese’s people brand perception and the Chinese luxury consumption is not significant (Sig. 0,615> 0,05), in a short term period. The second regression focused on the long term effect (defined in the study as a 3 to 5 years perspective). The results show a higher correlation between the variables, higher than the short term simulation with R1=0,285 and R2=0,350. Studying the model 1, it appears that the age has a significant effect on the consumption, with a significance level of 0,011* for the model 1 and of 0,012* for the model 2. The same goes for the co-branding knowledge. (0,044* model 1). The two variables are significantly linked with the future co-branded luxury products consumption. The model 2 confirms this with a significance level of 0,012* for the age. When including the Chinese people’s brand perception, the co-branding knowledge variable becomes non significant (0,056). This can be explained by the fact that the Chinese people’s brand perception has a positive impact on the consumption (0,015). Thus, the co-branding knowledge is included in the Chinese people’s brand perception as it has been showed previously the relationship between the two variables (H3). Finally, as 0,015< 0,05, the results validate the link between the Chinese people’s brand perception and the Chinese luxury consumption, focusing only on the long term effect. From this, as the two variables do not have a significant link for the short term effect test (0,615) but have a strong relationship within a long term perspective (0,015), the hypothesis H4 is partially supported. The regression/correlation analyses helped to understand identify two times period to take into account to understand the influence of the Chinese people’s brand perception on the luxury consumption in China.

5.2. Answering the hypotheses: Summary

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5.3. Discussions

The results for H1 showed that the link between co-branding and Chinese’s brand perception exists. When asking Chinese people their opinion about co-branding (after having given them a precise definition), the results were irrevocably positive. A general trend showed that Chinese consumers will be interested in luxury co-branded product. The reception of the new strategy will lead to an acceptation and an integration of co-branded luxury products in China. Scholars used to do research on the co-branding strategy in general and they mainly proved that this kind of strategy is well received by consumers when it is well-thought and run. The findings came up with positive results. Starting with the scientific proof that the studied strategy will be positively accepted by Chinese consumers was a really good incentive to follow the study and to further understand the following results. The results for H2 were really interesting for the theoretical part of the study. Indeed, the question of the brand image and the impact that co-branding could have on it, have been studied in previous research. But nothing has been done in China before. Thus, the findings presented in this research were new. The fact that the lower brand has a negative impact on a higher brand image is important to bear in mind while doing a co-branding strategy. In fact, the study revealed that the choice of the partner is a crucial issue. The co-branded product launch could be a real success for the brand image, or could also have bad fallout for the brand. The choice of the partner also goes through the brand origin. The literature review showed that Chinese people has a high Chinese pride and like to be proud of their roots. It is all in the deep Chinese culture. From this, the assumption was that when a western brand wanted to collaborate with a Chinese brand, local people could have been proud of this partnership and it could have positive repercussions on the Western brand. The findings proved that even if Chinese people could remain pride of their culture, they are not proud of the Chinese quality. At the moment, the research proved that collaborating with a Chinese brand will have negative impacts on the Western brand image. Nonetheless, the interpretations were that within minimum 3 years, when the Chinese brands will be more recognized as delivering quality goods, the Chinese people’s general opinion will change. The Chinese brands will be recognized as powerful and from this moment, collaborating with them will have a positive impact on the partner’s brand image. The findings supporting H3 defined the way how to do co-branding and how to select the brand partner too. In fact, the results proved that when a Chinese consumer knows the two brands involved in the co-branding strategy, he/she will be interested in knowing more about the new product. The interest will also be present if he/she knows one of the brands, even if the influence will be lower. The results supported the arguments of Aaker (2002), proving that the previous knowledge of a brand implies a growth of interest in the eye of consumers. The main interpretation is that it could be easier for two well-known brands to start a co-branding strategy, as their consumers will have interested in it. It is thus a good start for the introduction of a new concept in China. The new concept of co-branding also should have an economic impact, generating cash and stimulating the sales. To this respect, the results of H4 showed the impact that the Chinese people’s brand perception could have on the Chinese luxury consumption. The impact is not significant at the moment as people do not really know the concept and are not ready to be the first using new products. Nonetheless, a long term objective will see a higher relation between the two variables. The consumption lever will be trigger with five years and will be directly related to what Chinese consumers think about the co-branding product and the brands engaged. Moreover, the significant impact of the age for the long term model showed that young consumers might be keener to buy co-branded product in the upcoming years, as they will be the future generation of luxury consumers. The introduction of the timescale criterion is new while studying co-branding strategy. The findings clearly showed that the time periods are important criterions to take into account when analyzing the relationships between the variables: Co-branding strategy in the luxury industry, Chinese people’s brand perception and Chinese luxury consumption. Having built this new model based on concrete figures, Chinese consumers’ insights and luxury experts, it could be a good base for further research but also for managers. Indeed, understanding the structure of the model means to understand the way variables are combined and work together. It is a way for managers to be aware of the key critical points to work on, in order to succeed in a luxury co-branding strategy in China, having a perfect insight of how Chinese consumers will react. Therefore, from the findings, the following part will develop the managerial implications that the research implies.

6. Managerial implications

6.1. How managers should understand the co-branding strategy?

6.1.1. The improvement of the brand image

The findings supporting the hypothesis H2 reinforced the idea that co-branding has a positive impact on the brand image. 71% of the participants of the survey thought that the image of a brand will change after a co-branding strategy. 10% of them are convinced that the change will be fully positive, whatever the choice of the partner. As well, 73% of the interviewees thought that the brand perception will be improved after a successful co-branding strategy. From this, managers should understand the general context. Before, the value of a company was completely based on its revenue and its financial performances and the brand management was not the only criterion to focus on. But during the last thirty to forty years, companies realized that the real value of a company lies on the consumers’ mindsets. The link between the company and the client is formed through the brand image. The research done previously, followed by the presented research, showed that that co-branding is an astounding weapon for companies to strengthen their brand image. When the brand association is well thought and well done, co-branding creates belonging feelings and builds the brand identity. By highlighting the complementarities of the brands, co- branding aims to improve the brand image by enriching its content. It is actually by merging the values and the two brands identities initially engaged in different industries, or producing different products/services that co-branded product can attract consumers. Improving the brand image, the brand preference and the customer loyalty is the way for companies to differentiate from competitors.

6.1.2. Tend to offer an added value to the Chinese consumer

In order to offer a successful co-branded product offer, managers should be aware that they need to point out the added value of this new product. The added value is clearly the reason of doing co- branding. Without advantages and outstanding outcomes, it is not worth to think about this kind of strategy because it will not bring something special to the customer. Actually, because of the growing supply and the tough competition, brands must be able to offer products and services that bring added value to their clients. Co-branded product should be tailored directly to meet the Chinese consumers’ needs and expectations. When analyzing Chinese consumers’ needs, some companies often come with the conclusion that one brand might not be enough to fulfill their desire. The co-branding offer represents the opportunity to get two brands in one product. It is also the guarantee of having the two brands image associated in one product, which strengthen even more the image of the co-branded product. The findings, showing the strong relationship and interactions between a co-branding strategy and the Chinese consumers’ brand perception, are also important to keep in mind. Indeed, it is by offering an added value to the consumer that brands succeed in gaining prestige. This also impacts the knowledge and the brand recognition in consumers’ mindsets. Thus, it has a stronger effect on the way that clients or potential buyers see the brand and the co-branded product. Finally, it seems that when managers decide to launch a new co-branded product, highlighting its added value, the whole chain, from the brand image to the clients’ brand perception is impacted. From this, managers should understand that the co-branded product will be a success as the brand image is reinforced; the consumer is convinced and has knowledge.

6.1.3. Create the exclusivity: the aim of each co-branding strategy

Co-branding is the collaboration between two brands to create a common product. This strategy contains a wide range of different objectives. Actually, apart from raising profit, increasing revenues, cutting costs, improving the brand image, attracting new consumers, marketing a new product range, co-branding strategy is also a resource for creativity and innovation. This argument was supported in the survey, as 52% of the interviewees answered that co-branding is mainly used to create an innovative and unique product. As well, 69% of the participants of the survey thought that a co-branding strategy should create a new product for the customer and answer his expectations of innovation. To work, a co-branding strategy should create exclusivity. Consumers always expect a luxury brand to surprise them, to innovative, to be unique. Luxury shoppers also expect from a brand to market its products as piece of art in which a strong personality, quality and character will be easily recognize. Create a unique line of product is usually the case in co-branding strategy and it is why consumers like it. It makes the product more and more valuable. Examples are numerous having created exclusive co-branded range of luxury product. Louis Vuitton collaborated with designer Yayoi Kusama for a limited collection (2012), Aston Martin and Jaeger- LeCoultre, Hermès and Bugati (1920-2008), Maserati and Zegna (2014), Tiffany & Co and Swarovski (2012), Stella McCartney and TopShop (2013), Virgin Airlines and Vivienne Westood (2013), Blancpain and Lamborghini (2013), Fiat and Gucci (2013), etc. In the last few years, the list is long and continues to extend. To understand co-branding strategy and what make a product unique, managers should have a look of examples currently present on the market. A case in point, while talking about co-branding in the luxury industry, is the success of the alliance Bentley and Breitling. Cars brands and watches brands are well-known for co-branding strategies as they can easily create a unique product while keeping the same technologies. It is a way to link innovation with tradition and to reach a balance on consumers’ needs. Managers who are about to launch a co- branding offer should analyze this example to understand how the two brands succeeded in creating an exclusive product. In fact, the two companies have played together as they shared the same values. Moreover, the best advantage for them is that their logo was really similar (it was also one of the reasons of the alliance decision). With this co-branding strategy, Bentley does not only stop to cars but it became a joint project with Breitling. People also used to link directly the two brands talking about “Breitling for Bentley” with the watch created. This exclusive product is famous within the luxury industry and represents one of the best successes of co-branding within the field (also with its association with the image of David Beckham as product ambassador). Taking this case as example and applying it to the research model of the study, it appeared that the whole process was successfully accomplished. In other words, the co-branding between Bentley and Breitling succeeded to create an added value reinforcing the consumers’ knowledge, strengthening the two brands image and impacting on the whole luxury industry.

6.2.1. Leverage effects and brand recognitions: be aware of the partner ’ s brand image

Firstly, it is worth remembering that the research showed that having a prior knowledge of a brand will favor a positive acceptation of a co-branding strategy. As well, it will greatly influence the interest that Chinese consumer will have on the co-branding operation involving the known brand. According to the survey, 73% of the interviewees agreed on the fact that co-branding will have a positive impact on Chinese consumers if the consumers previously know minimum one of the brands involved. Indeed, if a consumer does not know one or the other brands collaborating together, he/she will be less likely to be interested in the co-branded product. For the experts, the basis of the co-branding clearly lies on the consumer’s knowledge. Actually, when asking if the co- branding in the luxury industry will be positively accepted by Chinese consumers, he answered that it is very much dependent on the knowledge of the brands and their status. Thus, managers who would like to set up a co-branding strategy in China must first measure the degree of brand recognition and awareness that Chinese consumers could have towards the brands involved in the potential strategic alliance. It is unlikely that a completely unknown brand have a positive impact on Chinese luxury consumers, and this, even if they are eager to know new and innovative brands. This idea of brand recognition is to be directly linked with the brand image. Indeed, it has been shown in the research model proposed by the study, that the co-branding strategy has a positive impact on the brand image. This is true when the partner has been properly selected. Indeed, as demonstrated in the hypothesis H2a, choosing a partner with a stronger brand image, and more recognized by Chinese consumers, permits to enhance the original brand image. Scholars used to talk about “the brand leverage effect”. The high-class brand image of a company will enhance the image of its partner. To support this argument, it was found in the study that 77% of the participants of the survey thought that a brand put its identity in its partner’s hand. 56% of them are fully convinced that the brand should be careful about the choice of the co-branding partner. Therefore, managers ought to think ahead about the choice of partner and be sure that it will live up to the expectations and objectives of the company. A balance must be reach between brands collaborating to enable the operation of co-branding to be done in the best conditions. Experts interviewed for the research all shared the opinion that a successful co-branding strategies lies on a perfect collaboration between the brands involved. Actually, they need to have common objectives in terms of consumer groups, execution and outcomes. If they do not agree on all three criterions, the result will be poor.

6.3. Co-branding between Western luxury brands and Chinese ones: be aware of the short term and long term visions

6.3.1. Understand the Chinese perception towards local brands …

Following the findings, only 4% of the interviewees thought that in the luxury industry, the brand image is not that important. This clearly shows that the majority of people agree on the fact that the brand image is the cornerstone of a luxury company. The results also showed that 75% of the interviewees were convinced that Chinese consumers are really sensitive to the brand image. The results highlighted the fact that 46% of the participants said that their perception of a co-branded product will change if the co-branding is done with a Chinese brand. In addition, 52% of the respondents thought that a Western brand being associated with local brand will not improve its brand image. From these results, it appears that Chinese consumers do not trust Chinese brands and will not consider as good and successful alliances between Western and Chinese brands. The Chinese luxury goods market is fully dominated by foreign brands and most of Chinese luxury buyers tend to favor foreign players that have unique brand heritage through a long history. When further thinking about this issue, managers will understand that the Chinese opinion about Chinese brands is negative. When asking Chinese people, China is known for its luxury counterfeits and its mass production, it remains the world’s factory. The major problem is that people do not believe in the Chinese luxury business and are not even aware of the potential of the local luxury industry. So, when asking them whether they would like to buy luxury made in China or not, they clearly and strictly respond that they would not. On the one hand, it is because the specter of counterfeit and Chinese bad quality remains. On the other hand, it is because they are convinced that luxury is necessarily European (French, Swiss, Italian, for example). According to the “2013 Bain & Company China Luxury Report”, the three brands that Chinese people desire the most in Beijing / Shanghai are Chanel, Hermes and Prada, and out of Beijing/Shanghai, they are Louis Vuitton, Chanel and Gucci. Thus, no Chinese brands appear in the list of most desired brands in China. This surely means that luxury cannot be Chinese, that only European companies may be desirable luxury brands. The findings showed that people think that linking a European brand with a Chinese brand will have a negative impact on the Western’s brand image. Where does the Chinese nationalist spirit lay? Where is the “China Pride” or the “Chinese Pride”, which would initiate the start of a Chinese consumption and awareness of Chinese potential? European managers, but also Chinese ones, need to understand that the Chinese have, for the moment, a low Chinese brands recognition and knowledge, especially for luxury brands. This is simply a lack of knowledge and communication around the success of some Chinese brands entering the privileged luxury brands market circle. Thus, even if for the moment, Chinese consumers do not receive positively the collaboration between European brands and Chinese brands, it is possible that this situation would change in the coming years. Chinese perception of local brands in the short and long terms could therefore change positively, leading to an opened field of opportunities for European luxury companies in China. “We have always expected that Chinese consumers would develop a growing awareness of their roots and believed that in time, those consumers would seek out brands that express their own values.” This quote from Dennis Chan, chairman of the luxury firm Qeelin, opens a new area for the understandings of the fast growing local luxury brands in China. The awareness of Chinese people concerning the new local luxury market will take few years. The consumers need to “digest” the current success of Western brands in China before realizing that Chinese brands could also take their part of the market.

6.3.2. … but keep an eye on the increase of Chinese luxury brands worldwide

As discussed above, it is true that the rich Chinese consumers just care about major international luxury brands. However, in the context of the study, it is extremely important to be aware of the emergence of the few 100% Chinese brands, who try to conquer the world luxury industry. According to a McKinsey’s study, China will represent 20% of the global luxury market by 2015, nearly $27 billion. The phenomenon of Chinese luxury brands plays a double role. On the one hand, there is a growing interest from major luxury groups for local companies. For example, in 2012, L Capital Asia (financed by LVMH), acquired 10% stake in Ochirly, one of the fashion brands in China. Another example could be, in 2012, the French luxury group PPR acquired a majority stake in Qeelin, the Chinese luxury jewelry brand. In addition, there is also the example of Hermès, which heavily invested in the Chinese brand Shang Xia. It is a real challenge for Hermès as the company went with this brand since its beginning and allowed it to set up in Europe. But on the other hand, the luxury industry also pointed out the rise of independent Chinese luxury brands and the growing interest of Chinese financial groups in European brands. For example, the company Cerruti was bought by Trinity, a subsidiary of the Chinese group Li & Fung, for more than €53 million. Chinese investment funds also have shares in large societies such as luxury LVMH, Hermès and Richemont. In addition, the Chinese group China Haidian also holds shares in companies such as Porsche Design, Eterna, etc. Managers, but also consumers, should understand that Chinese luxury is becoming very powerful and it is very interesting for managers to follow this trend. Indeed, having a precise knowledge of Chinese luxury brands expansion, it will be easier to ride the wave of launching a co-branding strategy, in the long term. Examples of Chinese brands making their way in the luxury industry are numerous. There are Trands, Ne-Tiger, Shanghai Tang, Shang Xia for fashion clothes (Shang Xia was created especially by the French group Hermès to conquer the Chinese market), Qeelin, Chow Tai Fook, for jewelry, Maotai for alcohol, Longio for watches or Herborist for cosmetics.

7. The limitations and contributions of the research

7.1. Pointing out some limitations

The research conducted was completely new as no one studied the question before. Moreover, it is important to bear in mind that the co-branding strategy is still mainly unknown within Chinese consumers’ mindsets. Studying and doing investigations in the unknown was greatly fulfilling and interesting but totally new studies always face some limitations that are relevant to point out, in order to improve the following research. The issue was the use of the data. The reliability and validity of data were not in cause as the pilot survey permitted to avoid any problem in the collected data. The main limitation was based on the questions formulations and the way how interviewees answered them. Actually, the survey asked them to express their feelings about co- branding strategies, if it will be positively accepted or not. From this, the survey started from the hypothesis that co-branding strategy, brand perception and luxury consumption were linked. It could have been interesting to measure this relation directly. The data collected were based on a Likert scale and relied on Chinese consumers’ feelings about a theoretical concept. It was thus really difficult to analyze the real impact it could have on brand image and luxury consumption. Even if the methods used are relevant, precise and scientifically correct, it could have been interesting to further study the model in order to run a deeper analysis, using further scientific analytic tools. Even experts of co-branding had difficulties to measure the possible impact that this specific strategy could have on consumers’ perception and consumption.

7.2. Contributions of the research.

7.2.1. Theoretical contributions

The theoretical contributions are numerous as the topic was new in China. The research initially started from the work of different scholars on co-branding strategies and on consumers’ brand perception. Further studying the possible impact that co-branding strategy between luxury brands could have on Chinese consumers, permitted to extend the research field on the topic and to bring new theoretical contributions. Indeed, our results showing the conditions of success of co-branding in China, improving the brand image is new, as it is a new phenomenon in China. Moreover, focusing on the Chinese luxury consumer and their potential willingness to buy co-branding products is also a new contribution for the theory. Nothing has been done before linking the co- branding concept with the luxury industry and in a Chinese context. One of the greatest contribution is the result indicating that co-branding in the luxury industry will work in China is the brand associations are correctly chosen. Analyzing the relations between higher brand image level and lower brand image level and their impacts on Chinese consumers’ brand perception and on their consumption is interesting for scholars. Another great contribution of the research is the differentiation between two consumptions level: short and long terms. Indeed, this is an insightful element to clearly understand Chinese consumers ‘behaviors and Chinese luxury consumption. The topic is extremely interesting and as shown in the limitations, it is always possible to be improved, in order to get higher and better understandings. Thus, the research gives to scholars and future students, new ideas to follow the study on this fascinating topic and industry in China. (Cf. “Suggestions for future research”)

7.2.2. Practical contributions

The practical contributions are the most important in a management point of view, because they will be the ones on which managers, marketing directors and executives will be interested in. The research gives insightful understanding on how to develop a successful luxury co-branding product in China, fitting with Chinese consumers’ expectations and demand. It shows that marketing managers should previously conduct detailed analyses on the fit of the brands before thinking about co-branding (for example: fit between Chinese brand and Western brand, fit between high brand image level company and lower level one). This main part is the key of a co-branding strategy success in China as it is directly linked with the brand connotations and perceptions that a Chinese consumer will have. The issue is to be aware of the consumers’ potential difficulties of understanding why two brands have collaborated together, why this product is linked with two luxury brands, etc. Providing those explanations to managers, it also allows them to understand the importance of luxury brand management and the need of advanced studies to launch a new co- branded product. Professional of the luxury industry will be able to find information in this study that could help them in their daily tasks, always being aware of the difficulty of successfully innovating within the luxury industry. Reading the analysis of the perception that Chinese consumers have on Chinese luxury brands could help luxury managers to understand the market and its consumers’ mindsets. Being experts of the luxury industry and wanting to expend their business to China, the research help them to avoid the tricks of the industry and to have knowledge of new marketing strategies such as co-branding. It shows them that this strategy is a powerful one when it is well-run and well-thought.

7.3. Suggestions for future research

In this research paper, several topic limitations could be pointed out. The study aimed to show if co-branding strategies in the luxury industry in China will work or not and which impacts they will have on Chinese consumers. It provides insightful and useful starting points to further investigate the issue. Although the study provides evidences that the co-branding strategies chosen for the luxury industry will have positive effects on Chinese consumers, it remains important to suggest further research on how the companies can promote their co-branding new strategy. Analyzing the impact of marketing campaigns promoting a co-branded product on Chinese consumers could also be an interesting part to develop. When having this kind of theoretical research and development, it could be a significant help for researchers, academics but mainly for managers in the luxury industry to entirely understand co-branding strategies and its effects in China. Having both strategic and operational backgrounds information could be a key element to understand the co-branding value chain. Finally, taking into account that the study was uniquely conducted in China is important. The generalization of the findings and the extensions of the implications to other random countries are highly limited.

8. Conclusion

Co-branding is a brand strategy, becoming increasingly relevant in both the academic literature and the managerial field. As the issue is new in China, the aim of the research was to explore the potential impacts that a co-branding strategy in the luxury industry could have on Chinese consumers regarding the brand perception and the luxury products consumption. Based on statistical tools, the results revealed that the co-branding strategy has significant influences on the brand image and the brand perception. Chinese consumers will positively accept luxury co- branded products, provided that the brand/product fits are respected. To do so, the research explained the best techniques to succeed co-branding in China. The research provided to managers a useful framework, highlighting the essential keys for a relevant co-branding offer: choosing the right brand to collaborate with, understanding the Chinese consumers’ behaviors, having a perfect understanding of the Chinese luxury market and targeting the right Chinese consumers selecting the right moment are. Especially on the Chinese luxury market - where everything is changing so fast - , the co-branding strategy will have positive scope for future development. Luxury brands will have the opportunity to ride the wave of the growing Chinese luxury market, coupled with the new rising change in Chinese’s luxury consumption motivations. As they will have an increasing luxury brands recognition and knowledge, high-end wealthy consumers will tend to drop “bling bling” goods in favor to sophisticated and unique luxury products. This will be a perfect niche market for luxury brands and for co-branding. The brands will have to consider that, for Chinese young consumers starting to experience the luxury consumption, a co-branding strategy between a luxury designer and a retailer will be preferred. The research pointed out the importance for companies to think about the relevance of the co-branding strategy in consumers ‘eyes. This innovative and creative co-branding concept may be preferred in China, as a faster and safer growth strategy. Moreover, the research opened a new path regarding the direct impact that co- branding strategy has on the Chinese luxury consumption. It led to an interesting finding: the time that Chinese consumers will need to accept, integrate and understand co-branded products. From this step only, the consumption lever will be set off. The forecasts for the integration of co- branding strategies in China were based on a 3 to 5 years plan. Finally, the research came up with many implications (theoretical and managerial) on the Chinese luxury market. It aimed to give a starting point for further research on this topic. The future investigations will for sure come to complete it and to show other insightful findings linking the intriguing co-branding strategy with the fascinating Chinese luxury market.

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Effects of the co-branding strategy in the luxury industry on Chinese consumers
Tongji University
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ISBN (Book)
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effects, chinese
Quote paper
Lucy Cheramy (Author), 2014, Effects of the co-branding strategy in the luxury industry on Chinese consumers, Munich, GRIN Verlag, https://www.grin.com/document/274775


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