New Strategic Brand Management Chapter 2-3

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Transcript of New Strategic Brand Management Chapter 2-3

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Chapter 2 & Chapter 3PRESTON AND SNOW

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Chapter 2: Strategic Implications of BrandingWHAT DOES BRANDING REALLY MEAN?

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Branding transforms the product category

How does the brand do this?◦ Brands organize the market◦ Gives the products their own identity

A brand is weak when products are transparent (Coke keeps its recipe secret)

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A brand is a long term vision Brands are not just about market share, but shape product category◦ Brands hold certain positions in product category◦ “What would the market last if we did not exist?”

Strategy is needed to unite the brand◦ What is the brand vision?◦ What are the core values?

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Permanently nurtures the difference Brands protect the innovators

◦ Grants exclusiveness◦ Rewards risk-taking attitude

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Brands act as a genetic program Serves as the memory and the future Acts like fast-setting concrete

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Respect the brand contract Brands are built through a consistent message Once established, customers use brands as a benchmark Satisfied customers become loyal customers Brand requirements:

◦ Forecast the needs and expectations of potential buyers◦ React to technical and technological progress◦ Provide product/service quality and quantity simultaneously◦ Control supply quantity and quality◦ Deliver products to distributors◦ Give meaning to the brand and communicate it to consumers◦ Increase the experience of consumption or interaction◦ Remain ethical and ecology-conscious

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Halo Effect

https://www.youtube.com/watch?v=fxyAYTieXlQ

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The product and the brand

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Halo effect: Kernel and Peripheral values

How does a brand have influence? Cue Messages:

◦ Search cues: factors readily accessible (price, label information)◦ Experience cues: sample the product or service◦ Credence cues (aka belief cues): long term fulfillment of promises

Influence buyers if:◦ Immediately available◦ Firmly believed◦ Highly valued◦ Highly differentiated

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Halo effect: Kernel and Peripheral values

Kernel Traits◦ Unconditional, signify the brand◦ If the brand does not have X or Y, is it still the brand?

Peripheral Traits◦ Conditional, depends on the product range or segment

◦ Samsung products differ depending on what category they’re in◦ Long term may become kernel traits

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Brands need a flagship product “Prototype” product Specific product most representative of the brand Reveals direction and focuses brand Problems arise when products are too similar

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Advertising products through the brand prism Brands can guide perceptions like a magnifying glass Products can reflect like a prism to help build the brand Details change the picture depending on how they are presented

◦ Volvo and BMW would promote ABS differently to fit their strategies

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Brands versus other signs of quality

Brands often coexist with other signs of quality This promotes and protects the brand

◦ Certifications of origin protect the heritage of the brand◦ Quality seals act as a promotional tool

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Obstacles to the implementation of branding

Branding is a long term process requiring repetition and consistency Corporate accounting is often short term

◦ Focus on the bottom line and ROI◦ Fast measurable results are preferred

Turnover with agencies and within brands results in new directions Innovations quickly become the status quo

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Asia’s branding culture Paradoxical

◦ Asian brands enjoy high market share, but are not intrinsically desired◦ Asians have a love affair with brands, but mostly Western brands (fashion and

luxury)

Samsung◦ Successful but needs more branding◦ Focus on products, not brand◦ Innovations are not disruptive◦ No capitalization, just distribution◦ Highly centralized management and communication

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Summary Time is often overlooked, but pivotal The brand needs focus

◦ Say no to products that change the brand

The essence of the brand creates is◦ A flagship product embodies the idea of the brand◦ Kernel traits identify products within the brand

Brands guide perceptions and promote products

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Chapter 3: Brands and business models

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Are brands for all companies? YES An instrument for growth and profitability Essentially another business tool

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The benefits of being a brand Brands lend personality, influence, value, and innovation that forms a community

Enhance exclusivity Act as a springboard for diversification Magazines are a great example

◦ Vogue, Elle, GEO, etc.

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Differentiating a commodity by the brand A commodity market is runs on optimal price alone

◦ Consumers pay for the value of the good◦ Long term differentiation between products suffers◦ Hints of classical liberalism

Brands disrupt the commodity market◦ Perception of brand product having more value◦ Examples: Coke, Evian

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YelloYello Strom has developed a meter that makes electricity visible and offers customers an entirely new transparency around their energy consumption.

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Yello

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Building a market leader without advertising

Brand needs to do the following◦ Have enough volume/sufficient supply◦ Have a stable quality to reduce risk◦ Have a mainstream price◦ Be end-user driven◦ Create barriers to entry for other brands◦ Have a strong national sales force

Example: Jacob’s Creek Wine

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Jacob’s Creek Wine

https://www.youtube.com/watch?v=STnrf0w33wg

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Brand building: From product to values, and vice versa

From product to value◦ Focus on product attributes◦ Starting point for most goods◦ As the product becomes more recognized, the name gains attention

From value to product◦ Focus on the name behind the product◦ Starting point for luxury and licensed goods◦ Initially name alone is worth the money, but the product needs to support

Brand names are important and should NOT be descriptive◦ Descriptive becomes generic, and the brand is lost

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Are leading brands the best products or best value curve? What’s a value curve?

Paradox that the number one brands are not the best products Value curve: what does it mean to be the best?

◦ Meet the needs of consumers in the best way possible◦ Have added intangible values, such as personality

Bacardi: easy to mix, appeals to casual partygoersBREAK THE RULE AND ACT FAST Strong brand awareness is enough to catch the attention of consumers unaware of product differences

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What to learn from branding and the value curve?

Starting a brand means finding a disruptive innovation Creating a market is the best way to lead the market Winners start first and move fast Reach critical size rapidly Focus on the customer’s values

Example: Insead MBA

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Backing the brand by a business model

Competition between brands is often a competition between business models

To grow through expansion, strategy relies on three factors◦ Availability◦ Accessibility◦ Attractiveness

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Case StudyThe Cola Wars: Coke vs. Pepsi

Coke:◦ “Put Coke at arm’s reach”◦ Able to be sold cheaply, at the same price as tea in the East◦ Coke’s image is not a product, but a bond

Pepsi Challenged◦ Cheaper to consumers◦ Focus on the product: better taste and started line extensions◦ Image was for the new “young” generation

Virgin Cola Failure◦ Didn’t have the distribution◦ Only one core product with no portfolio for support◦ Small sales force

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Summary Brands are necessary for all companies and products Brands foster differentiation in the market Branding can be a chicken or egg debate: product or value?

◦ Either way you get a chicken

The value curve identifies the “best” brand Brand competition is often business model competition

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Questions Thank you