The effects of different acquisition strategies on brand equity and purchase intention

Sammanfattning: Purpose - This study investigates the effect factors of brand equity and purchase intention for the original brand from the M&A perspective, involving two types of acquisitions (acquiring a medium image brand and acquiring a high-end image brand). The study object is a Chinese low-end automobile brand, Changcheng, who seeks to improve the brand. The two brands (medium and high-end) supposed to be acquired by Changcheng were selected through pre-test. The study aims to bring management enlightenment to the related enterprises. Design/methodology/approach - In total, 360 responses are collected through random sampling from an internet survey platform in China. The Chinese auto brand, Changcheng, is chosen as the acquiring low-end brand for the experiment, then the study selects one from 10 brands with a medium brand image (JEEP) and the one with a superior (high-end) brand image (Land Rover). The influence of the two kinds of M&A on brand equity and purchase intention is tested and compared. Findings - The results indicate that the different M&A strategies have significantly different effects on original brand's brand equity and purchase intention after M&A. The acquired high-end brand substantially improves the low-end brand's purchase intention and brand equity in terms of perceived quality, brand loyalty and brand awareness. The acquired brand with medium image improves the perceived quality and purchase intention of the low-end acquiring brand. A company who wants to conduct M&A to improve the brand must take serious consideration to the two different strategies due to the different effects they bring about. Originality/value - This study is the first of its kind that investigates the role of M&A in brand equity enhancement and purchase intention improvement. In addition, the study highlights the importance of superior brand acquisition for an acquiring inferior brand as it increases brand equity and purchase intention significantly of the inferior brand. Keywords - Brand image, Acquisitions and Mergers, Automobile industry, Brand equity, Purchase intention Paper Type - Research paper