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The super-ordinal business objective. Increase shareholder value. 6/3/09 ... Person brands e.g. Cindy Crawford, Heidi Klum, Michael Jordan, Jennifer Lopez, etc. ... – PowerPoint PPT presentation

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  • Introduction to Branding

The super-ordinal business objective
  • Increase shareholder value

  • Creating brand value

The Power of Brands
  • Rank Brand bn. 2005
  • 1 Coca Cola 67.52
  • 2 Microsoft 59.94
  • 3 IBM 53.38
  • 4 GE 47.00
  • 5 Intel 33.59
  • Source Interbrand

Put it in perspective
  • Greater than the 2003 GDP of Czech Republic
    (60.15 bn), Algeria (62.67 bn), New Zealand
    (57.52 bn.).
  • Gross value of Coca Cola companys Dec. 2004 net
    fixed assets 6.09 bn.
  • Personal Income for 2003, for Charlotte-Gastonia-C
    oncord MSA - 47.85 bn 1.439 mill. people (BEA
    US Dept. of Commerce)

What does this value indicate
  • The amount you would have to pay if you wanted to
    buy the brand (Bills Gates 46.5 bn. in 2005)
  • The power to command future sales (Cokes 2004
    sales 21.96 bn.)
  • The incredible skew in value placed on an
    intangible asset (6 bn. Vs. 67 bn.)
  • Lastly, the strength and favorable attitude
    towards the name in your minds (1985 Cokes

Origins of branding
  • Derived from old Norse word brandr meaning to
  • Marks on Chinese porcelain, pottery jars from
    Grecian, Roman and Indian artifacts dating from
    1300 BC
  • Cattle Ranchers
  • Bakers to mark their bread - English law in 1266
  • The Moon the Stars (1851) PG brand
  • Uneeda biscuits 1898 first nationally branded

Once upon a time (in a land far, far away!) there
were commodities
  • Undifferentiable by seller/manufacturer
  • Often sold loose
  • Quality highly variable
  • In competitive markets we have many mfrs. /
    sellers for the same commodity.
  • QUESTION How do I get a buyer to prefer and buy
    my commodity?

How do you differentiate
  • ANSWER Differentiate it from competition
  • HOW By branding your commodity.

What is a brand
  • A differentiated product is a brand.e.g. Adidas,
    Gap, Abercrombie Fitch, I-Pod, Motorola Razr,
    Panthers, Coca Cola, etc.
  • A brand must satisfy two conditions
  • Distinctive identity (name, symbol, logo, slogan,
  • A distinctive image (e.g. Nano vs. Zen)

Some advantages of branding
  • Can be sold prepackaged hence specific quality
    levels can be assured
  • Opportunity to communicate specific brand
  • Opportunity to appeal to specific market segments
  • Ready value in MA transactions

Why is branding important
  • Push vs. Pull
  • Financial value of brands in the context of
    mergers and acquisitions (KKR paid 30 bn. for
    RJR Nabisco (Oreos, Newtons, Teddy Grahams, Chips
    Ahoy, etc.) in 1989 first MA transaction to
    recognize value of the brand name)

Why is branding important
  • Jump start sales across product categories e.g.
    Hooters Airlines, Reebok bottled water, Ralph
    Lauren paints.
  • Ability to operate highly profitably on minimal
    fixed investment (e.g. Sara Lee Corp. Hanes,
    Ball Park, Kiwi, Coach, etc. is an assetless
    company no manufacturing operations. Also
    Baskin Robbins, Sam Adams beer, Calvin Klein
    jeans and Motorola cellphones)
  • Separate manufacturing from production

Critical features of brands
  • Intangible
  • Exist at a perceptual level
  • Whether a brand has been created or not is
    determined by the consumer.
  • (manufacturers may invent the brand name,
    advertising and positioning, but if the consumer
    does not perceive the brand as such (i.e. a
    differentiated product), a brand HAS NOT been

Types of brands
  • Consumer brands (most fall in this category) e.g.
    Nike, Gatorade, Maytag, Pantene, Tyson chicken,
    Mercedes, etc.
  • Industrial brands e.g. Xerox, Caterpillar,
    Komatsu, Boeing, Airbus, etc.
  • Service Brands e.g. British Airways, Fedex, UPS,
    State Farm Insurance, Citibank, etc.

Types of brands
  • Corporate Brands e.g. GE, Disney, Honeywell, etc.
  • Retail brands e.g. Gap, AF, JC Penney,
    Albertsons, etc.
  • Person brands e.g. Cindy Crawford, Heidi Klum,
    Michael Jordan, Jennifer Lopez, etc.

What are the brands benefits?
  • Functional level does the product perform as it
    is supposed to perform primary benefits e.g.
  • Crest clean teeth, whitening, fresh breath,
    protect against gum disease, etc.

Brand benefits
  • Emotional level does using this brand give me
    emotional satisfaction secondary benefits.
  • Do I feel self-confident after using Crest ?
  • Do I feel desirable in my AF jeans?

Brand benefits
  • Self-expressive level does using this brand say
    something about me to my peers tertiary
  • If I drive a Corvette, what does it say about me
    to my peers?
  • If I wear a Brooks Brothers suit, what does it
    say about me to my peers?

In Conclusion
  • Today almost everything is branded
  • Brands cannot be seen, heard or felt intangible
    and exist in your mind
  • Logo, symbol and brand name attempt to give the
    brand a physical identity
  • Manufacturers / sellers do not create brands
  • Consumers create brands