The Impact of Influencers
Social Media Influencers’ Impact on Start-up Fashion Brands A case study of Daniel Silfen
Effekten af Influencere: Influenceres Indflydelse på Start-up-modebrands Et casestudie af Daniel Silfen
Written by
Louise Christina Sieverts: 43081 Sofie Monk Pedersen: 80597 Supervised by Kathrine Weicker
Master Thesis
MSc in Business Administration and Organizational Communication / Cand.merc.(kom)
Copenhagen Business School
Date for Submission: May 15th, 2018
Resumé
Modeindustrien præges i stigende grad af brugen af indflydelsesrige individer, populært kaldet influencere,
som markedsføringsredskab i et forsøg på at nå de mere end 3 milliarder aktive forbrugere på de sociale medier. Da influencermarketing er omkostningseffektivt, er det et populært middel blandt start-ups samt små og mellemstore modevirksomheder. Dette er på trods af manglende forskning i influenceres specifikke påvirkning af forbrugernes opfattelse af brands. Med dette udgangspunkt vil denne kandidatafhandling besvare følgende problemstilling: hvordan benytter start-up-modebrands influencere som led i at opbygge deres brandidentitet, og har dette indflydelse på forbrugernes opfattelse af brandet?Formålet med afhandlingen er således at bidrage til den begrænsede eksisterende litteratur på området og åbne op for yderligere forskning. Som en del af dette tages der udgangspunkt i et enkelt casestudie, start-up- modebrandet Daniel Silfen, der designer accessories til modebevidste kvinder i alderen 18-24 år.
For at kunne besvare afhandlingens problemstilling bedst muligt arbejdes der med fire undersøgelsesområder:
1) forbrugernes brug af mode, 2) forbrugernes brug af influencere, 3) start-up-modebrands’ brug af influencere og 4) indflydelsen af denne brug på forbrugernes opfattelse af start-up-modebrands. Til fjerde
undersøgelsesområde anvendes Kellers Brand Resonance Model som struktur og analyseapparat for at give et detaljeret indblik i, hvordan brandets brug af influencere har en indflydelse på denne brandopfattelse.
Afhandlingens videnskabelige standpunkt er socialkonstruktivistisk, da der argumenteres for at fænomener såsom mode og trends skabes gennem netværkseffekter og dermed i sociale interaktioner. I besvarelsen anvendes kvalitativ primærempiri i form af et ekspertinterview med casestudiet, Daniel Silfen, samt semi- strukturerede, dybdegående interviews med forbrugere.
Med afsæt i ovenstående konkluderes det, at start-up-modebrands benytter influencere til at skabe kendskab og tilegne sig specifikke associationer for dermed at opbygge en brandidentitet. Undersøgelsen viste dog, at forbrugernes opfattelse af produkt- og influencerrelevans er altafgørende for, hvorledes brugen af influencere har en effekt på brandopfattelsen. Ved manglende relevans kan den brandidentitet, som brands påtænker at kommunikere, blive opfattet anderledes af forbrugerne. På trods af disse forbehold konkluderes det, at start- up-modebrands’ brug af influencere har stor indflydelse på forbrugernes opfattelse af brandet, og at dette i særdeleshed manifesterer sig i brand identity, brand meaning og brand responses. Ydermere konkluderes det, at brugen af influencere ikke kan stå alene.
Table of Contents
Resumé 1
List of Figures, Images, and Tables 4
Structure of the Thesis: Reader’s Guide 5
INTRODUCTION 6
1. Preface 6
1.1 Research Area 7
1.1.1 Research Question 7
1.1.2 Clarifications 8
1.2 Delimitation 10
1.3 Purpose 11
2. Case: Daniel Silfen 12
2.1 Background 12
2.2 Marketing Activities 13
2.2.1 SOIL Agency 13
2.2.2 Social Media Influencers 14
2.3 Financial Situation 15
2.4 Applicability of Case 16
3. Philosophy of Science 17
3.1 Social Constructivism 17
3.2 Relevancy of Social Constructivism 18
THEORETICAL FRAMEWORK 19
4. Theory 19
4.1 Social Media Influencers 19
4.1.1 The Rise and Mechanics of Social Media Influencers 20
4.1.2 Capital of Social Media Influencers 21
4.1.3 Social Media Influencers in Fashion Cycles 23
4.2 Branding 25
4.2.1 Branding Perspectives 25
4.2.2 Co-creation of Brand Value in Start-ups 26
4.3 Branding in Start-ups 27
4.3.1 Guidelines for Creating Brand Identity for Start-ups 28
4.4 Consumer Perception of Start-up Brands 29
4.4.1 Cultural Brand Consumption 29
4.4.2 The Brand Resonance Model 32
EMPIRICAL RESEARCH 38
5. Methodology 38
5.1 Abduction 38
5.2 Single Case Study 39
5.3 Qualitative Methodology 39
5.3.1 Quality Criteria 39
5.4 Data Collection 40
5.4.1 Primary Data 40
5.4.2 Secondary Data 41
5.5 Brand Interview 42
5.5.1 Data Collection 43
5.5.2 Data Analysis 44
5.6 Consumer Interviews 44
5.6.1 Interview Process 45
FINDINGS 51
6. Analysis 51
6.1 Consumers’ Use of Fashion 53
6.1.1 Sub-conclusion 54
6.2 Consumers’ Use of Social Media Influencers 55
6.2.1 Consumers’ Definition of Social Media Influencers 55
6.2.2 Consumers’ Use of Instagram 59
6.2.3 Selection Criteria for Following Social Media Influencers 59
6.2.4 Attitudes Towards Specific Social Media Influencers 62
6.2.6 Influence of SMIs 66
6.2.7 Sub-conclusion 68
6.3 Start-up Fashion Brands’ Use of Social Media Influencers 68
6.3.1 The Product and Its Attributes 69
6.3.2 Brand Awareness Communication 70
6.3.3 Branding Guidelines 72
6.3.4 Sub-conclusion 73
6.4 Influence of Social Media Influencers on Consumers’ Brand Perception 73
6.4.1 Brand Identity 74
6.4.2 Brand Meaning 84
6.4.3 Brand Responses 95
6.4.4 Brand Relationships 101
6.4.5 Sub-conclusion 103
7. Discussion of Findings 105
8. Conclusion 109
REFLECTIONS 111
9. Recommendations 111
10. Evaluation of Theory and Methodology 114
10.1 Evaluation of Theory 114
10.2 Evaluation of Methodology 115
11. Future Implications 115
ADDENDA 117
12. Bibliography 117
13. Appendices 124
List of Figures, Images, and Tables
Figure 1: Structure of Thesis (own design), p. 5 Figure 2: Research Overview (own design), p. 8 Figure 3: Theoretical Overview (own design), p. 19 Figure 4: Keller’s Brand Resonance Model, p. 32
Figure 5: Updated Brand Resonance Model (own design), p. 38 Figure 6: Analysis Overview (own design), p. 51
Image 1: Instagram Photo of Josephine Havmøller, p. 77 Image 2: Instagram Photo of Caroline Vedel, p. 78 Image 3: Instagram Photo of Caroline Vedel, p. 78 Image 4: Instagram Photo of Trine’s Wardrobe, p. 79 Image 5: Instagram Photo of Trine’s Wardrobe, p. 79 Image 6: Instagram Photo of Laulaubaubau, p. 79 Image 7: Instagram Photo of Trine’s Wardrobe, p. 80
Table 1: Clarifications of Key Concepts, p. 9
Table 2: Outline of Interviewee Profiles, p. 47
Structure of the Thesis: Reader’s Guide
Figure 1: Structure of Thesis (own design)
INTRODUCTION
1. Preface
With the internet’s omnipresent pervasion into all aspects of our lives, social media has emerged as a relatively new channel for marketing communications (Lim et al., 2017: 20). Marketers employ numerous strategies in attempts to reach the more than 3 billion active people on social media site (Barker et al., 2017: 1; Smith, 2017) like Instagram, Facebook, and YouTube. It is evident that social media influencers (henceforth referred to as SMIs) have gained great popularity as one of these strategies, as more than 73% of all marketers make use of influencer marketing today (Ward, 2017). Influencer marketing is the employment of influential individuals to promote a brand’s products (Falcon.io, 2017). As influencer marketing is relatively inexpensive (Barker, 2017), it is particularly appealing and pertinent for small- and medium-sized enterprises (SMEs) and start-ups, which are characterized by scarce resources and low budgets (Bresciani & Eppler, 2010: 356).
An SMI is a “(...) new type of independent third party endorser (...)” (Freberg et al., 2011: 90) who through these endorsements functions as a digital opinion leader for her/his vast number of followers on social media. As consumers often follow the lives of these SMIs closely, they come to appear accessible, relatable, and intimate, which amplifies their trustworthiness as perceived by consumers (De Veirman et al., 2017: 801).
From a marketing perspective, this enables SMIs to disseminate messages more authentically and credibly when compared to other advertising initiatives (De Veirman et al., 2017: 798). Additionally, due to their credibility, SMIs have come to possess a certain power to shape consumer attitudes (Freberg et al., 2011: 90), indicating that these SMIs essentially have a significant impact on consumers’ attitudes towards brands, specifically. Because of this, marketers are racing each other to use SMIs in attempts to capitalize on their influence. This newer marketing channel has also gained great popularity in the fashion industry (McKinsey &
Company, 2017: 45) where Instagram, which is focused on visual storytelling (Instagram
1, 2018), lends itself to the visually focused industry.
However, while the commercial use of SMIs is growing globally, research centered around how their
endorsements specifically impact consumer attitudes towards the brands they are sponsored by is limited (De
Veirman et al., 2017: 800). This particularly holds true for SMEs (Odoom et al., 2017:69) and start-up brands
(Bresciani & Eppler, 2010: 356), where the literature on branding is scarce in general. This is quite remarkable considering that, numerically, they make up the vast majority of companies (Berthon et al., 2008: 28).
1.1 Research Area
Based on the above, we wish to shed light on the topic of SMIs and their impact on start-up fashion brands. The case of start-up (fashion) brands is specifically interesting to study because neither an image nor an identity exists at the initial establishment of a brand. Therefore, establishing a favorable, differentiated brand identity in the eyes of consumers through branding activities is paramount for brands’ customer acquisition, and thereby success and survival in their early stages (Odoom et al., 2017: 68; Bresciani & Eppler, 2010: 356). When an SMI endorses a brand, associations about the brand, i.e. a brand perception, may be developed in the minds of consumers based on the endorsement (cf. Keller, 2013: 261). One could argue that associations are also formed in the minds of other stakeholders. However, since the survival of start-up (fashion) brands is dependent on consumers, who possibly have the power to make or break a young brand, this thesis aims its focus on that particular stakeholder group. Therefore, we are interested in investigating how start-up fashion brands use SMIs when constructing their brand identity, which associations consumers mentally form about a brand when endorsed by SMIs, and ultimately, how this endorsement impacts consumers’ perception of a brand. This leads us to the research question outlined below.
1.1.1 Research Question
How do start-up fashion brands use social media influencers in the course of constructing their brand identity, and does it have an impact on consumers’ perception of the brand?
Our research is built around a single case study of the start-up fashion brand, Daniel Silfen, which will be used
to answer our research question with the aid of four study areas (cf. figure 2 below). First, we will go into
consumers’ use of fashion to map out how their interest in fashion SMIs has emerged. This will enable us to
subsequently go into depth with consumers’ use of SMIs to find out how these may generally have an impact
on consumers’ views of fashion and fashion brands, while this also provides knowledge around motivations for
brands to collaborate with SMIs. In turn, originating in consumers’ use of SMIs, we analyze Daniel Silfen’s use
of SMIs in the course of constructing its brand identity to determine how this impacts consumers’ perception
of the brand. Finally, the findings from the preceding three study areas facilitate analysis of how SMIs have an
impact on how consumers perceive Daniel Silfen. For this, we will use Keller’s brand resonance model, which
also constitutes the main theoretical model in this thesis. In this way, the four study areas allow us to answer the research question, which, rooted in consumers’ use of fashion and SMIs, correlates Daniel Silfen’s use of SMIs for construction of its brand identity to the consumer perception of the brand as impacted by the brand’s use of SMIs.
Figure 2: Research Overview (own design)
1.1.2 Clarifications
In this thesis, we understand a start-up fashion brand as having operated in the fashion industry, i.e. making and selling clothes and/or accessories, for less than five years. Furthermore, start-up fashion brands are characterized by scarce resources and low budgets (Bresciani & Eppler, 2010: 356; 358; Major & Steele, 2018).
In addition, we understand start-ups as belonging to the category of SMEs (e.g. Bresciani & Eppler, 2010). In
Europe, this is broadly defined as companies employing less than 250 people with a revenue of less than € 50m
(DKK 372m) or a balance sheet total of less than € 43m (DKK 320m) (The European Commission, 2018). SMEs
are comprised of small, medium, and micro companies. We argue that start-ups most typically fall under the
category of micro companies, i.e. employing less than ten people and having a revenue or balance sheet total
of less than € 2m (DKK 14.8m) (cf. The European Commission, 2018).
Characteristically, the primary branding challenge for start-ups is the absence of an established brand identity and image at their initiation (Bresciani & Eppler, 2010: 356). Therefore, the common branding objective of start-ups is to establish awareness around their brands and products (cf. Kotler et al., 2012: 565; Juntunen et al., 2010: 126) in the course of their pursuance of a favorable corporate image (Juntunen et al., 2010: 126).
The following table defines key concepts used throughout this thesis. Thus, whenever we apply one of these terms, we adhere to our definitions below.
Concept Clarification
Blog A personal web log, i.e. online diary, presented on a frequently updated website by an individual or a few individuals (WebFinance Inc., 2018).
Brand Elements, e.g. symbols, that identify companies and help them distinguish their products from those of competitors (Keller, 2013: 30).
Branding The measures taken to differentiate the goods of one company from the goods of another (Keller, 2013: 30).
Brand Awareness The awareness of the brand forming the foundation of the external perception of a brand.
Brand Identity The associations of a brand that a company pursues to establish or cultivate (cf.
Heding et al., 2009: 12) through, e.g., communication.
Brand Image The associations constituting part of the external perception of a brand, which are formed based on, e.g., the brand’s communication, Word of Mouth (WOM), personal experiences with the brand.
Fashion A collection of symbols, social meanings, and behaviors systematized into an intricate network of social exchange (Craik, 2009: 106).
Influencer Marketing Promoting products by the use of people who influence a brand’s target audience
(Falcon.io, 2017).
Social Media Platforms such as Facebook, Instagram, or YouTube, which enable users to create content and share it with their social network (Oxford University Press
4, 2018).
Social Media Influencer (SMI)
Any ‘ordinary’ consumer who, based on his/her ability to publicly display, consume, and post about his/her life, taste, and style on Instagram, has attracted a sizeable network of people following him/her (cf. McQuarrie et al., 2013: 136, De Veirman et al., 2017: 798).
(Clothing) Style The collective appearance of the clothes a person is wearing.
Trend A fashion (Oxford University Press
3, 2018), defined as popular or the latest style of clothing (cf. Kotler et al., 2013: 559; Oxford University Press
1, 2018). Popular being what is admired by the majority of a given culture (Oxford University Press
2, 2018).
Table 1: Clarifications of Key Concepts
1.2 Delimitation
We set the following delimitations in order to investigate the research question of this thesis thoroughly.
Firstly, we focus on the Danish market due to our geographical access to, as well as existing knowledge of, this market.
Secondly, we focus on the fashion industry. From all accounts, fashion spreads through network effects, meaning that when numerous people successfully adopt a trend, it (positively or negatively) influences the value of that trend as perceived by others (Wolny & Mueller, 2013: 563). Because SMIs display their trend adoptions to their bands of followers (cf. McQuarrie et al., 2013: 136-137), they arguably play a big part in these network effects. Therefore, fashion represents a pivotal point for research on influencer marketing.
Thirdly, this dissertation focuses specifically on start-ups, thereby delimiting us from concentrating on
companies not characterized as start-up fashion brands.
Fourthly, we specifically focus on the use of SMIs on Instagram. With more than 800 million monthly users worldwide (Osman, 2018; Instagram
1, 2018), Instagram has the highest engagement rate and follower growth rate of any other social media platform (Pauriol, 2017). Because of this and its features allowing for immediacy and community-development, 92% of SMIs view Instagram as their primary platform (Hashoff, 2017). This serves as our motive for focusing exclusively on Instagram.
Fifthly, we will be viewing brands from a consumer perspective, thus focusing on consumers’ associations and perceptions surrounding a brand.
Finally, the primary focus is on our case company Daniel Silfen. Thus, the focal customer group of this thesis will be the brand’s target audience: Danish women aged 18-24 (app. 11), which is also the biggest age group represented on social media (Statista, 2016).
1.3 Purpose
The purpose of this thesis is threefold, as it is rooted in our three roles as, respectively, consumers, academics, and professionals in relation to this topic.
As consumers, we have experienced first-hand the discovery of new brands through SMIs, and we have seen that SMIs affect us. However, we are curious as to exactly how and why. We thereby have an interest in learning whether and how SMIs influence our own consumption behavior and decision making.
The academic purpose of this thesis is to expand the research and literature on start-up branding combined with influencer marketing. More specifically, based on existing theory, this thesis aims to analyze how the use of SMIs affects consumers’ perception of start-up fashion brands, exemplified by Daniel Silfen. This will contribute to existing literature on the area and open up to further research into the topics.
The professional aim of this dissertation seeks to develop knowledge, which can provide managers of start-up
brands with insights into how SMIs can have an impact on their brand as perceived by their consumers. Thus,
this thesis can also function as contributory managerial insights.
2. Case: Daniel Silfen
This thesis will use the Danish start-up fashion brand Daniel Silfen as a case study, selected because of its Danish origin, presence in the fashion industry, start-up characteristics, and use of SMIs on Instagram. The following section introduces the brand.
2.1 Background
The Danish accessories brand, Daniel Silfen, was founded by 24-year-old entrepreneur Daniel Silfen in August 2013 as an independent sub-brand to the accessories brand ADAX A/S, founded and owned by Daniel’s parents (app. 11). Daniel Silfen thus shares its Danish Central Business Register (CBR) number with ADAX, which is a private limited company (Daniel Silfen
1, 2018; Virk, 2018). However, the connection between the two entities is not explicitly apparent on either of their websites, social media accounts, or the like (cf. Daniel Silfen
1, 2018;
ADAX, 2018; Instagram
2, 2018; Instagram
13, 2018). According to Daniel himself, his interest in bags originates from his accessories-oriented family, but his drive to start his own brand emanates from his desire to create something that was more fashionable than ADAX (app. 11). This could explain the general lack of emphasis around the ownership of Daniel Silfen by ADAX.
In addition to Daniel, who functions as the brand’s manager, Daniel Silfen employs Celine Silfen and Emma Bauerfeind, who are primarily in charge of marketing and coordination. However, everyone partakes in the day-to-day operations including the packing of orders, customer service, social media, and design inputs (app.
11).
At the time of establishment in 2013, Daniel Silfen exclusively focused on catering to the male audience.
However, in 2017, the brand made a shift and now primarily targets the female audience, as this proved to be a more lucrative market for accessories. In this market, Daniel Silfen views its primary competitors to be the Danish accessories brands; Beck Söndergaard, Markberg, Decadent, and Núnoo (app. 11).
Daniel Silfen offers a range of high-quality leather bags in various colors, sizes, and styles as well as t-shirts,
hoodies, purses, and the like. The idea is that everyone should be able to afford a Daniel Silfen bag - a point in
which Daniel takes great pride. To give an example, the most popular model, the Emma bag, is offered at DKK
the Copenhagen area, Aalborg, and Aarhus, with the assistance of a sales agent. More specifically, Daniel Silfen’s target group consists of style-conscious, self-confident women aged 18-24 who dare to play around with colors when it comes to clothing. They are moreover quality-conscious and price sensitive (app. 11; Daniel Silfen
2, 2018).
2.2 Marketing Activities
Daniel Silfen’s 2017 goal was to gain 10,000 followers on Instagram, which it managed to achieve, whereas the 2018 goal is for the brand’s bags to be sold in 100 stores around Denmark. Within ten years, Daniel Silfen’s vision is to be the biggest bag brand in Denmark. For that to happen, Daniel Silfen is preoccupied with building a brand that people know and recognize. Thus, its primary objective is creating awareness around the brand and products (app. 11).
Around the time of Daniel Silfen’s establishment in 2013, the brand used advertisements in magazines as its primary marketing means. However, today Daniel Silfen focuses its marketing activities on Instagram, where the brand has around 13,400 followers (Instagram
2, 2018). Here, the brand allocates 60% of its marketing budget to influencer marketing led by its PR agency, SOIL agency (app. 11), elaborated in the section below.
Since Daniel Silfen launched its new website in December 2017, the largest share (44.6%) of visitors have entered the website from social media, from which 96% came through Instagram (app. 20). Interestingly, when looking at bounce rates, i.e. the share of users leaving the website after viewing only one page (Google, 2018), the visitors visiting from social media had a bounce rate of 14.5%, while the bounce rate for Instagram
specifically, excluding Instagram Stories, was 5% (app. 20). This indicates that visitors from social media and, in particular Instagram, e.g. SMIs’ Instagram accounts, find Daniel Silfen’s website highly relevant, as the vast majority browse through several pages. The fact that almost half of the traffic comes from social media is concordant with Daniel Silfen spending a significant portion of its marketing budget on SMIs.
2.2.1 SOIL Agency
In March 2017, Daniel Silfen hired SOIL Agency, which is a Copenhagen-based PR, strategy, and
communications agency. The agency was founded in 2014 and currently employs four people (app. 11;
LinkedIn, 2018; SOIL Agency
1, 2017). SOIL’s clients are beauty, fashion, lifestyle, and jewelry brands, whom the
agency services within four main categories: PR, strategic & creative consulting, brand building, and social
media (SOIL Agency
2, 2017; SOIL Agency
3, 2017). Above all, SOIL’s main focus is to position its clients’ brands in the media and the minds of consumers (SOIL Agency
4, 2017). With regards to Daniel Silfen, SOIL is responsible for all activities related to SMIs, with the brand’s own employees on the sideline. Moreover, Daniel Silfen’s products are displayed in SOIL Agency’s showroom, providing access to SMIs and journalists. This often results in both the representation of products in magazines and the borrowing of a bag, for a designated period, by SMIs (app. 11).
2.2.2 Social Media Influencers
At the beginning of 2017, Daniel Silfen estimates to have collaborated with around 50 SMIs. However, since employing SOIL Agency, the brand has cut back on the number of SMI collaborations and now works with a select few in earnest. Of the many collaborations, Daniel Silfen’s employees mentioned having worked with the Danish SMIs Trine’s Wardrobe, Karo Dall, Laulaubaubau, Ditteblog, Sus Wilkins, Caroline Vedel, Fanny Børnedal,
Josephine Højbjerg, and Fie Laursen (app. 11).Among these SMIs, Daniel Silfen continues to work with Trine’s Wardrobe, Karo Dall, Laulaubaubau, Caroline Vedel, and Ditteblog who are paid to post photos of themselves wearing Daniel Silfen bags (app. 11). Trine’s Wardrobe is the biggest SMI with 108,000 followers (Instagram
3, 2018), second to her is Caroline Vedel with 41,900 followers (Instagram
4, 2018), third is Karo Dall with 23,700 followers (Instagram
5, 2018), fourth is Laulaubaubau with 15,100 followers (Instagram
6, 2018) and fifth is Ditteblog with 11,300 followers (Instagram
12, 2018). Model and actress Sus Wilkins was chosen as campaign model for Daniel Silfen’s Spring/Summer 2018 campaign and often shares photos from this campaign with her 16,100 followers
, 2018). One-time collaborations include aspiring actresses Fanny Børnedal (Instagram
10, 2018) and
Josephine Højbjerg (Instagram
9, 2018), as well as TV-personality Fie Laursen (Instagram
8, 2018) who was
dropped because she did not fit the brand due to her negative image among consumers (app. 11; see
description of Fie Laursen in app. 17 and consumer attitudes towards her on p. 63). In addition to the above,
Daniel Silfen started working with SMI Josephine Havmøller in mid-February 2018 (Instagram
11, 2018). The
SMIs Daniel Silfen collaborates with today are chosen together with SOIL Agency, based on an assessment of
the match between SMI and brand (app. 11). For a description of these SMIs, confer app. 17.
2.3 Financial Situation
First of all, it must be noted that Daniel Silfen did not wish to share any data specifically related to its finances.
As Daniel Silfen is a part of ADAX, the start-up brand does not publish its own annual reports, nor is the brand mentioned in ADAX’s annual reports from the last five years (Deloitte, 2013-2017). In this regard, we use the annual reports of ADAX to acquire a financial understanding of the company that owns Daniel Silfen.
ADAX can be categorized as an SME based on its balance sheet showing a total of DKK 51.5m in 2016 while having 21 full-time employees (Deloitte, 2017). With a solvency ratio of 38.3% and a return on equity (ROE) of 39.4%, ADAX is among the top 39.8% performing wholesale traders in the fashion industry, as its solvency ratio and ROE
1are well above 15% and 10%, respectively (cf. Deloitte, 2018; 2017), and actually have been since 2010 when comparing to the ratios from 2016 (cf. Deloitte, 2013; 2017). Moreover, ADAX is among the 48.2%
of wholesale traders who experienced profit the last three fiscal years (cf. Deloitte, 2018; 2017). Conclusively, ADAX appears to be a healthy company relative to the industry.
The brand explained that Daniel used ADAX’s fund to establish the Daniel Silfen brand (app. 21), providing him with the necessary equity he would have otherwise had to raise himself, lend, or acquire from external
investors. In this sense, we argue that ADAX is an investor in Daniel Silfen as well as the owner. It was further explained that the main objective for launching the brand under ADAX was to capitalize on ADAX’s already established, and possibly lucrative, manufacturer and supplier deals (app. 21). We assert that this probably saved Daniel Silfen a great deal of time, resources, and money, as it avoided the hassle of locating and acquiring similar deals by itself. Moreover, backed by ADAX, Daniel Silfen can draw on ADAX’s 36 years of industry expertise (Virk, 2018) within production, procurement, design, and marketing of accessories. In this way, the brand can steer clear of common mistakes usually made by start-ups. Additionally, ADAX helps Daniel Silfen with its financial management, including preparation of budgets (apps. 11; 21). The fact that Daniel Silfen shares its CBR number with ADAX possibly saves the brand extra expenses in the form of accountant and administrative costs associated with the upholding of independent accounts, while simultaneously providing Daniel Silfen with exemption from publishing its books. Daniel Silfen also shares offices with ADAX, and thereby presumably avoids expenses related to rent.
1 ROE is used as the closest indicator of return on investment (ROI), as ROI is not disclosed in ADAX’s annual report of 2016
In 2017, Daniel Silfen estimated to have sold 2,000 bags and stated that the brand has enough profit to cover its marketing expenditures independently (app. 21). However, from a quick assessment (cf. app. 23) of its potential revenue from selling 2,000 bags, amounting to DKK 1.4m, only subtracting estimated costs of goods and payroll costs, it is evident that the brand is challenged financially, not even considering its other expenses such as marketing. We have conducted three estimates in app. 23. Estimate I displays payroll costs equal to DKK 30,000 per employee, resulting in an operating loss of DKK 464,960. Estimate II shows payroll costs of DKK 15,000 per employee, resulting in an operating profit of DKK 183,040. Finally, estimate III shows that for Daniel Silfen to break even, the salary ought to be DKK 19,237 per employee (app. 23). Thus, as soon as we place a regular premise of employee salary in the profit and loss statement, Daniel Silfen is unable to yield (much) profit. Therefore, we find it reasonable to assume that Daniel Silfen would not be able to survive without the financial help of ADAX.
The above indicates that Daniel Silfen operates on scarce financial resources. This is further accentuated by emphasis from the brand that the financial aid from ADAX is very limited (cf. app. 11). This highlights that Daniel Silfen’s assessment of its financial situation is that it only has access to a small pool of money (app. 21).
We evaluate this to be a realistic assessment by Daniel Silfen, as it seems reasonable that a larger firm like ADAX would restrict itself to providing limited funds to its sub-brand to breed an entrepreneurial culture of innovation, which would not be cultivated had the start-up received unlimited fund provisions. Moreover, we argue that a revenue of DKK 1.4m does indicate a start-up environment when compared to the much higher maximum revenue of DKK 14.8m characterizing a micro firm (cf. p. 8).
2.4 Applicability of Case
As Daniel Silfen is faced with introducing a new brand in the highly competitive fashion industry, we argue that
one of the most fundamental premises of being a start-up brand is present. We assess that the limited financial
aid from ADAX is but a small part of achieving success as a start-up, as we assume that it is much more critical
that a start-up creates products favored by the market. As previously explained, unless a start-up is able to
acquire customers, it will not survive (cf. p. 7). Furthermore, when reviewing Daniel Silfen’s primary objective
of establishing brand awareness through influencer marketing, it is in accordance with the main objective and
cost-effective activities typical for start-up brands. On this basis, we argue that Daniel Silfen’s affiliation with
research question, one could argue that the connection between ADAX and Daniel Silfen is not particularly influential on consumers’ perception of Daniel Silfen, considering the inconspicuous connection between the brands. Thus, the most critical aspect of Daniel Silfen’s affiliation with ADAX concerns its access to financial resources, which was assessed to be rather insignificant above.
3. Philosophy of Science
A paradigm provides a lens through which the area of research, theories, methods, and results are selected and viewed (Presskorn-Thygesen, 2016: 23). In the following, we present our chosen paradigmatic perspective followed by an elaboration on its relevance to this thesis.
3.1 Social Constructivism
To meticulously explore our research question, we apply the paradigm of social constructivism, which revolves around the view that knowledge and reality are constructed, transferred, negotiated, and maintained in social situations through social interactions (Larsen, 2012: 124). In a similar way to other paradigmatic perspectives, social constructivism can be explained by presenting its apprehensions in three general constituents: ontology, epistemology, and methodology (Presskorn-Thygesen, 2012: 26-27).
The ontology of social constructivism is relativistic, which means that what is perceived as reality is entirely dependent on the eye of the beholder. The scientific objects that social constructivism concerns itself with have no objective characteristics and must be thought of as social constructions. This leads to a subjective epistemology, which means that an objective truth does not exist. While people belonging to the same social communities may share a mutual perception of what is objectively true, this truth is merely what they have incidentally ‘agreed upon’ through language and interaction. Thus, what is considered the truth is, in fact, subjective (Presskorn-Thygesen, 2012: 36-37). Based on the above, social constructivism’s methodology is qualitative, which allows the researcher to gain detailed, nuanced, and in-depth understandings of specific phenomena which are unquantifiable, such as an individual’s socially constructed lifeworld (Larsen, 2012: 130).
A key concept of social constructivism is the reality of everyday life, contrived by the theorists Berger &
Luckmann (1966). The reality of everyday life shows itself as a pre-arranged reality to an individual, where
patterns or objects seem to exist independently of the individual’s apprehension of them. This reality of
everyday life is experienced on the basis of an individual’s here of the body and now of the present, which are out of sync with those of other individuals, thus subjective. Nonetheless, the reality of everyday life is also intersubjective as it is shared with others in the sense that individuals cannot exist in their everyday life without interacting with each other (Berger & Luckmann, 1966: 35-36). When interacting, individuals use language and typifications composed of behavioral expectations and categories to make their subjectivity available to others and to negotiate these individual conceptions of social reality on a continuous basis. This way, they come to share a common sense of the world over time, and in this process, conceptions of reality become embedded in the institutional fabric of society, depicting and accentuating a socially constructed reality. Thereby, social institutions are created in the interaction between humans and are hence socially constructed (Larsen, 2012: 124-126) through the construction process explained in app. 1. Examples of these social institutions could be phenomena such as SMIs, fashion, and brands.
3.2 Relevancy of Social Constructivism
In connection with our focus on consumer perceptions, we argue that no consumers are islands, but rather integral parts of social networks and contexts. Hereby, we assert that consumer perceptions are essentially socially constructed, as it is highly probable that individuals and their perceptions are affected by their social environment. As such, the perceptions of consumers are created in their interactions with others but are nevertheless subjective. Furthermore, in accordance with McCracken (1986), the perceived meanings that brands come to possess are initially created in a world that is culturally constituted (cf. McCracken, 1986: 74), hence socially constructed. As fashion spreads through network effects, cf. p. 10, we argue that fashion and trends are also socially constructed. These social constructivist characteristics of brands and fashion are closely related to the assertion that consumers choose brands that correspond to their desired self-expression (Heding et al., 2009: 157), by which they engage in socially constructing brands, fashion, and their ‘self’. This illustrates that our paradigm allows us to analyze phenomena like brands, fashion, and consumers’ selves as being socially constructed (cf. Larsen, 2012: 129), enabling us to deeply investigate the individual consumers’ perceptions interactively with their social environment. However, during the entire process, we must be aware of the fact that the assertion that reality is constructed based on people’s here and now is also a condition for us as researchers. In this way, we acknowledge that this thesis is merely our social construction of our interviewees’
social constructions about the field (Larsen, 2012: 129).
THEORETICAL FRAMEWORK
4. Theory
In the following sections, we introduce the theory that forms the foundation for our analysis and discussion.
Figure 3 (below) portrays the interrelation between the different theoretical sections of which the content is illustrated with a question.
Figure 3: Theoretical Overview (own design)
4.1 Social Media Influencers
The following presents an overall review of existing literature revolving around SMIs. This provides
foundational insights on which we can base our analysis of study areas 1 through 4.
4.1.1 The Rise and Mechanics of Social Media Influencers
The emergence of social media has enabled ordinary consumers to reach thousands of other consumers like themselves (McQuarrie et al., 2013: 136). Previously, appearing in the media or achieving an influential role has been reserved for celebrities or people in powerful positions, but that is no longer the case. Unlike celebrities who gain their audience by, e.g., appearing on TV, these above-mentioned ordinary consumers gain their audience by displaying, consuming, and posting about their personal lives on social media in a way that attracts followers (McQuarrie et al., 2013: 136-137). For that particular reason, SMIs are viewed as ‘one of us’ by consumers, who perceive them to be accessible, relatable, and trustworthy (De Veirman et al., 2017: 789). As such, their actions of displaying their personal taste and style on Instagram earn these SMIs a status as trusted tastemaker (De Veirman et al., 2017: 789). As consumers are bombarded with thousands of impressions each day, they progressively turn to these trusted tastemakers for help in processing and managing the selection through the curation of information for them (McKinsey & Company, 2017: 45). Thus, consumers utilize SMIs for the gathering of information, inspiration, and advice related to their purchase decisions (Kulmala et al., 2013: 20), making them a valuable information channel for today’s consumers (Gillin, 2007: xiii). Indeed, when it comes to trust, 9 out of 10 consumers trust information coming from SMIs more than they trust traditional advertising, simply because SMIs appear more authentic (McKinsey & Company, 2017: 45). Consequently, brands are increasingly allocating budgets to influencer marketing (Ward, 2017) in their eagerness to reach consumers through SMIs, as getting their products endorsed in this fashion is more likely to be perceived as WOM than ordinary advertising (De Veirman et al., 2017: 789). In truth, WOM has always been an influential factor when it comes to consumer behavior and purchase decision making (Kotler et al., 2012: 798), and even more so today with social media amplifying the concept of WOM by facilitating electronic-WOM (eWOM) between consumers and SMIs (cf. Kulmala et al., 2013: 21). Furthermore, when getting SMIs to endorse products, these endorsements become part of the natural curation of content already appearing on their Instagram accounts every day, which makes it seem more personal and unbiased. Hence, information
communicated by SMIs often has higher persuasion power and meets lower message resistance. Therefore, it has become desirable and strategic for brands to utilize SMIs’ networks of followers as a way to diffuse certain messages and promote their products (De Veirman et al., 2017: 789).
The idea that people play a part in the flow of mass communication has been around longer than the concept
SMIs, the effect of the message increases. In other words, interpersonal communication from SMIs is more successful in affecting consumer attitudes than mass media (Katz & Lazarsfeld, 1955, cited in Uzunoğlu & Kip, 2014: 593) and traditional advertising efforts which consumers often ignore or deem intrusive (De Veirman et al., 2017: 800-801). However, in the digital environment of today, where individuals engage in a sharing culture, Uzunoğlu & Kip have evolved Katz & Lazarsfeld’s two-step flow theory into a multi-step flow theory (cf.
app. 2). While SMIs remain the key opinion leaders, their networks of followers have become equally important, as the network also partakes in generating content and eWOM within their online networks (Uzunoğlu & Kip, 2014: 598). This has made it more difficult for brands to control and shape the conversation on social media. Nonetheless, brands still make an attempt at this through the employment of SMIs by offering them, for example, a trial of their products or by paying them to endorse their products to create awareness and interest, drive action, or build image (Uzunoğlu & Kip, 2014: 594; De Veirman et al., 2017: 801).
However, not all SMIs are equally suited for effective brand communication, and a major challenge remains for brands to identify the SMIs best suited for their purpose. Many brands pick an SMI based on the number of followers on Instagram (De Veirman et al., 2017: 799). Nevertheless, a high number of followers does not automatically mean that the SMI is a more influential opinion leader (De Veirman et al., 2017: 807).
Consequently, brands must consider other factors than the number of followers, such as trustworthiness, tone of voice, content, as well as SMI and brand match (Uzunoğlu & Kip, 2014: 595) to find the most influential opinion leaders for their brand.
4.1.2 Capital of Social Media Influencers
McQuarrie et al. (2013) have developed on the French sociologist Pierre Bourdieu’s concept of cultural capital to describe how some ordinary consumers are able to gain a network of followers (McQuarrie et al., 2013:
136), thus becoming SMIs. McQuarrie et al. employ Bourdieu in the context of fashion based on his newer work, which is concerned with how people can increase or preserve their position within a specific field based on the availability of that field’s specific capital (Bourdieu, 1998; 1999; 2008, referenced in McQuarrie et al., 2013: 138).
The concept of field is defined as a “(...) structured space of positions (...)” (Bourdieu, 1993: 72) governed by
specific rules and norms, shaping the practices of agents within the field. In order to subsist in the field, agents
are equipped with habitus, entailing knowledge and understanding of the field’s inherent laws, rules, and
norms (Bourdieu, 1993: 72-73). Such a field could be the field of Danish fashion, and examples of its agents could be magazines (Rocamora, 2016: 244), fashion brands, and SMIs. Moreover, examples of its rules and norms could include the definition of fashion and the characterization of fashion as good, bad, valuable, tasteful, innovative, and so forth (Rocamora, 2016: 244), shaping the practices of what agents wear.
An agent’s position in the field is determined by his/her/its capital and is conditional to the field’s other agents and their positions (Bourdieu, 1986, referenced in Rocamora, 2016: 240). Each field has its own specific capital, highlighting that capital is only effective relative to a specific field (Bourdieu, 1993: 73). Therefore, the
particular value of different forms of capital is relative, as the value is dictated by the field (Bourdieu, 1986 cited in Rocamora, 2016: 240). There are essentially four types of capital: economic, cultural, social, and symbolic. Economic capital translates directly into financial assets, i.e. money. Cultural capital refers to an individual’s cultural resources, such as educational qualifications, cultural goods, and bodily behavior. Social capital concerns the strength and size of an individual’s social connections and network. Finally, symbolic capital comes into play when evaluating an agent’s acquired prestige, status, or honor within a field (Bourdieu, 2008: 281-283; 286). Essentially, economic capital is the foundation for the other three forms of capital, while cultural, social, and symbolic capitals are all more or less mutually convertible (Rocamora, 2016: 240). Within a field, capital is unequally distributed, which means that agents constantly struggle to accumulate as much of the field-specific capital at stake as possible (Bourdieu, 1986 cited in Rocamora, 2016: 240). As such, a field is structured by the struggle of internal power relations and reproduced through the constant circulation of capital among its agents (Rocamora, 2016: 235).
Field theory prompts the researcher to investigate which capitals a field’s agents are pursuing and trading (Bourdieu, 2004: 34, referenced in Rocamora, 2016: 235). McQuarrie et al. view capital as a resource, which can be further invested to accumulate more capital (McQuarrie et al., 2013: 139). In the context of fashion, cultural capital is translated into taste, understood as judgment power, as defined by Gronow (1997,
referenced in McQuarrie et al., 2013: 139). Judgment power is based on rules and norms of the fashion field, laying the foundation of agents’ ability to exercise taste and identify fashionable clothing. As such, taste as judgment is not something one can learn in school. Rather, it is developed through repeated pursuit
(McQuarrie et al., 2013: 143). While there are different levels of taste, and while all agents may exercise their
Whenever an SMI is deemed fashionable through the exercise of taste, s/he accumulates cultural capital. This capital enables the SMI to take more risks with regards to fashion, which - if judged tasteful - will reward the SMI with more cultural capital, setting up a loop of positive feedback (McQuarrie et al., 2013: 139; 143; 149).
The same applies to economic and social capital, which also form positive feedback loops around the SMI. For example, as their follower base grows beyond a certain point, brands will notice SMIs as promotional elements within the fashion system (cf. McCracken, 1989) and pay them to advertise. These economic resources further the SMI’s exercise of taste, thus the acquisition of followers, which again sustains the income of economic resources. In terms of social capital, SMIs may earn invitations to fashion events through their social connections. This adds to the SMI’s prominence as a fashion insider, which again increases the number of followers resulting in even more invites, strengthening the social capital. In this sense, when having reached a certain point, SMIs begin to convert their accumulated cultural capital into economic and social capital in dynamic, positive feedback loops. These loops play on different elements of the fashion system (McQuarrie et al., 2013: 149; 153), enabling brands to leverage the symbolic capital of SMIs for promotional purposes, while similarly giving back to the SMI, e.g. in the form of cultural capital, adding to their perception as taste leaders (Rocamora, 2016: 245). It must be noted that, once an SMI acquires a high number of followers and gains access to the fashion system, s/he is de facto no longer an ordinary consumer. Given that being an ordinary consumer is of the essences of being an SMI, this may compromise the SMI’s position (McQuarrie et al., 2013:
151).
4.1.3 Social Media Influencers in Fashion Cycles
The most complicated part of fashion is understanding the cycles in which different trends become popular, then fall out of style, only to come around again. The three most cited fashion theories in this area, expounded below, all consider fashion to move from trendsetters, or through arbiters of fashion, to society (Craik, 2009:
105-106). Although very broad, these three theories will be used to illustrate different views on how SMIs partake in the fashion cycles of trend creation.
Veblen’s (1899) trickle-down theory of fashion presumes fashion to move from the social elite to the masses of
society. As soon as society adopts a trend, the elite feel the need to innovate new trends to continuously stand
out from the masses (Veblen, 1899, referenced in Craik, 2009: 106-107). Critique of this theory includes its
inability to describe how trends today often emerge among street influencers and are subsequently adopted by
the elite or fashion industry, i.e. trickle-up theory (Craik, 2009: 107), or how trends may trickle-across from one
group to other groups (Craik, 2009: 213). We argue that SMIs play an essential role in each of these
perspectives relative to their respective status. In relation to trickle-down, SMIs may be viewed as the social elite who influence and inspire the masses to adopt certain trends. Similarly, they may function as street influencers whom fashion forecasters look to to predict future trends (cf. Craik, 2009: 213). Moreover,
consumers’ perception of SMIs as being ‘one of us’ may emphasize the idea of SMIs being part of trickle-across.
Blumer’s (1968) collective behavior model of fashion holds the view that trends emerge from a collective wish to be ‘in fashion’, thus in line with what is viewed as trending. In this way, fashion derives from a consensus among the masses rather than from above, and trends are dropped as new perceptions of taste develop (Blumer, 1968 referenced in Craik, 2009: 107-108). This theory has been challenged due to Blumer’s difficulty in exemplifying how this consensus is produced, how some trends take off and others do not, and why some trends last longer while others are short-term fads (Craik, 2009: 109). We contend that SMIs can be considered part of the masses among whom the consensus of fashion arises. Our assertion that the masses feature SMIs may suggest an explanation as to how a collectively perceived fashion is formed, as SMIs can be viewed as frontrunners within the masses. Moreover, this view merges with our notion of fashion being socially constructed and agreed upon, as fashion among the masses must evidently happen through language and interaction.
Lastly, Sproles’ (1985) six-stage fashion process accounts for fashion as a dynamic process that involves sociological, economic, and psychological factors. The six stages are as follows:
1. The fashion is invented based on social norms
2. The fashion is endorsed and adopted by elites and celebrities 3. The fashion is diffused through the fashion conscious
4. The fashion is adopted by society
5. The fashion is transformed from a novelty to a symbol of its time while experimenting with new fashion
6. Obsolescence of an existing fashion and the start of a new phase
(Sproles, 1985, referenced in Craik, 2009: 109).
to deliberately exploit SMIs to have specific products endorsed, thus, spread to society. In addition, Sproles’
theory adds a perspective on how these endorsements may form trends, and it illustrates how the creation of fashion is a cyclical and dynamic process of which SMIs take part.
The above section provides us with an in-depth understanding of SMIs and suggests that they can, in fact, be utilized by fashion start-ups for branding purposes. On that basis, the next section illuminates the phenomenon of branding in detail.
4.2 Branding
This section briefly introduces the term corporate branding and presents different branding perspectives to set the scene. Thereafter, it presents a theory of brand value co-creation.
In essence, corporate branding is an approach to differentiate a company from other companies (Keller, 2013:
30), whereas product branding is more related to differentiating specific products from those of competitors (Heding et al., 2009: 17). Because start-ups typically only operate with one product early on, these two branding forms fuse together, meaning that their corporate brand is often identified as their product brand and vice versa (Witt & Rode, 2005: 273-274). Therefore, both corporate and product branding are understood as branding in this thesis.
4.2.1 Branding Perspectives
Over the years, two paradigms have prevailed in the literature on brand management, namely a positivistic viewpoint and a constructivist/interpretive viewpoint. The positivistic perspective posits that the company creates, owns, and controls its brand, which is communicated to a somewhat manipulable consumer (Heding et al., 2009: 21). At first, this paradigm centered around a company/sender focus, including the economic and identity approaches, but shifted at the beginning of the 1990s to a human/receiver focus, including the consumer-based and personality approaches (Heding et al., 2009: 26). Around the end of the 1990s, a
paradigm shift occurred, and the constructivist perspective became dominant in the branding field. Contrary to the positivist stance, the constructivist viewpoint acknowledges that brands are created in the interplay
between active consumers and the company. Based on this, the constructivist paradigm centers around a
cultural/context focus, including the relational, community, and cultural approaches (Heding et al., 2009: 23-
24; 26) (cf. app. 22 for an illustration of the approaches).
In practice, differentiation between the approaches is rather blurred (Heding et al., 2009: 248), which is part of the explanation for why the theories on branding that we will introduce belong to different approaches. Most of them fall under the constructivist perspective, but one of them falls under the positivist perspective.
On the one hand, we believe a brand to be a cognitive construal in the minds of consumers, and this is predominantly concordant with the consumer-based approach within the positivist stance (cf. Heding et al., 2009: 85). However, we distance ourselves from the assumption of this approach, depicting that the company is able to entirely control a brand and its value creation (cf. Heding et al., 2009: 86). Moreover, as pointed out earlier, we believe that no consumer is an island, which is substantially in agreement with the cultural
approach (cf. Heding et al., 2009: 211) and hence, the constructivist perspective. We position ourselves somewhere in the middle of the two, but we lean primarily against the constructivist paradigm. This accentuates our recognition to the cultural, social, and contextual influences on consumers’ thoughts,
perceptions, and opinions (cf. Heding et al., 2009: 154; 183; 211) with regards to matters such as brands, SMIs, and fashion.
4.2.2 Co-creation of Brand Value in Start-ups
Boyle (2007) argues that a corporate brand, including its image, is co-created in conjunction with consumers. In the co-creation process, Boyle identifies five successive stages, of which the company is in control during the first two. This control shifts to the consumers during stages 3 through 5, and the value added at one stage is dependent on the success of the preceding stages (Boyle, 2007: 123):
1. A new product with unique attributes is created by the company
2. Brand awareness is developed through communication from the company
3. On the basis of interpreting communication from the company or other sources, consumers form pre- consumption brand associations, which vary depending on whether they consider it to be relatable, meaningful, and reflecting of their identities or values
4. Consumers form post-consumption brand associations upon consuming the product, which, depending
on the alignment between their experiences and expectations, may be the same as pre-consumption
brand associations. Through repeated consumption, consumers may deepen their perception of a
brand’s uniqueness resulting in brand loyalty or brand relationship
In contrast to Boyle, who only acknowledges the consumer as a possible co-creator, Juntunen (2012) asserts that brand value co-creation for start-ups specifically occurs in the network relationship of all stakeholders through all five stages. In other words, a start-up’s brand strength is dependent on all of its stakeholders. At the same time, Juntunen recognizes that above all, corporate branding starts with the consumers (Juntunen, 2012: 231; 237; 240-241), which elevates their role proportionally to other stakeholders.
While Boyle focuses on the dyadic relationship between consumers and brands, in agreement with the relational approach, Juntunen emphasizes the relationship between brands and the network of stakeholders, in agreement with the community approach (cf. Heding et al., 2009: 154; 183). Thereby, both belong to the constructivist stance by virtue of their co-creation focus. Even though both theorists assign a great deal of control to consumers, they also acknowledge the role of the company in brand building. For example, Juntunen highlights the importance of a start-up brand’s communication (Juntunen, 2012: 237), which is consistent with Boyle’s assertion that the company is the one developing a product and creating awareness (cf. Boyle, 2007:
123). This indicates that the company essentially has ‘the first say’ regarding its brand image. However, Boyle also recognizes that there is only so much the company can do. Once the company has communicated and made an attempt at creating awareness, it is up to the consumers, who do not only form associations about the brand based the company’s communication but also based on other sources, such as WOM (cf. Boyle, 2007: 123).
We assert that in order to create a brand image that is particularly positive, it is a precondition for start-ups to build a favorable corporate identity first (Witt & Rode, 2005: 279). The corporate identity essentially represents the associations that a company pursues to build or cultivate (Heding et al., 2009: 13-14). We argue that Boyle’s first two stages represent the brand’s attempts at creating this identity. Hereby, we will utilize these two stages to investigate the input from Daniel Silfen into its brand identity through its use of SMIs. As we do this, we maintain an acknowledgment of the fact that the brand is but one of many sources for its image, and consumers are but one of many stakeholder groups who actually form an image of the brand.
4.3 Branding in Start-ups
Brand building in smaller companies is distinct from brand building in large enterprises (Ojasalo et al., 2008:
104-105). For starters, branding is particularly challenging for smaller companies due to their low budgets and
scarce resources (Keller, 2013: 572), wherefore they must consider the cost and efficiency of the branding
activities they employ. Furthermore, branding is a difficult specimen for start-ups because they do not yet have an established reputation or brand identity, and they often lack the know-how to build one (Bresciani & Eppler, 2010: 356). However difficult that may be, it is still vital for start-ups to construct their brand fairly quickly to establish themselves and survive in the market (Bresciani & Eppler, 2010: 357). As a means for survival, branding provides an expedient to differentiation for start-ups (Odoom et al., 2017: 68) often competing against sizeable, well-known brands (Witt & Rode, 2005: 279). Thereby, the brand becomes of the essence for start-ups’ growth and customer acquisition, thus, highlighting the importance of the brand in terms of survival (Bresciani & Eppler, 2010: 356).
Nevertheless, many start-ups fail to recognize the importance of branding. Instead, they are product-centered and emphasize their pursuance of leads, sales, and revenue (Wong & Merrilees, 2005: 161; Krake, 2005: 232).
While understandable, this is also a highly short-term-oriented approach. Regardless of whether start-ups actively pursue to develop a brand, a brand will naturally take its form. That is because consumers create associations to and perceptions of products that they see, buy, or hear about (Wong & Merrilees, 2005: 161).
Since start-ups’ corporate brands are most likely equivalent to their product brands (Witt & Rode, 2005: 273- 274), the opinions that consumers form about a product automatically constitute the corporate brand concurrently (Wong & Merrilees, 2005: 161). Therefore, all start-up brands - intentionally built or not - can be analyzed based on the consumers’ perception, i.e. brand image.
4.3.1 Guidelines for Creating Brand Identity for Start-ups
Keller (2013) suggests five guidelines for small businesses looking to build a strong brand (Keller, 2013: 572- 573). We argue that these can be seen as means for start-ups to create a strong identity:
1. Focus on building one or at maximum two strong brands
2. Emphasize only one or two essential associations of those brands in the marketing activities
3. Build a unique set of consolidated brand elements, e.g., brand name, logo, packaging, to create brand awareness and improve brand image
4. Focus on creativity when creating push and pull advertising to catch consumers’ attention and develop a demand. Often, small brands hinge on WOM to build their brand, which is why cost-effective public relations, promotions, and sponsorships are considered key
5. Leverage secondary associations to the widest possible extent, particularly those with relevant
Krake (2005) added three new guidelines to Keller’s: communicate logically and consistently, establish an apparent connection between the entrepreneur’s character and the brand, and breed a strong affection for the brand internally (Krake, 2005: 232).
Krake and Keller’s guidelines will be used to evaluate the strength of Daniel Silfen’s conditions for creating a strong brand identity.
4.4 Consumer Perception of Start-up Brands
Hereinafter we specify our focus on consumers, whom we persistently acknowledge are influenced by their networks of relationships.
Keller (2013) argues that branding serves the purpose of equipping products with brand equity. Brand equity is thus a branding tool that can also be utilized as a means for companies to depict the impacts of their marketing activities and assess the value of their brand. Brand equity entails “(...) the marketing effects uniquely
attributable to a brand.” (Keller, 2013: 57). In this thesis, these effects are viewed from a consumer
perspective, meaning that we focus on customer-based brand equity (CBBE). Keller defines CBBE as the “(...) differential effect that brand knowledge has on consumer response to the marketing of that brand” (Keller, 2013: 69), which can be related to existing or potential customers (Keller, 2013: 68). CBBE determines whether consumers react more or less favorably towards brand initiatives. Thus, it is first and foremost about creating these differences in consumer reactions, and the key to this is building brand knowledge. Brand knowledge comprises the entirety of experiences consumers have had with a brand over time (Keller, 2013: 69) and consists of two constituents: brand awareness and brand image, which vary depending on the individual consumer. Brand awareness refers to the strength of the brand knowledge or consumers’ ability to identify a brand, whereas brand image represents consumers’ associations to a brand (Keller, 2013: 72). When we refer to brand perception in the following, we refer to both constituents, as brand awareness is a prerequisite for brand image.
4.4.1 Cultural Brand Consumption
