t itle: “brand management in conjunction with merger and...

Department of Business Administration

Title: “Brand Management in conjunction with

Merger and Acquisition in Theory and Practice – Volvo Car Corporation”

Author: Jochen Steurenthaler

15 credits

Master Thesis Business Administration

Brand Management after Acquisitions_________________________________________ I

ABSTRACT

Title: “Brand Management in conjunction with Merger and Acquisition in Theory

and Practice – Volvo Car Corporation”

Level: Thesis for Degree of Master of Science in Business Administration.

Author: Jochen Steurenthaler

E-mail: [email protected]

Supervisors: Ass. Prof. Dr. Maria Fregidou-Malama

University of Gävle, Sweden

E-mail: [email protected]

Date: 2009 - March

Aim: This study deals with Brand Management after acquisitions. Since this subject

is still quite unexplored, a case study backed the theoretical review in order to

answer the two research questions. Furthermore, the work educes a model

which shows the ascendancies that are involved in the field of Brand

Management after acquisitions. It is the aim to reveal the necessity of strong

branding for acquired companies and the importance of the continuity of their

presenting brand values. I hope this paper adds new knowledge in the Brand

Management sector in connection with acquisitions and gives the reader a

proper understanding about the issue.

Method: The study occupies a theoretical and an empirical study. The theory part

presents a selection of theories and models developed by scholars in the field of

business administration. While the first research question concerning brand

equity after acquisitions is addressed in the theoretical review in chapter 3, the

second question regarding brand image is mainly discussed during the

empirical part. The data for the latter was primarily obtained by a case study

which is a qualitative method and occupies interviews and discussions.

Brand Management after Acquisitions_________________________________________ II

Result: Brand Management has become a key issue for companies and is a sensitive

subject in the context of Merger and Acquisition. Hence, it is a challenge for

the acquirer and the acquired company to manage control and adapt to the new

situation. Brand equity as a key asset of Brand Management is the amount of

loyalty a customer has towards a brand and it is certainly influenced by such

transactions as M&A. In the real-life comparison of the specific case it proved

to be successful for the acquirer to maintain the autonomy of the acquired

brand and continue the meaning of the brand. In addition, the loyalty of the

customers is of great importance to assure a smooth process of the business

operations.

Suggestions for future research:

Due to the current situation and constant changes it would be interesting to

repeat the study some time in the future for a final conclusion. Furthermore,

since the findings for the empirical part of this study are based on a strong

acquired brand, it would be interesting to investigate the case of another

company of weaker nature, and maybe of a different branch. The high profile

of the target firm and its strong brand values had a remarkable influence on the

revelations of this study.

Contribution of the thesis:

The result of this study helps companies to maintain their brand values during

an acquisition. The research adds new knowledge in the brand management

sector in connection with acquisitions, and it is useful for companies which are

involved in M&A activities.

Keywords: Brand Equity, Brand Loyalty, Brand Management, Brand Awareness,

Automotive Industry, Merger and Acquisition

Brand Management after Acquisitions_________________________________________ III

TABLE OF CONTENTS

Page

ABSTRACT ..........................................................................................................I

TABLE OF CONTENTS................................................................................. III

LIST OF FIGURES...........................................................................................VI

LIST OF ABBREVIATIONS......................................................................... VII

1. INTRODUCTION ........................................................................................ 1

1.1 Background ...................................................................................................... 1

1.2 Purpose of the Study ........................................................................................ 2

1.3 Research Objective and Research Question..................................................... 2

1.4 Research Method.............................................................................................. 3

1.5 Limitation......................................................................................................... 3

2. METHODOLOGY OF RESEARCH – STRATEGIES AND

PROCEDURE............................................................................................... 4

2.1 Primary versus Secondary Data ....................................................................... 4

2.2 Internal and External Secondary Data ............................................................. 6

2.3 Deduction versus Induction ............................................................................. 6

2.4 Qualitative versus Quantitative Research ........................................................ 7

2.5 Direct Data versus Indirect Data ...................................................................... 8

2.6 Case Study...................................................................................................... 10

2.7 Data Collection and Quality of Research....................................................... 11

3. THEORETICAL REVIEW – KEY ISSUES ABOUT BRAND

MANAGEMENT........................................................................................ 15

3.1 Brand Management – An Overview .............................................................. 15

3.1.1 Brands versus Products....................................................................................... 16

3.1.2 The Importance of Branding............................................................................... 18

3.2 Brand Management in an M&A Context....................................................... 19

3.2.1 Company Acquisitions – An Introduction......................................................... 19

3.2.2 Motives for Brand Acquisitions.................................................................. 21

3.2.3 Risks of Brand Acquisitions ....................................................................... 23

Brand Management after Acquisitions_________________________________________ IV

3.3 Brand Equity .................................................................................................. 24

3.3.1 Brand Awareness ........................................................................................ 25

3.3.2 Brand Image................................................................................................ 26

3.3.3 Brand Loyalty ............................................................................................. 27

3.4 The Four Steps of Brand Building ................................................................. 30

3.4.1 Brand Salience ............................................................................................ 31

3.4.2 Brand Performance and Imagery ................................................................ 32

3.4.3 Brand Judgments Feelings .......................................................................... 33

3.4.4 Brand Resonance......................................................................................... 35

3.5 Concluding Reflections on the Literature Review......................................... 36

4. CASE STUDY – VOLVO CARS AND THE ACQUISITION BY FORD

MOTOR COMPANY................................................................................. 39

4.1 The Automotive Industry and Volvo Cars – An Introduction ....................... 39

4.1.1 VOLVO – A Traditional Swedish Car Manufacturer.................................... 40

4.1.2 Facts and Figures about Volvo.................................................................... 41

4.1.3 Volvo Cars as a Player within Ford Motor Company................................. 43

4.2 Ford Motor Company’s Acquisition of Volvo Car Corporation ................... 45

4.2.1 Volvo Cars and the Attitude towards Acquisition ...................................... 46

4.2.2 Risks of Brand Acquisitions ....................................................................... 47

4.3 Brand Equity and Volvo Cars ........................................................................ 48

4.3.1 Brand Awareness ........................................................................................ 48

4.3.2 Brand Image................................................................................................ 49

4.3.3 Brand Loyalty ............................................................................................. 50

4.3.4 Brand Reinforcement and Revitalization.................................................... 51

4.4 Volvo Cars faced to the Customer-Based Brand Equity Model .................... 54

4.4.1. Brand Salience - Question Identity: Who are you? .................................... 54

4.4.2 Brand Performance and Imagery - Question Meaning: What are you?...... 55

4.4.3 Brand Judgement and Feelings - Question Response: What about you?.... 56

4.4.4 Brand Resonance - Question Relationships: What about you and me?...... 58

4.5 Reflections on the Empirical Study ............................................................... 59

Brand Management after Acquisitions_________________________________________ V

5. ANALYSIS.................................................................................................. 62

5.1 Volvo Cars´ Sales Developments .................................................................. 62

5.2 The Acquisition’s Impact on the Volvo Brand .............................................. 62

5.3 Brand Equity and Volvo Cars ........................................................................ 65

6. CONCLUSION AND DISCUSSION........................................................ 69

6.1 Brand Equity after an Acquisition ................................................................. 69

6.2 Brand Image after an Acquisition .................................................................. 70

6.3 Reflection and Future Research Suggestions................................................. 71

REFERENCES .................................................................................................. 74

APPENDIX ........................................................................................................ 79

Brand Management after Acquisitions_________________________________________ VI

LIST OF FIGURES

Page

Figure 1: Classification of Research Data.................................................................................. 4

Figure 2: Primary Data vs. Secondary Data ............................................................................... 5

Figure 3: Qualitative versus Quantitative Research................................................................... 8

Figure 4: M&A Objectives....................................................................................................... 20

Figure 5: Motives for Brand Acquisitions................................................................................ 21

Figure 6: The Brand Equity Model .......................................................................................... 25

Figure 7: Brand Reinforcement / Revitalization ...................................................................... 30

Figure 8: Costumer-Based Brand Equity Pyramid................................................................... 31

Figure 9: Branding and Acquisition ......................................................................................... 37

Figure 10: Sales Output............................................................................................................ 42

Figure 11: Sales per Model in 2007 ......................................................................................... 43

Figure 12: FMC Portfolio......................................................................................................... 44

Figure 13: Profit and Loss........................................................................................................ 44

Figure 14: FMC Acquisition of Volvo Cars............................................................................. 46

Figure 15: The Brand Pyramid................................................................................................. 52

Figure 16: Branding and Acquisition, VCC & FMC ............................................................... 65

Brand Management after Acquisitions_________________________________________ VII

LIST OF ABBREVIATIONS

AB – Aktiebolag (Swedish), publicly traded

firm

BM – Brand Management

CBBE – Customer-Based Brand Equity

Cf. – Confer

CEO – Chief Executive Officer

e.g. – exempli gratia (Latin), for example

Et allii – “And others”. Used if more than two

names appear as authors of a publication

Etc. – Etcetera

f. (ff.) – and following page(s)

FMC – Ford Motor Company

GM – General Motors

PAG – Premier Automotive Group

p. (pp.) – page (pages)

R&D – Research and Development

UK – United Kingdom

USA (U.S.) – United States of America

VS – Versus

VCC – Volvo Car Corporation

Brand Management after Acquisitions_________________________________________ 1

1. INTRODUCTION

This study deals with the concept of Brand Management, especially in conjunction with

Acquisitions. The work intents from both a theoretical and practical perspective with a

special focus on brand equity issues. The literature review presents a compilation of theoretic

approaches and definitions in the field of Brand Management concerning acquisitions,

merger and alliances. Theories and models published in seminal text books and articles

throughout the past decade, but also most currently, served as sources for the review. After

the reflection of the theory a model is drawn. This is the assumption for the empirical study in

order to answer the research questions. The empirical part of this study consists of a

qualitative short time analysis describing, and explaining how the brand Volvo Cars handled

there strategic Brand Management after they were acquired by Ford Motor Company in

1999. Two research questions are the guidelines throughout this paper, and the first one is for

the most part answered and discussed in the analysis and reflection of the theory. The second

research question deals mainly with the case study, and is answered and discussed on the end

of the paper in the analysis and conclusion.

1.1 Background

In the automotive industries it has become a fierce competition in the last decades. New

technologies, tougher environmental conditions and so forth are challenges for car producers.

It is the purpose of all brands to increase company value and to be one step ahead of the

competitors. However, research and development (R&D) demand a huge amount of capital

and a certain size of enterprise is required. Hence, automotive companies are undergoing

considerable change in order to remain competitive advantage and thus, they have moved into

the era of mergers, acquisitions and strategic alliances. Nowadays, single brand car

manufacturers are rare compared to the past and there never have been so many multinational

companies. Acquiring and selling brands inside the automotive industry became a normal

procedure.1

It is the responsibility of company management to make the right decision and to apply

effective Brand Management and control brand equity. After an acquisition appear changes in

both – the acquired brand and the acquirer – organizations. However, the acquired brand is to

a greater extent affected by such process and is confronted with different tasks through the

1 Lundbäck, M.; (2004), p. 10


entire company. One of several key words in the context of Brand Management is brand

equity.

The Volvo brand is an interesting object and ideal for a research project. The official date for

the founding of Volvo was 14th April in 1927, when the first Volvo automobile left the

production, but the first routes of the brand appeared even earlier, in 1915. It became one of

the most famous Swedish brands and the Volvo Group provides different kinds of

transportation related products, as for example, trucks, busses, construction equipment and

marine engines. Besides, the company has achieved rapid growth in the service area with, for

example, financial solutions supporting the sales of the manufacturing business units.

However, this study deals only with Volvo Cars. This division was sold by the Volvo Group

to Ford Motor Company in 1999.

Due to the popularity of the Volvo brand and the famousness and largeness of the acquirer

this acquisition is a particular exciting case. The motivation for this research topic stems from

my work experiences with several national and international companies in the automotive

field. The theory versus real-life comparison is a great challenge and exposes very interesting

findings.

1.2 Purpose of the Study It is the purpose of this study to apply literature review and analysis together with empirical

research in order to identify the problem and answer the research questions in a scientific

way. The theoretical framework and the real-life situation in the case study should be an

essential method, to research, evaluate and gain a better understanding about the issue. It is

the aim to reveal the importance of strong branding for acquired companies and the necessity

of managing their brand equity in order to continue with successful Brand Management.

1.3 Research Objective and Research Question

Managing a brand and brand equity respectively, after an acquisition seems to be an

unexplored subject concerning Brand Management. This study occupies the following

research questions:

• “How can a brand manage its brand equity after an acquisition?”

• “Is it possible to keep a positive brand image in people’s minds after an acquisition?”


1.4 Research Method

The theoretical review of this study is provided in chapter 3. The theory part presents a

selection of theories and models developed by scholars in the field of Marketing

Management, mainly from North American and European universities published in seminal

text books and articles throughout the past decade but also most currently.

The secondary data is selected and analysed during the desk research of this paper and I

always tried to choose the newest available editions for being up to date. Due to the lack of

coherent available secondary data, the empirical part of this study is not only a necessity to

answer the research questions but also to prove or disprove the assumption after the

theoretical review.

The case study which is the essential part of the empirical part is a qualitative method and

occupies interviews and discussions. A detailed description about strategies and procedure is

provided in chapter 2.

1.5 Limitation

Although I took great care when preparing the literature review, some assumptions may

appear simplified and generalised. Brand Management is a vast field and there is a large

repertory of valued literature. An extensive literature study was done. I chose the sources and

concepts considered the most related for this study for a reliable overview of the field study.

However, the reader might disagree with my judgement of relevance in some cases, since all

literature choices base on subjective opinions.

Despite the outmost care applied when collecting information during observations, interviews

and discussions in the case study, some assumptions and conclusions could be victims to

extended subjectivity.

As most researches this study is also influenced by time limitations. The actual tense situation

in the automotive industry and the turbulent time of the quarterly reports had a negative

influence on the availability of the interviewees due to their responsibilities.


2. METHODOLOGY OF RESEARCH – STRATEGIES AND PROCEDURE

This chapter presents different kind of research methods that can be used for a study as this

one. Methods are explained and discussed in order to consolidate the use of the case study.

The chosen research design for the empirical part is presented in this chapter and it

illustrates how the used data was collected.

Figure 1: Classification of Research Data

Source: Kumar, V. and Malhotra, Naresh K.

2.1 Primary versus Secondary Data

Primary research generally refers to that research which involves the collection of original

data using an accepted research methodology. Secondary research normally denotes an

activity whereby no new original data is collected but where the research project draws on

existing (“secondary”) sources alone.2 According to Riley any research activity usually

includes secondary research.

2 Riley, M. et alii; (2000), p. 8


Primary data is normally specifically collected in pursuit of particular research objectives. It is

originated by a researcher for the specific purpose of addressing the problem at hand.3 Thus,

primary data is “new” and original data and there it differs to secondary data. Secondary data

was collected for some purpose other than a specific problem at hand. It is all available

information as for example books, statistical reports from government and other agencies,

articles and so forth.4

Primary data collection is necessary when a researcher cannot find the data needed in

secondary sources. Three basic means of obtaining primary data are observation, surveys, and

experiments. According to Malhotra, primary data involves all six steps of the marketing

research process:5

1. Problem definition 2. Development of an approach to the problem 3. Research design formulation 4. Field work or data collection 5. Data preparation and analysis 6. Report presentation and presentation

Usually the choice will be influenced by the nature of the problem and by the availability of

time and money, since obtaining primary researches can be expensive and time consuming.

Secondary data is generally less expensive than primary data, and it can be located quickly. In

other words, compared to primary data, secondary data can collected easily and more rapidly,

at a quite low cost, and in a short time. Figure 2 shows an abstract of the difference between

secondary data and primary data within the main characteristics of collection purpose,

process, time and costs.

Primary Data Secondary Data

Collection purpose For the problem at hand For other problems

Collection process Very involved Rapid and easy

Collection cost High Relatively low

Collection time Long Short

Figure 2: Primary Data vs. Secondary Data

Source: Author, confer: Malhotra, Naresh K.; (2007) 3 Malhotra, Naresh K.; (2007), p. 106 4 Riley, M. et alii; (2000), p. 9 5 Malhotra, Naresh K.; (2007), p. 107


2.2 Internal and External Secondary Data

As shown in the research tree, the secondary data can be classified into internal and external

data. Internal records are sales/patronage outcomes, marketing activities, cost information,

distributor reports and customer feedback. These data are ready availability, reasonable

accessibility, and relevance to the organization’s situation.6 There are two significant

advantages of internal data. The records are easily available and the acquisition is

inexpensive. It is actually, the least costly research data of marketing research and the

importance for companies is increasing, since the popularity of database marketing rose.7

External data are those, generated by sources outside the organization. These data may exist

in the form of published data as for example books, annual reports, private studies,

newspapers or in form of standardized sources of marketing data as for example store audits,

or different kind of panels. The internet would be a third form of external data.8 At this point

it should be mentioned, that Malhotra classifies the Internet as a form of computerized

database where he distinguishes between “online”, “internet”, and “offline”.9

The most popular external source is however published data, since the data is readily available

and moreover, they are often sufficient to answer the research question.10

2.3 Deduction versus Induction

There are two ways of conducting research, the inductive and the deductive approach. Both

have to be considered and are important to an understanding of theory construction. In the

traditional dichotomy deduction is understood as the process that goes from the general to the

specific. According to Riley, deduction is the process which begins with theory and proceeds

through hypothesis, data collection, and testing of the hypothesis to deduce explanations of

the behaviour of particular phenomena.11 More simply, using the identified theory and

comparing it with the data means that the research follows the so called deductive approach.

6 Kumar, V, et alii (2002), p. 107 7 Malhotra, Naresh K.; (2004), p. 108 8 Kumar, V, et alii (2002), p. 106 9 Malhotra, Naresh K.; (2004), p. 112 10 Kumar, V, et alii (2002), pp. 109-111 11 Riley, M. et alii; (2000), pp. 12-13


An inductive approach would be planning to explore the data and develop theories from them

which can be subsequently related to the literature.12 Thus, the researcher can study an object

without first establishing the study in existing theory.

In this study both approaches – a deductive and an inductive – were chosen due to the fact

that it was more efficient to answer the research questions, and thus reach my research

purpose. Regarding the deductive approach, a model based on the existing theory was built

and empirically tested. On the other hand, due to the rare theoretical information about Brand

Management combined with M&A, an inductive approach is necessary as well, to provide

reasonably accepted evidence. More precisely, the data obtained from the case study are key

elements in order to build the model and hence, further develop theory. The model is related

to the literature and adds new knowledge in a quite unexplored field of Brand Management.

2.4 Qualitative versus Quantitative Research

Research methods can be divided into qualitative methods and quantitative methods.

Qualitative research provides insights and understanding of the problem setting. Quantitative

research seeks to quantify the data and, typically, applies some form of statistical analysis.13

Some other researchers state that quantitative methods have been widely used because of the

fact that things that can be measured or counted gain scientific credibility over the

immeasurable.

Quantitative research gathers and analyses statistical data. It contains research on large scale

and relatively large number of representative sets of data as the research seeks to quantify

data. This method place reliance upon the research instruments employed to gather data and

analyse/measure it; as for example experiments or questionnaires.14 Quantitative data can be

distinguished in descriptive and causal research. Both research methods are types of

conclusive research.

Qualitative research refers to studies when the researcher gathers and analyses detailed data of

ideas, feelings and attitudes. This method is necessary for finding out what is in a consumers´

mind. The data is collected in order that researchers can know more about things that cannot

12 Saunders, M. et alii (2007), pp. 57, 117-118 13 Malhotra, N. K.; (2007), p. 143 14 Riley, M. et alii; (2000), p. 40


be directly observed and measured. Sometimes qualitative data is undertaken to explain the

finding obtained from quantitative research. Both methods shouldn’t be seen as competing

methods but rather as a complementary. For any new marketing research problem,

quantitative research must be preceded by appropriate qualitative research.15

Qualitative Research Quantitative Research

Objective To gain a qualitative understanding

of the underlying reasons and

motivations

To quantify the data and generalize

the results from the sample to the

population of interest

Sample Small number of non representative

cases

Large number of representative

cases

Data collection Unstructured Structured

Data analysis Non statistical Statistical

Outcome Develop an initial understanding Recommend a final course of action

Figure 3: Qualitative versus Quantitative Research

Source: Malhotra, N. K.; (2007), p.137

Furthermore, the purpose of qualitative data is to develop an understanding of the problem

setting, which can be classified into direct and indirect approach (see next part).

2.5 Direct Data versus Indirect Data

Qualitative research procedures are divided in direct or indirect approach. In the direct

approach the interviewee knows the purpose of the research or the aim is obvious given the

nature of the interview. The major direct techniques for the research procedure are focus

groups and depth interviews.16

Focus group interviews:

This technique is based on an interview which is conducted by trained moderator among a

small group of respondents in a non structured and natural manner. According to Malhotra, it

is the most important qualitative research method, and the main purpose of focus groups is to

15 Malhotra, N. K.; (2007), p. 143 16 Malhotra, N. K.; (2004), pp. 139-157


gain insights by listening to a group of people from the appropriate target market talk about

issues of interest to the researcher.17

Depth interviews:

The characteristics of depth interviews are like focus groups. However, depth interviews are

conducted on a one-on-one basis. It is a direct way of obtaining information from a single

interviewee. A highly skilled interviewer tries to uncover in a personal interview underlying

motivations, beliefs, attitudes, and feelings from the respondent. Through the personal way of

the interview depth interviews can uncover greater depth of insights than focus groups.18

In contrary, an indirect qualitative research is a type of qualitative research whereas the

respondent doesn’t know the purpose of the project. The tools for indirect approaches are the

so called projective techniques which contain association, completion, construction, and

expressive techniques.

Association techniques:

This technique is a one-on-one technique whereas an individual is presented with a stimulus

and has to respond with the first thing that comes to his mind. The best known technique

concerning this issue is word association. In this case a list of words is presented to a

respondent and he has to respond to each with the first word that comes on his mind.19

Completion techniques:

In completion techniques, the respondent has to complete an incomplete stimulus situation. In

marketing research the common methods are sentence completion and story complementation.

Construction techniques:

This method is closes related to completion techniques and respondents are required to

construct a response in the form of a story, dialogue, or description. The two main

construction techniques are picture response and cartoon tests.

17 Malhotra, N. K.; (2004), p. 139 18 Malhotra, N. K.; (2004), pp. 147-150 19 Malhotra, N. K.; (2004), p. 151


Expressive techniques:

Respondents are presented with a verbal or visual situation and there job to relate feelings and

attitudes of other people to the situation. In this technique they do not express their own

feelings or attitudes, but those of others. There are two main expressive techniques which are

role playing and third-person technique.

In this study, a direct approach in form of depth interviews was chosen. All interviews were

conducted with only one interviewee, and thus the respondent was not influenced by other

participants. The obtained information might uncover greater depth of insights than interviews

with more than one participant.

2.6 Case Study

The case study is a qualitative research technique which may or may not involve observation.

As mentioned earlier, qualitative research is usually undertaken in a more unstructured, rather

informal way than quantitative inquiry. Furthermore, it uses small samples that provide deep

insights helping to explain the problem setting.20 A case study involves an empirical

investigation of a particular contemporary phenomenon within its real life context. For this

strategy multiple sources of evidence are used.21

The case study investigates a contemporary phenomenon within its real-life context and

provides the researcher with the holistic and meaningful characteristics of the examined

phenomena. In addition, the case study strategy also has considerable ability to generate

answers to the question “why?” as well as the “what?” and “how?” questions and this is also

the case in this study.22

It is an advantage of a case study that the data collection can include internal documents,

interviews, discussions, and observations from real-life situations in the particular company.23

This study was also enriched by an extensive data collection, and besides interviews and

discussions, internal documents were observed. The case study is not only about collection

data, but rather about the analysis and interpretation of the information. The case study

20 Riley, M. et alii; (2000), p. 96ff 21 Saunders, M. et alii (2007), p. 139 22 Ibid 23 Saunders, M. et alii (2007), p. 140


research method was the chosen way to conduct the theory in conjunction with real-life

comparison as it had been suggested from different scholars as for example Malhotra.24

2.7 Data Collection and Quality of Research

In this study both secondary and primary data were used. The external secondary data was

mainly literature from textbooks, journals and websites and was the source for the theoretical

review of this paper. The case study bases mainly on primary data, and somewhat on internal

and external secondary data sources. In addition, annual reports and company brochures were

ordered from the case study company to get a better overview over the target firm and in order

to combine, expand and control the researches which are available on the internet as for

instance the company website.

The data in the case study are obtained by external secondary data and by conducted

unstructured interviews with people knowledgeable about the phenomenon of interest.25 The

interviews were the tool for gathering detailed information about the company’s organization,

the brand image, awareness, and loyalty after the acquisition by Ford Motor Company.

Furthermore, information about brand reinforcement and brand revitalization were gathered

through the interviews.

The researcher has to decide whether to perform a face-to-face or a telephone interview.

According to Riley, telephone interviews require the same planning as face-to-face

interviews. It needs even a more structured approach than a face-to-face interview; due to the

fact without useful cues apparent in face-to-face contact it is less easy to monitor responses

which suggest misunderstandings or inconsistencies.26

Initially, I preferred face-to-face interviews and discussions for the data collection of this

study and complimented these meetings by several telephone calls and emails. To get detailed

information from different sources I had the chance to conduct two lengthy interviews with

responsible managers of the Volvo Car Corporation in Gothenburg, and an interview with the

sales manager of a large Volvo car dealer. It was my idea that besides interviews with the

headquarters of the company I could complete the research with a responsible person who is

24 Malhotra, N. K.; (2004), p. 130ff 25 Malhotra, N. K.; (2007), p. 42 26 Riley, M. et alii; (2000), p. 135


in direct contact day to day with the end customer. This can be valuable information in order

to research the company from top to bottom. Before the interviews were conducted, a

guideline with questions and headlines was designed in order to lead the discussion. I made

sure that all questions were regarded to my area of research and related to the implemented

theory. A guideline of the interview questions is attached in the Appendix on page 79.

In order to get also a neutral opinion about the issue, two more interviews were conducted.

Both interviewees are working for an independent international car company. The companies

were chosen, because they are familiar with the whole automotive industry and are dealing

with all different kind of brands for several decades. To make sure interviewing the right

persons, I interviewed the Managing Director of niche car specialist Dream Cars in the United

Kingdom and the Marketing Manager of Kehler’s Prestige Autos of the World in Canada.

Due to time and money limitations, both interviews were conducted through a video-

telephone-interview. Video telephony is a useful technology and it enables the researcher to

conduct an interview in another city on a regular basis without loss of time due to travel.27

At this point I want to mention, that I made sure, that my questions were all related to finding

answers to the research questions or to enlarge my understanding of the subject from the

company’s perspective.

All interviews were recorded by a tape-recorder in order to be able to reflect the respondents`

answer correctly. Then, all interviews were inscribed and the information from the different

interviewees was conducted and analysed.

Quality of Research

The quality of the research is an essential issue for the author. I do not strive for a

generalisation of my findings, since my explanations and analysis depend on my socially

constructed perception of the world and on the perspectives of those people that I collected

my data from. The out coming findings of this study may be not objectively true, however, I

still want to emphasize that they are trustworthy. To determine the trustworthiness and the

quality of the gathered data two factors – validity and reliability – have to be considered.

27 Cf. http://en.wikipedia.org/wiki/Videoconferencing


There are four common tests to all social science methods including construct validity,

internal validity, external validity, and reliability.28

Construct validity: The researcher has to make sure establishing correct operational measures

for the concepts being studied. There are three tactics to meet the test of construct validity

increase construct validity. The use of multiple sources of evidence would be the first one

which is of great importance when collecting data. A second tactic is to establish a chain of

evidence and the third tactic is to have the draft case study report reviewed by key

information.29

For this study multiple sources of evidence were used such as annual reports, brochures,

websites, textbooks and articles. The reader is in the position to follow the paper’s structure

from the research questions to the conclusion on the end of the study. Documents and

interviews are well cited and to make sure the third tactic is covered, I have had the key

informants review a draft case study.

Internal Validity: This would be only relevant for explanatory or causal studies, and not for

descriptive or exploratory studies. Internal validity is only a concern for causal case studies

whereas the researcher wants to determine under what conditions even x lead to another

event.30 However, due to the fact that this study is not primarily of explanatory nature the

internal validity is not of a great importance in this case.

External Validity: At this point it deals with the problem in what grade the research results

from a particular study are generalized to all relevant contexts.31 In other words the third test

deals with the problem if the study of one issue is applicable to another issue of the same field

of study. I have put the transferability of the made conclusions from this one-time and one-

company study into question, and I would not dare to generalise the findings and transfer

them to the situation at other cases, since acquisitions may be different.

Reliability: This is the extent to which a scale produces consistent results if repeated

measurements are made on the characteristic.32 To put this simply reliability means that if the

28 Yin, R. K., (2003), pp. 33-38 29 Yin, R. K., (2003), pp. 33-38 30 Yin, R. K., (2003), p. 36 31 Saunders, M. et alii (2007), p. 598 32 Malhotra, N. K.; (2007), p. 284


inquiry would be repeated to a later moment or conducted by someone else, the obtained

results would be the same or similar compared to this study. Since the goal of reliability is to

minimize the errors and biases in a study, I tried to be as objective as possible. Although, I

believe my finding to be credible and e.g. the interviews were recorded as evidence on a tape

recorder, the investigation may turn out different when repeated. Several error potentials have

to be considered such as the participant error which is depending on the mood of the subjects

and time of the investigation. Furthermore, the observer error and the observer bias are

relevant. Latter relates to the various interpretation procedures of interviewers.33

33 Saunders, M. et alii (2007), p. 101


3. THEORETICAL REVIEW – KEY ISSUES ABOUT BRAND MANAGEMENT

This chapter presents the fundamental theory and models and it aims at answering the first

research question, which asks how a brand can manage their Brand Equity after an

acquisition. In order to approach this question, the field of Brand Management with the

special focus on brand equity as one aspect of managing a brand after an acquisition are

introduced and described in the theoretical review. In addition a model is drawn by the end of

the chapter in order to answer the first research question and give an elementary assumption

for the case study.

3.1 Brand Management – An Overview

In general Brand Management has become an important issue for Companies. Brand

Management starts with understanding what “brand” really means. This starts with the leaders

of the company who define the brand and control its management. It also reaches all the way

down the company and especially to the people who interface with customers or who create

the products which customers use.34

Today the situation became different and the availability of new technologies has enabled

companies to easily imitate products, services and processes of others. Hence, it generates a

huge strategic problem for businesses of differentiation.

According to Kevin Lane Keller, branding has been around for centuries as a means to

distinguish the goods of one producer from those of another. He furthermore explains that the

word “brand” is derived from an Old Norse word, the so called “brand”. This simply stands

for “to burn” and it was and it is still the means how owners mark and identify their

livestock.35

Intellectuals defined branding in different ways. However, most of the definitions are quite

similar and deliver more or less the same message. One definition of branding by De

Chernatony & McDonald is,36

34 Keller, K. L.; (2008), p. 2 35 Keller, K. L.; (2008), pp. 2-3 36 De Chernatony & McDonald; (1998), p. 20


“A successful brand is an identifiable product, service, person or place, augmented in such a

way that the buyer or user perceives relevant, unique added values which match their needs

more closely. Furthermore, its success results from being able to sustain these added values

in eth face of competition”.

When writing about definitions of branding, a word by the Marketing guru Kotler should be

presented. He describes a brand as a name, term, sign, symbol or design, or a combination of

these, that identifies the maker or seller of a product or service.37

The brand is an important part of a product and it helps sellers and buyers in many ways. A

successful branding can add value to a product and thus, companies benefit from a clever

Brand Management. For example, most consumers would call a Lamborghini a symbol of

masculinity bursting with power and Italian magnificence and something bombastic, an

expensive product. But the same technique in an unknown car would likely be viewed as a

lower in quality, even if the attributes were identical.

3.1.1 Brands versus Products

Before providing an insight into the theoretical background of the paper, there is a short

insertion about the difference between Brands and Products. This might help the reader to get

a better understanding about the importance of branding and the empirical part of this work.

In the literature a product is defined as anything we can offer to a market attention,

acquisitions, use, or consumption that might satisfy a need or want.38 This might be a physical

good as for example an automotive, a computer or a pair of jeans. A product may be also a

service such as an airline or a bank. Keller defines five levels of meaning for a product:39

1. The core benefit level is the fundamental need or want that consumers satisfy by

consuming.

2. The generic product level, attributes or characteristics which are absolutely necessary

for its function but with no distinguishing features.

3. The expected product level, what purchasers normally expect when they buy a

product.

4. The augmented product level, it distinguishes in some way from its competitors. 37 Kotler, P. and Armstrong G.; (2004), p. 285 38 Keller, K. L.; (2008), p. 3ff 39 Keller, K. L.; (2008), p. 3ff


5. The potential product level, possible developments of a product in the future.

Products have to satisfy the consumer in some way. Taking a closer look to the illustrated

levels it can be assumed that most competition takes place at the product augmentation level.

Nowadays, most firms can successfully deliver satisfactory products at the expected product

level. Competition is distinguishing on issues such as services, advertising, packaging,

customer advice, financing, delivery arrangements, warehousing, and other things that people

value.

Products are called “brand products” when possessing the following characteristics:40

• clear label mark

• constant or steady increasing quality

• constant design

• market drawn consumption promotion

• broad distribution in the business market

• high awareness

According to Keller, a brand is therefore more than a product and it distinguishes from its

unbranded commodity counterpart.41 Brand feelings and perceptions about the products are

involved and matters for consumers. Furthermore, consumers pay attention about the brand

name and what it stands for, and about the company associated with the brand and how they

perform.

Unlike to the previous example about products, a branded product may be an Audi TT, a Dell

computer or a pair of Levis jeans. In relation with a service it may be Lufthansa airlines or

Deutsche Bank.

Kotler and Keller claim that nowadays hardly anything goes unbranded, since branding is

such a strong force.42 The problem of “normal” products – so called commodities – is that

they are hardly tangible and they are very basic. Thus, it cannot be physically differentiated in

the minds of consumers.

40 Thommen, C.P. and Achleitner, A.K.; (2001), pp. 162-165 41 Keller, K. L.; (2008), p. 5 42 Kotler, P. and Keller, K. L.; (2007), p. 146


3.1.2 The Importance of Branding

First of all it should be mentioned that branding is not a must and since a few years –

especially in the USA no-name products (Generics) have become somewhat more important.

The characteristics of these products are elementary labels and mostly a low pricing which

can be up to 50% under the pricing of an equal brand product.43

Branding is all about creating differences and it should be a competitive advantage for the

company. Kotler and Keller illustrated eleven points of marketing advantages of strong

brands:44

• Improved Perceptions of Product Performance

• Greater Loyalty

• Less Vulnerability to Competitive Marketing Actions

• Less Vulnerability to Marketing Crises

• Larger Margins

• More Inelastic Consumer Response to Price Increases

• More Elastic Consumer Response to Price Decreases

• Greater Trade Cooperation and Support

• Increased Trade Cooperation and Support

• Possible Licensing Opportunities

• Additional Brand Extension Opportunities

The importance of branding begins with creating a simple name for your company.

Consumers remember simple. Also, making sure the brand name can be associated with a

positive value, characteristic, or position is part of the importance of branding. According to

Charles Fuchs, a professional Internet and network marketer, consumers like products to

which they can associate positive qualities.45

Other researchers explain the importance of branding with simply to issues which put

companies in a fortunate position. The so called price-driver and the volume-driver can affect

the revenue of a company in a positive way. For example, in the global market, the winner is

usually the brand with the most consistent positioning in people’s mind. It is obvious that

43 Thommen, C.P. and Achleitner, A.K.; (2001), pp. 162-165 44 Kotler, P. and Keller, K. L.; (2007), p. 137 45 http://ezinearticles.com/?expert=Charles_Fuchs


customers prefer a coherent brand instead of a less coherent brand, even if the less coherent

brand has a better product. Hence, a coherent brand is in a “price-driver position” and can

charge more for its products.46

This is also supported by Kotler. Coherent brands enjoy scale economies and higher brand

recognition. He writes about a “bandwagon effect”, and first-time buyers have more

confidence in choosing the company’s products. Thus, consumers are willing to pay more for

a coherent brand than for a less coherent brand.47

Furthermore, consumers might have a fairly inelastic response to price increases and elastic

responses to price decreases or discounts for the brand over time. It is a marketing advantage

for strong brands when consumers are convinced about what they do and a brand with

positive customer-based equity can command a price premium.48

As mentioned before, there is also a volume-driver. According to Gad it is a simple fact that

well-known brands that stand for something special usually reach a higher market share than

less-known brands.49 In general, market share leaders are in a better position and they make

more money than their lamer competitors. However, according to Kotler, many high market

share leaders are not that profitable. An example would General Motors. The world’s largest

automotive manufacturer was doing more poorly in the 1980s than many of its smaller

competitors.50

3.2 Brand Management in an M&A Context

This section presents the chosen theory of BM in connection with M&A. Due to the fact that

M&A is a vast field but only the conjunction with BM are relevant for this study, the following

parts give a proper theoretical understanding.

3.2.1 Company Acquisitions – An Introduction

Nowadays, company acquisitions are a normal procedure in the business world, and also

mergers and other kind of “strategic alliances” have become commonplace. General speaking,

an acquisition occurs when one company takes a controlling ownership interest in another

46 Cf. Gad, Thomas; (2001), pp. 23-25 47 Kotler, P., (1999), pp. 7-9 48 Keller, K. L.; (2008), pp. 88-89 49 Cf. Gad, Thomas; (2001), p. 23 50 Kotler, P.; (1999), p. 7


firm, a legal subsidiary of another firm, or selected assets of another firm such as a

manufacturing facility.51 The key principle behind buying a company is to create shareholder

value over and above that of the sum of the two companies. Two companies together are more

valuable than two separate companies – at least, that's the reasoning behind Merger and

Acquisition (M&A).

There has been a phenomenal growth in M&A and there is no manager or worker who can

consider that they are immune from the likelihood that their organization will be taken over or

merged with another firm in the future.52

At this point it should be also mentioned that businesses also may combine acquisitions

through joint ventures, strategic alliances or others. An alliance could be for example an

agreement to sell each firm’s products to the other’s customers or develop a technology,

product, or process.53 Some other researchers state that alliances are when companies join

forces in pursuit of common goals. However, they should not lose their strategic autonomy

and disregard their own specific interests.54 Through M&A merged or acquired companies

abandon their independence and create a new entity. Thus, they are pursuing a single,

coherent set of objectives. This is shown in figure 7:

Figure 4: M&A Objectives

Source: Lundbäck, M.; (2004), p. 12

An advantage of alliances is the opportunity for each partner to gain access to the other’s

skills, products, and markets at a lower commitment of management time and financial

resources. Some significant disadvantages are limited control and the requirement that each

party share the profits, and the potential for loss of trade secrets and skills.55

51 DePamphilis, D.; (2005), p. 5 52 Cartwright S. & Cooper C. L; (1999), pp. 2-3 53 DePamphilis, D.; (2005), p. 12 54 Dussauge P. & Garrette B. ; (1999) 55 DePamphilis, D.; (2005), pp. 11-12


3.2.2 Motives for Brand Acquisitions

According to Cartwright and Cooper, acquisitions are considered to be rational financial and

strategic alliances made in the best interests of the organization and its shareholders.

Furthermore, it is a purpose to maximize company value and increase shareholder wealth and

benefit through financial synergies as for example through economies of scale, transfer

knowledge and increased control.56 However, there are also non-value-maximizing motives

and are somehow related to mergers as for instance increasing market share, management

prestige or reduce uncertainty. Furthermore, the acquiring company may restore market

confidence or they might act as a takeover defence. It could be also a strategy for protecting

profits from taxation.57

Some other researchers see an acquisition more as a total financial motive. Common theories

of what causes mergers and acquisitions are shown in figure 8:58

Figure 5: Motives for Brand Acquisitions

Source: DePamphilis, D.; (2005), p. 17

56 Cartwright S. & Cooper C. L; (1999), p. 21 57 Cartwright S. & Cooper C. L; (1999), p. 22 58 DePamphilis, D.; (2005), p. 17


Furthermore, acquisitions may serve as an attractive alternative to investment in Research and

Development (R&D). By acquiring another company they receive entrance to a new market

and/or a larger share of a market served by the firm. Hence, an acquisition can be seen as a

substitute for innovation.59

This was also supported by Schierenbeck. Companies are in the position to capture marketing

resources. An acquisition enables a company to capture new marketing resources and

exchange firm specific resources such as brands which are hard to develop internally.60

Above all, there are three underlying reasons why companies takeover and acquire other

brands and why they are paying enormous sums for these:61

• The acquiring firm don not pay for the current performance of the brand but rather for

their future potential. For example Nestlé has made Kit Kat into a truly European

brand, with greatly improved sales and still further potential for future expansion

• It is a small market and only very few possible acquisitions are possible in these

crowded but lucrative markets. The Acquires are willing to pay a premium only to

prevent competitors from getting the brands.

• It is an advantage and easier for the purchasing firm buying already established and

successful brands than building them than starting from scratch.

The acquiring of brands can be also a strategy for building a brand portfolio. In addition, the

acquiring of brands is an extremely fast method of building a brand portfolio and it is more

time consuming to develop a brand. According to Riezebos, it is the most important reason for

a firm, to acquire another brand due to the market position that the brand occupies. By

acquiring such brands it enables the acquirer to take control over the favoured market.62

Companies, which have a strong competitive position with their brands and a good reputation

with consumers, appear to be attractive acquisition candidates. At this point it should be

59 Peck S. & Temple P.; (2002), p. 248ff 60 Schierenbeck, H.; (2003), pp. 49-56 61 Randall, G., (2000), pp. 18-19 62 Riezebos, R., (2003), p. 203


mentioned, that the value of the brand assets in many cases is largely excluded from the

company’s balance sheet and thus it is almost impossible to determine an overall value. One

commentator according to Keller put it in this way, “The worth of a strong brand is rarely

represented fully in a company’s stock price. It does not appear on a balance sheet. But it is

the motor behind the numbers, the fuel that drives consumers to the marketplace and helps

them make choices.”63

Sometimes brand acquisitions are based on the benefits of having a multi-brand or a brand

portfolio. Although in some cases there are reasons to reduce the number of brands,

sometimes even to a single brand, it can occur the opposite on the other hand. Market growth

would be an example why it is necessary to have several brands on the market at the same

time. A single brand cannot cover a market on its own and multiple brands allow for the best

market coverage. In addition, there is a need of differentiation and with a multiple presence is

necessary to support the market as a whole.64

Another motive for brand acquisitions is the power of a strong multi-brand policy. This policy

can stop any new competitors entering a market. Several brands in different sectors of the

market can produce a strong entry barrier for other competitors.65

Above all, with a strong brand portfolio a firm has the ability to maximize brand equity. All

brands in a portfolio play in the best case together and not harm or decrease the equity of the

others. At best, each brand maximizes equity in combination with all other brands in the

portfolio.66

3.2.3 Risks of Brand Acquisitions

Brand acquisitions are a mixed blessing. It was mentioned earlier that it is an ideal situation

when each brand in the portfolio takes as many sales as possible away from competitors, but

takes as few as possible from the other players among the own portfolio. However, by

creating a multi-brand portfolio through acquisitions cannibalisation may occur. Brand

cannibalization takes place when brand “A” of a company impacts brand “B” from the same

company negatively. This happens because the brands belong to the same product category.67

63 Keller, K.L.; (2008), p. 413 64 Kapferer, J.N.; (2004), p. 333ff 65 Kapferer, J.N.; (2004), p. 334ff 66 Keller, K.L.; (2008), pp. 434-435 67 Randall, G., (2000), pp. 146-147


For example, Seat, Skoda, VW and Audi belong to the Volkswagen group. These brands have

been separated geographically, however, they are still found in several countries. Thus,

Volkswagen is currently subject to the “cannibalization” risk. Although, the Volkswagen

group try to control the brands through for instance differentiation and price policies they are

faced with a problem here. Most people are aware of the fact that these four brands come

from the same factories. As some of GM´s brands are built on the same techniques, so are

different Volkswagen cars. The lower price brands as Skoda and Seat use this as sales

arguments, and thus it entails ideal conditions for internal cannibalisation.68

Furthermore, brand acquisitions may produce over branding. According to Aaker, most firms

have too many brands, sub brands or endorsed brands. Some brands reflect product types and

others may reflect price-value and so forth. Customers as well as employees may be

overstrained by the portfolio and they have a hard time understanding what is being offered

and what to buy.69

Kapferer also consider that the essence of a brand is differentiation. Hence, it may be a hard

time for a brand after an acquisition, since the economic press, and thus the publicity, talks in

terms of groups. Hence, they publicise the fact that brands that were once different and unique

are now produced under the same umbrella by the same group. Questions are coming up and

people are asking themselves what remains of the original brand identity of the acquired firm.

Questions could be for example: Do Volvos still have a Volvo engine or do they have a Ford

engine? Will the specificity of Saab disappear with its integration within the GM group?70

3.3 Brand Equity

Brand Equity can be described as the amount of loyalty a customer has towards a brand or in

other words it is a set of assets and liabilities linked to a brand, its name and symbol that add

value or subtract from the value provided by a product or service, to a firm and customers

respectively.71

Important points when considering brand equity are brand awareness and brand image.

Sometimes brand awareness alone is enough to create favourable consumer response when

68 Kapferer, J.N.; (2004), p. 347 69 Aaker, D.A., (2008), p. 251ff 70 Kapferer, J.N.; (2004), p. 348 71 Randall, G., (2000), p. 23


consumers are willing to base their choices only familiarity. However, according to Keller, it

is better for firms when consumers think that all brands in the category are the same. Thus, it

needs more than only brand awareness to convince consumers that there are meaningful

differences among brands.72

Other researchers see brand equity as a key asset of a firm whereas three other types of brand

assets – brand awareness, brand loyalty, and brand associations – are the key issues which

have to be actively managed.73

Figure 6: The Brand Equity Model

Source: Aaker, D.A., (2008), p. 158

This study is mainly focusing on brand awareness and brand image. Furthermore, brand

loyalty is illustrated, since it is an important issue for this study.

3.3.1 Brand Awareness

Brand awareness is consumers´ ability to identify the brand under different circumstances and

it consists of brand recognition and brand recall performance. Brand recognition means that,

customers can correctly discriminate the brand as having seen or heard it. For example if a

customer goes to a store, if they can recognize that they have seen the brand before, they now

have brand awareness about the brand.

Brand recall means that, customers are able to retrieve the brand when they are thinking of a

special product category, for example: what car they should purchase when looking for a

72 Keller, K. L.; (2008), pp. 53-55 73 Aaker, D.A., (2008), p. 158ff


safety vehicle (a Volvo?). It is generally easier to recognize a brand than it is to recall it from

the memory.74

Brand awareness is very important when the customers making a decision for three main

reasons:75

Learning Advantages: The first way that brand awareness affects consumers decision making

is by influence the “right“ brand associations that make up the brand image. If you want to

create a brand image you must establish it in people’s mind/memory.

Considering Advantage: It is important that the customer think of and consider your brand

whenever they are making a purchase for which your brand could be an option, or when they

consuming a product that your brand could potentially satisfy.

Choice Advantage: The third advantage of creating brand awareness is that brand awareness

can affect choices among brands, even if there are basically no other associations to those

brands. For example, in some cases consumers have been shown to adopt a decision role to

choose more familiar, well-established brands.

In short, brand awareness is formed by increasing the knowledge of the brand through

repeated exposure and strong associations with the right product category or relevant purchase

or consumption cues.76

3.3.2 Brand Image

Brand image is what people have in memory about a brand and it is the perception and beliefs

held by consumers. A positive brand image is created by marketing programs that link strong,

favourable, and unique associations to the brand in memory.77

These three dimensions provide the key to building brand equity, it does not matter how

unique brand association is unless customers evaluate the association favourable, and it does

not matter how desirable a brand association is unless it is sufficiently strong that customers

74 Keller, K.L.; (2008), p. 54 75 Keller, K.L.; (2008), p. 54ff 76 Keller, K.L.; (2008), p. 54ff 77 Kotler, P. and Keller, K. L.; (2007), p. 140


actually recall it and link it to the brand. And it should be recognized that not all strong

associations are favourable, not all favourable associations are unique.78

The important aspect of a brand image is the mental picture that consumers have of a brand or

branded article.79 Brand image can be reinforced by brand communications such as

packaging, advertising, promotion, customer service, word-of-mouth and other aspects of the

brand experience.

3.3.3 Brand Loyalty

Brand loyalty is according to Aaker a very important issue and an enduring asset for some

businesses is the loyalty of the regular customers.

Loyal customers are an essential important advantage for a company and there are four main

reasons for this:80

1. It reduces marketing costs, since loyal existing customers are easier to hold.

Furthermore, it is easier to keep existing customers happy and prevent them for

changing to a competitor. The higher the loyalty, the easier it is to keep customers

happy and it is above all less expensive keeping existing customers than trying to

acquire new customers.

2. It is more difficult to enter a market where the competitor benefits from existing loyal

customers. Significant resources are required for acquiring new customers in such

market. Above all, the profit potential for the entrant is reduced.

3. Loyal customers create and strengthen the image of a brand. A base of existing

customers also provides reassurance to others and people feel comfortable in the fact

that others have selected the brand.

4. Loyal customers give a firm some breathing room. If a competitor of the firm develops

a superior product, the loyal customer rather waits for his “home” brand and allows

the firm the time needed to counter with an equal product. Above all, according to the

78 Keller, K.L.; (2008), p. 56 79 Riezebos, R.; (2003), p. 63 80 Aaker, D.A., (2008), p. 159ff


author, a firm can allow itself the luxury of pursuing a less-risky follower strategy

when having an existing of high loyal customers.81

In addition, the theory above is supported by Keller and he agrees that brand loyalty is closely

related to brand equity; however, it is a distinct concept. Brand loyalty may be for the first

time when a new or resurgent competitor is attracting customers.82

3.3.4 Brand Reinforcement Brand Revitalization

Effective brand management requires taking a long-term view of marketing decisions and one

important point is that brand equity has to be reinforced over time, or revitalized if necessary.

Reinforcing brands involves ensuring innovation in product design, manufacturing, and

merchandising and ensuring relevance in user and usage imagery. Brand equity is reinforced

by marketing actions. This means that is has to consistently convey the meaning of the brand

to consumers in terms of what products the brand represents, what core benefits it supplies,

what needs it satisfies and how the brand makes those products superior. The aim is to create

a strong, favourable, and unique brand association in the mind of the consumers.83

Concerning brand equity, it is important to recognize the tradeoffs that exist between those

marketing activities that fortify the brand and reinforce its meaning and those that attempt to

leverage or borrow from its existing brand equity to gather some financial advantage.

The researcher Keller furthermore claims that it is of great importance to fortify the brand.

Otherwise the brand will decline brand awareness and weaken brand image. However, as

mentioned before these elements – sources of brand equity – are essential and by disregarding

them the brand itself may not continue to yield valuable benefits.84

Brand Revitalization

Market changes, changes in the consumer tastes, new technology, or any new development in

the marketing environment could potentially affect the fortunes of a brand. Hence, it is an

intention of the firm to revitalize a brand. Reversing a fading brand’s fortunes requires that it

81 Aaker, D.A., (2008), p. 160 82 Keller, K.L.; (2008), p. 88 83 Kotler, P. and Keller, K. L.; (2007), p. 144 84 Keller, K.L.; (2003), pp. 671-673


“returns to its roots” and restore lost sources of brand equity. Another possibility may be that

the brand establishes new sources of brand equity that are established.85

However, the “return to its roots” usually follows new paths that are very different from those

that led to the brands initial success. Hence, Kapferer would not restore lost sources of brand

equity since these paths did not lead to any new demand or pocket of growth and were

probably the reason for the brands downfall. Revitalization involves establishing new

parameters for the brand which is a necessity to attract new customers. Furthermore, it has to

develop new user occasions, new distribution channels and new consumer networks.86

Considering the CBBE frame work which was explained earlier, two general approaches are

possible to revitalize the brand. Firstly, the depth and/or breath of brand awareness should be

expanded by improving brand recall and recognition by consumers during purchase or

consumption settings. The second possibility would be to improve the strength, favourability,

and uniqueness of brand associations making up the brand image.87

Revitalising a brand can be managed through distribution change which would be according

to Kapferer the classic strategy. Another possibility according to the author is revitalising

through innovations. Changing brand awareness is probably the easiest way to create new

sources of brand equity. However, Keller does not see a problem with the depth of brand

awareness but rather with the breath of brand awareness, since consumers think of the brand

in very narrow ways. In his opinion strategies are needed to increase usage of the brand and

find new uses for the brand that are already reviewed. It might be necessary to implement

moreover a new marketing program to improve the strength, favourability, and uniqueness of

brand associations for improving brand image.88

Considering brand revitalization by managing a brand portfolio, it is necessary to carefully

consider the role of the different players in the portfolio over time. Furthermore, the

relationships among the different players in the portfolio have to be considered.

85 Kotler, P. and Keller, K. L.; (2007), p. 145 86 Kapferer, J.N.; (2004), pp. 387-392 87 Keller, K.L.; (2003), pp. 671-673 88 Keller, K.L.; (2003), pp. 671-673


Figure 7: Brand Reinforcement / Revitalization

Source: Keller, K.L.; (2003), p. 672

In addition, a brand migration strategy has to be especially designed and implemented due to

the fact that customers have to understand how various brands in the portfolio can satisfy their

needs as they potentially change over time or as the products and brands change themselves

over time.89

3.4 The Four Steps of Brand Building

The way to build a strong brand, according to the CBBE model (Costumer-Based Brand

Equity), is by the following four sequential steps, each one representing a fundamental

question that customers ask about brands. Brand Equity can be described as the amount of

loyalty a customer has towards a brand.90

The CBBE model is built by “six brand building blocks”, which can be assembled as a brand

pyramid, shown in figure 5 on the next page.91

89 Keller, K.L.; (2003), pp. 671-673 90 Keller, K.L.; (2008), p. 58 91 Keller, K.L.; (2008), p. 59


Figure 8: Costumer-Based Brand Equity Pyramid

Source: Keller, K.L.; (2008), pp. 60-61

3.4.1 Brand Salience

The Costumer-Based Brand Equity Pyramid above illustrates the brand building process.

Achieving the right brand identity involves creating brand salience with customers. Brand

salience relates to aspects of the awareness of the brand, for example, how often and easily

the brand is evoked under various situations or circumstances.92

Brand salience is an important first step in building brand equity and according to Keller; a

highly salient brand is one that has both depth and breath of brand awareness. Depth of brand

awareness is explained by Keller that it concerns the likelihood that a brand element will

come to mind and the ease with it does so. For instance, a brand that can be easily recalled has

a deeper level of brand awareness than one that only can be recognized.

Moreover, the breath of brand awareness concerns the range of purchase and usage situations

in which the brand element comes to mind. Brand awareness is more than just customers

knowing the brand name and maybe heard about it earlier; maybe even many times.

According to Keller brand awareness also involves linking the brand – the brand name, logo,

symbol, and so forth – to certain associations in memory.

92 Keller, K.L.; (2008), pp. 60-61


An example for the product name would be Apple or the company name as for example

Maggi. A very well known symbol according to Keller’s assumption would be the crane of

Lufthansa.93

Although brand salience is an important step in building brand equity, many customers

consider also the meaning or the image of the brand and thus salience is not sufficient.94

3.4.2 Brand Performance and Imagery

The product it is the heart in brand equity, because that is what the consumer’s experience

with a brand, what they hear about a brand from others, and what the firm can tell the

customers about the brand in their sales promotions. A good product that completely satisfies

consumer’s needs and wants is the base for a successful brand. Many studies shown that high-

quality brands tend to perform better financially.95

There are five important types of attributes and benefits that often lie behind brand

performance: 96

• Primary ingredients and supplementary features: The actually ingredients and

supplementary features that allow for customization and more flexible use.

• Product reliability, durability, and serviceability: Mean satisfy performance overtime,

expected economic life of the product and ease of servicing the product if it needs

repair.

• Service effectiveness, efficiency, and empathy: Means how completely the brand

satisfies the customer’s service needs, in speed and responsiveness etc and if the

service providers are trusting, caring and having the customer’s interests in mind.

• Style and design: Colour, shape, size and materials. And how a product feels, locks or

maybe how it smells or sounds.

• Price: The price is very important. Often high price is associated with high quality.

And low price with low quality.

93 Thommen, C.P. and Achleitner, A.K.; (2001), p. 162 94 Keller, K.L.; (2008), pp. 60-61 95 Keller, K.L.; (2003) p. 81 96 Keller, K.L.; (2003), p. 83


Brand Imagery

Brand imagery is how people think about a brand abstractly, rather than what they think the

brand actually does. Thus, imagery refers to more intangible aspects of the brand. Many kinds

of intangibles can be linked to a brand, but four categories can be highlighted: user profiles;

purchase and usage situations; personality and values; history, heritage, and experiences. In

either case, associations to them involve more specific, concrete examples that transcend the

generalizations that make up the usage imagery.97

One set of brand imagery associations is the type of person or organization that use the brand,

a second set is under what conditions or situations the brand could or should be bought and

used.98

3.4.3 Brand Judgments Feelings

Brand judgments focus on personal evaluations and opinions that customers have regarding to

a brand. It involves how different performance and imagery associations are put together to

form different kinds of opinions. To create a strong brand four types of brand judgments are

particularly important: quality, credibility, consideration and superiority.99

Brand quality: Customers can have many different opinions and attitudes towards a brand but

commonly the most important ones in some way or another relates to perceived quality of the

brand.

Brand credibility: Customers may form judgments with respect to the company or

organization behind the brand, brand credibility refers to how the brand is seen as a totality.

Brand consideration: If customers not seriously consider the brand for possible purchase or

usage eliciting favourable brand attitudes and perceptions of credibility is not enough.

Consideration depends in part on how relevant the brand is for the customer, if the brand is

appropriate and meaningful to them.

97 Keller, K.L.; (2003), p. 84ff 98 Keller, K.L.; (2003), pp. 84-87 99 Keller, K.L.; (2008), p. 67


Brand superiority: Superiority is about if customers view the brand as unique as and better

than other brands, if they think that the brand offers advantages that other brands cannot. In

building intense and active relations with customers superiority is an important part.100

Brand Feelings

Brand feelings are customers’ emotional responses and reactions with regard to the brand.

Brand feelings are associated with the social currency evoked by the brand. These feelings

can be mild or intense and can be positive or negative. The emotions evoked by a brand can

become so strongly associated that they are accessible during product consumption or use.

The following are six important types of brand-building feelings:

• Warmth: The brand makes consumers feel a sense of calm or peacefulness.

Furthermore, consumers may feel sentimental or warm hearted about the brand

• Fun: According to Keller it might upbeat types of feelings such as consumers feel

amused, light hearted, joyous, playful, cheerful, and so on.

• Excitement: This is another form of upbeat feeling. Consumers may feel “being alive”,

or being cool or sexy.

• Security: In consuming the brand it gives the consumer a feeling of safety. They do

not worry as they might have otherwise felt.

• Social approval: It makes consumers feel that others look favourably on their

appearance, behaviour, and so on.

• Self-respect: By using the brand consumers feel a sense of pride, accomplishment, or

fulfilment. It makes them feel better about themselves.

The six types can be selected in two groups, and thus the first three types of feelings are

experiential and immediate, increasing in level of intensity. On the other hand, the other three

types of feelings are more private and enduring, increasing in level of gravity.101

100 Keller, K.L.; (2008), p. 68 101 Keller, K.L.; (2008), pp. 69f


3.4.4 Brand Resonance

Brand resonance is the ultimate relationship and level of identification that the customer has

with a brand, it is about the kind of relationship where the customer feels that they are in sync

with the brand. Harley-Davidson and Apple are examples of brands with high resonance. The

depth of psychological bonds and levels of activity engendered by this loyalty are examples

on how resonance is characterized. Brand resonance can be broken down into four categories:

behavioural loyalty, attitudinal attachment, sense of community and active engagement.102

Behavioural loyalty: This type of brand resonance is about how loyal the customers are, how

often do they purchase and how much do they purchase? Customers that are loyal to a brand

generate enormous amounts of money through a lifetime. Behavioural loyalty is necessary but

not sufficient for a resonance to occur.

Attitudinal attachment: Just satisfaction is not enough to build brand resonance according to

previous research. To create greater loyalty, deeper attitudinal attachments are required. This

can be created by developing marketing programs and products and services that fully satisfy

consumer needs.

Sense of community: The brands may try to make the customers identify and feel kinship or

affiliation with other people associated with the brand, a sense of community. E.g. Apple

encourages owners of their computers to form local groups, here can their customers share

ideas and get product discounts.

Active engagement: At this kind of brand resonance customers beside spending money on

purchasing and consuming the brand they are willing to invest money, time, energy and other

resources. At this point customers are becoming ambassadors of the brand and help to

strengthen the brand ties of others. To reach this active engagement to the brand strong

attitudinal attachment or social identity are required.

102 Keller, K.L.; (2003), pp. 92f


3.5 Concluding Reflections on the Literature Review

This section concludes the literature review. Furthermore, it provides with a first conclusion

and an assumption for the first research question.

Concluding the literature and incorporate the later case study, a model as shown below can be

developed. As it was mentioned at several places, brand awareness and brand image are

important elements related to brand equity. For a brand it is a great competitive advantage

when a customer goes to a store and recognizes the brand, since he might have seen or heard

about it before. It is even better when the customer can even recall the brand when thinking

about a special product category. These two issues seem to be an obvious concept to most of

the researchers. However, it is Aaker who emphasizes on brand loyalty also, which might be a

key issue for this case. Hence, the model below illustrates the combination of those three

types of brand assets: brand awareness, brand image and brand loyalty.

The literature reveals Brand Management and branding strategies variegated and detailed. It

seems to be an obvious compliance and it is an important matter for a firm. Moreover, there

are many sources of literature which approach brand acquisitions, but it is difficult to find

consistent and coherent definitions about branding after an acquisition. Although brand

acquisitions are a common business and firms are buying other firms or brands in all different

branches. Whether this is because researchers do not see a necessity for detecting the issue yet

cannot be answered at this point.

However, it is obvious that firms acquire other brands to get for example an extensive and

improved portfolio. There are motives for acquisitions which were explained earlier, and it is

a lack of sources in the theory about branding after an acquisition. The following model,

which is shown on the next page, is an assumption which can be drawn after reflecting the

literature.

The model brings together the elements which were mentioned earlier. Highly involved is a

brand equity model by Aaker which is shown in chapter 3.3. Moreover, the performance by

Kotler and Keller are determining factors for this approach.


Figure 9: Branding and Acquisition

Source: Author; (2008)

As shown in figure 9, “Brand X” has got a reasonable brand equity, which was built in its

lifetime before any takeover. Brand awareness and brand image are key strategic assets and

they can provide a host of competitive advantage. Awareness provides the brand with a sense

of familiarity, and people normally like familiar, and thus it would be a positive brand image

what people have in memory.

Then, after another was acquiring “Brand X”, a new situation appears. “Brand X” becomes

“New Brand X” which does not automatically mean that “Brand X” became a completely new

company. According to this model however, the situation is contrary, since certain factors are

involved.

Brand Loyalty is a key and enduring asset, since loyal customers are an essential important

advantage for a company. Loyal customers give a brand breathing room and they may await

something from the “New Brand X”. Hence, brand revitalization and brand reinforcement

come into the play. Potentially powerful new sources of brand equity and consistency in type

and amount of marketing efforts can reinforce the “New Brand X”.


The brand equity of the “New Brand X” can be revitalized by expanding the awareness and

increase the amount of consumption. Revitalization involves establishing new parameters for

the brand which is a necessity to attract new customers. Above all, the “New Brand X” may

improve the brand image what means in detail improving strength, unique and favourability.

Furthermore, the “New Brand X” may identify neglected segments and attract new segments

or balance new and old target markets.

The model assumes that the “New Brand X” can benefit from the brand loyalty which people

may still have from the “Brand X” before the acquisition. Furthermore, as shown in the

model, there is a connection between the “New Brand X” and the “Acquirer”. The degree of

the influence by them might be different in every case and cannot be answered at this point.

The first research question of this work asks how a brand can manage its brand equity after an

acquisition. Despite the lack of specific approaches addressing this issue, the question is fairly

answered in this chapter. The model which was shown in the concluding reflection is the

assumption for the following empirical study. Besides answering the second research

question, it should give information about the first research question; in what degree it can be

affirmed.


4. CASE STUDY – VOLVO CARS AND THE ACQUISITION BY FORD MOTOR COMPANY

This chapter presents the findings of the investigated company which were essentially

gathered through interviews, discussions, internal and external documents. The literature

review presented the key assets of theory; however, the rather imprecisely defined area of

brand management after an acquisition, which is the main subject of this study, suggests one

exemplary approach as the basis for empirical examination. The goal is to answer the second

research question, whether it is possible to keep a positive brand image in people’s minds

after an acquisition, and to prove the research model which was drawn, in order to answer

the first research question.

4.1 The Automotive Industry and Volvo Cars – An Introduction

It is the world’s largest manufacturing industry. The total automotive industry produced over

66 million cars, vans, trucks and busses in 2005.103 These vehicles are essential to the working

of the global economy and to the wellbeing of the world’s citizens. Hence, the impact of this

industry is phenomenal. More than eight million people are working directly for the

automotive industry and are required in making vehicles and the parts that are needed for

producing them. This is over 5% of the world’s total manufacturing employment, and about

50 million people earn their living from cars, trucks, busses and vans.104

Furthermore, the automotive industry plays a key role on the technological level. It is one of

the largest investors in Research and Development. In the 20th century the auto industry

changed its basic manufacturing process twice. Ford and General Motors were pioneers in

changing from manual production to mass production. Toyota pioneered the concept of the

lean production. In the beginning of the 21st century it is less about production issues in the

automotive industries. Now the industry is committed to contributing to an integrated

approach to a cleaner environment and reduced carbon emissions. Engines are more efficient

and carmakers are working constantly on fuel reduced solutions and thus they can put cleaner

vehicles on the road.105

103 http://oica.net/wp-content/uploads/2007/06/oica-depliant-final.pdf 104 Ibid 105 Lundbäck, M.; (2004), p. 3f


However, there is another issue which will be more important for this paper than R&D

discussions. Automotive companies are undergoing considerable change in order to retain

competitive advantage. In addition, single brand car manufacturers are rare nowadays and the

number is declining rapidly, since mergers, acquisitions and strategic alliances have a

significant influence on the automotive industry.106

For example in 1990 General Motors acquired a large stake in the Swedish car manufacturer

Saab and they finally had full control over the whole company within 10 years. In 1999

Volkswagen acquired a stake in the Czech car manufacturer Skoda and like GM with Saab

they fully controlled the company after a few years. Rover was taken over twice in less than

10 years. First the German automaker BMW acquired the company in 1994 while they were

involved in a joint venture with Honda. Then Ford Motor Company purchased Land-Rover

and an English consortium acquired Rover.107 There are several other examples such as the

alliance started in 1998 between the German company Daimler-Benz and the American

carmaker Chrysler. This alliance, however, has already dissolved and Daimler-Chrysler

completed the sale of Chrysler Group Cerberus Capital Management in August 2007. Thus,

Daimler-Chrysler changed its name to Daimler AG. In 1999 the French automaker Renault

started an alliance with Nissan. And finally the target firm of this thesis, the Swedish car

manufacturer Volvo Car Corporation, was acquired by Ford Motor Company in 1999.

4.1.1 VOLVO – A Traditional Swedish Car Manufacturer

On February 20th, 1915 the application documents were sent from SKF – Svenska

Kullagerfabriken – to the Royal Swedish Patent & Registration Office. A new brand name

was born. Some smart member of the company's management came up with the name

VOLVO (with capital letters) which was simple, smart and easy to pronounce.

Volvo means "I roll" in Latin and was a separate company within SKF AB. It was a registered

trademark with the intention to be used for a special series of ball bearing, but this idea was

only used for a short period of time and SKF decided to use "SKF" as the trademark for all of

its bearing products. AB Volvo was discontinued until 1926 when the SKF board eventually

agreed to financially support the idea of starting up a car manufacturing operation.108

106 Lundbäck, M.; (2004), p. 10 107 Lundbäck, M.; (2004), p. 10 108 Volvo´s Value Lasts: A History of Volvo Car Corporation 1927-2008; (2008)


The official date for the founding of Volvo was 14th April in 1927 when the first Volvo

automobile left the production. Just before this historical date, the brand logo was adopted. It

is an ancient chemical symbol for iron, a circle with an arrow pointing diagonally upwards to

the right, and stands for steel and strength.109

In 1999 the Volvo Car Corporation belonged to AB Volvo, which is a Swedish supplier of

commercial vehicles such as trucks, buses and construction equipment, drive systems for

marine and industrial applications, aerospace components and financial services.

As mentioned earlier, in 1999 AB Volvo sold its car division to Ford Motor Company. It was

an agreement by both parties that the brand name should also be used in the future by both

Volvo Cars and the rest of the companies in the Volvo Group. Moreover, the Volvo

Trademark Holding AB was founded and the brand name was consequently put into the

holding company. The Volvo Trademark Holding AB is equally owned by Volvo Cars and by

the previous owner, AB Volvo. Currently the holding company's management group consists

of Leif Johansson, President & CEO of AB Volvo and Bill Ford Jr. Chairman & CEO of Ford

Motor Company and they decide how the brand name can be used and in what contexts.110

4.1.2 Facts and Figures about Volvo

Since the first Volvo car left the factory on 14 April, 1927 it was called ÖV4 almost 15

million cars have been produced. Of all the cars manufactured to date, some 8 million are still

on the road today.

Volvo Cars sales and service network covers about 100 countries, comprising some 2,400

sales outlets and service workshops around the world, including around 1,500 in Europe and

400 in North America and the rest in other countries. Volvo Car Corporation has got

approximately 24,384 employees (2007). Of those employees 17,616 are employed in

Sweden. Furthermore, about 23,000 employees are working inside the word-wide dealer and

service network.111

109 Volvo´s Value Lasts: A History of Volvo Car Corporation 1927-2008; (2008) 110 Volvo Car Corporation: Company Philosophy; (2007) 111 Volvo Personvagnar AB: Company facts 2008; (2007)


Since 1999, when FMC acquired Volvo Cars from AB Volvo, sales of Volvo Cars were

continuously increasing. As shown in figure 10, there were some slight cutbacks in 2002,

2005 and 2006 compared to their previous sales volumes. However, in 2004 there was a sharp

rise in sales figures and only about 2,000 fewer cars were sold than in 2007. The latter was the

most successful year in history for Volvo Cars according to their sales figures.

Facts

Sold cars worldwide Sold cars in the ten most increasing markets

1997-2007 Amount

of cars Country 2007 2006

Increase since

2006 in %

1997 398093 Russia 21077 10803 95,1

1998 396445 China 12460 7193 73,2

1999 401509 Turkey 2737 1838 48,9

2000 409059 Norway 8842 6306 40,2

2001 412390 Poland 3567 2665 33,8

2002 406695 France 13497 10726 25,8

2003 415046 Switzerland 7651 6246 22,5

2004 456224 Netherlands 20253 16607 22,0

2005 443947 Australia 4853 3998 21,4

2006 427747 Denmark 5103 4246 20,2

2007 458323

Figure 10: Sales Output

Source: Internal documentation

In total they sold 458,323 cars in 2007. The sales in detail are shown in figure 11 on the

following page.112 The most important markets are the USA with approximately 23% of the

total sales, followed by Sweden (13,5%), Germany (7%), Great Britain (6,5%) and Russia

(4,5%). The most considerable growth in 2007 was achieved by Volvo in Russia (95%) and

China (73%).

112 http://www.volvocars.com/intl/corporation/FactsandFigures/Pages/default.aspx


Sales Per Model in 2007

79140

62348

49990 4672641839 41726

22676 19197 17415 13603

688 30

1000020000

30000400005000060000

700008000090000

XC90 S40 V70 C30 S80(All-new)

S60 XC70 V70(All-new)

C70(New)

XC70(All-new)

S80 C70

Model

Sol

d ca

rs

Figure 11: Sales per Model in 2007


4.1.3 Volvo Cars as a Player within Ford Motor Company

Ford Motor Company is an American multinational corporation and after Toyota and General

Motors the world’s third largest automaker. In 2007 FMC revenues increased to US $173.8

billion compared to US $161 billion in 2006. Moreover, 6,553 million cars (6,597 in 2006)

were produced in 2007 and the company was employing about 245,000 people at around 100

plants and facilities worldwide.113

Since the FMC is also operating in the financial sector it should be mentioned at this point

that the total revenue of the automotive sector in 2007 was about US $155.8 billion. The

majority of this sum was achieved in the US and Europe with almost 90% of the revenue.114

Volvo belongs to the Premier Automotive Group (PAG) which is a group within the FMC and

was founded in 1998. The group oversees the business operations of Ford’s European

Premium automobile subsidiaries, which are currently only Jaguar and Volvo. Formerly,

Aston Martin, Land Rover and even Lincoln joined this group. However according to the

interviewer’s observation, Volvo Cars will be the only brand within the PAG group in the

113 Ford: Fourth Quarter and Full Year 2007 Earnings Review & 2008 Outlook 114 Ibid


Profit and Loss

625,0750,0

875,0750,0

625,0 625,0

375,0

-37,5 -162,5

-400,0

-200,0

0,0

200,0

400,0

600,0

800,0

1000,0

1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Mill

ion

US $

future, since FMC is selling Jaguar and Land Rover to Tata Motors and the sale is expected to

be complete by the end of the second quarter of 2008.

Thus, Volvo is joining the FMC portfolio, which currently looks as shown in figure 12:

Figure 12: FMC Portfolio


Volvo Cars as a subsidiary of FMC contributed some significant profits to the whole group.

According to the economy department of Dagens Nyheter, the total profit of the Volvo Car

Corporation between 1999 and 2007 was approximately 4,625 billion US dollars.115 The exact

amount is unknown, since FMC did not reveal separate sales figures until 2005. However, as

shown in figure 13, there was a profit collapse in 2006 and the corporation had a light loss of

about 37,5 million US dollars. In 2007 a loss of 162.5 million dollars was indicated and the

forecast for 2008 is even worse.

Figure 13: Profit and Loss

Source: Economy department DN; (2008), p. 4

115 Swärd, Lasse (2008): Feta Volvovinster för Ford: Dagens Nyheter , December 3th, 2008, p. 4


4.2 Ford Motor Company’s Acquisition of Volvo Car Corporation

On January 28th, 1999 AB Volvo signed an agreement with Ford Motor Company (FMC),

selling the passenger vehicle business, Volvo Car Corporation (VCC), to FMC. AB Volvo

received a price of SEK 50 billion. With the purchase of VCC, FMC acquired all of VCC´s

facilities worldwide. This includes three major assembly plants and two power train plants in

Europe, and Volvo's passenger vehicle product development centre in Gothenburg.116

Leif Johansson, president of AB Volvo and chief executive officer of the Volvo Group said

after the agreement was signed, “The proposed sale of Volvo Car Corporation to Ford Motor

Company will bring very important benefits to the parties concerned. Volvo will be able to

concentrate its management and financial resources on becoming a leading global player

within commercial products to the benefit of Volvo’s shareholders, employees and customers.

Volvo Car Corporation’s future prospects will, by being an important part of one of the

world’s largest and most profitable automotive groups, improve considerably”.

The FMC management was very excited about acquiring the VCC brand and Jacques Nasser,

Ford president and chief executive officer stated later, "Volvo is a premium automotive brand

with unique appeal that represents a good opportunity to profitably extend our line-up and

grow the Ford business worldwide.” Another comment was that Volvo would be a perfect

complement to the Ford family of brands worldwide.117

With the acquisition FMC had the right to use the Volvo brand for passenger vehicles

including cars, minivans, sport utility vehicles and light trucks on a perpetual basis. AB Volvo

was still allowed to continue to use the Volvo brand for commercial vehicles and its non-

automotive-related products.

Since it is common and part of an acquisition that the purchaser takes full control over the

whole brand, this case was different. According to Lundbäck, with the acquisition the control

over VCC is in the hands of FMC and thus the strategic management is conducted by FMC.

However, the Ford brand does not automatically have control over the Volvo brand.118

116 Source Ford Motor Company 117 Ibid 118 Lundbäck, M.; (2004), pp. 12-14


Figure 14: FMC Acquisition of Volvo Cars

Source: Lundbäck, M.; (2004), p. 14

Figure 14 above illustrates the role of VCC under the umbrella of FMC. Volvo Cars was

integrated with the other brands with in the FMC portfolio and was treated as an equal player

among the other brands.119 However, to complete the figure above, it has to be mentioned at

this point that Aston Martin no longer belongs to FMC. Furthermore, on March 26, 2008 Ford

announced that it had agreed to sell its Jaguar and Land Rover operations to Tata Motors, and

that the sale is expected to be completed by the end of the second quarter of 2008.120

4.2.1 Volvo Cars and the Attitude towards Acquisition

After the first contacts with the company’s contact persons and the facilities in Gothenburg it

became apparent that Volvo Cars is more than just a “normal” car manufacturer. They

welcome you with the company’s pride and history. There is an antique Volvo race car and a

new Volvo car, a new V70 station wagon, in the entrance hall. It seems to be a link between

the old traditional and successful car manufacturer and the new generation of Scandinavian

design.

It was the idea of AB Volvo’s CEO Leif Johannson to find new financial sources and

possibilities to spur on developments and the future. Ford was, according to Bengt

Magnusson, the sponsorship director of Volvo Cars, the right decision. The reputation of the

119 Lundbäck, M.; (2004), pp. 12-14 120 http://media.ford.com/newsroom/release_display.cfm?release=27953 (2008)


Ford Motor Company is excellent and there are and were actually no cannibalization effects,

since Volvo Cars belongs to Ford’s Premier Automotive Group (PAG). As mentioned earlier,

Volvo Cars will be the only brand within the PAG group in the future. However, even in

earlier times when the group was larger, Volvo with its safety and family attributes was not an

“inside” competitor. This would have been different with, for example, an owner like BMW.

It would not be a problem to work as a part of this company or in a joint venture, since BMW

is one of the best known, strongest and valued automotive brands. However, in regard to the

target group issue, problems might occur with an owner like BMW. It is another Premium car

manufacturer and there could be an overlapping of the products and, in the end, there could be

cannibalization effects.

Ford as a mass producer helps Volvo to reduce its costs of production. This does not

automatically mean that Volvo converts whole components of Ford cars. They rather use units

that are produced million-fold, such as for example, screws, bends, cables, filters and so forth.

The economy of scale is an appreciated synergy effect and is advantageous for both parties.

According to the interviewees it was the right decision to choose FMC as a new owner and

partner in 1999. They did benefit quite a lot from the Volvo brand. Furthermore, the former

Ford president Jack Nasser supported a strong Volvo brand and he emphasized the parallel

development and the similarities of the two companies.

4.2.2 Risks of Brand Acquisitions

The main concerns in regard to acquisitions are cannibalization effects in the acquirer’s

portfolio. But in the interviews it turns out that Volvo was not concerned, as a player in Ford’s

portfolio, either in the beginning or later or nowadays. As a member of the PA group Jaguar

may have been the closest competitor to Volvo. But even the Jaguar brand is far from being a

danger for Volvo, since the target groups are significantly different and the typical Jaguar

customer is not necessarily a potential Volvo purchaser and vice versa. One example is that

Jaguar has no station wagons in their product line, which would be a must for a real

competitor to the family-friendly Volvo brand. In addition, even if there is any overlapping in

the products it is been solved now, since Jaguar is no longer owned by FMC.

Just some of GM´s brands are built using the same techniques, so are also different Ford cars.

However, Volvo is not worried about that and journalists are not writing “this is only Ford”. It


is according to the interviewer’s observation rather the opposite as for example Volvo Cars is

using the famous Ford F10 Motor, which is a good thing. For the automotive industry motors

are very important. This is one example of several ways in which Volvo can benefit from the

mass producer Ford.

Since Volvo is a very small car manufacturer compared to Ford there was a danger that Volvo

might disappear after the acquisition. Hence, the Volvo Trademark Holding AB was founded

and was and still is very important, since thus they are keeping the brand and the brand name

respectively. The Volvo brand was so strong that it was very important to protect the name for

its cars also. It was Jack Nassers idea that Volvo would continue as a brand name. It could

have happened that a Volvo had become a “normal” Ford car. There was even a danger of

disappearance for the famous Volvo emblem, at least on the cars.

Hence, the Holding was founded to protect the Volvo brand. That is a very interesting

solution which did not happen so often in the automotive branch.

4.3 Brand Equity and Volvo Cars

The importance and meaning of brand equity was explained in chapter 3 of this paper. This

study involves brand awareness, brand image and brand loyalty as key assets of brand equity.

Furthermore, the findings of brand reinforcement and revitalization in connection with brand

equity are listed in this section.

4.3.1 Brand Awareness

The ability of consumers to identify the Volvo brand under different circumstances changed

somewhat in the last decade. Although they promote with slogans on their web pages, as for

example “For a world, which is safer” where they want to associate the brand with safety, the

brand should also be recalled and recognized, under other circumstances. The customer

should remember the brand when maybe looking for an ecologically-friendly vehicle. It turns

out in the interviews that most of the car brands, especially the models driven by the average

Joe, should be associated with environmental friendliness and low fuel consumption. This is

due to the sharply rising oil price, which makes fuel and diesel more expensive. Furthermore,

the motor vehicle tax, which in Europe is often connected with the emissions of the vehicle, is


an important issue for vehicle owners. The better the emissions the lower the motor vehicle

costs.

In the interview with Jan Ljungström, a sales manager of Volvo Cars, it was revealed that the

safety of a car has taken a back seat and according to him, the automotive industry is focusing

too much on the environmental issue. Light and smaller vehicles tend to score better in terms

of emissions and fuel consumption, although there are exceptions. However, a family with 3

children may not purchase a compact car, since they rather need a station wagon, which in

general is worse, compared to a small car, when it comes to economical issues.

In the discussions it turned out that Volvo wants to expand its brand awareness. In earlier

times it was all about safety and it was the aim of the management to create above all, one

association in the consumer’s minds: “Volvo = Safety”. The depth and breath of brand

awareness were clear. People should recall the Volvo brand when thinking about a safe car or

they should be aware of its safety while driving it.

According to Volvo Cars, they have a promise in the premium marketplace. The consumer

should be aware that Volvo “designs cars for a better life” and this is a unique offer in the

premium segment. The interviews showed it is the aim of Volvo that their customers see a

different kind of premium experience in their offer, an experience based on sharing and

caring. Since they claim that every Volvo customer is unique and expects to be treated

personally they ask their stuff to meet the customer’s desire for a premium car. The people

should be aware that all of their cars are premium in design, build, fit and finish.

4.3.2 Brand Image

According to Kelly Odell, the sales director of Volvo Cars in Gothenburg, there was no

damage to the brand image after the acquisition. Journalists were not writing “this is only a

Ford”. It is rather the opposite as for example, Volvo Cars is using the famous Ford F10

Motor, among other engines, which is according to the interviewee, a good thing. A few

things like that were done. For the automotive industry motors are very important. In addition,

Ford is a very well known and accepted company with a great history and a good reputation

and Volvo did not see a danger for the brand image.


Somehow the brands supersede the owners. It turned out during the observation that the new

owner would have to do some pretty radical things to change the perception of the brand from

a positive to a negative from what it has been. However, in the end who owns the shares is not

the most crucial thing because customers trust and believe in the brand. A comparison can be

made. It is like people who know me and like me. One of the interviewees worked for a big

telecom operator before he came to Volvo Cars. The other people from the previous company

still like him. And as long as he does not do some radical thing, like start selling pornographic

films or something like that, then probably he could change to another big company or start

his own company or whatever and they would still like him because he would still be the

same person (same brand).

As long as those owners do no really radical things the perception of the brand is not going to

change significantly because someone else owns the shares. According to the Volvo

Management Ford is perceived as a serious, respected owner and they demonstrated that they

are responsible and have not done crazy things with the Volvo brand.

The brand image has to be established in people’s minds/memories and brand associations

make up the brand image. Volvo wants to create an image in consumers´ mind which includes

safety, quality and ecology. These are the three main dimensions of the brand and it is their

target to achieve the best customer satisfaction world-wide. Hence, commercials, articles and

newsletters emphasize the subjects and it is obvious that it is their marketing strategy to make

up a positive brand image which should be associated with those three dimensions.

4.3.3 Brand Loyalty

Brand loyalty is and was according to the interviewees an important issue for Volvo Cars. In

general Swedes are pretty loyal and they feel a certain sense of loyalty to their brands as, for

example, Ikea, Volvo and similar companies. They have a kind of national pride. According

to the interviewees, the Volvo owner sees the Swedish as something positive. Global

advertising reflects a lot of “Swedishness”. Volvo Cars´ target group, the people they sell cars

to, see the Swedish as a positive thing.

As mentioned earlier, especially in the home country of the brand there is a kind of patriotism

and nationalism. The same things happen in almost every country. Odell explains, that people


are very loyal to their brands. Surely price enters in but when taking away the price and all

things are equal and consumers could choose between the 20 top brands on the market and all

would cost the same, most Germans would choose Mercedes or BMW or the like and most

Swedes would choose a Saab or a Volvo. Volvo believes that they have very loyal customers

in Sweden.

The latter turns out to be a key issue of this study. It was mentioned before that people in

Sweden grew up with the Volvo brand and thus they are emotionally connected to the

company.

Volvo’s customers believed in the Volvo brand, trusted in the acquisition and Volvo’s move.

According to the interviewees it was important for Volvo Cars to continue the “Volvo way”

and avoid a mix of Ford and Volvo, a mix of apples and oranges. It was all about focusing on

Volvo Cars, on the own brand. They were not interested in receiving assistance from Ford in

developing their brand and they had to take the initiative themselves to fulfil the company’s

prospects.

According to the interviewer’s observation, Volvo Cars sold more Volvos last year than ever

before. Both the brand awareness and the brand preference are higher than it ever been. The

sales director of Volvo Cars Sweden evaluates the development of the Volvo brand under

Ford’s wings positively and he mentioned that you could not find any argument that point to

the opposite.

4.3.4 Brand Reinforcement and Revitalization

Today the brand wants to be associated with different subjects. As mentioned earlier, the

environmental features of a car nowadays are of great importance and hence, it is in the

interest of Volvo that consumers also recognize and recall their brand when it comes to this

issue. But there are other associations which should be covered by the brand as for instance: a

family car, for young people, for young singles and young couples, off road. This changed,

according to the interviewees, after the acquisition by Ford Motor Company. New and more

models were developed and introduced to the market. With the acquisition the R&D was

modified and new financial sources were available under the wings of Ford. In 2002 Volvo

produced the SUV XC90, and at the latest from this point on, the brand can be associated with

“off-road” and “SUV”.


According to the interviews Volvo did not reach a new clientele with the acquisition by Ford

and they did not change their customer group. However, the may have attained new customers

in the US, since Volvo became a part of one of the most popular companies of America. In

addition Volvo was one of the first European car brands that was established in the US market

and probably could increase its brand popularity in the US with the acquisition. The SUV

XC90 is a good seller on the still important American market. At this point it must be

mentioned that this vehicle was already planned before the acquisition, although the

production started afterwards.

Another example of the expansion of the brand awareness is the Volvo C30. This player from

Volvo’s portfolio should be recalled and associated by consumers when thinking about

“youth, single or cool”. The slogan for this car is: “The Volvo C30 is a cool car … for young

singles or couples, who cultivate an intensive, urban lifestyle.” (Fredrik Arp, President &

CEO, Volvo Car Corporation). In addition, Volvo Cars is focusing on driving dynamics and

believe that people choose a car with their hearts; cars they like to see, to touch and to drive. It

is the purpose of Volvo that drivers feel confident and in command and their passengers feel

relaxed and secure, regardless of weather or road conditions. Volvo Cars advertise that,

“everyone in the car will arrive feeling energised and ready to go”.

Furthermore, regarding to the “safety image”, Volvo is returning to its roots and wants to be

the worldwide leader in safety. See figure 15 for a detailed overview of the most important

brand issues, illustrated in a brand pyramid, from the company’s employee book.

Figure 15: The Brand Pyramid



As seen in the graphic, “Safety” is on top and it is the leading edge of Volvo. Safety has

always been a key issue to Volvo and their customers expect it. In the interviews it turned out

that Volvo continues to focus on their strengths and where they are best. They are convinced

that they are the best in security and they are the leader in engineering new security systems.

Hence, the Management of Volvo Car Corporation makes it clear in the internal employee

guide and emphasizes that every employee of Volvo Cars knows what the Volvo brands

stands for. More precisely, they are stating in their actual guide, “Cars are driven by people.

The guiding principle behind everything we make at Volvo, therefore, is – and must remain –

safety” (Sales handbook from 1936).

On the other hand they are working and focusing on economically and environmentally

friendly cars. Bengt Magnusson mentioned in the interview,” If we have to develop the

world’s most economical diesel engine, then we try this and do our best. Maybe we cannot

fulfil this in the first start-up but maybe in the second. But concurrently we keep going with

the Scandinavian design and our safety philosophy and focus on those issues where we can

gain ground.”

Furthermore, according to the interviewer’s observation, the design became a key issue for the

company. It is a part of their brand promise and they believe that they “design cars for a better

life”. Volvo Cars is advertising that the Swedish heritage means that their designs are inspired

by their [Swedish] relationship with nature.

Nowadays the majority of the publicity has a propensity to save. Since the sharp increase in

gas prices people are pickier when buying a new vehicle. Hence, the media is worried about

the Swedish automotive industry and some believe that reinforcement in economically

efficient cars is of great importance. Safety and the Scandinavian design are good values but

they may not straighten the latter out. According to Lasse Swärd, a reporter who is writing for

Dagens Nyheter Motor, the Ford Motor Company totally failed with the development of its

portfolio.121 FMC is years behind their competitors and they are not ready for the new market

situation. According to Swärd, Ford mismanaged and they forgot about long-term

consequences. Whereas Toyota, for example, focused its R&D on new technologies such as

hybrid cars, Ford continued building “gas monsters” which were loaded every further year

with stronger and more powerful engines.

121 Swärd, Lasse (2008): Volvo och Saabs ägare gjorde helt fel, in: Dagens Nyheter , September 20th, 2008, p. 1


4.4 Volvo Cars faced to the Customer-Based Brand Equity Model

As mentioned earlier in the paper, CBBE stands for Costumer-Based Brand Equity. To

evaluate the brand equity of a company a consumer survey would be necessary. In this case

persons in charge were interviewed and thus the model, with its different steps, can be faced

to the brand’s philosophy.

4.4.1. Brand Salience - Question Identity: Who are you?

Most people are familiar with the name “Volvo” and they certainly have heard it somewhere.

After the acquisition it was very important to emphasize the meaning of the Volvo brand and

the Volvo Car Corporation respectively.

Volvo was somehow a competitor to Ford; however they had not really the same target group

as Ford. Volvo Cars was a Premium brand and the idea of Ford was to acquire the philosophy

which Volvo had. They wanted to use the expert knowledge and the R&D sectors of Volvo.

More precisely, they wanted to use the Volvo safety philosophy and they actually gained a lot

with that. On the other hand, it was an advantage for Volvo Cars to be a part of FMC. They

benefited through better terms and conditions of purchasing. The economy of scale was a

huge benefit for Volvo Cars.

Especially after the brand acquisition it was important to continue with the same brand

strategies. Volvo Cars focused on information strategies and they wanted to inform customers

about their relation with Ford. The interviewees uttered that as yet, people do not really

understand their relation with FMC. It is only Volvo Cars which is involved in the FMC and

not, for example Volvo trucks.

The information strategy was of great importance and they were focusing on informing their

customers exactly about their new owners and the relationship with them. Volvo Cars had to

make clear what their thoughts were with that acquisition, and their future plans were

explained. In addition they wanted to make sure that their customers knew that Volvo Cars

and the Volvo brand respectively would continue exactly as they did before.

The interviewees believe that Ford tries to be Ford and Volvo tries to be Volvo outwardly and

really build their own brand with their own values. They do not think either one of them tries


to borrow values from the other. It is not that Volvo Cars think now they are part of the big

strong Ford Company, or Ford says they bought one of the safest companies and that makes

them somehow a safer company.

Jack Nasser underlined that Volvo should be Volvo and they should continue being Volvo

and expand its brand. The FMC was not interested in a change of the brand identity.

Otherwise the brands could be mixed up and according to the interviewees this would not be

good, since Ford and Volvo each stand for something. As yet the situation did not change and

people who worked or are working for Volvo Cars have not noticed a change of the brand

identity.

4.4.2 Brand Performance and Imagery - Question Meaning: What are you?

Volvo wants to be seen as a Premium car manufacturer. On the technology side Volvo is a

rather advanced company, especially in safety, where Volvo contributes to the whole

automobile industry. For example the 3.60 technique and other safety features provide an

advantage for everybody (automobile industry). They are best in security and they are the

leader in engineering new security systems.

It is their strongest asset and their safety commitment goes back to Volvo’s beginnings, when

the founders stated,” Cars are driven by people. The guiding principle behind everything we

make at Volvo, therefore, is – and must remain – safety”. In addition Volvo Cars have an

ambitious goal for the future. The aim is that by the year 2020 no one will be killed or injured

in a Volvo. They are aware that it will be tough to fulfil this goal but it will be their mission

for future developments.

Furthermore, Volvo Cars is very strong in the station wagon sector and thus, they offer very

family-friendly and convenient cars. According to the interviewees, Volvo was the first to

develop versatility cars, going back to 1953, when the Volvo Duett was launched.

However, Volvo Cars also provides Off-road and cross-over vehicles with its XC-Range

platform. They are announcing their cars as “Adventure, elegantly rugged, freedom” and

claim that they keep with the XC-Range their safety leadership in the cross-over segment.


Above all Volvo Cars wants to be seen as a premium car with “Charisma, reward, youthful

indulgence”. The C-Range includes coupes and convertibles – “the kind of cars you fall in

love with”. According to Volvo Cars, these cars are exciting models that make people aware

of Volvo, and their desirability has a positive effect on the entire brand.

However, they have to work and focus on economically and environmentally friendly cars.

An interviewee mentioned that if Volvo Cars has to develop the world’s most economical

diesel engine, then they try this and they do their best. Maybe they cannot fulfil this in the

first start-up but then perhaps in the second. It is the aim of Volvo Cars that they can be easily

recalled when thinking about economical and environmentally friendly vehicles. Thus, they

are able to give the customer a full covered package and explanation with “what they are”.

4.4.3 Brand Judgement and Feelings - Question Response: What about you?

It was important for the leadership of Volvo Cars to inform its customers and the public about

the new situation after the purchase by FMC.

According to the interviewer’s observation the Swedish society was not concerned about that

Volvo Cars would get a new owner. The concerns were more about what Ford was going to

do. People were worried that the production may move to the USA or to Germany and would

have a real financial impact on Swedish society. Ford has demonstrated that they are probably

pumping more money into Sweden than they are taking out (estimation). They have not had a

mass move of jobs from Sweden to somewhere else and something similar.

The interviewees believe that it must have been a strategy to avoid the “Fordness” and keep

the “Volvoness”. The Volvo Car Corporation had two choices: they could play up the

“Fordness” if they thought it was an advantage for the brand or they could play it down, and

according to the interviewees in this case the strategy was to play it down.

At this point the special situation between Sweden and its Volvo brand has to be mentioned.

According to Bengt, people in Sweden grew up with the Volvo brand and it has always been a

traditional Swedish company. It is a brand which affects Swedish citizens. The development

of automotives and the beginning of the Volvo brand actually went hand in hand. Hence, there

are many feelings involved and the Volvo brand, with its development and inventions, is a


source of pride in Sweden. Nowadays people are very dependent on cars and it is probably the

2nd most costly acquisition after a house.

The special relationship between Sweden and the Volvo brand makes the following marketing

strategy clear. On Christmas in 1952, every single seven-year-old in Sweden received a hard

gift package. These packages did not come from mothers or fathers across the nation, because

although it was the children who were the recipients the real targets were in fact their parents.

The sender of those packages was Volvo in Gothenburg and they launched an entirely new

form of marketing tool – a 24 – page children’s book intended to be read by adults. Besides it

should be mentioned that this directed marketing – at that time it was a fairly unknown tactic

– was very effective. 1953, one year after the Christmas book, was the first year that Volvo

sold more than twice as many cars as any other make on the domestic market.

In addition, Volvo is a Swedish brand and people used to comment positively or negatively on

Volvo issues. It turns out in the interviews that this is just another sign of the support by

Swedish people since they have strong feelings for the brand. If Volvo Cars would change the

owners again and they would change something significant, such as moving facilities outside

of Sweden, then the Volvo brand would not continue. Ford was accepted as an owner and

there was a solution for the whole process. The interviewees believe that it is uncertainty

which makes people nervous.

Furthermore, Volvo in Gothenburg is different from Volvo in Stockholm. In the capital the

Volvo Company is only a company like any other company. But in Gothenburg half of the

city is affected by Volvo. The papers came to the point once and stated, “If the West coast of

Sweden is doing well, then Volvo is doing well and if Volvo is not doing well, then the West

coast is not doing well either”. The whole establishment of Gothenburg is anyhow addicted to

AB Volvo or Volvo Car Corporation.

As mentioned earlier it was an order from the former CEO Leif Johannson to explain to

Volvo Car’s business customers on the field how Volvo was integrated in the FMC and how

the organization would be structured. Furthermore, there were internal Marketing strategies

about the issue.


4.4.4 Brand Resonance - Question Relationships: What about you and me?

The fourth question of the CBBE model deals with brand resonance, which is the ultimate

relationship and level of identification that the customer has with a brand and to what degree

the customers are in sync with a brand.

According to the interviewer’s observation it is a kind of patriotism and nationalism. As

mentioned before, after the acquisition, Volvo Cars continued just “being Volvo” and they

required deeper attitudinal attachments. Today the Volvo Ocean Race is a big deal. Volvo

Cars and AB Volvo sponsor this together. It is an agreement between those two companies. It

is not a Ford corporate issue. Ford wants to give Volvo Cars more freedom and they want

Volvo to operate more independently. This was a statement by Ford at the end of the year

2007.

Furthermore, this is an important issue for the Volvo brand to show its universalism. Even

though, since 1999 AB Volvo and Volvo Car Corporation are separate and autonomous

companies, they are still cooperating in such a huge sponsorship together. This is due to the

fact that both parties benefit from this program. More precisely, although Volvo Cars does not

sell trucks or boat engines it has a positive side effect for the brand itself. According to the

interviewer’s observation, it is about the breath of brand awareness in usage situations in

which the brand element comes to mind. Volvo Cars is no longer a player of AB Volvo, but

nevertheless people are linking the brand – the brand name, logo, symbol, and so forth – to

different associations in memory. A boat fanatic who is affected by strong and powerful

Volvo engines and hence, links the Volvo brand with “fun” and “excitement” may transfers

those attributes to Volvo Cars products as well.

Hence, it is no wonder that the Volvo Trade Mark Holding was founded after the acquisition.

This was and still is very important, since Volvo Cars is keeping the brand and the brand

name. The Volvo brand was so strong that it was very important to protect the name also for

its cars. According to the interviewees it was Jack Nasser’s idea that Volvo would continue as

Volvo as a brand name. It could have happened that a Volvo had become a “normal” Ford car.

There was even a danger of disappearance for the famous Volvo emblem, at least on the cars.

Hence, the Holding was founded to protect the Volvo brand.


Furthermore, Volvo always tried to have a special relationship to its customers and to society.

Since the 1960s visitors to Volvo have had the unique opportunity to see the entire car

production process from a sheet of steel to a finished car. Volvo Cars did not change this at all

and nowadays they are even more into Customer Relationship Management. At the Volvo

Cars Brand Experience Centre the core values are illustrated through text and image

communication and with many hands-on examples. This centre is open to companies,

organisations and schools with a technical program.

According to the interviewer’s observation, many of the world’s car manufacturers offer visits

in their factories, but it is probably only at Volvo that visitors are able to view the entire

production process from roll of steel sheeting to fully built and delivery-ready car.

Above all, there are Volvo fans and supporters not only in Sweden. Volvo fan clubs were

founded worldwide, especially in the car segment. The support and enthusiasm did not change

after the acquisition; they are just focusing on the product and myth Volvo.

4.5 Reflections on the Empirical Study

The findings in the case study reflect the target firm’s perspective as a player of the Ford

Motor Company. VCC increased altogether the sales volume of their products and in 2007 the

company sold 458,323 vehicles, the company’s highest volume in history. The company

achieved significant profits during 1999 and 2005; however sales figures have been negative

since 2006. Whereas the company contributed a profit of about 375 million dollars (625

million in 2004) it achieved a negative result of approximately 37,5 million dollars in 2006 (-

162.5 million in 2007).

The previous owner AB Volvo sold their car section because they were, among other things,

looking for new financial sources and with the help of FMC they could expand and enhance

the development of Volvo Cars. According to the interviewer’s observation Volvo did not see

a danger of internal cannibalization within the Ford group when they joined the Premier

Automotive sector of the acquirer. In the premium portfolio all the brands differ and it turns

out in the study that even Jaguar, which is most like Volvo Cars and thus the closest

competitor, has got a different target group. Since Volvo Cars is now the only player within

the PA group has been solved in any event.


Volvo Cars faced to the CBBE model reflects in a manner of speaking the brand equity of the

company. The company’s brand equity did not change after the acquisition and VCC followed

its traditional roots. It was of prime importance to inform customers about the new

relationship with FMC and the aim of the informing strategy was to underline that the Volvo

brand would continue exactly as it did before. It turns out in the discussions that the Ford

management supported a strong Volvo brand from the beginning and they made clear that

they were not interested in a change of the Volvo identity. The meaning of the brand did not

change under the wings of FMC and, according to the management they are the leader in

safety, which is still the main focus of the brand and what people associate first and foremost

with Volvo. However, the performance changed in the last decade and nowadays VCC offers

many more car models than before and they cover, e.g., with the XC-Range platform also the

Off-road and cross-over market.

The Swedish society was not concerned that FMC would own Volvo Cars; they rather were

concerned about the owner’s plans. This is due to the fact that people have particular feelings

for this traditional Swedish brand and especially the industry in the metropolitan area of

Gothenburg at the west coast of the country is affected by VCC. People were worried that

FMC may cut jobs or move them abroad, but this did not happen until now under the wings of

Ford. Furthermore, Volvo Cars is still benefiting from its previous owner AB Volvo and

every year they sponsor an important event together, the so-called Volvo Ocean Race. This is

just one example how the company is expanding its brand awareness and of how people

connect the car manufacturer with extra non-product-related associations. It turns out in the

discussions that it was an equitable decision to found the Volvo Trade Mark Holding to

protect the brand, the brand name and so forth.

FMC acquired with Volvo Cars a brand which is associated with “Safety” in the premium

marketplace. Safety has always been the pillar of Volvo and as shown in their internal brand

pyramid it is still the main asset and enjoys top priority. This did not change after the

acquisition, but rather was reinforced to emphasize its leading position. However, it turns out

in an interview with a sales manager of Volvo Cars that due to the pollution of the

environment and high gas prices, the company is also focusing on those issues and thus,

maybe neglects their core business. On the other hand, VCC is aware that they have to adjust

to the new customer demands and they are focusing on economically and environmentally


friendly cars. Furthermore, Volvo Cars revitalized the Scandinavian design and is marketing

its Swedish heritage.

In addition the Volvo management is not aware of any damage to the brand image and there

was no danger for this scenario. Although VCC is using among other things, Ford engines the

public did not change their point of view about cars made by Volvo. Since FMC enjoys an

excellent reputation it has not caused any negative associations. It is rather the opposite and

FMC has demonstrated that they are responsible and they have not done a bad job with the

Volvo brand. People in Sweden have a strong national pride and are somehow loyal to their

brands as other people are generally loyal to their national brands. However, in this case it

was important that the target company continued the “Volvo way” and that the owner did not

change the brand’s philosophy.


5. ANALYSIS

In this chapter the empirical findings are summarised. Furthermore, it analyses their

significance, compares the findings with the theory and reflects upon their contribution to

answering the second research question.

5.1 Volvo Cars´ Sales Developments

First of all, before taking a closer look at the empirical findings, an essential issue of Business

administration – result of operations – can be positively affirmed. The sales volume of Volvo

Car Corporation increased after the acquisition by the Ford Motor Company in 1999. There

were some up and downs and the sales volumes fluctuated between the year 2000 and 2007.

After the first business year as a player of the FMC portfolio, already 5,064 cars (1,27%)

more were sold compared to the previous year when Volvo Cars still belonged to AB Volvo.

More important is, though, that Volvo Cars´ sales volume never fell below the volumes which

were sold before the acquisition. The volume of sold cars increased and in 2007, when Volvo

Cars had the best result of sold cars ever, 61,878 (15,6%) more cars were sold than in 1998.

However, the sales figures on the contrary are balancing another picture of the time of Volvo

Car Corporation as a subsidiary of FMC. Whereas the company achieved some remarkable

profits during 1999 and 2005, the sales figures have been negative since 2006 and the

company had a significant loss of 162.5 million US dollars in 2007. Those figures do not

match with the sales volume whereupon the company had its best result of sold cars ever but

nevertheless, a remarkable loss was obtained. At this point only speculations can be made and

after the observation it is not possible to draw a conclusion about this issue. However, it does

not have an influence on the analysis of this study and its main subject, Brand Management

after acquisitions.

5.2 The Acquisition’s Impact on the Volvo Brand

According to Cartwright and Cooper (1999) and DePamphilis (2005) acquisitions are

considered to be rational financial and strategic alliances made in the best interests of the

organization and its shareholders. The study reveals that AB Volvo sold Volvo Cars to FMC,

since it was the purpose to maximize company value and benefit through financial synergies

as for example through economies of scale. Another Synergy effect would be the Research


and Development area which is partly supported by the desire of Volvo Cars. It was rather the

intent of FMC to acquire Volvo Cars for their specific knowledge about safety and security

technologies. The motives of FMC for the acquisition were not about creating synergies

within production or finance, since Volvo is a quite small player on the global automotive

market.

The multi-brand portfolio of Ford is not entirely immune against cannibalization. According

to Aaker (2008) and Randall (2000) brand acquisitions may produce over branding, and

cannibalization may occur. Thus, brand “A” of a company may impact brand “B” from the

same company negatively. However, the interviewees made clear that they are and that they

were never concerned about any form of cannibalisation or internal competition among the

brands in FMC´s portfolio. The brands have their distinct identities and target segments. As

already pointed out in the previous chapter, Volvo Cars is now the only player of the PA

group and thus, it is the only true and last universal premium brand of the whole concern.

Lincoln, the other remaining premium brand of the portfolio is only offered at Ford USA and

does not belong to the PA group.

As mentioned in chapter 3.6, Kapferer (2004) writes about a danger of internal

cannibalization and product overlapping which may occur in a multi-brand portfolio. Volvo

Cars is benefiting through economy of scales and thus, using units which are produced

million- fold by the parent company and also converted in other brands. Although equal units,

as for example cables or plugs, are embedded in Ford and Volvo cars the products are far

from being equal. Whereas other car brands are really faced with that problem, since it is

more or less only the body or the emblem which is different between the products, the study

reveals that Volvo Cars is not confronted with that issue.

Furthermore, the theory deals with the danger of incompatible associations after acquisitions.

It is differentiation that makes brands unique and special. According to Kapferer (2004) the

uniqueness of a brand could be damaged after an acquisition and, as a player in a portfolio of

a large firm, it may loose its independence. However, according to the interviewees, the rules

were already made clear before the acquisition was made. FMC supported a strong Volvo

brand and Ford tries to be Ford and Volvo tries to be Volvo outwardly and really build their

own brands with their own values. According to the interviewer’s observation, Volvo does not

share Kapferer´s concerns and journalists are not writing “this is only Ford”. Above all, due to


the different identities and administration of the brands within the portfolio of FMC, Volvo

Cars was never concerned that any unwanted associations could be transferred to the Volvo

brand.

When taking a closer look at the brand equity of Volvo Cars it turns out that some attributes

did not change. Keller (2008) divides brand equity in a pyramid (see chapter 3.4). Yet, it is the

desire of Volvo Cars that people have a certain picture of the brand in their mind and the

salience in this case would be safety. The strategy to inform the customers after the

acquisition that the brand would continue and keep its traditional attributes seemed to be a

necessary consequence for the Volvo management. The Volvo brand was thus reinforced with

ensuring innovation in product design, manufacturing, and relevance in user and usage

imagery, as Kotler and Keller (2003) suggest. However, Volvo Cars has also built new brand

associations with new models and hence, they expand the depth and the breath of awareness.

At this point it has to be mentioned that the acquisition of Volvo Cars by FMC was not a

distress sale. FMC purchased a healthy car manufacturer and thus the suggestion to revitalize

a brand by “returning to its roots” and restore lost sources of brand equity which is proposed

by Kotler and Keller (2007) is a fitting strategy for the Volvo Car Corporation. The

observation made clear that Volvo Cars emphasises its leading role in the development of

safety and security technologies. They furthermore have recognized the importance of

universalism, which means more precisely, that it is not enough anymore only to cover the

brand with safety issues. Hence, Volvo Car Corporation is aware of that through adding new

associations and improving design – Scandinavian design – the company can increase usage

by engaging a wider range of consumer preferences and behaviours.

Above all, before even considering new brand associations some significant reinforcement

strategies were developed to emphasize a strong Volvo brand especially after the acquisition,

as a player within the FMC portfolio. As the interviewees explained, it was of great

importance and they were focusing on informing their customers exactly about their new

owner and their relationship with them. However, it turns out that many people do not

understand the real relationship between Volvo Cars and its owner. This is due to the fact that

after the acquisition occurred not much was said about it, at least not in public.


5.3 Brand Equity and Volvo Cars

The study reveals that Volvo is still a highly salient brand. The holding which was founded

after the acquisition was certainly a necessity to protect the values of the Volvo brand. Thus

the emblem remained and hence the depth and the breath of the awareness benefited. This was

also supported by the FMC management and it turns out that they have always been interested

in a strong Volvo brand which continues its development and reinforces and revitalizes its

strengths.

Above all, the research model which was drawn in chapter 3.5, the reflection of the theory,

can be implemented for the case study of this paper. Figure 16 below illustrates the

framework and the key issues of brand equity which were also suggested by the theorist

Aaker, whose brand equity model was also drawn in chapter 3.

Volvo brand (cars)

Brand Awareness

Brand Image

Ford Motor Company

to 1999

Acquisition1999

Brand Revitalization

Brand Reinforcement

Volvo Car Corporation

Brand Loyalty

After 1999

Before

After

Figure 16: Branding and Acquisition, VCC & FMC


Brand awareness, brand image and brand loyalty frame a triangle around the Volvo brand,

forming its brand equity, and emphasize the importance of this subject.

The first, brand awareness of the target firm changed according to the interviewer’s

observation, in the last decade. Nowadays the awareness of a car brand is highly influenced


by car magazines, trade journals or TV shows. The first way in which brand awareness affects

the consumer’s decision-making is by influencing the “right“ brand associations that make up

the brand image. It was made clear in a discussion that the awareness can change overnight

from “top to flop”. A Marketing strategy may be successful and may create a positive picture

in consumers´ mind but nevertheless a published negative headline can destroy the whole

image.

Kotler and Keller (2007) emphasize the importance of the three dimensions strong,

favourable, and unique associations which provide the key for building brand equity, and thus

creating a positive brand image in memory. A strong brand association of Volvo Cars is still

“safety” and it is furthermore a unique and favourable association. The study reveals that

Volvo Cars was a healthy company before the acquisition and, as Keller (2008) suggests, the

Volvo brand is still managed through preserving and building on their traditional brand

equity. However, Volvo Cars has created and built new associations into their new models,

which are upgrading the existing ones and not replacing them.

The Brand Image of the Volvo brand has to be evaluated from different standpoints, since the

role of Volvo in Sweden is unique. It is a matter of fact that the brand occupies a significantly

strong position in Sweden, and especially, in the Swedish economy. It is no coincidence that

the so-called average Swedish family, which is called Johansson, consisting of 2 children,

owning a house and a dog, drives a Volvo. Although it is only an expression, it shows the

high awareness of the Volvo brand. The study reveals the special position of Volvo Cars in

Sweden and the particularity of the brand in the western part of the country, where the Volvo

Corporation has its headquarters. Faced to the CBBE model of Keller (2008) it turns out a

strong Identity that people have with the Volvo brand. Those feelings continued after the

acquisition by FMC and are caused by the significant brand loyalty in Swedish society.

The latter comes into play when the brand is restructuring or following new paths. Aaker

(2008) emphasizes the importance of brand loyalty, and the loyalty of regular customers is an

enduring asset for a brand. Besides reducing marketing costs with loyal customers and other

advantages which were explained earlier, customers´ loyalty allows the brand, to a certain

degree, to try something new or, as happened in this case, to commit among other things, to

new financial sources. As Aaker suggests, Volvo Cars is aware of the significance of its

existing customers and hence the management of the corporation used different marketing


strategies to inform and convince them about the new situation. This was also supported by

FMC and, as it was observed, they were not interested in changing the traditional meaning of

the Volvo brand, and supported its progress.

However, the study reveals that it was not the loyalty of the customers alone which were

affected after the acquisition. As Keller (2003) argues, Volvo Cars focused and is focusing on

product-related associations such as design, ecology and better engines, like the famous Ford

F10, to reinforce the brand. This successful Ford Duratec V8 engine was used until 1999 for

the Ford Taurus. That engine went out of production after 1999, but was resurrected and

modified by Volvo Cars for use in the Volvo XC90 SUV in 2005. Volvo Cars modified and

advanced the 3.4 L V-8 engines to a 4.4 L V-8 machine. It was initially offered in the Volvo

XC90 SUV and it is also available in the current Volvo S80. According to the interviewees,

Volvo definitely benefited from this and it was rather an asset for Volvo’s image than

damaging. Furthermore, as Keller suggests, the brand was and still is reinforcing and

enhancing its image with non-related associations. More precisely, Volvo Cars is still creating

and adding new sources of brand equity, such as for example, the Premium experience and

lifestyle associations. Volvo Cars admits that premium quality goes beyond durability and it

concerns everything the brand does. It is not only the fit and the finish of their products, it is

also the way they build their cars, and how they treat and talk to customers.

In summary, it can be stated that the brand Volvo Cars enhanced and developed well as a

subsidiary of the Ford Motor Company. Although the sales volume fluctuated it increased

after the acquisition and the corporation contributed some great earnings, especially in the

years 1999-2005. The development of the brand Volvo Cars can be referred to as positive.

Ford Motor Company supports a strong Volvo brand and from the beginning they financed

the R&D sector of the Scandinavian car manufacturer and engineering in close collaboration.

Volvo underlined and maintained its position in the premium car sector and, in fact the

business expanded after the acquisition. The brand also developed on physical nature

whereabouts new models were added and still new models are once in a while introduced.

The brand kept and reinforced its leading position when it comes to safety aspects, and above

all, new sources of brand equity were created and thus Volvo Cars is these days much more

than only the “safe car”. It is obvious that FMC gave VCC plenty of rope and the company

did not change its traditional roots under the wings of a big group. FMC broke with premium


brands they acquired earlier and sold Aston Martin, Jaguar and Land Rover. Volvo Cars

however, still belongs to FMC´s portfolio and it is the premium figurehead of the Group.

Hence, the second research question, which asks whether it is possible to keep a positive

brand image in people’s minds after an acquisition, can be affirmed, bearing in mind a

number of limitations, which were mentioned earlier. Besides the first research question is

backed by the Empirical Study. The question asks how a brand can manage its brand equity

after an acquisition and, the analysis reveals consensuses of the case study and the theory as

well, as further suggestions from the investigation. A detailed conclusion and discussion

about the research questions, is provided in the following chapter on the next page.


6. CONCLUSION AND DISCUSSION

The last chapter summarises the main developments throughout the literature review and the

case study. In addition, it provides space for my personal interpretation and discussion of the

research results, and looks ahead to possible further studies and research which could be

carried out.

6.1 Brand Equity after an Acquisition

The first research question asks how a brand can manage its brand equity after an acquisition

and the literature review showed that in the vast field of brand management, branding after an

acquisition is not accurately described. Nowadays company acquisitions are a normal

procedure. Especially single brand car manufacturers are rare compared to the past and

multinational companies are expanding their portfolios by acquiring other brands. Extensive

research in the field led to a number of theoretical suggestions and gave a framework for

Brand Management after acquisitions. The chosen theory appeared suitable for a comparative

case study. Furthermore, the theoretical part of the study could conclude by affirming the first

research question, and the researcher hypothesized a model, which then became the reference

point in the empirical part of the paper.

As mentioned earlier in the concluding reflection of the literature review, Brand Management

itself is described precisely by scholars. On the other hand, branding after an acquisition with

further suggestions in M&A, in combination with Brand Management, are hardly defined.

Nevertheless, it turns out that brand equity, as described by Aaker, Kotler and Keller,

provides and arranges a brand’s fundamental being. In other words, in theory a brand has got

reasonable brand equity and it is managed and developed by the company itself. However,

there is never full control of brand equity and outward factors may appear and have an impact.

More precisely, the awareness of a brand is highly influenced nowadays by magazines, trade

journals and TV shows and thus it may have negative consequences for the image of a brand.

Yet, acquisitions do not automatically have a negative impact on brand equity and it can be

concluded from the Volvo Case that somehow the brands supersede the owners and the

acquisition. Generally speaking, acquiring a brand does not change the whole brand’s

philosophy and as long as the acquirer is not making radical changes, which could impact the

brand negatively, the people’s perception won’t change. It is a matter of fact that it is


somehow up to the acquirer how they are going to treat the acquired brand and in what degree

they are involved in their business. Keller´s CBBE model reveals, among other things, that

brand feelings are affected and are associated with the social currency evoked by the brand. It

may have bad consequences for an acquired brand if all of the sudden the new owner were to

move jobs to emerging countries, where, e.g., production costs are lower and thus, cutting

jobs in the brand’s country of origin. Therefore, the company may lose face and, in addition,

the brand equity would be damaged.

6.2 Brand Image after an Acquisition

The Analysis and Reflection showed congruencies between the theoretical framework and the

descriptive acquisition of Volvo Car Corporation. Although discrepancies were reported, I

conclude that the second research question can be answered affirmatively: It is possible to

keep a positive brand image in people’s minds after an acquisition. However, each issue is a

case generis. The Volvo case indeed conforms to the model which was drawn upon the

literature reflection by the researcher and explains how different branding tools can apply a

successful collaboration between the acquirer and the acquired company. I agree with the

proposition of the sales manager of VCC and I believe that who owns the shares is not the

most crucial issue, and that customers trust, to a certain degree in the brand. However, a brand

which is involved in M&A requires more than loyal and staunch customers in order to

continue with successful business as a strong brand. It is the acquirer and the brand itself

which have to revitalize the brand and reinforce the meaning and position. At this point it has

to be admitted that the case study of this work deals with a strong multinational brand which

acquired another strong brand and thus the researcher is not in the position to speculate about

other scenarios; e.g. unfriendly takeover due to financial issues.

Despite the fact that Volvo management emphasizes the great reputation of its owner and

partner FMC, it is somehow virtually ironic how tremendously anonymously VCC is

integrated in FMC and vice versa. Furthermore, the study reveals that many people simply do

not know that Volvo Cars is owned by another company [FMC] and actually the top

management and leadership that is responsible for the brand has its headquarters in North

America. Why has Volvo Cars downplayed the relationship with the owner and why does it

appear that the brand is somehow hiding the acquisition, and there seems to be a lack of

information about the issue? Is this because despite FMC being a highly salient brand and the

Volvo management extolling the new owner during the acquisition, this traditional Swedish


company was and still is worried about its brand image? Or does the reinforced premium car

manufacturer simply see a danger of losing its Premium and Scandinavian design image as a

player of the multinational mass car producer? These issues were discussed, with the

interviewees and there seems to be a partial truth in the mentioned suppositions.

Again, FMC did not purchase Volvo Cars in order to restructure and change the Volvo brand

as a player of their portfolio. The top management did not see the necessity to change the

development of the brand. It can be concluded that a company that is acquiring a strong brand

should continue to allow the acquired brand to manage and market its business without

interfering too much. According to the findings, I believe that it was more about reinforcing

and revitalizing the brand and thus, they were able to keep a positive brand image – especially

in the minds of loyal customers. The loyalty of customers turns out to be an important asset in

Brand Management in combination with M&A. It was mentioned earlier in this study that the

national aspect – patriotism – must be considered to a certain degree. In other words, it was an

advantage for the researcher to study and evaluate the target brand in the country of origin and

thus, non-product-related associations such as brand feelings are more distinct than in another

country. Speculations about whether the results of the empirical study would have been

different if researching in another country can be only assumed and will not be pursued at this

point but indicate yet another interesting field for further research.

6.3 Reflection and Future Research Suggestions

The case study research method was the chosen way to conduct the theory in conjunction with

real-life comparison as it had been suggested from other similar studies. The data collection

for the empirical part of the study was essentially collected through structured and

unstructured interviews. Although the responsible managers of Volvo Cars were cooperative

and agreed to join interviews and discussions, tight schedules of the contact persons and a

quite short research period did not allow more research at the target company. Furthermore,

the legal year 2008 seems to make history: First the world was distressed by high commodity

prices and in summer 2008 the price of oil surged to a record new high of nearly US $150.

The big three American car manufacturers GM, Ford and Chrysler continued to profit from

selling gas-guzzling SUVs and sedans while defying protests from environmental activists.

Thus, it hit the automobile industry badly, resulting in declined sales of large-sized cars and

other vehicles. Then, the collapse of the American housing bubble and an ongoing credit

crunch hit the auto giants with devastating power. Now, most people are hoarding their cash,


afraid to buy new cars, and many who are brave enough to shop for a ride are discovering that

they cannot get an affordable car loan. VCC is, as any other car manufacturer and as a player

of the FMC portfolio, greatly challenged by the current crisis. Furthermore, the company is

the last remaining brand from FMC´s premium auto group. Due to the unprecedented external

challenges facing FMC and the entire industry, it is prudent for Ford to evaluate options

for Volvo and hence, the multinational concern published recently that Volvo Cars would be

up for sale to raise cash due to the serious circumstances. Furthermore, FMC stated that the

review will take several months to complete and they will continue working closely with

Volvo. Above all, FMC and its subsidiary will continue to put in place processes that allow

Volvo to operate on a more independent basis in the absence of the Premier Automotive

Group structure, an effort which began in November 2007, following a previous review by

Ford of strategic options for Volvo.122

The consideration that FMC may sell VCC due to the current crisis was announced when my

research was concluded and thus, it was not a part of this study. However, this would be an

interesting subject for further studies to investigate implications of the mentioned scenario.

The observation reveals that the VCC management emphasized the smooth operation and that

the acquisition was done under “perfect” circumstances without any noteworthy doubts about

the owner FMC. Hence, analysing the consequences of another possible acquisition would be

an interesting subject-matter and in particular with regard to brand equity issues. Specifically,

the possibility that a future acquirer might come from a non-western country (e.g. China)

could lead to outcomes diametrically opposed to the findings of this study. Taking brand

image as an example, a potential job shift away from the country of origin as a result of such

an acquisition may impact Volvo Cars´ brand equity negatively.

It was an exciting task to investigate the initiatives and attitudes towards brand management

combined with an acquisition in a traditional car manufacture firm. Due to the current

situation and constant changes it would be interesting to repeat the study in the future for a

final conclusion. Furthermore, since the findings for the empirical part of this study are based

on a strong acquired brand it would be interesting to investigate the case of another company

of weaker nature, and maybe from a different branch.

122 http://www.ford.com/about-ford/news-announcements/press-releases/press-releases-detail/pr-ford-motor-company-announces-it-29498 (2008/12/01)


The knowledge I personally acquired through this study has been useful for me and especially

the interviews and discussions with responsible managers from the automotive branch and the

target company itself were interesting and valuable for the author. I hope that this work adds

new knowledge in the Brand Management sector in connection with acquisitions and it is

useful for companies which are involved in M&A activities. In addition, the study makes a

valuable contribution to theory building in the area of Brand Management after acquisitions.

Above all, I want to thank my supervisors, Assistant Prof. Dr. Maria Fregidou-Malama and

Prof. Dr. Stefanie Müller, as well as my interviewees for their indispensable contribution.

Special thanks go to VCC, which supported me, in addition to the interviews, with material

which was very useful for the research.


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Mergers, Acquisitions, and other Restructuring Activities: An Integrated Approach to

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The New Strategic Brand Management: Creating and Sustaining Brand Equity Long

Term

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Keller, K. L.

Strategic Brand Management: Building, Measuring, and Managing Brand Equity

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3rd edition (2008)

Kotler, P.

Kotler on Marketing: How to Create, Win and Dominate Markets

Simon & Schuster, London, UK; (1999)

Kotler, P. & Armstrong, G

Principles of Marketing

Pearson Education Incorporation, Upper Saddle River, USA; 10th edition (2004)

Kotler, P. & Keller K. L.

A framework for marketing management

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Lundbäck, M.

Managing the R&D integration process after an acquisition: Ford Motor Company's

acquisition of Volvo Cars

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Malhotra, N. K.

Marketing Research: An Applied Orientation

Pearson Education Incorporation, Upper Saddle River, USA; 4th and 5th edition (2004 and

2007)

Randall, G.

Branding: A Practical Guide to Planning your Strategy

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Saunders, M. & Lewis, P. & Thornhill, A.

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Schierenbeck; H.

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How Brand Image drives Brand Equity

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Managing Brands for the Long Run: Brand Reinforcement and Revitalisation Strategies

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Websites: Encyclopedia Wikipedia, (visited April 7th, 2008)

http://wikipedia.org/

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http://ford.com/

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http://media.ford.com/newsroom/release_display.cfm?release=27953

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http://www.volvocars.com/de/

http://www.volvocars.com/se/Pages/default.aspx

http://www.volvocars.com/Pages/default.aspx

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London, United Kingdom (conducted August 2nd, 2008)

Kehler, Daniel; Marketing Manager of Kehler’s Prestige Autos of the World

Winnipeg, Canada (conducted August 19th, 2008)


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Odell, Kelly; Sales Director of Volvo Cars Sweden

Gothenburg, Sweden (conducted September 7th, 2008)

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APPENDIX

The following questions provided the framework for the conducted interviews. However, they were merely used as starting points and during the course of the interview evolved to deeper discussions.

1. Have you reached a new clientele (customer group) after the acquisition by Ford in 1999?

2. Has your organization been changed as a result of the acquisition?

3. Do you think Volvo Cars contributes in some way to the Ford Motor Company?

4. How important was it for Volvo to found the Volvo Trade Mark Holding? How

important was it for the brand name? Do you think it had been a negative effect for the brand Volvo if had not founded the Holding? If so, in what way?

5. What kind of Marketing Strategies did you use after the acquisition?

6. What do you think how important is it for Swedes (or other nationalities) to buy

Swedish products and Swedish brands respectively?

7. Do you think it is important for Swedes that Volvo is a Swedish brand? If so, why?

8. Do you know if there have been any new perceptions after the acquisition?

9. Was there a damage of the brand image in some way?

10. What were the biggest Marketing challenges for Volvo after the acquisition?

11. Volvo’s Chairman, Håkan Frisinger, said when FMC’s acquisition was made public: “This is a solution which strongly enhances the prospects for Volvo Car Corporation, its employees and for the Volvo Group as a whole” (Frisinger, 1999). Now after more than 9 years after the acquisition, how would you evaluate the development for the Volvo brand under Ford’s wings?

12. What do you think about the Volvo brand in the future?

13. Do you have any other information or contribution about the issue?