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CHAPTER 1:CHAPTER 1: BRANDS & BRAND MANAGEMENT BRANDS & BRAND MANAGEMENT

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What is a brand?What is a brand?The American Marketing Association (1960) proposed the following company- oriented Definition of a brand as:

• a “name, term, sign, symbol, or design, or a combination of them, intended a “name, term, sign, symbol, or design, or a combination of them, intended to to identifyidentify the goods and services of one seller or group of sellers and to the goods and services of one seller or group of sellers and to differentiatedifferentiate them from those of competition.” them from those of competition.”

• These different components of a brand that identify and differentiate These different components of a brand that identify and differentiate it are it are brand elementsbrand elements. .

This definition has been criticised for being too product-oriented, with emphasis on visual features as differentiating mechanisms (Arnold, 1992; Crainer, 1995). Despite these criticisms, the definition has endured to contemporary literature, albeit in modified form. Watkins (1986), Aaker (1991), Stanton et al. (1991), Doyle (1994) and Kotler et al. (1996) adopt this definition. Dibb et al. (1997) use the Bennett (1988) variant of the definition which is:

What is a brand?What is a brand?

• A brand is a name, term, design, symbol or any other feature that identifies one seller's good or service as distinct from those of other sellers.

The key change to the original definition are the words ``any other feature'' as this allows for intangibles, such as image, to be the point of differentiation. The particular value of this definition is that it focuses on a fundamental brand purpose, which is differentiation. It should not be forgotten that brands operate in a market environment where differentiation is crucially important (Wood Lisa , 2000)

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What is a brand?What is a brand?

• Many practicing managers refer to a brand as more than Many practicing managers refer to a brand as more than that— as something that has actually created a certain that— as something that has actually created a certain amount of amount of awareness, reputation, prominence,awareness, reputation, prominence, and so on and so on in the marketplace. in the marketplace.

• We can make a distinction between the AMA definition of a We can make a distinction between the AMA definition of a “brand” with a small b and the industry’s concept of a “brand” with a small b and the industry’s concept of a “Brand” with a capital b. “Brand” with a capital b.

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Brands vs. ProductsBrands vs. Products

• A A productproduct is anything we can offer to a market is anything we can offer to a market for attention, acquisition, use, or consumption for attention, acquisition, use, or consumption that might satisfy a need or want. that might satisfy a need or want.

• A A productproduct may be a physical good, a service, a may be a physical good, a service, a retail outlet, a person, an organization, a place, retail outlet, a person, an organization, a place, or even an idea.or even an idea.

Product Brand

What Useful object or service Feelings and associations which exist in your consumer mind

Consumer Value Serves a need Builds an emotional connection

Consumer relationship None/commodity Loyalty

Consumer experience Functional Consistent, differentiating, affirming

Example I need a computer to get my work done

Mac’s are just better designed … more productive and more funs

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Five Levels of Meaning for a Five Levels of Meaning for a ProductProduct

• The The core benefit levelcore benefit level is the fundamental need or want that is the fundamental need or want that consumers satisfy by consuming the product or service. consumers satisfy by consuming the product or service.

• The The generic product levelgeneric product level is a basic version of the product is a basic version of the product containing only those attributes or characteristics absolutely containing only those attributes or characteristics absolutely necessary for its functioning but with no distinguishing features. necessary for its functioning but with no distinguishing features. This is basically a stripped-down, no-frills version of the product This is basically a stripped-down, no-frills version of the product that adequately performs the product function.that adequately performs the product function.

• The The expected product levelexpected product level is a set of attributes or characteristics that is a set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. buyers normally expect and agree to when they purchase a product.

• The The augmented product levelaugmented product level includes additional product attributes, includes additional product attributes, benefits, or related services that distinguish the product from benefits, or related services that distinguish the product from competitors. competitors.

• The The potential product levelpotential product level includes all the augmentations and includes all the augmentations and transformations that a product might ultimately undergo in the transformations that a product might ultimately undergo in the future.future.

• The CORE product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.

Example- Car

• Core product : Transportation from one place to another.

• Actual Product : Brand of the car, looks and design of the car etc.

• Expected Product : Decent mileage, proper engine, inflated tyres etc.

• Augmented Product : After-sale services, insurance policy etc.

• Potential Product : May run more smoothly as it wears off a little.

Example- Hotel

Example of a service: a hotel room• Core benefit: the inner urge of customers to sleep and

have some privacy and silence. • Basic product: a hotel room with a single bed, and

basically that’s all. • Expected product: a hotel room with a bed that is neat

and clean, and the room has at least a small bathroom. • Augmented product: a hotel room with a bed in a

popular hotel; the room has a nice bathroom with hair dryer, is air conditioned and has a TV and a minibar.

• Potential product: a hotel room with a huge double bed with water mattress, LCD television, a big bathroom with a hydro-massage shower cabin, etc.

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• A brand is therefore more than a product, A brand is therefore more than a product, as it can have dimensions that differentiate as it can have dimensions that differentiate it in some way from other products it in some way from other products designed to satisfy the same need. designed to satisfy the same need.

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• Some brands create competitive Some brands create competitive advantages with product performance; advantages with product performance; other brands create competitive other brands create competitive advantages through non-product-related advantages through non-product-related means. means.

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Why do brands matter?Why do brands matter?

• What functions do brands perform that What functions do brands perform that make them so valuable to marketers?make them so valuable to marketers?

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Importance of Brands to ConsumersImportance of Brands to Consumers

• Identification of the source of the productIdentification of the source of the product

• Assignment of responsibility to product Assignment of responsibility to product makermaker

• Risk reducerRisk reducer

• Search cost reducerSearch cost reducer

• Promise, bond, or pact with product makerPromise, bond, or pact with product maker

• Symbolic deviceSymbolic device

• Signal of qualitySignal of quality

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Reducing the Risks in Product Reducing the Risks in Product DecisionsDecisions

• Consumers may perceive many different types of risks in Consumers may perceive many different types of risks in buying and consuming a product:buying and consuming a product:

Functional risk—Functional risk—The product does not perform up to The product does not perform up to expectations.expectations.

Physical risk—Physical risk—The product poses a threat to the physical The product poses a threat to the physical well-being or health of the user or others. well-being or health of the user or others.

Financial risk—Financial risk—The product is not worth the price paid.The product is not worth the price paid. Social risk—Social risk—The product results in embarrassment from The product results in embarrassment from

others.others. Psychological risk—Psychological risk—The product affects the mental well-The product affects the mental well-

being of the user.being of the user. Time risk—Time risk—The failure of the product results in an The failure of the product results in an

opportunity cost of finding another satisfactory product.opportunity cost of finding another satisfactory product.

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Importance of Brands to FirmsImportance of Brands to Firms

• To firms, brands represent enormously To firms, brands represent enormously valuable pieces of legal property, capable valuable pieces of legal property, capable of influencing consumer behavior, being of influencing consumer behavior, being bought and sold, and providing the bought and sold, and providing the security of sustained future revenues. security of sustained future revenues.

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Importance of Brands to FirmsImportance of Brands to Firms

• Identification to simplify handling or tracingIdentification to simplify handling or tracing

• Legally protecting unique featuresLegally protecting unique features

• Signal of quality levelSignal of quality level

• Endowing products with unique Endowing products with unique associationsassociations

• Source of competitive advantageSource of competitive advantage

• Source of financial returnsSource of financial returns

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Can everything be branded?Can everything be branded?

• Ultimately a brand is something that resides Ultimately a brand is something that resides in the minds of consumers. in the minds of consumers.

• The key to branding is that consumers The key to branding is that consumers perceive differences among brands in a perceive differences among brands in a product category. product category.

• Even Even commodities commodities can be branded:can be branded:– Coffee (Maxwell House), bath soap (Ivory), flour Coffee (Maxwell House), bath soap (Ivory), flour

(Gold Medal), beer (Budweiser), salt (Morton), (Gold Medal), beer (Budweiser), salt (Morton), oatmeal (Quaker), pickles (Vlasic), bananas oatmeal (Quaker), pickles (Vlasic), bananas (Chiquita), chickens (Perdue), pineapples (Dole), (Chiquita), chickens (Perdue), pineapples (Dole), and even water (Perrier) and even water (Perrier)

Define Commodity • 1. The basic idea is that there is little differentiation

between a commodity coming from one producer and the same commodity from another producer - a barrel of oil is basically the same product, regardless of the producer. Compare this to, say, electronics, where the quality and features of a given product will be completely different depending on the producer.

• Some traditional examples of commodities include grains, gold, beef, oil and natural gas.

• More recently, the definition has expanded to include financial products such as foreign currencies and indexes.

• Technological advances have also led to new types of commodities being exchanged in the marketplace: for example, cell phone minutes and bandwidth.

Branding is Universal (anything can be branded)

Commodity – Chicken, Coffee, salt, fruits, vegetables, water,

etc.

Physical good - Consumer products; Business to Business;

High-tech products.

Services – Jet Airlines, United Airlines, AB Bank , Qubee etc

Retailers and distributors – Agora, Swopno, Mina Bazar etc

On-line product and services – google, e-bay, etc, Cell Bazar,

People and Organizations – Paul Newman.

Sports, Arts, and Entertainment – Cowboys?

Geographic Locations – Coxbazar, Kolkata. Ideas and Causes – Red

Cross, NRA.

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An Example of Branding a CommodityAn Example of Branding a Commodity

• De Beers Group added the phrase “A De Beers Group added the phrase “A Diamond Is Forever” Diamond Is Forever”

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Source of Brands StrengthSource of Brands Strength• “The real causes of enduring market

leadership are vision and will. Enduring market leaders have a revolutionary and inspiring vision of the mass market, and they exhibit an indomitable will to realize that vision. They persist under adversity, innovate relentlessly, commit financial resources, and leverage assets to realize their vision.”

Gerald J. Tellis and Peter N. Golder, “First to Market, First to Fail? Real Causes of Enduring Market Leadership,” MIT Sloan Management Review, 1 January 1996

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Importance of Brand ManagementImportance of Brand Management

• The bottom line is that any brandThe bottom line is that any brand——no no matter how strong at one point in timematter how strong at one point in time——is is vulnerable, and susceptible to poor brand vulnerable, and susceptible to poor brand management. management.

Brand Rating DefinitionsRating DefinitionAAA Extremely

strong

AA Very strong

A Strong

BBB Average

BB Under-performing

B Weak

CCC Very weak

CC Extremely Weak

C Failing

Rating DefinitionAAA Extremely

strong

AA Very strong

A Strong

BBB -B Average

CCC-C Very weak

DDD-D Failing

Source: Sri Lankan’s most valuable brands. LMD the voice of business. Vol. 13(8), March 2007, p. 102.

Source: http://brandirectory.com/methodology

Best Global Brand

Indian Best Brand

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Branding Challenges and OpportunitiesBranding Challenges and Opportunities

• Savvy customers Savvy customers (It means they are very knowledgeable about the (It means they are very knowledgeable about the differences in price and quality between the various brands (considered)differences in price and quality between the various brands (considered)

• Brand proliferation Brand proliferation ((brand proliferation is when a company puts on the brand proliferation is when a company puts on the market a product and variants of a product under different names.)market a product and variants of a product under different names.)

• Media fragmentation Media fragmentation (Describes a trend to increasing choice and (Describes a trend to increasing choice and consumption of a range of media in terms of different channels such as web consumption of a range of media in terms of different channels such as web and mobile and also within channels, for example more TV channels, radio and mobile and also within channels, for example more TV channels, radio stations, magazines, more websites. Media fragmentation implies increased stations, magazines, more websites. Media fragmentation implies increased difficulty in reaching target audiences.)difficulty in reaching target audiences.)

• Increased competitionIncreased competition• Increased costsIncreased costs• Greater accountability Greater accountability

Problems Brand Proliferation

• First, the larger the number of brands in the company's portfolio, the greater the overlap of brands on target segments, positioning, price, distribution channels, and product lines. The overlapping results in cannibalization of sales and duplication of effort. If managed poorly, many of the brands in the portfolio may end up competing with each other rather than with the brands of competitors.

• Second, a larger brand portfolio means lower sales volumes for the individual brands as the total market divides among them. Without scale economies in product development, supply chain, and marketing, firms cannot support each brand at competitive levels.

• Third, the rise of powerful mass merchants such as B&Q, Carrefour, and Wal-Mart has triggered brand consolidation perhaps more than anything else. Retailers' tremendous negotiating power, especially against weaker brands, forces manufacturers to critically evaluate their brand portfolios.

• Finally, marginal brands end up consuming a disproportionate amount of a company's time and resources, and exacerbate tensions between the narrowly focused brand and country managers.

Examples Brand Proliferation

• Colgate Dental Cream: The mega brand, the category volume driver.

• Colgate Gel: Positioned as giving long-lasting fresh breath

• Colgate Cibaca Top: Positioned on economy

• Colgate Total: With therapeutic, multi-benefits positioning

• Ponds dreamflower talc• Ponds dreamflower talc

magic• Ponds sandal talc• Ponds cold wash• Ponds face wash• Ponds cold cream• Ponds moisturising lotion• Ponds dreamflower

moisturising bodylotion

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The Brand Equity ConceptThe Brand Equity Concept

• No common viewpointNo common viewpoint on how it should be on how it should be conceptualized and measuredconceptualized and measured

• It stresses the importance of brand role in It stresses the importance of brand role in marketing strategies.marketing strategies.

• Brand equity is defined in terms of the marketing Brand equity is defined in terms of the marketing effects uniquely attributable to the brand.effects uniquely attributable to the brand.

– Brand equity relates to the fact that different outcomes result in Brand equity relates to the fact that different outcomes result in the marketing of a product or service because of its brand name, the marketing of a product or service because of its brand name, as compared to if the same product or service did not have that as compared to if the same product or service did not have that

name.name.

Brand Equity Define

• “The value of a brand. From a consumer perspective, brand equity is based on consumer attitudes about positive brand attributes and favorable consequences of brand use.” – American Marketing Association

• “A set of assets and liabilities linked to a brand, its name and symbol, that adds to or subtracts from the value provided by a product or service to a firm and/or to that firm’s customers.” – David Aaker

• “The tangible and intangible value that a brand provides positively or negatively to an organization, its products, its services, and its bottom-line derived from consumer knowledge, perceptions, and experiences with the brand.” — Susan Gunelius

This definition hits the three main points that define brand equity:

• Tangible and intangible value: This can be tangible value such as revenues and price premiums or intangible value such as awareness and goodwill.

• Positive or negative effects: The organization, products, services, and bottom line can benefit or suffer from brand equity.

• Consumer catalysts: Brands are built by consumers, not companies. Therefore, brand equity is built by consumers too.

Brand Equity ……

• The additional money that consumers are willing to spend to buy Coca Cola rather than the store brand of soda is an example of brand equity.

One situation when brand equity is important is when a company wants to expand its product line. If the brand's equity is positive, the company can increase the likelihood that customers will buy its new product by associating the new product with an existing, successful brand. For example, if Campbell's releases a new soup, it would likely keep it under the same brand name, rather than inventing a new brand. The positive associations customers already have with Campbell's would make the new product more enticing than if the soup had an unfamiliar brand name.

Brand Equity Benefits• Positive brand equity can help a company in a variety of ways. The most

common is the financial benefit which enables a company to charge a price premium for that brand. For example, the Tiffany’s brand has enough equity that a price premium isn’t just accepted, it’s expected.

• Positive brand equity can also help to expand a company through successful brand extensions and expansions. And not only can brand equity help increase sales and revenues, but it can also help reduce costs. For example, there is little need for awareness promotions for a brand that has deep, positive equity. Marketing budgets can be more strategically invested in initiatives that will drive short-term results.

• A company with strong brand equity is also positioned for long-term success because consumers are more likely to forgive bumps in the road when they have deep emotional connections and loyalties to a brand. Positive brand equity helps a company navigate through macro-environmental challenges far more easily than brands with little or negative brand equity can.

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Strategic Brand ManagementStrategic Brand Management• It involves the It involves the designdesign and and implementationimplementation of of marketing marketing

programsprograms and activities to build, measure, and manage and activities to build, measure, and manage brand equity. brand equity.

• The The Strategic Brand Management ProcessStrategic Brand Management Process is defined as is defined as involving four main steps:involving four main steps:

1. Identifying and establishing brand positioning and values1. Identifying and establishing brand positioning and values

2. Planning and implementing brand marketing programs2. Planning and implementing brand marketing programs

3. Measuring and interpreting brand performance3. Measuring and interpreting brand performance

4. Growing and sustaining brand equity4. Growing and sustaining brand equity

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Strategic Brand Management Strategic Brand Management ProcessProcess

Mental mapsCompetitive frame of referencePoints-of-parity and points-of-differenceCore brand valuesBrand mantra

Mixing and matching of brand elementsIntegrating brand marketing activitiesLeveraging of secondary associations

Brand value chainBrand auditsBrand trackingBrand equity management system

Brand-product matrixBrand portfolios and hierarchiesBrand expansion strategiesBrand reinforcement and revitalization

Key ConceptsSteps

Grow and sustainbrand equity

Identify and establishbrand positioning and values

Plan and implement brand marketing programs

Measure and interpretbrand performance