The Importance of Customer-Based Brand Equity and Brand Loyalty in Building Strong Brands. How Red Bull Utilized Brand Extension into the Sports Industry in Their Brand Building.

Abstract

Objectives

The main objectives of this study were to investigate the importance of brand loyalty and brand equity in building strong brands, as well as how brand extension may act as a tool in fostering the growth of the two. The study will also aim to determine whether Red Bull has been able to do so through their extension into the sports industry. The results can assist brands in learning the factors affecting brand equity and brand loyalty, and the role brand extensions play in building strong brands.

Summary

Branding is a technique used to strengthen brands and allows them to distinguish themselves from their competition. Based on the literature review, a conceptual framework was developed which suggested the relationships between brand loyalty, brand equity, brand extension, brand awareness, and consumer-brand relationships. A survey and a focus group were conducted to determine whether the relationships suggested were accurate, as well as determine what some of the main drivers of brand loyalty are.

Conclusions

The four significant aspects of branding were tested using multiple regression and correlation analyses to determine whether their relationships were positive or negative. Most of the results aligned with those in previous literature, where the relationships were positive. The only outlier was the relationship between brand extension and brand loyalty, where there was no significant relationship. The analysis of the focus group discussion came up with three main topics: brand trust, brand awareness, and brand associations. These further strengthen the results of the presented hypotheses. In terms of implications for international business, the research presented further shows the importance of brand loyalty and brand equity in building strong brands, as well as how brand extension may act as a vital tool in fostering both. Here, it’s important to understand consumer motivations and values to foster strong consumer-brand relationships.