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Brand extension in case of sbi & icici

PPBM Project: Brand Extension in case of SBI & ICICI

Objective of Study

The current study investigates the impact of category similarity, brand associations and success perceptions into extension categories. Two brands, namely State Bank of India and ICICI Bank were selected for the study. The study was experimental in nature. However, the study covered responses from real customers instead of students acting as respondents.

The study by Aaker and Keller (1990) assessed how consumers form attitudes towards brand extensions. It also assessed the hypothetical brand extensions, which can be considered as future brand extension. With few exceptions, past research has primarily examined single brand extensions with a unique parent brand. In reality, brands are associated with several extended categories. Using the scanner panel data, Swaminathan (2003) examines the effect of experience with a parent brand and a successful previous brand extension on trial and repeat of a subsequent brand extension. We assume that, in reality, consumers also compare the earlier extension with the success evaluation of the brand extension in a new category and based on the evaluation, consumers decide whether

to engage with the brand. Following this discussion, we predict the following:

  • There is no significant difference between present extension and future extension for
  • State Bank of India
  • There is no significant difference between present extension and future extension for

ICICI Bank.

Methodology

The objective of the study is to evaluate the customer evaluation of brand extension in their present extension and also for future possible extension. Two existing brands (State Bank of India and ICICI Bank) were selected on the basis of consumer familiarity, large banks and positive brand image. State Bank of India has highest share in market share, branch network and ATM network. State Bank of India has penetration in the entire country. ICICI Bank is a new generation private sector bank and in few years since its inception, it became the second largest bank in India. The study aimed to capture the customer evaluation of bank brand extension in two areas—present extension and future extension. Responses were elicited from 80 subjects (20×4). These 80 subjects were the customers of the respective bank. As the study was of the nature of field experiment, it was decided to contact the customers of the bank instead of taking students as subjects. The field experiment is summarized in Table 1:

Table 1: Summary of Field Experiment

Extension

Ban k

Present Extension

Future Extension

Public Sector Bank

(State Bank of India)

State Bank of India- Insurance (SBI Life)

State Bank of India- Gold Trading (SBI Gold)

Private Sector Bank

( ICICI Bank)

ICICI Bank-Home

Loans(ICICI Home loans)

ICICI Bank-Diamond

Trading( ICICI Diamond)

The sampling method was purely judgmental and the research instrument which was the questionnaire, was used to judge the evaluation of the brand both in present as well as future extension category. In order to reach a sample size, three factors were taken into account—judgmental, minimum cell size, and time. Using these criteria, 20 respondents from each cell were chosen. So the total sample size was 80 (20×4). A structured questionnaire was used for the study in which questions captured demographic variables, existing brand associations and evaluation into extension category (See Annexure).

Results and Discussion

The customer perception of State Bank of India was captured through open ended questions. The summary of the findings describing the percentage of respondents for the banks is shown below:

  • Large Network 82%
  • No. 1 Bank 50%
  • Old Bank 80%
  • Safe Bank 80%
  • Trusted Bank 60%
  • Reliable 60%
  • Service Oriented 40%
  • Long Queue 60%

As seen from the above brand associations, brand associations such as large network, No. 1 bank, old bank, safe bank, trusted bank, reliable and service oriented are positive associations whereas long queue can be considered as negative brand association.

ICICI Bank

  • Prompt and quick service 80%
  • Better facilities 90%
  • Responsive 50%
  • 8 AM to 8 PM banking 40%
  • ATM 55%
  • Convenience 40%

The broad results, based on success perception for present and future brand extension is summarized in Table 2.

Table 2: Mean Value Comparison

Parameters

Present Extension

Future Extension

SBI-Insurance

ICICI-Home Loans

SBI-Gold

Trading

ICICI-Diamond

Trading

Relation

3.93

3.93

4.00

3.27

Expertise

4.33

3.53

3.93

3.87

Reliable

4.27

3.53

4.87

4.13

Safety

4.33

3.40

4.73

4.07

Aggressive

2.93

3.93

3.27

4.53

Promptness

3.53

4.27

3.47

4.27

Quality

3.80

3.93

4.80

4.87

Success

3.80

3.53

4.27

4.47

The results of success perception are given in Tables 3, 4, 5 and 6:

Table 3: ICICI Home Loans (Present Extension) vs.

ICICI Diamond Trading (Future Extension)

Extension

Mean

Std. Deviation

Std. Error Mean

ICICI-Home loans

3.53

0.99

0.26

ICICI Diamond trading

4.47

0.52

0.13

Table 4: Independent Sample Test

Levene's Test for Equality of Variances F

Sig.

t-test for Equality of

Means

t

df

Sig.

(2-tailed)

Mean

Difference

Std. Error Difference

Equal variances assumed

7.310

0.012

–3.236

28

0.003

–0.93

0.29

Equal variances

not assumed

–3.236

21.088

0.004

–0.93

0.29

Table 5: SBI Insurance (Present Extension) vs.

Gold Trading (Future Extension)

Extension

Mean

Std. Deviation

Std. Error Mean

SBI Insurance

3.80

0.56

0.14

SBI-Gold trading

4.27

0.96

0.25

Table 6: Independent Samples Test

Levene's Test for Equality of Variances F

Sig.

t-test for Equality of

Means

t

df

Sig.

(2-tailed)

Mean

Difference

Std. Error Difference

Equal variances assumed

4.894

0.035

–1.624

28

0.116

–0.47

0.29

Equal variances

not assumed

–1.624

22.538

0.118

–0.47

0.29

As observed from the above tables, significant differences in the mean were observed between present and future extension for ICICI Bank. While for State Bank of India, significant differences were not observed.

Considering success as the dependent variable and other variables such as relation, expertise, reliability, safety, aggressiveness, promptness and quality as independent variables, the results of the forward regression analysis is shown in Table 7.

Table 7: Regression Summary

Ban k

Regression Result

State Bank of India

ICICI Bank

Safety (beta figure)

0.708 (0.000)

0.365 (0.021)

Quality (beta figure)

0.487 (0.003)

R2

0.501

0.545

Note: Bracket shows the significance level.

Forward regression analysis, using SPSS analysis, separated the independent variables which influenced on dependent variable, success. This is the reason why all the independent variable s are not shown. Multico llinearity arises when intercorrelations among the independent variables are very high. Some approaches are suggested to verify whether multicollinearity exists. The result of the multicollinearity test is seen in Tables 8 and 9.

Table 8: Collinearity Diagnostics (for SBI)

Model

Dimension

Eigenvalue

Condition Index

Variance Proportions (Constant)

Safety

1

1

1.992

1.000

0.00

0.00

2

7.728E-03

16.056

1.00

1.00

Note: A Dependent Variable: Success

Table 9: Collinearity Diagnostics (for ICICI Bank)

Dimension

Eigenvalue

Condition

Index

Variance Proportions (Constant)

Quality

Safety

1

2.925

1.000

0.00

0.00

0.01

2

5.403E-02

7.357

0.23

0.04

0.90

3

2.135E-02

11.704

0.76

0.95

0.09

Note: A Dependent Variable: Success

Eigenvalues are obtained by factoring independent variables. They provide an indication of how many distinct dimensions there are among the independent variables. When several Eigenvalues are close to 0, the variables are highly correlated. Based on the above observation, it indicates that the independent variables are not multicollinear.

As observed from tables 8 and 9, safety is observed to have the strongest influence on the success evaluation of brand extension (State Bank of India with a correlation coefficient r=0.708, p 0.01 and ICICI Bank with a£ correlation coefficient r=0.603,

p 0.01). Quality has a strong influence on the success evaluation only for ICICI Bank,£

not for State Bank of India (ICICI Bank with a strong correlation coefficient r=0.665,

p 0.01).£ This study adds to the literature on brand extension by examining how the major brand associations of leading banks affect the success evaluation. The present study has demonstrated that higher brand associations (safety and quality in case of ICICI Bank

and safety in the case of State Bank of India) affect the success evaluation.

Conclusion

This study is based on field experiment which captures the customer insights about the present and future brand extensions of real brands. The purpose of the study is to examine the success perception for present as well as future extensions based on real settings. Earlier experiments were conducted with the subjects who are students. In those cases, subjects were not adequately exposed to the decision-making regarding the brands. The field experiment differs from the earlier studies and can give reliable finding based on customer insights. The study is, therefore, robust in nature. Although much has been written about the success evaluation from the customer point of view in consumer goods industry, there is sparse empirical study conducted for service brands. Branding decisions are becoming increasingly important in services, but little service specific research has focused on this domain so far. This is surprising when service industry accounts for the ever growing share of the global economy. Little is known how brand extensions are evaluated in a services context

(Van Riel et al., 2001). The study indicates that the success perception of future extension was found to be much higher than the present extension for ICICI Bank in diamond trading. Based on existing brand associations and relevant brand affect in the extension category, the field experiment recommends the extension of existing bank brand in diamond trading in case of ICICI Bank. In the evaluations, ICICI Bank scores higher for various associations such as aggressiveness, promptness, quality and overall success evaluation when subjects are considering extension into diamond trading. Diamond trading has been associated with the premium image and ICICI, backed with its higher abstract associations, have higher evaluation when compared with its existing brand extension of home loans. Brands can be broadly categorized into functional—function oriented brands and prestige oriented brands (Park et al., 1991). Function oriented brands have dominant associations related to core product performance and prestige related brands relate to consumers' expression of self image. Based on these finding, consumers' abstract associations may be seen as relevant across a wide set of categories because of their intangible nature. Although there was a greater acceptability for the future brand extension, we cannot just generalize that all the future extension will score a higher rating than the present extension. The acceptability would have emerged due to the scope of exploiting the current brand assets in the extension category of gold trading and diamond trading. There seems to be some plausible explanations for the above result. There is enough scope for a brand to leverage its asset to enter into the category of gold trading and diamond trading. The potential to exploit the newer category by an existing reputed brand is immense despite the fact that the fit between banking and gold/diamond trading is minimal.

ICICI Bank is the newer private sector bank and the brand associations linked with the brand are aggressiveness, prompt and quick service. Surprisingly, this does not lead to significantly higher success perception ratings for its present extension. However, the success perception for ICICI Bank was significantly higher for future extension. As diamond trading is associated with more upscale image, the success perception by customers was found to be higher although fit (relation) and the customer perception of expertise was low.

The findings have several implications for both brand management theory and practice. The extant knowledge in the area of brand extensions is based almost mainly on the study of consumer brands. The study also offers relevance for service brands by

showing the way to exploit their brand asset based on customer's confidence of success parameters. The effect of customers' evaluation of success parameter is also qualified for bank brands. The study does not imply that bank brands can be leveraged indiscriminately for future extensions.

References

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