An employee's perspective of co-branding separation on brand commitment
Date
2014-07-11
Authors
Munzhelele, Mukundi
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Abstract
The use of co-branding as a strategy has become increasingly important to managers due to saturation in mature markets and the search for growth in emerging nations (Chul, 2009; Helmig, Huber, & Leeflang, 2008; Uggla & Asberg, 2010). In this study, a co-branded joint venture strategy is seen as an enterprise or an organisation introducing a national brand into a foreign market using brands that are successful in that foreign market, thus creating a co-brand (Kuvykaite & Mascinskiene, 2010).
Co-branded strategies do not necessarily last for an indefinite period of time and the companies involved may want to separate after some time, particularly when the multi-national firm wants to align subsidiaries under the same corporate identity and brands. This split leads to impacts on a number of different levels including internal stakeholders (e.g. employees), external stakeholders (suppliers, consumers etc.) and the reputation of the firms. It can be argued that employees are the most affected by co-branded ventures above all other stakeholders.
Danone Southern Africa is a firm of French origin which entered the South African dairy market through a joint venture with Clover South Africa. The two companies formed the Joint venture, Danone-Clover in 1998 (Abratt & Motlana, 2002), to operate within the fresh dairy produce market (i.e. Yoghurt, Custard and Maas). Whilst the two organisations had formed a joint-venture, Clover South Africa continued to operate separately within the broader dairy and beverages market. Danone subsequently bought out Clover’s share in the joint-venture in 2010 (Danone, 2010), resulting in the two firms no longer having a joint venture operation and functioning as separate entities within the South African market.
This study explored the effects of a co-branding joint-venture separation, on the brand commitment of employees of the separated organisation. The study explored the process of the separation from a case study perspective. One-to-one interviews were conducted, with the use of open-ended and semi-structured questions with the
responses recorded. The population of the study were employees of Danone Southern Africa, based at the Roodepoort head office. There were two sets of respondents, the first being employees who were part of Danone-Clover and are now employees of Danone Southern Africa. The second were respondents that had only being under the employment of Danone Southern Africa, i.e. joining the organisation post the joint venture separation in 2010. The study made use of judgemental sampling where sample sizes are often determined on the basis of theoretical saturation, as a result 18 respondents were interviewed.
The results of the study showed that a co-branding joint venture separation has a negative impact on brand commitment, in that brand commitment decreases after the dissolution of the joint venture. In this specific case study, Danone’s brand performance was not negatively impacted particularly in terms of market share, where Danone is the dominant player within its category. The corporate brand, however, was negatively impacted in terms of external brand recognition, as there is confusion between the Clover and Danone brands with consumers seeing Danone as part of Clover South Africa.
The Danone brand, post dissolution, performed well in the marketplace due to the fact that there was high fit between the two organisations that had formed the joint venture, a restraint of trade agreement post the joint venture dissolution, Danone Southern Africa buying the dominant sub-brands from Clover, the inability of competitors to take advantage of the dissolution of the joint venture and manager performance in managing the brand post dissolution. Danone has however, been negatively impacted internally by the dissolution. The organisation has experienced high turnover across senior, middle and junior management, leading to a loss of institutional knowledge. The results also suggest that due to the high fit between the firms, brand promise and understanding of the brand were negated as issues, post dissolution, for Danone. The dominance of the sub-brands also made it somewhat easier for employees to continue to perform, as those brands were already well established within the organisation and the country. The Danone organisation also experienced a negative culture in the eyes of the internal stakeholder, which in part has been a large contributor to the higher turnover. The study
also showed that employees who remained with the organisation post the co-branded joint venture separation had higher commitment than employees who joined post the joint venture separation. There were also informal processes for learning within the organisation post dissolution, it was recognised that a more formal and prioritised knowledge management process needed to be started by the organisation.
This study has theoretical and managerial implications. Future research could include other geographic territories, industries and a consumer evaluation on the effects of the dissolution. Given that the two organisations will become competitors (from 2015 onwards), it offers an opportunity for a longitudinal study on the two organisations and how they interact (in the areas of brand standing, identity, employee perception, market share and brand interaction with consumers) over the coming years.
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Keywords
Employee brand commitment, Co-branding separation, South Africa, Danone, Clover SA, Internal marketing, Case study