MASTER THESIS
The Internationalization of a Premium Grocery Retail Brand
A Case Study of the Danish Retail Chain Irma, and the Swedish Grocery Retail Market
Date of hand‐in: June 19 2009 Advisor: Tilde Heding Sarah Loftager Pottenger, Cand.Merc.Com
Marianne Sørensen, Cand.Merc.IMM
Kombi‐sekretariatet
Department of Management, Politics and Philosophy
COPENHAGEN BUSINESS SCHOOL 2009
Resumé
I takt med globaliseringen er der kommet et øget fokus på de potentielle fordele ved internationalisering og formålet med denne afhandling er således at undersøge, både teoretisk og empirisk, det underudforskede område indenfor internationalisering af brands fra detailhandlen. Ved at sammenfatte en bred vifte af litteratur indenfor områder såsom branding, internationalisering af brands fra detailhandlen samt nationale kulturer er vi i stand til at udarbejde en teoretisk ramme med hvilken vi strukturerer analysen af en konkret virksomhedscase, nemlig Irmas mulige brand internationalisering til det svenske marked. Mere specifikt ønsker vi at undersøge:
Hvordan det er muligt at internationalisere et premium brand, som er stærkt forankret i det danske dagligvaremarked, ved at flytte det på tværs af nationale grænser til det svenske marked?
I et forsøg på at svare på dette spørgsmål har det været nødvendigt først at undersøge Irmas brand identitet, image og personlighed i det danske marked. I en sådan undersøgelse har vi forsøgt at identificere Irmas brand DNA, et DNA som på mange måder er unikt og som derfor gør det muligt for Irma at differentiere sig i forhold til sine konkurrenter. Irmas brand DNA viste sig at være dybt forankret i god kvalitet, højt serviceniveau samt et varesortiment med et øget fokus på økologi og miljø samt social ansvarlighed.
Ved en nærmere gennemgang af det nuværende svenske brandlandskab indenfor dagligvarehandelen kan vi konkludere, at Irmas brand DNA, identitet og eventuelle image vil lade brandet indtage en unik og ubesat position på det svenske marked. Hertil kan tilføjes at ser man bort fra nuanceforskelle, er den danske og svenske nationale kultur på mange områder bemærkelsesværdig ens. Dette er specielt vigtigt i relation til arbejdsrelaterede områder således, at Irma er i stand til at overføre sin velfungerede værdibaserede ledelsesstil samt unikke organisationskultur. I denne henseende er vi
meget opmærksomme på de vigtige elementer som indgår for at de svenske medarbejdere kan komme til at live the brand på samme høje niveau, som det er tilfældet i Danmark.
Ikke desto mindre forventes det, at Irma ville skulle tilpasse sig til både hårfine kulturelle forskelligheder og potentielle særegne trends på det svenske marked. Derfor konkluderer vi slutteligt, at den ideelle strategi for Irma ville være brand glocalization implementeret således at den er 100% overensstemmende med kernen i Irmas brand DNA.
Endelig breder vi vores konkrete resultater ud til også at omfatte internationalisering af brands fra detailhandlen generelt.
Executive Summary
In an era of globalization with ever greater attention focused on the potential benefits of internationalization, the purpose of this thesis is to explore both theoretically and empirically the underdeveloped question of retail brand internationalization. In particular, by synthesizing a broad and diverse range of research covering such areas as branding, retail internationalization and national cultures, we have built a framework with which to structure the analysis of a concrete business case, namely Irma’s potential brand entry into the Swedish market. Specifically, we seek to answer the question: How is it possible to internationalize a premium brand strongly anchored in the Danish grocery retail market by transferring it across national borders to the Swedish market?
Providing an answer to this question required that Irma’s brand identity, image and personality first be fully understood within the Danish market. Key to this process was the distillation of the brand’s core‐DNA, a DNA that uniquely differentiates it from the brands of other competitors in the local market. This DNA turned out to be an extensive and deep‐rooted commitment to outstanding quality, excellent service and an assortment with a strong focus on organic and environmentally and socially responsible products.
Next, in examining the current brand landscape of the Swedish grocery retailing market, we conclude that Irma’s brand DNA, identity and eventual image would uniquely position the brand within a largely unoccupied segment of the Swedish market. In addition, while not without its nuances, we note that Swedish national culture is very similar to Danish national culture across a number of key dimensions.
This is particularly important in relation to work practices and culture, such that Irma is able to replicate its strong values‐based management style and organizational culture.
In particular, we find there are critical elements for employees to be equally as successful in living the brand in Sweden as they are in Denmark.
Nevertheless, it is expected that Irma would have to adapt in certain respects to both potentially subtle differences in national culture and potentially distinct trends in the Swedish marketplace. Thus we ultimately conclude that the ideal strategy is one of brand glocalization implemented in such a way as to be 100% consistent with Irma’s core brand DNA.
Finally, we briefly extend the specific findings of the thesis to retail brand internationalization more generally.
Contents
1. Introduction ... 6
1.1 Problem Identification ... 7
1.1.1 Problem Elaboration ... 10
2. Methodology ... 10
2.1 Methodological Approach ... 10
2.2 Empirical Choice ... 12
2.2.1 Primary Data ... 12
2.2.1.1 Collecting Primary Data ... 14
2.2.2 Secondary Data ... 17
2.2.3 Empirical Validity ... 17
2.3 Theoretical Choice ... 18
2.4 Applying a Case Study ... 20
2.4.1 The Selection Criteria of the Case Study ... 20
2.5 Delimitation ... 22
2.6 Thesis Structure ... 22
3. Theoretical Framework ... 23
3.1 Brand Management ... 23
3.1.1 The External Brand ... 24
3.1.1.1 Brand Equity ... 24
3.1.1.2 Brand Image ... 26
3.1.1.2.1 Tangible and Intangible Elements of a Brand Image ... 26
3.1.1.3 Customer‐Based Brand Equity ... 28
3.1.1.4 Brandscapes ... 30
3.1.2 The Internal Brand ... 33
3.1.2.1 Living the Brand ... 33
3.1.2.1.1 Benefits of Living the Brand ... 36
3.1.3 Incorporating the External and Internal Brand Elements ... 36
3.1.3.1 De Chernatony’s Brand Building Model ... 37
3.1.3.1.1 Brand Vision ... 37
3.1.3.1.1.1 Logo ... 38
3.1.3.1.1.2 Slogan ... 38
3.1.3.1.2 Organizational Culture ... 39
3.1.3.1.2.1 The Impact of Organizational Culture on Brand Performance .. 39
3.1.3.1.3 Auditing the Brandsphere ... 40
3.1.3.1.3.1 The Corporation ... 40
3.1.3.1.3.2 Customers ... 40
3.1.3.1.3.3 The Macro‐Environment ... 42
3.1.3.2 The Brand Identity Prism ... 42
3.1.3.2.1 Reviewing the Brand Identity Prism ... 44
3.1.4 Brand Management Paradigms ... 45
3.1.4.1 Paradigmatic Categorization of the Theorists ... 48
3.2 Retailing ... 51
3.2.1 Retail Branding ... 51
3.2.2 The PLIN Model ... 53
3.2.2.1 Reviewing the PLIN Model ... 55
3.3 Segmentation ... 55
3.3.1 VALS Segmentation ... 56
3.4 National Culture... 58
3.4.1 The Impact of National Culture on Business ... 58
3.4.1.1 Reviewing Hofstede’s Method of Analysis and Conclusions ... 62
3.5 Adapting the PLIN Model ... 64
3.6 Conclusion on the Theoretical Framework ... 67
4. Case Study ... 69
4.1 The Story of Irma ... 69
5. Analysis ... 70
5.1 Brand Analysis – The Irma Brand in Denmark ... 71
5.1.1 Physique ... 71
5.1.1.1 Logo – The Irma Girl ... 72
5.1.1.1.1 The Irma Girl as a Branding Tool ... 72
5.1.1.2 The Irma Slogan: “It’s All About People” ... 73
5.1.1.2.1 It’s All About People – the Impact on Branding ... 73
5.1.1.3 Store Environments ... 74
5.1.1.3.1 Store Environments’ Influence on the Brand ... 76
5.1.1.4 Product Assortment... 77
5.1.1.4.1 The Product Assortment as a Brand Differentiator ... 78
5.1.1.5 Irma’s Website and Weekly Advertisement ... 79
5.1.1.5.1 A New Brand Challenge ... 80
5.1.1.6 Krydderiet ... 80
5.1.1.6.1 Leveraging the Brand ... 80
5.1.1.7 The Brand Experience ... 81
5.1.2 Personality ... 82
5.1.2.1 Results of the Open‐Ended Association Tests ... 82
5.1.2.2 Irma’s Personality ... 84
5.1.3 Relationship ... 85
5.1.3.1 Brand Identity ... 85
5.1.3.2 Brand Meaning ... 86
5.1.3.3 Brand Responses ... 88
5.1.3.4 Brand Relationship ... 89
5.1.4 Irma’s Culture ... 92
5.1.4.1 Management for Fun ... 95
5.1.4.2 Values Based Management ... 96
5.1.4.3 Living the Irma Brand ... 97
5.1.4.4 Irma’s Vision and Mission ... 99
5.1.5 Reflection ... 101
5.1.5.1 Irma ‐ A Risk Reducing Brand ... 102
5.1.6 Self‐image ... 103
5.1.7 Irma’s Brand Identity ... 104
5.1.8 Conclusion on Irma’s Brand Identity ... 108
5.1.8.1 Physique ... 108
5.1.8.2 Personality ... 109
5.1.8.3 Culture ... 110
5.1.8.4 Relationship ... 110
5.1.8.5 Reflection ... 111
5.1.8.6 Self‐image ... 111
5.2 Host Market Analysis ... 112
5.2.1 Product ... 112
5.2.1.1 The Green Wave in Sweden ... 112
5.2.1.2 Future Impact ... 113
5.2.1.3 Product in Relation to Irma ... 114
5.2.2 Lifestyle ... 115
5.2.2.1 Shopping Habits ... 115
5.2.2.2 Fast Meal Solutions ... 116
5.2.2.3 Segmentation ... 116
5.2.2.4 Lifestyle in Relation to Irma ... 119
5.2.3 Image ... 119
5.2.3.1 Image in Relation to Irma ... 120
5.2.4 Niche ... 121
5.2.4.1 The Swedish Retail Grocery Market ... 121
5.2.4.1.1 ICA Sverige AB ... 122
5.2.4.1.2 Coop Norden Sverige AB ... 122
5.2.4.2 Niche in Relation to Irma ... 123
5.3 PLIN Key Findings ... 125
5.4 In the Middle of the PLIN Model ... 126
5.5 Match Table ... 128
5.6 National Culture... 130
5.6.1 The Cultural Environment of Sweden ... 131
5.7 The Internationalization of Irma’s Brand ... 132
6. Conclusion ... 136
7. References ... 140
7.1 Literature ... 140
7.2 Academic Articles ... 142
7.3 Newspapers ... 145
7.4 Internet ... 145
7.5 Reports... 146
7.6 Other Sources ... 146
8. Appendix ... 148
Appendix 1 – Approach Scale ... 148
Appendix 2 –The Circular Process of the Thesis ... 149
Appendix 3 ‐ Research Design & Methodology ... 150
Appendix 4 – Recorded Interview with Gitte Matzen ... 154
Appendix 5 – Store Observations ... 155
Appendix 6 – Store Photos ... 168
Appendix 7 – Interview Guide ... 170
Appendix 8 – Case Selection Criteria ... 171
Appendix 9 – The Danish Grocery Retail Market ... 172
Appendix 10 – Brand Equity Model ... 173
Appendix 11 – Branding Ladder and Customer‐Based Brand Equity ... 174
Appendix 12 – Brand Building Model ... 175
Appendix 13 – Kapferer’s Brand Identity Prism ... 176
Appendix 14 – Brand Management Paradigms ... 177
Appendix 15 – The PLIN Model ... 178
Appendix 16 – VALS Framework... 179
Appendix 17 – The Irma Girl ... 180
Appendix 18 ‐ The Customer Value Hierarchy ... 181
Appendix 19 – Josefsen’s Hypotheses ... 182
Appendix 20 – The Happiness of Working – From “Fun” to “Results”... 183
Appendix 21 – Irma’s Value Set ... 184
Appendix 22 – Graphic Illustration of Irma’s Brand Identity Prism ... 185
Appendix 23 – The Main Swedish Grocery Retail Groups ... 186
Appendix 24 – Groups of Scandinavian Retailers ... 187
Appendix 25 – Grocery Retailing in Sweden and Denmark ... 188
1. Introduction
In spite of the increased focus and attention given to large international retailers, such as WalMart and Carrefour, it is still a very small minority of retailers that choose to expand into foreign markets. One explanation is that, even today, there is still a lack of reliable information on foreign market conditions that can create significant problems for firms considering international expansion (McGoldrick & Davis 1995). In fact, even for larger firms, this lack of certainty can create cognitive barriers for senior management that ultimately bias them towards either staying home or selecting for expansion what are perhaps mistakenly assumed to be psychically and culturally close neighboring markets (Johanson & Vahlne 1977). Thus, if retailers are to have a chance of succeeding in a foreign market it is essential that they accept that markets are far from homogenous, regardless of geographical proximity (McGoldrick & Davis 1995).
Market competitive dynamics and structure, the macroeconomic environment, regulation, infrastructure, and national culture and consumer behavior can all be very diverse between countries. Therefore, it is important for international retailers to be able to anticipate, understand and adapt to each of these potential differences when considering international expansion as a means to achieve growth and / or increased economies of scale and scope.
Despite the many problems that may be encountered, internationalization, and in fact globalization, have become increasingly important for business in recent decades (Alexander 2009). Often there may be certain forces at work in the domestic market, for instance a saturated competitive environment that will influence a company’s decision to expand internationally. The company may also simply see a good business opportunity in fulfilling a need that has not yet been met in another market. There are, however, a large numbers of factors that must be considered before making the decision to internationalize – both in terms of analyzing the company and its current position in the home market and doing extensive research on the new market (e.g.
consumer behavior, culture, trends in the society) (Akehurst & Alexander 1995).
One element of such decision making that has been given less attention in academic research is the ability of a firm to leverage and translate its brand from one market to another. In particular, strong brand equity and customer loyalty in a home market may mean very little in a foreign one. In addition, cultural differences may play a very large role in how the firm’s brand identity is received, interpreted and responded to by consumers in the new market. Thus, in addition to an analysis based on market attractiveness and competitive positioning, we suggest that an integral part of market entry evaluation is also a brand analysis that examines, within the context of the foreign market, both brand resonance with target segments and brand positioning relative to other market players. However, such analysis can only be performed once a firm’s brand identity, image and equity are already fully understood within the context of the home market.
1.1 Problem Identification
During our five years at CBS, we have studied a substantial number of academic articles and other scholarly works as part of various courses covering brand management, retail marketing, international marketing, and communication.
However, the field that has captured our strongest interest is brand management in general and retail branding in particular. As a result of this interest, we have chosen these disciplines as the overall theme for this thesis. The academic work within the field of brand management is extensive. The result is a wide range of theories, models, frameworks, concepts, and perspectives. For example, some of the major theories within the brand building field come from Keller (1993, 2001), Aaker (1996), Kapferer (1997) and de Chernatony (2005).
However, despite our participation in these numerous brand and retail related courses and a subsequent thorough examination of these two academic fields, we are wondering how come we have not come across academic work specifically committed
to the examination of transferring a locally existing premium brand across national borders into a new, competitively, and culturally different market. Could it really be that this particular issue of internationalization and its specific premium brand perspective apparently is not examined in detail? We find this particularly surprising in an era of globalization given the massive transfer of goods, labor, technology and capital across national borders. National borders seem to have diminished in importance – so why has more research not been explicitly dedicated to the branding challenges inherent in such internationalization?
On this basis, the focus of this thesis is upon how businesses can transfer a locally established premium brand across national borders. More specifically we examine, in the context of a case study, whether it is possible for an organization to take advantage of locally established brand equity in a new market, or rather whether the brand will need to be modified or even rebuilt in order to be successful. This implies that we will be analyzing the process of repositioning and potentially rebuilding an existing brand in a cross border market.
We are convinced that with the ever increasing number of brands fighting for mindshare in today’s global markets, it is more important than ever for a business to be able to build a strong brand that differentiates its specific products or services and functions as a guiding signal capable of influencing consumer buying behavior. Due to the competitive nature of the global market, any business needs to constantly reevaluate their activities and consider new potential customer segments and markets to exploit in order to be able to defend themselves against ever stronger competitive forces. As a consequence, it seems logical for a business with only national activities to take the next step and explore the possibility of international operations by transferring the locally known and anchored brand to new international markets.
Based on the above introduction and problem identification the following problem statement is formulated:
How is it possible to internationalize a premium brand strongly anchored in the Danish grocery retail market by transferring it across national borders to the Swedish market?
In order to examine this problem statement, we seek to establish a framework of various theoretical contributions, and through the combination of these leverage an academic understanding of the issue of premium brand internationalization. To be able to investigate this particular theoretically rooted topic, we choose to ground the thesis both empirically and practically by applying Irma as a case company and Sweden as the host market for the brand internationalization. The rationale for choosing Irma as a case company is that the firm is rather limited in its geographical locations – primarily Zealand within the Danish market with some initial expansion to Jutland.
Thus, the interesting challenge is to see if and how it might be possible to move the brand to a non‐Danish market. Additionally, Irma is a business and brand with a long history and thus it is interesting to examine the potential for, and challenges of, repositioning the brand and business concept across national borders. A logical next step for Irma – at least in our opinion – would be to expand into our neighboring market, Sweden.
However, it is important to underline that Irma currently does not – to the best of our knowledge – have any intention of expanding to Sweden. Therefore the case should be regarded as hypothetical and as an illustrative example of how to internationalize a premium brand within the grocery retailing industry. Nevertheless, as an additional point of interest it is quite surprising that Irma is not even considering the possibility and that Irma’s CEO, Alfred Josefsen, regards it as impossible to move the Irma brand beyond Danish borders (Josefsen 2009). By examining this case we are able to explore our theoretical field and leverage our practically founded results to a more abstract level of understanding. We thus formulate two case specific research questions, which are presented below.
RQ1: What constitutes Irma’s brand identity?
RQ2: How does Irma’s brand identity match the Swedish retail market?
1.1.1 Problem Elaboration
With the aim of elaborating on the formulated problem statement, it should be mentioned that we seek to investigate the repositioning of a premium brand with strong local and national roots to a foreign country. The focus of our thesis is then the relocation of the brand to a foreign market where consumers do not have pre‐existing brand associations. The challenge for the business is thus to build brand equity across national borders, create customer awareness, and gain customer loyalty to ultimately ensure a customer‐valued brand that is successful.
The problem statement is supported by the two research questions, which are analyzed accordingly in the thesis sections Brand Analysis and Host Market Analysis.
RQ1 aims at an examination of Irma’s brand identity in the Danish market, whereas RQ2 concerns the host market for Irma’s brand internationalization and whether there is a match between the brand identity and the market abroad.
2. Methodology
The purpose of this methodology section is to present, explain and argue for the methodological choices and approaches applied in the thesis. First we describe the overall methodological approach of the thesis. Next the empirical choices are presented and argued for followed by a section on empirical validity. After this we introduce the theoretical choices, argue for the selected case study and present the thesis’ delimitations. Finally, we outline the overall structure of the thesis.
2.1 Methodological Approach
In order to satisfy our curiosity and to answer our problem formulation, we take point of departure in the academic literature and its theoretical contributions. With the aim of making the thesis a bit more concrete and practical, we employ Irma as a case
company and Sweden as the potential target market. In this way, the case company and the Swedish market can be regarded as concrete tools that facilitate and complement the theoretical investigation.
Viewing our approach to the thesis on a scale consisting of two diametrically opposite end points ranging from a totally abstract theoretical level to an entirely concrete level, we locate the thesis a bit above the middle, closer to the abstract theoretical end of the scale. See appendix 1.
The argument for this particular approach is that despite our inclusion of Irma as a case company and Sweden as a potential market for expansion, the primary purpose of these two elements is to facilitate the examination of the field under investigation, namely the transfer of a nation‐specific premium brand across country borders.
Choosing this approach implies that the thesis is more theoretically than empirically anchored, which also explains the relatively heavy emphasis placed on both the theoretical framework and the application of the relevant theories.
The methodological approach can be characterized in terms of the hermeneutical circle, which is a dynamic circular process (Andersen 2003). The rationale for this circular process is that we gradually develop our understanding of the field under investigation through new interpretations which again lead to a new understanding.
The research is thus an iterative and interpretive process that constantly evolves (ibid).
Specifically, we approach the thesis by developing a preliminary understanding of the theoretical field relating to branding, retailing and internationalization and of Irma.
This is followed by the further identification of the problem under investigation together with an exploration of the collected empirical sources of evidence, anchored in both the primary and secondary data, together with the theoretical perspectives from the related fields of study. After having the specified the problem formulation we construct the methodology and research design. We thus reevaluate our preliminary understanding as a result of new theoretical and empirical insights and additional perspectives, and on basis of this new frame of comprehension we respecify the problem and establish a problem statement. This circular process illustrates how new
information forces us to constantly reevaluate the problem under investigation. For a visual illustration of the circular process see appendix 2.
We employ a combination of deductive and inductive methodologies, as we alternate between reaching well‐founded conclusions with respect to a specific case based on general principles (deduction), and constructing new theoretical principles anchored in the collection of empirical data (induction) (Andersen 2003). Despite the combination of the two methods, the tendency is more deductive than inductive, as we mainly employ existing theories as a starting point, and then utilize these in the analysis of the collected empirical data (see appendix 3).
2.2 Empirical Choice
This thesis relies on both primary and secondary data (see appendix 3). The choice of incorporating both types of data is based on the fact that they complement each other well (Blumberg, Cooper & Schindler 2005). In the following sections we present our main data sources.
2.2.1 Primary Data
Primary sources of evidence are in particular useful as they allow us to empirically explore Irma’s brand identity due to its specificity and relevance for the problem statement (Blumberg, Cooper & Schindler 2005).
When deciding on which primary data we needed to gather to analyze our problem statement, we were conscious of covering all field perspectives relevant for the analysis to avoid one‐sided conclusions. As a result, our primary data represents a collection of three perspectives: 1) Irma’s viewpoint, 2) Irma’s customers’ perceptions, and 3) the composition of Irma’s actual market offering.
Irma’s viewpoint is represented by the interview with Marketing Manager Gitte Matzen (see appendix 4) and a CBS presentation by CEO Alfred Josefsen. However, it is
important to note that Irma’s own perspective may be biased (Blumberg, Cooper &
Schindler 2005), as both representatives are currently part of the Irma organization and consequently they may not be completely objective in their viewpoints. Hence, we seek to counter this by integrating other perspectives into the analysis and thereby avoid jeopardizing the validity of our research (ibid). Apart from gathering information on Irma’s perspective, the basis for the interview with Gitte Matzen was primarily to develop an understanding of Irma’s market situation, challenges and vision for the future. Alternatively, the presentation by Alfred Josefsen covered the new management style that he brought into the company and the impact that this has had on the firm’s turnaround and current success.
The customer perspective is represented by our association tests (see section 2.2.1.1 Collecting Primary Data), for which we interviewed randomly chosen Irma customers to get their perception of Irma and Irma’s brand personality. Moreover we gathered data on Irma’s customers’ values by applying the Means End Chain (see section 2.2.1.1.
Collecting Primary Data) and this ultimately lead to the creation of a customer value hierarchy (see appendix 18). This information facilitated our ability to explore whether Irma’s offer actually satisfies the retailer’s customers’ needs, and it also indicated how customers feel about themselves in shopping at Irma, leading to a picture of the store as an expression of customer self‐expression.
In order to analyze Irma’s actual market offering, we collected data on Irma’s store environments based on our own observations (see appendix 5 and 6) and according to a pre‐designed observation list (see section 2.2.1.1 Collecting Primary Data). With this data we were able to detect general trends in the overall offering concerning brand and product presentation, store layout, and atmosphere. We apply these findings in our analysis of what constitutes Irma’s brand identity.
2.2.1.1 Collecting Primary Data
Our methodological approaches for the collection of primary data are presented and argued for in the following section. Each of the utilized approaches is likewise identified in relation to the facet or facets of Kapferer’s Identity Prism that it concerns.
The interview with Ms. Matzen (2009) and the CBS presentation of Josefsen (2009) were sources of data that primarily presented Irma’s corporate identity by particularly emphasizing the organizational culture, management style and employees of the firm.
The empirical sources thus primarily focused on the internal aspects of the brand, and as a result these types of data were in particular useful in the analysis of the cultural facet of Kapferer’s Identity Prism.
The interview with Gitte Matzen (2009) was semi‐structured in order to not only gather responses to certain pre‐determined questions but also allow for the opportunity to pursue interesting and relevant conversational directions. In addition, the questions were formulated as open‐ended to stimulate an open and free conversation (Blumberg, Cooper & Schindler 2005). Instead of creating fully structured questions in advance, we established an interview guide that embraced all the topics that we wanted to discuss with Ms. Matzen (see appendix 7). The rationale for conducting a semi‐structured interview was that we were able to guide the interview in directions relevant for our thesis, while simultaneously reducing our influence on the outcome and avoid leading questions. In this manner the interviewee was able to reflect on the questions and bring in new perspectives that she found relevant. The semi‐structured interview was thus a flexible format and it gave us the opportunity to pose follow‐up and elaborating questions as new topics were introduced (Blumberg, Cooper & Schindler 2005). The reason for not conducting more qualitative interviews was due to time and budgetary constraints (ibid).
The association tests that we conducted were to identify the brand associations that customers have with the Irma brand and Irma’s brand personality. The rationale for
applying this particular method was the fact that when exploring consumers’ brand associations a method typically linked to such an investigation is association tests to elicit the cognitive brand constructions in the consumer’s mind (Heding, Knudtzen &
Bjerre 2008). The association tests were thus very useful in the personality facet of the Identity Prism. We conducted association tests with 10 people, all of whom were dedicated Irma customers. The number of association tests conducted was based on the fact that in order to be able to make generalizations ideally there should be a minimum of approximately 8 interviews (McCracken 1990). In asking the respondents to identify Irma as a person and explain their choice, we sought to elicit some of the associations that they had with the Irma brand that they would normally be unwilling or unable to express verbally. Through the information from these tests we then tried to establish an overall picture of how Irma’s brand and its personality is viewed and perceived by their customers.
By asking the recipients how they imagine Irma as a person, we allowed them to individually express both the tangible and the intangible elements of the retailer. In this way, they summarized the gestalt of a variety of different elements, including store design, service, assortment and other elements of the offering, all in terms of a person and the associated personality. However, the challenge (and the difficulty) is that the brand image exists in the mind of the consumer and therefore there is a tendency for the answers to diverge more than if the interviewees were guided by a restricted set of pre‐chosen possible answers.
The Means End Chain (MEC) approach and the associated laddering technique was applied as it enabled us to understand how consumers make links between products, personally relevant consequences and more deeply held values (Reynolds & Gutman 1988). MEC is thus a way of understanding consumer behavior and motivation. The laddering technique can be described as a certain technique applied for in depth interviews which through succeeding why, where and when questions enables the researcher to understand consumer values. The responses to the questions form a value hierarchy (ibid) (see appendix 18).
By applying the MEC we are able to identify the attributes (the means) and how these attributes have consequences for an individual consumer who will typically engage with brands where the consequences reinforce the consumer’s underlying individual values (the ends) (Reynolds & Gutman 1988). The MEC was thus carried out to elicit the underlying values of Irma’s customers and to determine whether and how their needs are satisfied by Irma’s offering. In addition we were also able to surface how customers feel about themselves when shopping at Irma. In particular this approach of in depth interviews enabled us to understand how the customers utilize Irma’s brand as a means for creating their individual identity and expressing their self‐image. The customer value hierarchy that we were able to establish based on the results of the MEC was thus in particular applicable to the self‐image facet of the Identity Prism as well as the reflection and relationship facets. Indeed this approach provided us with an in depth understanding of the underlying consumer behavior rationales and values.
The results of the MEC are based on the responses of two participating customers which are combined and presented in the customer value hierarchy (see appendix 18).
We acknowledge that the results may not be statistically representative due to the very limited sample size, but given the high level of involvement required from the customers and the extensive amount of time needed to create the value hierarchy, we choose to economize on our resources and apply them elsewhere. Nevertheless, we believe that the results still function as an indicator of the likely values of Irma’s customers.
Our rationale for choosing store observations as a method for analyzing a part of Irma’s brand identity was that this particular method offered us the possibility of investigating the external visual expression of Irma’s brand identity and its degree of consistency across different store formats in its natural setting (Blumberg, Cooper &
Schindler 2005). The store observations thus provided us with valuable insights especially in relation to the facet of the Identity Prism concerning physique. We conducted store environment observations in five different Irma stores in the Copenhagen area and the observations can be characterized as structured (ibid) due to
the pre‐created observation list that identified the given objects under observation.
The objects under investigation were identified in accordance with the suggestion of McGoldrick (2002) (see section 3.1.1.2 Brand Image). We categorized the objects in four broad themes relevant for identifying Irma’s brand identity: store layout, personnel, product assortment, and brand & communication.
2.2.2 Secondary Data
As mentioned above the thesis also relies on secondary data. The primary advantages of utilizing this type of data are that it is already available, and thus the researcher saves time, money and effort relative to collecting the data himself, and that the data is generally of quite high quality depending on the source (Blumberg, Cooper &
Schindler 2005). However, disadvantages include the potential lack of relevance and the often aggregate level of information (ibid). In this thesis the secondary data builds on: 1) literature primarily concerning topics such as branding, retailing, and internationalization (e.g.: Kapferer (1997), Tongeren (2008), and Akehurst & Alexander (1995), among others), 2) academic articles (e.g.: Keller (1993, 2001) and Louro &
Cunha (2001)), 3) articles from the press (e.g.: JP (2009. 04.14), Børsen (2008.05.22), 4) reports (e.g.: GAIN Report 2008) and 5) internet resources (e.g.: www.irma.dk, www.coop.se). The secondary data is thus founded on a collection of different sources – some very contemporary and others more classical. By integrating these sources we seek to take advantage of the generic nature of the classical sources of evidence while also taking into account more recent trends and developments.
2.2.3 Empirical Validity
We seek empirical validity by including a balanced collection of empirical data that integrates all the parameters of the internationalization of a retail brand, namely the supply side (retail), the demand side (customers), and the market (Denmark and Sweden). We thus incorporate multiple sources of evidence which capture both qualitative (e.g.: interview, association tests, customer value hierarchy) and
quantitative (e.g.: numbers, figures and statistics) data required for our analysis. Our motivation for combining these types of data is the benefit of triangulation, where we increase the validity of our research by relying on multiple sources investigating the same phenomenon. We are thus able to “develop converging lines of inquiry”
(Blumberg, Cooper & Schindler 2005:197). By applying methodological triangulation we utilize two divergent sources of evidence to determine the third, namely the field of analysis (Andersen 2003).
2.3 Theoretical Choice
After having described the empirical choices, we will now present and explain the rationales for the main theoretical choices.
In order to examine Irma’s brand identity, we chose to apply Kapferer’s Identity Prism (Kapferer 1997) as it structures an understanding of the constituent brand elements.
The advantage of applying this model is that it embraces both the external and internal aspects of the brand, in other words it embraces both the internal brand focus of the business and the external customer focus (see section 3.1.4 Brand Management Paradigms). The incorporation of these two perspectives is a considerable strength of Kapferer’s theory and the nature of the theory is thus broadly encompassing. The challenge in applying Kapferer is, however, that he does not indicate the relative weight of each of the elements, and thus he leaves it to the practitioner to create the requisite balance when utilizing the model. Moreover, Kapferer does not clearly define or demarcate each of the elements and as a consequence we have chosen to extend the Identity Prism (see Table 4). In this manner the Prism becomes more concrete and readily approachable, as well as better tailored to the specific problem under investigation. Thus, these theoretical contributions whereby we extend the Prism have been chosen on basis of their relevance in relation to the specific element and the Irma case in particular.
With the aim of analyzing the internationalization of a premium brand to the Swedish market, we have reviewed available relevant literature dealing with retail internationalization (e.g.: Hutchinson et al. 2007; Williams 1992; Evans, Treadgold &
Mavondo 2000; Dawson 1994), and on that basis have chosen a conceptual model of the strategic considerations for international retail expansion, namely the PLIN model (Simpson & Thorpe, as cited in Akehurst & Alexander 1995). The arguments for applying this particular model are that firstly, it relates specifically to retail internationalization (see section 3.2.1 Retail Branding), and secondly, it offers the possibility of integrating factors of consumer behavior and perception with general market trends. Thus we are simultaneously able to examine the retailer’s product offering and the competitive situation in the market and whether there is a match between market trends and the retail offer. The PLIN model therefore covers many of the relevant factors that must be considered by Irma before internationalizing (see section 3.2.2.1 Reviewing the PLIN Model). We employ the model as an overall framework for the second part of the analysis regarding the Swedish market.
The motivation for not applying any of the other reviewed theories or models is that they mainly concentrate on, for example, the underlying motivational factors for business internationalization (e.g.: Hutchinson et al. 2007; Williams 1992; Dawson 1994) and possible strategic entry modes (i.e.: joint ventures, mergers and acquisitions, franchising and foreign direct investments) and their associated benefits and drawbacks (Claver et al. 2007) in the internationalization process. Besides these focal points, others (Evans, Treadgold & Mavondo 2000) suggest more holistic frameworks embracing the entire internationalization process and a variety of factors (e.g. the strategic decision making process and entry strategies) that may impact the organization’s performance. Despite the interesting aspects of these topics, they are not the themes under investigation in this thesis and their relevance diminishes accordingly.
2.4 Applying a Case Study
Applying a case study for exploratory and descriptive purposes is a widely used research approach (Blumberg, Cooper & Schindler 2005). According to Yin (2002 as cited in Blumberg, Cooper & Schindler 2005:190), a case study can be defined as “an empirical inquiry that investigates a contemporary phenomenon within the real‐life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used”. An essential characteristic about case studies is thus the “embeddedness of a phenomenon in its real‐life context”
(Blumberg, Cooper & Schindler 2005:190). As already mentioned, we apply Irma as a case in order to ground the thesis practically and empirically, and to counterbalance the heavy concentration on theory. The Irma case is thus utilized as a tool for exploring the phenomenon of retail brand internationalization in a concrete retail context.
2.4.1 The Selection Criteria of the Case Study
In this section the underlying arguments of the case study are presented as well as our criteria for selecting this particular case. The case selection criteria are described in appendix 8.
One of the primary rationales for choosing Irma as a case company is that Irma is a strictly Danish firm largely limited in its geographical extension to Zealand, with some recent initial expansion to Jutland (www.irma.dk). Consequently, Irma’s geographical extension and national embeddedness support the purpose of the thesis. The firm’s success in Zealand has given Irma the courage to expand the business to Jutland, which also shows that Irma realizes the potential benefits of penetrating additional markets.
However, there are only market share and mindshare for so many retailers in the Danish market, a market which is already quite crowded (see appendix 9). Thus, in a few years a logical next step could well be penetrating a new national market, such as Sweden.
Entering the Swedish market also seems particularly plausible for Irma, not only due to its geographical and cultural proximity (Johanson & Vahlne 1977), but also due to the fact that COOP, Irma’s parent company (www.coop.dk), is already present in this market (www.coop.se). Therefore one could argue that Irma may be able to reap certain benefits in collaborating with COOP to enter the Swedish market. Such benefits could include economies of scale in purchasing and logistics and the exploitation of co‐
branding between the parent and subsidiary. Besides these two examples, one could assume that there may also be several other benefits of engaging in a collaborative relationship with COOP that could offer competitive advantages to Irma relative to its competitors.
The Irma case is also particularly relevant for this thesis as the retailer is very committed to a high quality assortment with a strong focus on organic, fair trade and environmentally friendly products (www.irma.dk) which are part of strong societal trends supported by increasingly globally minded, health conscious and informed consumers (GAIN Report 2008). As Irma’s Marketing Manager confirms (Matzen 2009), Irma is indeed benefitting from these trends in attracting new customers due to the match between the retailer’s offering and the needs and wants of an increasing number of customers. Finally, these trends clearly transcend Danish national borders and are particularly strong in many Western European countries, including Sweden (GAIN Report 2008). Thus, Irma’s offering is potentially well suited to appeal to certain target segments in a number of other international markets.
Having been awarded Best Workplace in Denmark in 2008 for businesses with more than 1000 employees (www.irma.dk), Irma also has a solid foundation for transferring the Irma brand across borders as it has refined the internal processes to develop and maintain a strongly favorable internal work environment capable of motivating committed employees and management that heartily support the brand. This accomplishment can be regarded as a genuine success considering the fact the grocery retail sector is not generally regarded as “a sexy business” (Josefsen 2009) and many of the jobs in the sector are traditionally anything but interesting or challenging.
Finally, Irma is a very old business with strong attachments to the Copenhagen area (see section 4.1 The Story of Irma). Such firm history makes it interesting to examine the possibilities and challenges of repositioning the premium brand in a new international market where the firm must start from scratch with zero brand awareness or customer loyalty.
2.5 Delimitation
The sole focus of this thesis is on how Irma can internationalize its premium brand within the Swedish grocery retail market. We do not examine how Irma’s brand equity can be measured as this investigation would not be particularly relevant in relation to the problem statement. This implies that we take point of departure in Irma’s brand identity and image in the Danish market and explore which elements Irma can and should transfer the new market. As part of this analysis, we also integrate the characteristics of the Swedish retail market and its consumers in order to explore the potential match between Irma’s offering and the characteristics of the Swedish market. We have chosen this particular focus primarily because we are convinced that, in today’s global markets where strong brands play a pivotal role in guiding consumer behavior, a strong offense is often the best defense. In other words, if Irma is unable to capitalize on its winning concept in the Danish market to leverage growth via internationalization, it may only be a matter of time before an international rival finds the Danish high‐end grocery segment to be an attractive target in the same way that Aldi and Lidl have attacked in the discount segment.
2.6 Thesis Structure
The subsequent sections are structured as follows. We take point of departure in the theoretical framework which forms the basis of this thesis. After that we introduce the Irma case study by presenting the main historical points of the retailer. We are then able to develop the analysis of Irma’s brand identity and the subsequent analysis of
Irma’s potential brand internationalization to the Swedish market. The analysis thus consists of two parts, first with respect to the Danish market and then with respect to market entry into Sweden. Ultimately, we present our conclusions based on the conducted analysis and reflect on the entire thesis.
3. Theoretical Framework
As already stated in the methodology, this thesis relies heavily on theoretical contributions from the academic literature related to branding, retail and internationalization. The following section presents the collection of theories and models that form the theoretical framework in which the thesis is anchored. This theoretical framework is established as a funnel that we increasingly narrow down as we move on. We thus first introduce and examine the broad field of brand management, after which we become more targeted in relation to the specific retail setting that Irma is operating within.
3.1 Brand Management
The increasing acknowledgement that brands are “sources of sustained competitive advantage” (Louro & Cunha 2001:849) motivates the strategic branding considerations of organizations and underlies the entire process of strategic brand management. With the purpose of structuring and systematizing the wide‐ranging field of brand management, we choose to regard this field in terms of the external and internal perspectives on branding. The following sections thus first present and discuss each of these perspectives in turn, before finally integrating the two viewpoints. It should though be noted that despite the rather definite division between the external and internal parts of the brand, in reality the distinction is not as clear‐cut as the two viewpoints interact and overlap.
3.1.1 The External Brand
When referring to the external part of a brand, the center of attention is on customers and their influence on the brand’s equity. In particular, this perspective focuses on customers’ perceptions of the brand, which then determine both brand image and customer loyalty.
3.1.1.1 Brand Equity
According to Aaker (1991:15), brand equity is defined as “…a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers”. A given brand possesses a certain amount of equity depending on the amount of added value created primarily by the brand’s image in the mind of consumers. Thus, a strong brand image clearly enhances a company’s brand equity and contributes to the development of a loyal set of customers. Although we recognize that brand equity can be looked at from a strictly financial perspective, for the purposes of this study we focus exclusively on customer‐based brand equity (see section 3.1.1.3 Customer‐Based Brand Equity).
According to Aaker (1991), brand equity directly influences other key elements of branding and brand image, such as customer loyalty and perceived quality (see appendix 10).
As shown in appendix 10, Aaker (1991) defines brand equity as a set of five categories.
From looking at the model, it becomes clear that strong brand equity conveys substantial value for the consumer, as well as the firm, and it is also likely to generate, among other benefits, greater loyalty, which in the long run may allow a firm to extend their brand. Each of the five categories is presented in Table 1.
Table 1 – Five Categories
Other assets There are certain proprietary brand assets that can prevent
competitors from eroding a customer base and the associated customer loyalty. Such assets can be a unique trademark (protecting the brand equity from competitors who wish to confuse and mislead the consumer by using similar name or other characteristic of the brand) or a patent (protecting the actual design or formulation of the product or service).
Brand associations
"A brand association is anything linked in memory to a brand" (Aaker 1991:109). The underlying value of a brand (or the brand’s image) is based upon organized associations. A positive brand association can act as a competitive advantage for the company behind the brand.
Perceived quality
"The customer's perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives" (Aaker 1991:61). Regardless of the actual specifications of a brand, consumers have a perception of the brand. The perception can be based on e.g. design, price or other attributes. The perceived quality of a given good is strongly associated with customer loyalty.
Brand awareness
Aaker (1991:74) defines brand awareness as “the ability of the potential buyer to recognize and recall that a brand is a name of a certain product category”. There is an overall tendency for consumers to buy brands that they are familiar with.
Brand loyalty Brand loyalty is defined by Aaker (1991) as the degree to which the consumer is likely to switch to competing brand. Typically, it is quite costly for a company to win new customers and relatively inexpensive to keep existing ones. Thus, firms often spend a great deal of effort to promote customer loyalty, via various loyalty initiatives.
3.1.1.2 Brand Image
Having a strong, positive and readily identifiable brand image is of great importance to a company since there are numerous links between image and overall firm performance (McGoldrick 2002). Drilling down, there are many component parts of an image – both tangible and intangible. Over the last 50 years, it has become increasingly clear that establishing and nurturing brand image is critically important for the retailer (Martineau 1958). From the many studies that have been conducted of retail brand images, there is a tendency for divergence between a retailer’s perception of their own image and the consumer’s perception of the image (Pathak et al. 1974). Whether there is an inconsistency in terms of underrating or overrating the stores attributes, both discrepancies can lead to failure. Achieving congruency between retailer and consumer perceptions is therefore vital for the business.
One of the challenges when trying to conduct an image analysis is to look at the details, as there is often a tendency within management to generalize and look at the big picture. However, one must take a step below that in order to detect any possible challenges or problems (McGoldrick 2002). One way of doing this is for the firm to go through a checklist (see appendix 5) – looking at things like price, quality and range of merchandise, staff, location, store atmosphere, and other important elements that support brand image. Identifying, measuring and refining these different elements can be of great help to the company (McGoldrick 2002) when trying to align their image with that of their customers.
3.1.1.2.1 Tangible and Intangible Elements of a Brand Image
As stated above, a firm’s image is made up of many different elements. It used to be that managers were mostly focused on the tangible elements that influenced brand image. However, it has been increasingly recognized that it is just as important to focus on the intangible elements.
Martineau (1958) defines image (specifically in relation to a retail store) as being “the way in which the store is defined in the shopper’s mind, partly by its functional qualities
and partly by an aura of psychological attributes”. Looking at the definition we can see that there is a need to consider both physical and measurable factors and, just as importantly, more intangible factors. Here, the “personality” of the store, which refers to things like the feel of the store, the atmosphere, the symbols and colors used, may be critical. According to Karmark (2005), one way of maintaining a brand’s uniqueness is by giving it emotional values or ultimately even a personality. Thus, one of the challenges of monitoring an image is that the image is formed selectively in the consumer’s mind, often as the result of focusing on intangible elements of the brand.
Keller (2003 as cited in Leone et al. 2006) reinforces this by claiming that brand knowledge is not about the facts of the brand, but rather it is all about the associations that become linked to the brand in the mind of the consumer (thoughts, feelings, perceptions, experiences and images, etc.). From the above, we can conclude that the feelings and emotions that a consumer associates with a brand are just as much a part of the brand image as the factual elements. According to Aaker (1997 as cited in McGoldrick 2002:190) image personality traits can be segmented into five characteristics:
• Sincerity: down‐to‐earth, honest, wholesome, cheerful
• Excitement: daring, spirited, imaginative, up to date
• Competence: reliable, intelligent, successful
• Sophisticated: upper‐class, charming
• Ruggedness: outdoorsy, tough
Turning to the research of branding, it is generally accepted by most researchers (e.g.
Kapferer 1997) that consumers seek congruency with their self‐image, and even their ideal self, in selecting both where they shop and what they buy. Thus, in the metaphor of a brand as a personality, the emotional value of a brand plays a key role in influencing how consumers relate to the brand and brand image. By mediating how consumers consciously or subconsciously relate to the personality of a brand, brand image thus plays an essential role in influencing consumer behavior. In particular,
