The implications of platform sharing on brand value
| Published date | 18 July 2008 |
| DOI | https://doi.org/10.1108/10610420810887590 |
| Pages | 244-253 |
| Date | 18 July 2008 |
| Author | Erik L. Olson |
| Subject Matter | Marketing |
The implications of platform sharing on
brand value
Erik L. Olson
Norwegian School of Management, Oslo, Norway
Abstract
Purpose – The paper seeks to examine empirically the potential dilution and enhancement of brands that share product platforms with other brands.
Design/methodology/approach – Study 1 uses two real platform-sharing examples from the automobile and consumer electronics industries in an
experimental setting. Study 2 uses conjoint analysis in the same two industries to study the impact of platform-sharing on preference and willingnessto
pay for a unique brand.
Findings – Study 1 finds that sharing a platform with an upscale brand is preferable to sharing with a downscale brand, although results are mixed on
whether a unique-to-brand platform is preferred to sharing with an upscale brand. Study 2 finds that unique-to-brand platforms are preferred to any
type of platform sharing, and calculates that this preference is worth about 6-10 per cent of the product’s retail price.
Research limitations/implications – Both studies use student samples, although all product classes and brands tested are popular with this
demographic, which is a key target market for the tested industries.
Practical implications – Platform sharing is an increasingly popular product development strategy that offers great cost savings in product design,
manufacturing and servicing. The findings suggest that managers also need to carefully consider the potential cost to a brand’sequity when calculating
the financial implications of platform sharing.
Originality/value – This paper brings together two areas that are usually not studied together, i.e. product development and brand equity
management, and finds that choices made in the former can have important implications for the latter.
Keywords Brand equity, Brand management, Product development, Resource sharing, Product differentiation, Value analysis
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this article.
Introduction
Platform sharing is an increasingly popular product
development method where various products and the brands
that are attached to them share the same architecture,
components, technologies, and service procedures.
Companies such as Black and Decker, Sony, and HP have
successfully used platform sharing to minimise development
and manufacturing costs, and create diverse product families
to extend their brands (Halman et al., 2003; Meyer and
Utterback, 1993; Uzumeri and Sanderson, 1995). Yet
platform sharing can also cross from one parent brand to
other brands and create a set of products that are physically
and/or technically identical in everything but brand name and
price.
... the auto companies have a split p ersonality when it comes to
acknowledging the mechanical genes of their vehicles. When
communicating with the investment community, automakers tout their
mechanical commonality as clever ways to improve manufacturing and
engineering efficiency and profits. Yet when communicating with the
automotive press, the same companies often pretend that everything is new,
unique, and designed expressly for the car or truck being introduced that day
(Csere, 2006a).
As the quote above suggests, the financial success of platform
sharing may be based in part on charging the customer for
what they perceive are a brand’s unique benefits while
attaching it to a product that is not very unique at all. The
price premium that customers are willing to pay for a
favourite brand attached to an otherwise identical product can
be substantial (Sullivan, 1998), adding greatly to the brand
owner’s bottom line at least as long as knowledge about the
brand’s lack of uniqueness remains a secret. While platform
sharing can save millions of dollars in new product
development, manufacturing and service costs, there is little
evidence that the potential threat to the equity of the brand is
considered in calculating the overall financial implications of
the practice.
Well, there’snothing singular about the MKX. Under the bling, the Lincoln
is virtually identical to the Ford, churned out in dizzying numbers from a
factory in Canada. This is badge engineering, chapter and verse [...] Why
would anyone pay a luxury brand premium for what is essentially an
extravagantly equipped Ford Edge? (Neil, 2007).
Platform sharing products lose a large part of their tang ible
uniqueness, and differentiation has been shown to be a key
factor in new product success (Cooper, 1996, 1999; Cooper
and Kleinschmidt, 1990; Dahl et al., 1999). The attachment
of brands with varying reputation and image can be one way
to hide the lack of uniqueness among platform sharing
products, but what happens when consumers find out,
through sources such as the media quotes above, that the
brands no longer signal a tangibly distinct product that might
be worth paying extra for? Using two studies, this research
examines the potential changes in brand image, attitude and
willingness to buy that may occur when consumers are given
information that a brand’s products are no longer technically
unique, but instead share platforms with other brands of
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
17/4 (2008) 244–253
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420810887590]
244
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