BM401

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BM401

• Session 11
• Branding Strategies

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CLASS OBJECTIVES

• Define what a brand is
• Describe brand meaning
• Discuss brand equity
• Detail brand issues within the product decision
  area
• Develop branding strategy for your new product

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OVERVIEW

• Meaning of brand has evolved over time often
  used to be used interchangeably with advertising
  now there is a more all-embracing meaning
  it encompasses all people and all facets of the
  firm
• Sellers promise to consistently deliver a
  specific set of features, benefits services
• Branding major product issue
• Significant long term investment (expensive)
• Brands must be managed create, maintain,
  protect enhance

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WHAT IS A BRAND?

• A brand is a name, term, sign, symbol or design
  or a combination of them, intended to identify
  the goods or services of one seller or group of
  sellers to differentiate them from those of
  competitors (American Marketing Association)

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BRAND MEANING

• Brand can have up to 6 levels of meaning
• Attributes what comes to mind when you think of
  Mercedes? Well-engineered, well built, high
  prestige, durable, high resale value, etc
• Benefits functional (safety) and/or emotional
  (feel important)
• Values reflect producers values Mercedes
  stands for high performance, safety, prestige
  seek buyers who seek these values

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BRAND MEANING

• Brand can have up to 6 levels of meaning
• Culture Mercedes represents German culture
  organised, efficient, high quality
• Personality brand can project a personality
  would Mercedes be a no-nonsense boss. Brand may
  take the personality of a well-known person
  (sport star)
• User brand suggests the type of person we
  expect to see buying/using the product. Mercedes
  driver 55yo executive or 20yo clerk?

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BRAND MEANING CONSEQUENCES

• Brand is therefore complex symbol
• Marketers must decide which level(s) to anchor
  the brands identity
• One mistake is only to promote the attributes
• Customers are more interested in the benefits
• Competitors can copy the attributes
• Attributes can age
• Even promoting benefits can be risky
• Competitors can outperform on the benefit

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BRAND MEANING CONSEQUENCES

• Most enduring meanings tend to be
• Values
• Culture
• Personality
• Phil Kotler wrote It would be a mistake for
  Mercedes to market an inexpensive car bearing the
  name Mercedes. This would dilute the value and
  personality that Mercedes has built up over the
  years (Mktg Mgt 8ed p445)

They define the brands essence
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BRAND EQUITY - AAKER
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BRAND EQUITY

• Brands vary in the amount of power and value they
  have in the marketplace
• The best have
• Acceptability
• Preference
• Loyalty
• Powerful brand has high brand equity
• Brand is an asset important element in many
  company takeovers

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BRAND EQUITY

• Move to place financial value on a brand
• Controversial issue
• Should it be done
• How to do it
• Some say that the value of a brand is already
  imbedded in a companys share price ie
  investors recognise the value of a firms
  brand(s) and price the share accordingly

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BRAND EQUITY

• High brand equity provides competitive advantage
• Reduced marketing costs
• More trade leverage
• Charge higher price (not discount)
• Launch other product more easily
• Barrier to competitors
• Manage brands not to damage brand equity
• Fundamental asset underlying brand equity is
  customer equity focus should be to extend loyal
  customer lifetime value

Stop marketing activities that chase ST profits
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BRAND EQUITY

• Aakers five levels of customer attitude
• The customer will change brands, especially
  forprice reasons. No brand loyalty
• Customer is satisfied. No reason to change brands
• Customer is satisfied and would incur cost by
  changing brand
• Customer values the brand and sees it as a friend
• Customer is devoted to the brand

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THE PRODUCT THE PRODUCT MIX

• Building brand Identity - brand bonding
• Brands are not built by advertising but by the
  brand experience
• Everyone in the company lives the brand
• Three ways to carry on internal branding
  -employees must
• Understand
• Desire, and
• Deliver on the brand promise

Customer focused
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THE PRODUCT THE PRODUCT MIX

• Building Brands in the new economy
• Heidi and Don Schultz urge companies to
• Clarify the corporations basic values and build
  the corporate brand
• Use brand managers to carry out the tactical work
• Develop a more comprehensive brand-building plan

Reinforces what was said before
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THE PRODUCT THE PRODUCT MIX

• Heidi and Don Schultz urge companies to
• Define the brands basic essence to be delivered
  wherever it is sold
• Use the brand-value proposition as the key driver
  of the companys strategy, operations, services,
  and product development
• Measure their brand-building effectiveness, not
  by the old measures of awareness, recognition,
  and recall, but by a more comprehensive set of
  measures including customer-perceived value,
  customer satisfaction, customer share of wallet,
  customer retention customer advocacy

Global challenges
All embracing concept
Key word - CUSTOMER
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An Overview of Branding Decisions
THE PRODUCT THE PRODUCT MIX

• Branding Challenges

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TO BRAND OR NOT

• Today brands are a strong force in the
  marketplace
• Even items like salt, nuts bolts and oranges
  have brand identification
• No brand generics are challenging for shelf
  space consumer patronage
• Generally these are lower quality products
• Major brands fighting back by introducing a new
  brand or lowering the price of existing

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TO BRAND OR NOT

• Branding gives the seller several advantages
• Brand name makes it easier for the seller to
  process orders and track down problems
• Sellers brand name and trademark provide legal
  protection of unique product features
• Branding gives the seller the opportunity to
  attract a loyal and profitable set of customers
• Branding helps the seller segment markets
• Strong brands help build corporate image, making
  it easier to launch new brands and gain
  acceptance by distributors and consumers

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BRAND-SPONSOR DECISIONS

• Manufacturer brand
• Distributor brand (retailer, store,
  private-label)
• Licensed brand name
• Slotting fee retailer charges manufacturer a
  fee to put product on the shelf
• Brand ladder consumer rank brands
• Brand parity they are equivalent
• Consumers spend more wisely, more sensitive to
  price, quality, value

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BRAND-NAME DECISION

• Four available strategies
• Individual names
• Blanket family names
• Separate family names for all products
• Corporate name combined with individual product
  names

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BRAND-NAME DECISION

• Individual names General Mills has Bisquick,
  Gold Medal, Betty Crocker Nature Valley
• Advantage is that firm does not tie its
  reputation to the products success
• Blanket family names Heinz GE
• Advantage is via lower costs to establish the
  product retailers willing to take product,
  consumers more likely to trial product, etc

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BRAND-NAME DECISION

• Separate family names for all products Sears
  uses Kenmore for appliances, Craftsman for tools
  and Homart for home installations
• Adopted when products are noticeably different or
  there is a distinct quality difference even
  though in the same product category
• Corporate name combined with individual product
  names Kelloggs Cornflakes, Rice Bubbles etc
• Corporate name legitimises individual name
  individualises

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BRAND NAME RESEARCH

• Association tests what images come to mind?
• Learning tests how easily pronounced?
• Memory how well remembered?
• Preference tests which names preferred?

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BRAND NAME QUALITIES

• It should
• Suggest something about the products benefits
• Suggest the product or service category
• Suggest concrete, high imagery qualities
• Be distinctive

Mustang, Kodak, Exxon
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BRAND NAME QUALITIES

• It should
• be easy to spell, pronounce, recognize, and
  remember
• not carry poor meanings in other countries and
  languages

AXA - pronounced same way globally
Nova means doesnt work in Spanish
Can a brand do all at once?
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BRAND STRATEGY DECISIONS

• Brand Extensions are any effort to use a
  successful brand name to launch new product in a
  new category
• Advantages
• Instant recognition
• Earlier consumer acceptance
• Saves advertising costs

Honda cars, motorcycles, mowers, snowmobiles,
etc
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BRAND STRATEGY DECISIONS

• Brand extension risks
• New product fails and image problems ripples over
  to established brand
• Brand name may be inappropriate eg Shell Sauce,
  Drano Milk
• Over extend dilute the brand strength
  consumers no longer associate the brand with a
  specific product

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BRAND EXTENSIONS
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BRAND STRATEGY DECISIONS

• Multibranding offers a way to establish different
  features and appeal to different buying motives
• Motive attempt to lock up shelf space
• Risks
• Each only obtains very small market share
  struggle to be profitable
• Cannibalise existing products

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BRAND STRATEGY DECISIONS

• New Brands are created when entering a new
  product category
• Line Extensions occur when a company introduces
  additional items in a given product category
• Considered most frequent new product activity
• Yoghurt innovative (non-fat), me-too (copying a
  competitor) or filling in (new package size)

New flavours, colours, added ingredients, new
package sizes
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BRAND STRATEGY DECISIONS

• Line extensions involve risks
• Brand loses specific meaning eg 20 years ago a
  Coke was a Coke was a Coke no we have
• Classic
• Diet
• Caffeine free
• Can, bottle, plastic bottle
• Vanilla or lemon twist
• Do not gain sufficient sales
• Cannibalise existing products

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BRAND STRATEGY DECISIONS

• Brand repositioning might require changing both a
  product and its image
• Why - consumer tastes change and new competitors
  enter the market with more relevant product
  attributes/features/benefits
• Major considerations
• Costs for changing product quality, packaging,
  updating advertising messages, etc
• Revenue will the new segment(s) be of
  sufficient size to warrant the repositioning

Could involve new market segment(s)
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THE PRODUCT THE PRODUCT MIX

• Co-branding (Dual branding)
• Ingredient co-branding
• Same-company co-branding
• Joint venture co-branding
• Multisponsor co-branding

Gives market entry to firm that does not have
quality brand and/or sufficient customer base but
comes with risks the dominant partner could
replace the other partner, who owns the
customer?
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EXERCISE

• Form same groups as before
• Required
• Name your product
• Describe your branding/advertising strategy
• What level of meaning are you adopting?
• Could the brand be extended to other products in
  the category?