Impact of Luxury Brand Retailer Co-Branding Strategy on Potential Customers: A Cross-Cultural Study

This study examines how consumers from two different cultures react to the luxury brand retailer co-branding strategy. A 2 (Familiarity: Familiar vs. Unfamiliar) × 2 (Product Fit: Fit vs. Unfit) × 2 (Brand Fit: Fit vs. Unfit) × 2 (Country: U.S. vs. Indonesia) between-subjects design was conducted. The results show that co-branding with retailers is not a good strategy for luxury brands in Indonesia, which is characterized by a high level of collectivism. However, consumers in the U.S., which is characterized by a low level of collectivism, demonstrate a positive attitude change toward the luxury brand when they are not familiar with the luxury brand or when the luxury brand collaborates with a high-end retailer. This study provides some valuable insights for luxury brands regarding their expansion strategy into foreign countries. One contribution is that we demonstrate that cross-cultural theories on brand extension and co-branding literature might not be applied to luxury brands. We find that Hofstede's power distance and individualism/collectivism dimensions could be used to explain the discrepancy. We also provide valuable insights for co-branding strategy for luxury brands.