Managing Products and Brands€¦ · • Mountain Dew 5. Measuring brand equity and growing and...

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EXECUTIVE EDUCATION© Imperial College Business School

Managing Products and Brands


Course Lecturer and Resources

Dr Omar Merlo, Imperial College Business School

[email protected]

Lecture slides

Readings

Case studies

mailto:[email protected]

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Assessment

Class participation and contribution

o 25% of final course grade.

o A number of tasks, workshops and presentations will be carried out in

the course. Your performance on these tasks, as well as your general

contribution and participation in lectures, will determine this grade.

Final paper

o 75% of final course grade.

o This is an individual task.

o To be submitted within 1 month of the final session of the class.

o The question will be provided in day 3.


Course Overview: Day 1

1. Fundamental concepts in product and brand management

• Course introduction

• Contextualising strategic market management

• Value-based product marketing

• Customer relevancy in product management

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2. Marketing management, organisational culture and innovation

• Product development and market orientation

• Innovation in product management

• Market driven and market driving strategies

• Euro Disney: The First 100 Days

3. Building brands

• The strategic brand management process

• How to build a strong brand

• Segmentation and brand positioning

• A Rose by Any Other Name

• The Birth of the Swatch



4. Brand communicatons

• Developing marketing communications for a product or brand

• Mountain Dew

5. Measuring brand equity and growing and sustaining brand equity

• Measuring and interpreting brand performance

• Managing brand equity over time

• Brand reinforcement and revitalisation

• New Coke

6. Digital product and brand management

• Fundamentals of online marketing and product management

• Brand advertising online

• Trends and challenges in product and brand communications

• Pets.com: The Rise and Decline of a Pet Supply Retailer

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1. Fundamental Concepts

1. Contextualising strategic market management

2. Value-based product marketing

3. Customer relevancy in product management


What is marketing?

5


• Customer value is only a means to an end

• The ultimate objective is financial value creation

Customer value

Financial value

Marketing and Value


The Value PropositionA successful strategy focuses on the Customer Value ratio:

Value =

All tangible and intangible attributes of the product/service

BenefitsPrice

All tangible and intangible costs to the customer

Superior Perceived Value: The customer perceives highervalue than any competitive alternative

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Workshop

• Think of a product or brand that failed in the marketplace.

• Using the value equation, how would you explain the failure of that product

or brand?


The Fox and the Hedgehog

• In an old tale by Aristochulus, the hedgehog is an animal that knows a lot about one thing, while the fox knows many little things...

• This tale provides useful insights into product management

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Customer Relevancy

Effective value propositions require tradeoffs:

What elements should we offer the customer?

What elements should we deny the customer?

Yet businesses often seek all possible sources of advantage.

Successful propositions are based on good performance on all the basic

dimensions, and on excelling in one or two.


The myth of excellence is the false belief that a value propositions should

be based on being good at everything.

Business need to focus on “customer relevancy”: the ability to see business

through customers’ eyes and conduct business on terms that customers

find meaningful.

Assume that there are 5 key attributes that determine competition in an

industry:

1. Price: Customers value honest price

2. Product: Customers look for consistently good products

3. Service: Customers values services that meet their basic, everyday

requests

4. Experience: Customers want to be respected and be offered

customised solutions

5. Access: Customers want to get what they want how they want it

The Myth of Excellence

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Customer Relevancy

• Rule 2: Anything less than 3 is not sustainable

• Rule 3: Domination or differentiation on more than one attribute is not sustainable, resulting in resources being wasted

• Rule 4: The definition of a 3 can continually change. Failure to keep up with changing requirements can cause the score to drop.

Wal-Mart Dell

Price

Product

Service

Experience

Access

SCORING EXAMPLES (1-5)

• Rule 1: The most sustainable ‘score’:

1. Dominate on one dimension (5/5)

2. Differentiate on a second dimension (4/5)

3. Achieve industry-par levels on the remaining dimensions (3/5)


Examples

Price Product Service Experience Access

Price TargetStaplesDixonsMazda

Geico Club MedGateway

Southwest Airlines

AvonE*Trade

Product Wal-MartZara

CitibankCircuit City

Boots

Disney StoresHarrodsBMW

Amazon.comCokeCNN

Service TescoSaturn

CaterpillarHome DepotFerragamo

Gucci

Four SeasonsKraft

UPSMcDonald’s

Gerber

Experience Honda OracleBest Buy

BoseIntel

NordstromSingapore

Airlines

AOLHallmark

Access Charles SwabPriceline

CasioCarrefour

Sony3M

WhirlpoolGE

American Express

Dell

Starbucks Marlboro

PRIMARY ATTRIBUTES

SE

CO

ND

AR

Y A

TT

RIB

UT

ES

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How do you communicate with

customers based on customer relevancy

factors?

Actual Desired

Price

Product

Service

Experience

Access

Workshop


High

Offerings

Low

Entertain-ment Meals

Lounges

Connections

Seating Choice Speed

Friendly service Frequent

departures

Factors ofCompetition

Other airlines

Southwest Bus

An Alternative View:

The Strategy Curve of the US Short-haul Airline Industry

Low price

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2. Marketing, Culture & Innovation

1. Product development and market orientation

2. Innovation in product management

3. Market driven and market driving strategies

4. Disney case study


Marketing as Culture

• Being market oriented involves ensuring that every person and

department throughout your firm acts in an integrated way to create

value for customers.

• Thus, marketing is not just a set of activities, but a culture, mindset, or

philosophy of doing business.

• Everyone throughout the organisation should embrace this

orientation.

• It is not sufficient for your customer-facing employees to be customer

focused. Everyone, including service and product development

employees, need to adopt this orientation!

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The Marketing Concept at GE

• Our philosophy introduces the marketing man at the beginning rather than the end of the production cycle and would integrate marketing into each phase of the business. Thus marketing will establish for the engineer, the designer and the manufacturing man what the customer wants in a given product, what price he is willing to pay, and where and when it is wanted.

– GE, Annual Report (1952)


Lunch Time. Dinner Time. Prime Time.

Built by the world leader

in appliance and LCD

manufacturing, the

LG Refrigerator with

built-in LCD TV is a

sight to behold. So

whether you’re

looking for an

afternoon snack or the

evening news, you’ll

find everything you

need in one

convenient place.

Why integrate a TV into an LG refrigerator? Why not?

Counter space is at a premium in kitchens today and that is where the TV is typically located.

British families are spending more time in the kitchen cooking, gathering and eating. For usewith cable or satellite TV, the LG refrigerator with built-in LCD TV has a coaxial cableoutput behind the right door hinge. An RG-179 cable (67' long) is included for easyinstallation. The TV refrigerator can also be used with any DVD player or VCR that has acoaxial output.

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A market oriented company...

• “Marketing is the whole business seen

from the point of view of its final result…the

customer”

- Peter Drucker


One that is not market oriented...

• “A company with its face towards the CEO

and ass towards the customer”

- Jack Welch, GE

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Market Orientation: How it works

Customers Competitors Collaborators

Interfunctional Coordination

Product Price Place Promotion

Intelligence Generation

Dissemination

Response


Market Intelligence Generation

Gathering of Data

– Secondary sources, such as databases, records, etc…

– Commissioning market research (e.g., of intermediaries and buyers)

– Benchmarking & competitive intelligence (e.g., reverse engineering)

– Market observation & customer visits

– Etc…

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Customers and product insights

• Sometimes it makes more sense to give customers a passive role

in the insights generation process

• In order to fit a solution to a need and give customers what they

truly need, it is often necessary to observe customers and the

problems they face


Ethnographic Market ResearchToyota: Toyota uses a system called “Genchi Genbutsu”, which means "go and see for yourself". For

example, Chief Engineer Yuji Yokoya drove the second-generation Toyota Sienna 53,000 miles across

North America in order to experience the highways his minivan would be driven on. This experience from

the point of view of the customer eventually allowed the design team to introduce features that truly met

customer needs.

Motorola: Motorola ethnographers found that Chinese businessmen working in rural areas with no

telephone coverage had developed a complex system of using pagers to send coded messages. The

discovery led Motorola to develop a two-way pager for the Chinese market.

3M: Ethnographers from 3M observed how customers use and interact with digital photography. They

noticed that when customers wanted to share their pictures with someone, the process was difficult,

involving either scrolling through myriads of unsorted photos on their cameras, or looking for the few

photos that had been printed on paper. This information led to the development of Post-it Picture Paper.

Pfizer: Pfizer used ethnographic market research to identify what prevented consumers to switch from

conventional over-the-counter pain relievers to TX Celebrex, a new product offered by Pfizer. This

enabled the company to tailor closely their advertising campaign to customers’ needs.

Starbucks: Starbucks leverages the fact that its employees have constant face-to-face contact with

customers to collect customer insights from them. It also takes employees on "inspiration" field trips

around the world to learn more about their customers and trends.

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Intelligence Dissemination

Sharing of information throughout the organization (horizontal and

vertical flows)

– Cross functional teams

– Job rotation

– Internal reporting and documentation

– Social capital

– Internal marketing, etc…


Responsiveness to Intelligence

Use of intelligence to develop marketing plans

– Product, service, and branding decisions

– Distribution and logistics decisions

– Communication decisions

– Pricing decisions

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Market Orientation: Why?

MarketOrientation

1. Organisational PerformanceProfitability, sales, market share

2. Customer ConsequencesPerceived quality, customer satisfaction,

customer loyalty

3. Innovation ConsequencesInnovativeness, new product performance

4. Employee ConsequencesPride, commitment, team orientation,

satisfaction


MarketOrientation

What Facilitates it?

1. Top Management factorsShould emphasise a market

orientation

3. Organisational systemsReduce formalisationReduce centralisation

Implement market-orientedrewards and employee training

2. Interdepartmental factorsIncrease connectednessImprove communication

Reduce conflict

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– Answer all questions by indicating to what extent you agree or

disagree with the statements.

– Sum the scores at the end of each table.

– At the end, sum the three totals and compare with this guideline:

– Where is room for improvement? What are some key organisational

hurdles that you need to overcome in order to improve in those

areas?

86-120 = High

60-85 = Moderate

24-59 = Low

The Market Orientation Scorecard


Assessment of Market Intelligence Generation Strongly Disagree

DisagreeNeither

Agree nor Disagree

AgreeStrongly

Agree

1. We have interdepartmental meetings at least once a quarter to discuss market trends and developments

1 2 3 4 5

2. We are quick to detect fundamental shifts in our industry (e.g., competition, technology, regulation)

1 2 3 4 5

3. We periodically review the likely effect of changes in our business environment (e.g., regulation) on customers

1 2 3 4 5

4. We are fast to detect changes in our customers’ products and service preferences 1 2 3 4 5

5. People here spend time discussing customers’ future needs with other functional departments/groups

1 2 3 4 5

6. We do a lot of in-house market research 1 2 3 4 5

7. We survey key customers at least once a year to assess the quality of our products and services

1 2 3 4 5

8. In this business, we meet with key clients at least once a year to find out what products/services they will need in the future

1 2 3 4 5

Total Score: _____________________

29-40 = High

20–28 = Moderate

8-19 = Low

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Assessment of Market Intelligence DisseminationStrongly Disagree

DisagreeNeither

Agree nor Disagree

AgreeStrongly

Agree

1. When something important happens to a major customer or market, the whole business knows about it in a short period

1 2 3 4 5

2. When one department finds out something important about competitors, it is quick to alert other departments

1 2 3 4 5

3. We would never ignore changes in our customers’ product/service needs 1 2 3 4 5

4. When we find that customers would like us to modify a product or service, the departments/groups involved make concerted efforts to do so

1 2 3 4 5

5. We periodically review our product/service development efforts to ensure they are in line with what our key customers want

1 2 3 4 5

6. We have effective communication systems in place that speed up the dissemination of important customer-related information

1 2 3 4 5

7. All of our business functions and departments are responsive to each other's needs and requests

1 2 3 4 5

8. When a customer complains or offers feedback, we are quick to share that information with anyone who can act on it

1 2 3 4 5

Total Score: _____________________

29-40 = High

20–28 = Moderate

8-19 = Low


Assessment of Responsiveness to Market IntelligenceStrongly Disagree

DisagreeNeither

Agree nor Disagree

AgreeStrongly

Agree

1. It takes very little time to decide how to respond to our competitors’ product and service changes

1 2 3 4 5

2. We are able to implement new ideas (e.g., R&D efforts, marketing plans, product and service redesigns/enhancements) in a timely fashion

1 2 3 4 5

3. Several departments/groups get together periodically to plan a response to changes taking place in our business environment

1 2 3 4 5

4. If a major competitor were to start targeting one of our key customers aggressively, we would consider a response immediately

1 2 3 4 5

5. We quickly act on customer complaints and feedback 1 2 3 4 5

6. Our customer-facing employees have the latitude to solve customer problems

quickly without much red tape and management involvement1 2 3 4 5

7. People here tend to talk more about opportunities rather than problems 1 2 3 4 5

8. When we see a new opportunity to create value for our customers, we act on

it quickly1 2 3 4 5

Total Score: _____________________

29-40 = High

20–28 = Moderate

8-19 = Low

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1984 1992

How Do We Explain this?

“Mainframes are the model of the industry and will

always be”

- Akers, CEO 1985-1993


“I still can't believe this! All this hype for something so ridiculous! Who cares about an MP3 player? I want something new! I want them

to think differently!Why oh why would they do this?!

It's so wrong! It's so stupid!”

How do we explain this?(From MacRumors: Forums Thread: Apple’s

New Thing, October, 2001)

“gee! an mp3 player with a HD! how original! kinda

reminds me of a JUKEBOX I once knew..”

“OH NO! Just checked Apple Store - they want $399.00 for

this thing...Ouch!!!”

“All that hype for an MP3 player? Break-thru digital

device? The Reality Distiortion Field™ is starting to warp

Steve's mind if he thinks for one second that this thing is

gonna take off.”

“Great, just what the world needs, another freaking MP3 player. Go Steve! Where's the Newton?!”

“Are you really aiming to become a glorified consumer gimmicks firm?”

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• In product management, customers should not be trusted to come up

with solutions. They aren't expert or informed enough for that part of

the innovation process.

• Customers should be asked only for outcomes. I.e., what they want a

new product or service to do for them.

• What form the solutions take should be up to you.

Why Market Driving?


Two Forms of Market Orientation

Market Driven

Shape

Shape

Given

Given

MarketStructure

Market Behaviour

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Shaping market structure

Deconstruction Construction Functional Modification

• Eliminate players in theindustry value chain

• For example:-Channels (Dell)-Competitors (BT and AT&T)- Suppliers (Intel, Samsung)

Add players into the industry value chain

For example:-Build a new network of players (web-based music retailers)-Add complementors(chip designers)

Shift the function performed by players in the market

For example:- Proactivelychanging the retail experience (Abercrombie, Virgin Megastores, Starbucks)


Shape market behaviour directly Shape market behaviour indirectly

• Market behaviour can beshaped directly by changing how customers behave.

• For example:-Build or remove customer constraints (IKEA, eBay, expedia.com)

Market behaviour can be shaped indirectly by changing customers’ perceptions.

For example:-Create new customer preferences (iPod and iTunes)-Reverse existing customer preferences (The Body Shop)

Shaping market behaviour

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M.O. and Innovation

Market Driven

Shape

Shape

Given

Given

INCREMENTAL INNOVATION

RADICALINNOVATION

MarketStructure

Market Behaviour


Market Driving Workshop

• Can you think of any products or brands, in any category, that are market

driving?

• How did they achieve that exactly?

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1. What makes Disney’s service concept successful? What are its core

elements? How does it create customer value?

2. Was Disney market-driven or market driving in France? In your view, what

choice would have been better?

3. How was the service concept changed for Europe and why? Were the

reasons for this change compelling?

4. Disney had hoped for a better start. What are the main factors that

account for Euro Disney’s disappointing initial performance? What would

you have done differently?

Euro Disney Case Study


3. Building Brand Equity

1. Core ideas of brand management

2. The strategic brand management process

3. How to build a strong brand

4. Segmentation and brand positioning

5. A Rose by Any Other Name case study

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What is a Brand?

• A brand is a name, term, sign, symbol, or design which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. But a brand is also more…


The “Core”Layer

The Expected Layer

The Augmented Layer

From Products to Brands

The Brand’s

dimensions of

differentiation

- Rational and tangible

- Symbolic, emotional and intangible

Differentiation

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Can anything NOT be branded?

• Even among commodities brands have emerged to dominate a product

category…


How much would you pay for

toilet paper?

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Brands and market capitalisation

Brand Brand value ($b) % of market

capitalisation

Coca Cola 67.5 64

Microsoft 59.9 22

IBM 53.4 44

GE 47 12

Intel 35.6 21

Nokia 26.5 34

Disney 26.4 46

McDonald’s 26 71

Toyota 24.8 19 Inte

rbra

nd

& B

usi

nes

s W

eek


The Concept of Brand Equity

• The brand equity concept stresses the importance of the brand in

marketing strategies.

• Brand equity is defined in terms of the marketing effects uniquely

attributable to the brand.

• Brand equity relates to the fact that different outcomes result in 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 name.

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VOSS

Evian

Fiji

Highland

Volvic

San Pellegrino

Buxton

Volvic

Buxton

San Pellegrino

VOSS

Fiji

EvianAguila

Customer-based brand equity:

Blind Water Tests

Taste perceptions when drinkers know what they are drinking

Taste perceptions when drinkers do not know what they are drinking

Perrier

Perrier


A Rose by Any Other Name

What’s the best marketing strategy for Rose Partyware?

Present your recommendations.

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Brand

Equity

High level of awareness and

familiarity

Strong, favourable, and unique brand

associations

Sources of brand equity

• Customer-based brand equity has two key elements:


Brand awareness

• There are two elements

of brand awareness:

– Brand recognition

– Brand recall

• Brand awareness has

important advantages for

marketers Brand Awareness

Learning advantage

Evoked set advantage

Choice advantage

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Brand image

• Strong, favourable and unique associations with a brand

• There are many means through which these associations may be made

(e.g., experience, WoM, etc)


RESONANCE

SALIENCE

JUDGMENTS FEELINGS

PERFORMANCE IMAGERY

4. RELATIONSHIPS

What about you & me?

3. RESPONSE

What about you?

2. MEANING

What are you?

1. IDENTITY

Who are you?

The brand equity pyramid

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Identity: Salience dimensions

• There are two key elements:

1. Depth of brand awareness

• Ease of recognition and recall

2. Breadth of brand awareness

• Consumptions situations


Meaning: Performance dimensions

• Primary characteristics & supplementary features

• Product reliability, durability, and serviceability

• Service effectiveness, efficiency, and empathy

• Style and design

• Price

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• The second type of brand meaning is concerned primarily with:

– User profiles

– Purchase & usage situations

– Personality and values

– History, heritage, & experiences

Meaning: Imagery Dimensions


Family

Shared experiences

Maternal

Multipurpose

Caring

Classic

Timeless Childhood

memories

For example…Nivea’s brand imagery:

Marlboro cigarettes have masculine

associations.

But these have taken much time and

effort to develop…

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1940s


1950s

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Late 1950s


1962

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Late 1960s


10-

681990s and today…

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Response: Judgment dimensions

• Personal opinions and evaluations of the brand based on the following factors:

– Brand quality

– Brand credibility

– Brand consideration

– Brand superiority


• The emotional responses and reactions to the brand, which may involve the

following factors:

– Warmth

– Fun

– Excitement

– Security

– Social approval

– Self-respect

Response: Feelings dimensions

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RESONANCE

SALIENCE

JUDGMENTS FEELINGS

PERFORMANCE IMAGERY

The ultimate relationship and level of identification that the customer has with the brand.

• Behavioral loyalty• Attitudinal attachment• Sense of community• Active engagement

Brand resonance


RESONANCE

SALIENCE

JUDGMENTS FEELINGS

PERFORMANCE IMAGERY

Intense, active

loyalty

Positive, accessible reactions

Points of parity and difference

Deep, broad brand awareness

Branding Objectives

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Brand Pyramid Workshop

• Identify a strong brand of your choice

• Analyse how it developed brand equity by applying the brand pyramid

model

RESONANCE

SALIENCE

JUDGMENTS FEELINGS

PERFORMANCE IMAGERY


Brand Positioning

• The specific image of a company’s offering in the minds of consumers,

relative to competing offerings

• Marketers attempt to “position” their products in a particular way in the

minds of target markets

• It’s about finding the appropriate “mental location”

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Establishing Brand Positioning

Define the competitive frame of

reference

Target market and segmentation

Nature of competition

Define the basis of positioning

Points-of-difference

Points-of-parity

Types of PoPs

Category POPs

Competitive POPs


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• Perceptual mapping is a visual tool to portray perceptual differences among

products expressed by consumers

• Highlights distinguishing position from the competition

• Driven by dimensions valued by customers

• Example: the car market (selected factors and brands)

Perceptual Mapping


Example of Perceptual Mapping

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The Positioning of ADSM

• If ADSM were:

– A car

– A sound

– An animal

• What would it be?


The Brand Spirit

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Challenges in Establishing PoPs

and PoDs

Many of the attributes or

benefits that make up the

POPs and PODs are

negatively correlated

But consumers often want

to maximise both

attributes and benefits

The best approach is to

develop a product that

performs well on both

dimensions

Examples of negatively correlatedattributes and benefits

Low price High quality

Taste Low calories

Nutritious Good tasting

Efficacious Mild

Powerful Safe

Strong Refined

Ubiquitous Exclusive

Varied SimpleBut there are also other options…

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The Problem of Negatively

Correlated PoPs & PoDs

• Three approaches are available to overcome the problem, listed in increasing order of effectiveness (but perhaps also difficulty)

Separate the Attributes

• E.g., use two different marketing campaigns

Leverage Equity of another Entity

• E.g., link to any entity that possesses the right kind of equity

Redefine the Relationship

• E.g., convince customers that there is no negative correlation


Swatch Case Study

1. What choices did customers have before the arrival of the Swatch, and how were these choices positioned?

2. What was the recipe for Swatch’s success? What did they do exactly from a positioning point of view?

3. What other brands have done something similar to Swatch? Can you think of any other brands that have used the same formula for success?

44


• Brands may be linked to other entities that have their own knowledge

structures in consumers’ minds

• Because of these linkages, consumers may assume that the same

associations of the secondary entity apply to the brand

• Thus, the brand can borrow some brand knowledge and equity

Leveraging Secondary Brand

Knowledge


Secondary Sources of Brand

Knowledge

Brand

Other brands

Places

Things

People

Alliances

Ingredients Company

Extensions

Country

Channels

Causes Events

Endorsements

Employees

Endorsers

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4. Communicating branding

1. Setting objectives and tasks

2. Choosing creative

3. Mountain Dew case study


Attention Interest Desire Action

Setting Communications

Objectives and Tasks

Cognitive stage Affective stage Behavioural stage

Inform

PersuadeRemind

Communications objectives

Consumer adoption

Communications tasks

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Mountain Dew Case Questions

• What decision criteria you think are important in evaluating a brand’s

advertising?

• Evaluate the following ads:

1. Cheetah

2. Mock Opera

3. Dew or Die

4. Labor of Love

5. Showstopper

• Which ad do you think is best?


Decision Filters• A set of decision filters should be employed to evaluate brand

communications

Is framing of

brand benefits

compelling?

Is expression of

brand symbolism

apt?

Will the ad

resonate with

target culture?

Engaging, simple,

original, creative?

Integrates product

into story?

Effective extension of

campaign equities?

Brand filters

Communications filters

Campaign filter

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5. Measuring and sustaining

brand equity

1. Measuring and interpreting brand performance

2. Understanding and communicating sources of brand equity

3. Managing brand equity over time

4. Brand reinforcement and revitalisation

5. New Coke case study


Why Measure Brand Equity?

• Give marketing activities board room legitimacy

– Shift away from perception of marketing as a cost centre

– Elevate marketing expenditure to a strategic level

• Coordinate organisational effort

– Mobilise cross-functional support and cooperation

– Provide an organisation-wide understanding of brand anatomy (i.e., what activities build or destroy brand value)

48


• Rewards a long-term view in marketing initiatives

– Move away from quarterly, semi-annual, or annual appraisal of marketing effectiveness

• Accuracy in financial accounting

– Brand values can be volatile

– Mandatory for acquired brands to be reflected in accounts but not internally created brands

Why Measure Brand Equity?


Marketing programmeinvestment

Customer mindset

Market performance

Shareholder value

The Brand Value Chain

• Product

• Communications

• Trade

• Employee

• Other

• Awareness

• Associations

• Attitudes

• Attachment

• Activity

• Price premium

• Price elasticity

• Market share

• Expansion

success

• Cost structure

• Profitability

• Stock price

• P/E ratio

• Market

capitalisation

VALUE

STAGES

MULTIPLIERProgram quality

Market conditions

Investor sentiment

• Clarity

• Relevance

• Distinctiveness

• Consistency

• Competitive

reactions

• Channel support

• Customer size

and profile

• Market dynamics

• Growth potential

• Risk profile

• Brand

contribution

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Implications

• The Brand Value Chain model has at least three significant implications

for marketers:

1. Value creation begins with the marketing programme investment

2. Value creation requires more than the initial marketing investment

3. The brand value chain provides a detailed road map for tracking

value creation to focus marketing research and intelligence efforts


Y&R’s BrandAsset Valuator

• Measures brands on four fundamental measures of equity value and

using a set of perceptual dimensions

• The four pillars:

1. Differentiation

2. Relevance

3. Esteem

4. Knowledge

BRAND STRENGTH

BRAND STATURE

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D R E K

D R E K

D R E K

D R E KBra

nd S

trength

D

+R (

futu

re)

Brand Stature E+K (current)

High

Low

Eroding Potential

Leadership

New/Unfocused

Unrealised/emergingPotential

The Brand Asset Valuator


The BAV and Profitability

Sourc

e:

Sta

ndard

& P

oors

High

Low

6.5%

6.3%

5.9%

9.3%

Profit Margin

Brand Stature E+ K (current)

Bra

nd S

trength

D

+R (

futu

re)

51


The BAV and earnings growth

High

Low

86.5%

48.9%

-27.2%

122.0%

Change in Earnings

Brand Stature E+ K (current)

Bra

nd S

trength

D

+R (

futu

re)

Sourc

e:

Sta

ndard

& P

oors


Y&R Australia (2006)

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eBay has had a massive increase in Brand Equity between 2003 and 2006.


2000 2003

2006

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A decline in differentiation caused the Sportsgirl brand to drop

between 2000-03. But a massive re-invention saw it bounce back to an

even stronger position in 2006.


2000

2003

2006


The BAV and Brand Development:

Apple (Adults, 2005)

Brand Stature

Brand

Strength

Switzerland

Germany

USAAustralia

New Zealand

Spain

Belgium

MexicoItaly

Argentina

France

Uruguay

Holland

Colombia

UK

Puerto RicoBrazil

Peru

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Brand Stature

Brand

Strength

SwitzerlandGermany

USA

AustraliaNew ZealandSpain

Belgium

Mexico

ItalyArgentina

France

Uruguay

Holland

Colombia

UK

Puerto Rico

Brazil

Peru

The BAV and Brand Development:

Coca Cola (Adults, 2005)


Workshop: Pillar patterns

D R E KD R E KD R E K

D R E KD R E K D R E K

D R E K

D R E K

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• The Interbrand approach involves three steps:

1. Financial forecasting

2. Role of branding

3. Brand strength

Find out more here: http://www.interbrand.com/en/best-globalbrands/best-

global-brands-methodology/Overview.aspx

• This approach is useful, partly because it’s a step closer to putting a

financial value on the brand

Interbrand Brand Equity Model


Brand Strength

Authenticity

Relevance

Differentiation

Consistency

Presence

Understanding

Responsiveness

Protection

Commitment

Clarity

INTERNAL EXTERNAL

http://www.interbrand.com/en/best-globalbrands/best-global-brands-methodology/Overview.aspx

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The Best Global Brands (2013)


Managing Brands Over Time

• The internal and external environments of a brand constantly change

• Thus, managers must know how to manage brands over time

1. They may wish to extend the brand

2. They may need to adjust the brand meaning

3. They may need to adjust the marketing mix

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1. Brand Extensions

• Key questions:

– How does a band extension leverage the equity in the parent

brand?

– How effectively does the extension contribute to the equity in the

parent brand?


Brand Extensions: Pros and Cons

Advantages of Brand Extensions Reduce risk perceived by customersPermits consumer variety seekingIncrease relevance of brand to new marketsIncrease probability of getting distribution and trialIncrease efficiency of promotional expendituresReduce costs of introducing and developing new brandIncrease pricing breadth

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Disadvantages of Brand ExtensionsConfuse customers (weaker line logic)May lead to retailer resistanceBoth success and failure can hurt parent brand’s imageCannibalise parent brand’s salesMay dilute a brand’s meaningIncreased costsOpportunity cost of developing a new brand

Brand Extensions: Pros and Cons


Gillette and Cannibalisation

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Brand Extensions

• Vertical Extensions– Extending the brand ‘up’ or

‘down’ the value spectrum

• Horizontal extensions– Extending the brand within its

current value position


2. Reinforcing Brands

• Begin by asking the questions:

1. What products does the brand represent, what benefits does it supply and what needs does it satisfy?

2. How does the brand make those products superior? What strong, favourable and unique brand associations exist in the minds of consumers?

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Defending Tylenol’s main source of brand Equity - Trust


3. Revitalising Brands

• There are many examples of once prominent and admired brands that have

fallen on hard times or even completely disappeared

• Some of them have made impressive comebacks

• What can brands do to recapture lost sources of equity?

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Revitalising Brands

• The need to revitalise is predominantly the result of neglect

• Assess the prospects for revival:

1. Is there residual goodwill among customers and distributors?

2. Is it the brand or the company which is responsible for the decline?

3. Is there a group of loyal customers with potential for growth?

• Revitalisation should typically only be pursued where some values, favourability and awareness remain


Revitalising the Brand

• The customer-based brand equity model suggests that there are two ways

to refresh old sources of brand equity:

A. Expand the depth or breadth of awareness

B. Improve the strength and uniqueness of brand associations making

up the brand image

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A. Expanding Awareness

• With a fading brand, often depth of awareness is not the problem

• Breadth of awareness is more often the problem, which can be dealt by:

1. Identifying additional or new usage opportunities

2. Identifying new and completely different ways to use the brand


De Beers diamonds and new usage opportunities

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Wrigley’s and new ways of using the brand


B. Improving Brand Image

• Repositioning the brand

– Find points of parity with category leaders

– Establish new points of difference or bring the focus back on the old PoDs

• Change brand elements

– Brand elements (e.g., name and logo)

1952 1978 1991 1997 2006

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65



66



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New Coke Case Study

1. Assess Coke’s brand equity. Where does it come from?

2. What was clever about Pepsi’s attack on the Coke brand?

3. What do you think are the main reasons for Coke’s failed response? What would you have done?


6. Digital marketing

1. Fundamentals of online marketing and product management

2. Brand advertising online

3. Trends and challenges in product and brand communications

4. Pets.com case study

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Non-traditional marketing

approaches

• Advertising has traditionally been the centre of marketing campaigns• But current trends suggest that the traditional advertising model is in

decline…

– Loss of control over traditional advertising media

– Democratisation of content and file sharing

– Personalisation of schedules

– Fragmentation of audiences

– Rising cost of advertising

• As a consequence, advertisers might need to consider more and more non-traditional marketing strategies and tools


Growth of “Channels”

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Breaking through the clutter…

“Marketers shouldn’t be thinking just about whether it’s either traditional channels or interactive channels, they should be thinking about the fact that given all this new technology the consumer’s tolerance for interruption has been diminished”

- Strauss Zelnick, President and CEO of BMG Entertainment


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Marketing Communication is

Certainly Changing

• Brands are increasingly relying on new tools to communicate with

customers

• For example, 1 in 5 advertising Euros in Europe is now spent online.

• Despite the continued weak economic conditions across Europe and

globally, Europe’s online advertising market grew 14.5% year-on-year

to a market value of €20.9bn in 2012. By comparison the overall

European advertising market - excluding online - grew at just 0.8% in

the same time period.


What are brands doing

online?

Organisations have now a large range of opportunities available to do brand advertising online. These include:

1. Display advertising

2. Games advertising

3. Mobile marketing

4. Social media marketing

5. Video marketing

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1. Online Advertising


The First Ever Online

Advertisement

• October 25th, 1994

• The website HotWired decided they needed to make money from their website

• AT&T was the first company to pay money to HotWired to display the world’s first banner advert, a 468 x 60 banner.

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Display Advertising

• Online display advertising is the meat and veg of online marketing.

• Online displays are useful primarily for three objectives:

• To deliver brand messages

• To immerse consumers with interactive experiences

• To generate a direct response from consumers


2. Games Advertising

• One of the most dynamic and fast-growing disciplines within the

online landscape.

• Placing advertising within a gaming environment and using bespoke

games to promote a product or service.

• IAB research shows 80% of the UK population play games regularly.

• For advertisers, gaming offers a large, growing and highly engaged

audience.

• Take a look at this example:

http://www.youtube.com/watch?v=4ba1BqJ4S2M

http://www.youtube.com/watch?v=4ba1BqJ4S2M

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3. Mobile Marketing

• Fast becoming the central focus of many media plans.

• As awareness and understanding grows, advertisers are

increasingly waking up to the potential of mobile.

• The range of advertisers using mobile to benefit their brands is also

becoming broader as more mainstream brands from sectors such as

finance and consumer goods are investing on mobile.


60000

45000

30000

15000

Cu

mu

lati

ve t

ota

l un

its

sold

(th

ou

san

ds)

Quarters after launch

0

1 2 3 4 5 6 7

Cumulative Units Sold

Source: Asymco

The iPad growth rate is

phenomenal

iPad

iPhone

iPod

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Mobile vs Desktop Internet

Users


4. Social Media Marketing

• Social networks now account for a quarter of time spent online in the

UK.

• Social media encompasses a vast range of activities: social

networking, blogging, word of mouth, content dissemination, user

generated content, crowd sourcing, interactive advertising and more.

• Social media is broadly split into three areas:

1. Paid, such as advertising on a social network

2. Earned, such as a genuine blogger review of a new product or

service

3. Owned, a brand’s official page in a social network

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Time Spent Online

Source: IAB (2012)


The Emotions of Highly Viral

Content

Source: HBR (2013)

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• Engaging customers in more sophisticated and creative ways may be the best way to capitalise on networking sites.

• Any means that allow information and brand elements to be shared by users represent a new powerful opportunity for marketers.

Focus on the Exchange


Let Your Customers Participate

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5. Video Marketing

• Online video advertising is one of the fastest growing advertising formats in the world and is becoming a key way to build brands.

• The last adspend report shows an explosive growth of 91% year on year meaning that the sector is now worth nearly £60 million.

• A recent survey of over 160 media buyers found almost three quarters expected their online video advertising spend to increase by 25 per cent before Q4 2012 (WebTVEnterprise: The UK Online Video Advertising Market - 2012).


The Most Globally Shared

Branded Videos of 2013

Position Brand Total shares (m)

1 Dove: Real Beauty Sketches 4.2

2 Geico: Hump Day 4.0

3 Evian: Baby & Me 3.3

4 Kmart: Ship my pants 3.0

5 Cornetto: Cupidity 2.9

6 Budweiser: Brotherhood 2.7

7 Pepsi Max: Test drive 2.7

8 MGM: Carrie 2.2

9 Ram Trucks: Farmer 1.9

10 TrueMove H: Giving 1.3

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Summary

1. Fundamental concepts in product and brand management

2. Marketing management, organisational culture and innovation

3. Building brands

4. Brand communications

5. Measuring brand equity and growing and sustaining brand equity

6. Digital product and brand management

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