PRODUCT and BRAND

MANAGEMENT

Session 6

Brand Management/ 1

A. Brands – an introduction

B. Brands as identifiers

C. Brands as assets

AGENDA

A. Brands – an introduction

B. Brands as identifiers

C. Brands as assets

AGENDA

Best Global Brand 2016interbrand

Marketing Advantages of Strong Brands

A. Brand - definition

2 very different definitions:

• A name, term, sign, symbol, design, or a combination of these,

that identifies the products or services of one seller or group of

sellers and differentiates them from those of competitors.

• The brand is simply a collection of perceptions held in the mind

of the consumer (Fournier)

• A synthesis

• Brands are the totality of perceptions and feelings that

consumers have about any item identified by a brand name,

including its identity (e.g. its packaging and logos), its quality

and performance, familiarity, trust, perceptions about the

emotions and values the brand symbolizes, and its user

imagery.

The scope of Marketing (1/3)

7

Goods Services

Modulo 1 – Cap. 1

The scope of Marketing (2/3)

8

Experiences People

PlacesEvents

Modulo 1 – Cap. 1

The scope of Marketing (3/3)

9

Property rights Organizations

IdeasInformations

Modulo 1 – Cap. 1

Factors Responsible for Branding Challenges

Savvy customers

Economic downturns

Brand proliferation

Media transformation

Increased competition

Increased costs

Greater accountability

Challenges to Brand Builders

A. Views on brands – the evolution

There has been a shift in the view on brands,

• FROM being an intangible component of the product/

identifier

• TO being an intangible asset/ resource

• The 2 views compared

• “old” view - brand as a component of the product, geared to

identify the product or firm or to synthesize its “meaning”.

• “new view” - brand as an asset, carrying firm’s values and

embodying its relational capital.

A. Brand Equity - definition

The differential effect that knowing the brand name has on customer response to the product or its marketing. (Keller - (CBBE) Customer-Based Brand Equity Model)

• Is a valuable asset that offers a competitive advantage

• Measures the brand’s ability to build strong and profitable

customer relationships that result in loyal customers

(customer equity).

• Brand equity is the financial value of a brand which

provides capital/value to products and services.

A. Brands – an introduction

B. Brands as identifiers

C. Brands as assets

AGENDA

B. The brand as an identifier

The brand is simply a collection of perceptions held in the

mind of the consumer (Fournier)

1. Brand associations

2. Brand “”dualism”

3. Brand as driver of experiences

4. Brand as a complex system (McKinsey – brand diamond)

5. Brand personality

6. Brand identity

Product AttributesCrest-Decay PreventionMichelin - Family Safety

Volvo – Durability-Safety

IntangiblesBayer - Fast Acting

Cadillac - Quality

Lexis - Luxury Technological Leadership

Customer BenefitsMcDonalds - Reward

Snickers - Reward

Rational: Thick, full body

Psych: Look, feel goodRelative PricePremium / QualityHotels:

Budget: Motel 6

Economy,: Fairfield Inn, HI

Expr

Midrange: Courtyard,

HolidayInn

Luxury: Marriott, HI

CrownPlaza

Super luxury: Hyatt Regency

Luxury suite: Embassy Suites

Use/ApplicationCampbells: lunch to meal

AT&T: Reach out and touch.

Food usage:start day, between meals,

between meals with

something, lunch, supper,

dinner w/ guests,

evening, weekends

User/CustomerCovergirl: Young, blonde

Revlon: SophisticatedMabelline: ??? to smart,

Cadbury, Schweppes: For

when your tastes grow up

Miller Lite: “Heavy drinkers”

Less filling

1. Brand Associations

The brand consists of a “network” of (subjective) associations,

made by customers and “resides” in their minds

Associative Network Memory Model

• Views memory as a network of nodes and connecting

links

– Nodes - Represent stored information or concepts

– Links - Represent the strength of association

between the nodes

• Brand associations are informational nodes linked to the

brand node in memory

Celebrity/PersonNike:Michael JordanReebok: ???

Mr. Clean, Pillsbury Dough

Life Style/Personal.Betty Crocker: Honest,

dependable, friendly,

specialist... old and traditional,

out of date

Product ClassHoover – vacuum cleanerMaxim - freeze dried

Parkay - butter

7-up Uncola

CompetitorsAvis - HertzPontiac - VW Rabbit

Country/Geog. AreaBenehana - JapanStolichnaya - Russia

Brand Associations/ 2

2. Brand “dualism”

Appealing to hearts and minds, to sentiment

and reason; with emotional and functional

overtones

• “The essential difference between emotion and

reason is that emotion leads to action while reason

leads to conclusions.” Donald B. Calne, Professor of

Neurology, University of British Columbia

• “Emotions are important determinants of economic

behaviour, more than rationality”, Dr Daniel

Kahneman, Nobel Laureate in Economics, 2002

3. Brand experience – a new approach

• Brand as identifier, built on brand associations before the purchase

• Purpose – increase awareness, develop a positive image

• Brand as driver of experience, built on experiences before, during and after the purchase

• Purpose – realize sensory stimulations, link to emotions and lifestyle

• Brand experience - subjective, internal consumer responses (sensations, feelings, cognitions, and behaviors) evoked by brand-related stimuli that are part of a brand’s design and identity, packaging, communications, and environments.

Brand experience scale (experience dimensions)

• Sensory– “I find this brand interesting in a sensory way”– “This brand makes a strong impression on my visual sense

or other senses”– “This brand does not appeal to my senses”

• Affective– “This brand induces feelings and sentiments”– “I do not have strong emotions for this brand”– “This brand is an emotional brand”

• Cognitive– “This brand stimulates my curiosity and problem solving”– “I engage in a lot of thinking when I encounter this brand”– “This brand does not make me think”

• Behavioral– “I engage in physical actions and behaviors when I use this

brand”– “This brand results in bodily experiences”– “This brand is not action oriented”

A comprehensive view:Brand diamond - McKinsey

Intangible (emotional

benefits and intangible

associations) and tangibles(rational benefits and

presence)

Benefits (what it provides –

rational and emotional

benefits) and identity (who

and what it is – intangible

associations and presence)

5. Brand personality

• Personality is the particular combination of emotional, attitudinal, and behavioral response patterns of an individual.

• Brand personality - a set of human characteristics associated with the name of a product, service or company” (anthropomorphic)

• “brand personality is the way a brand speaks and behaves”

• Marlboro ‘masculin’, Diana is ‘feminin’

• IBM is ‘old’, Apple is ‘young’

• Coke is ‘conforming’, while Pepsi is ‘irreverent’

Brand Personality - dimensions

Big Five – openness, conscientiousness, extraversion,

agreeableness and neuroticism

6. Brand identity

• Brand identity is a unique set of brand

associations…that represent what the brand stands

for and imply a promise to customers from the

organization members.

• Brand identity - the outward expression of a brand

(including its name, trademark, communications, and

visual appearance).

• Because the identity is assembled by the brand owner, it

reflects how the owner wants the consumer to perceive the

brand - and by extension the branded company, organization,

product or service. This is in contrast to the brand image, which

is a customer's mental picture of a brand

5. Brand identity

• Brand identity consists of twelve dimensions organized around

four perspectives - the brand-as-product (product scope,

product attributes, quality/value, uses, users, country of origin),

brand-as-organization (organizational attributes, local versus

global), brand-as-person (brand personality, brand-customer

relationship), and brand-as-symbol (visual imagery/metaphors

and brand heritage).

• The brand system:– Brand essence

– Core identity

– Extended identity

– Value proposition

– Relationship

Brand Image (Keller)

• More deeply a person thinks about product information and relates it to existing brand knowledge, stronger is the resulting brand association

Strength of Brand

Associations

• Is higher when a brand possesses relevant attributes and benefits that satisfy consumer needs and wants

Favorability of Brand

Associations

• “Unique selling proposition” of the product

• Provides brands with sustainable competitive advantage

Uniqueness of Brand

Associations

A. Brands – an introduction

B. Brands as identifiers

C. Brands as assets

AGENDA

C. The brand as an asset

1. The value of the brand for customers and firms

2. Brand relationships – different categories

3. Brand – lovemarks and brand love

4. Brand equity

1. Brand value (generic)

• Value to customers:

– Quality

– Reliability and

stability

– Hedonic

– Practicality (ease in

the buying process)

– Accessibility

• Value to firms:

– Profitability

– Monopolistic

competition

– Extensions

– Innovativeness

Brands “have value” for both customers and firms

Roles that Brands Play

2. Brand relationships

• Customers establish relationships with their

brands (and viceversa)

• Those relationships have very different

features and strenght (from very tight to very

loose)

• They are conceptualized in very different

ways (example by Fournier)

Brand relationshipFournier

• Arranged marriages• Casual friendship/

buddies• Marriages of

convenience• Committed

partnerships• Best frienships• Compartmentalized

friendship• Kinships

• Rebounds/ avoidancedriven relationships

• Childhood frienships• Courtships• Dependencies• Flings• Enmities• Secret affairs• Enslavements

Qualità della relazione della marca

Qualità della relazione della marca

3. Brand love

• Iconic brands …contribute to consumer's self-expression and

personal identity [with] such a strong identity that they become

more or less cultural icons.

• Lovemarks - products, services or entities that inspire Loyalty

Beyond Reason (emotional, individual bonds).

• You don’t just like them. You love them. Unconditionally. You really care about them and they’re major priorities in your life. They make you feel that way because they’re mysterious, sensual and intimate. Something mere brands simply are not.

• Brand Love – tight relation with following components:

high quality; linkages to strongly-held values; beliefs that the brand

provides intrinsic rather than extrinsic rewards; use of the loved brand

to express both current and desired self-identity; positive affect; a

sense of ‘rightness’ and a feeling of passion; an emotional bond;

investments of time and money; frequent thought and use; and length

of use.

Brand categories(saatchi&saatchi)

LOVEMARKS

Brand love – componentsBagozzi

• high quality

• linkages to strongly-

held values

• beliefs that the

brand provided

intrinsic rather than

extrinsic rewards

• use of the loved

brand to express

both current and

desired self-identity;

• positive affect

• a sense of

‘rightness’ and a

feeling of passion

• an emotional bond

• investments of time

and money

• frequent thought

and use

• length of use.

Brand love - aspects

• passion driven behaviors reflecting strong desires to use it, to

invest resources into it, and a history of having done so;

• self-brand integration including a brand’s ability to express the

consumers’ actual and desired identities, its ability to connect to

life’s deeper meanings and provide intrinsic rewards, and

frequent thoughts about it;

• positive emotional connection, broader than just positive

feelings, including a sense of positive attachment and having

an intuitive feeling of ‘rightness;’

• anticipated separation distress if the brand were to go away,

• long-term relationship which includes predicting extensive

future use and a long-term commitment to it;

• positive attitude valence;

• attitudes strongly held, with high certainty and confidence.

4. Brand equity

• A number of models have been devised to account

for brand equity. We report some of them:

a. Customer Based Brand Equity (Keller)

b. Brand asset valuator (Y&R)

c. Brand equity (Aaker)

d. Interbrand

a. Defining Customer Based Brand Equity (CBBE)

• Approaches brand equity from the perspective of the

consumer and stresses that the power of a brand lies in

what resides in the minds and hearts of customers

• Differential effect that brand knowledge has on

consumer response to the marketing of that brand;

based on brand awareness (recall and recognition) and

image

Salience - Brand Awareness (depth and breadth)PerformanceImageryJudgmentFeelings (strong and favourable)Resonance (intense and active)

CBBE Pyramid

CBBE PYRAMID

Step 1: Salience - talks about Brand Awareness (depth and breadth)

Identity – Ensure customers can identify the brand and can associate the brand with a specific product class or need.

Depth of brand awareness: how likely the brand will spring to mind (recognition and recall) much the customer knows your brand when they see/hear about it

Breadth of brand awareness: when the customer thinks about your brand, and the range of purchase/usage situations in which the brand comes to mind.

Step 2a. Performance (2, 3, 3, 2, 1)Meaning – Establish meaning to the brand so that when

customers think of the brand, they strategically link both tangible and intangible brand associations with the brand.

CBBE PYRAMID

Performance dimensions: 1a primary characteristics,1b secondary features, 2a product reliability, 2b durability, 2c serviceability, 3a service effectiveness, 3b service efficiency, 3c empathy, 4a style, 4b design, 5 price

Step 2b. ImageryUser profiles, purchase and usage situations, personality and

values, history, heritage and experiences.

usually intangible aspects of the brand, can be formed directly; via own experiences, can be formed indirectly; via external marketing communications, advertising, word-of-mouth

Step 3a. JudgmentResponses – Gauge customer responses to the brand

identification and brand meaning.

Brand judgments are personal opinions and evaluations about the brand.

Judgment dimensions: quality, credibility, consideration, superiority

CBBE PYRAMID

Step 3b. Feelings (strong and favourable)Feelings dimensions: warmth, fun, excitement, security, social approval, self-respect

Step 4. Resonance (intense and active)Relationships – Convert the brand response to create intense,

active loyalty relationship between the customer and the brand.

Loyalty, Attachment, Community, Engagement

b. BAV - Brand-Asset Valuator -

• Brand equity is determined by 4 different components:

1. Differentiation - ability of the brand to stand apart from its

competitors (unique)

2. Relevance – actual and perceived importance of the brand

(personally appropriate, tied to penetration)

3. Esteem - perceived quality and perceptions about the

growing or declining popularity of a brand (quality and

popularity)

4. Knowledge - extent of the consumer’s awareness of the

brand and understanding of its identity (awareness about

the brand and what it stands for, intimacy)

• 1 and 2 determine the strenght (or vitality) of a brand (its

potential for growth); 3 and 4 its stature (current strenght).

• These components develop in sequence

BAV – brand dimensions

How Brands are built

BAV – brand development

c. Brand Equity and its determinants (Aaker)

Brand equity is driven and measures (at the

same time) by 5 factors:

– Brand loyalty.

– Brand awareness.

– Perceived quality.

– Brand associations.

– Other proprietary assets.

Those factors have a broad impact, as in the

following slide.

AWARENESSAWARENESS

PERCEIVED QUALITYPERCEIVED QUALITY

ASSOCIATIONSASSOCIATIONSLOYALTYLOYALTY

PROPRIETARY ASSETS

PROPRIETARY ASSETS

BRAND EQUITY

Brand Equity – ComponentsAaker

d. Interbrand method

1. FINANCIAL PERFORMANCE2. ROLE OF BRAND3. BRAND STRENGTH

Interbrand method

FINANCIAL PERFORMANCE

Financial performance measures an organization’s

raw financial return to the investors. For this reason, it is analyzed as economic profit, a concept akin to Economic Value Added (EVA).

ROLE OF BRAND

Role of brand measures the portion of the decision to purchase that is attributable to brand – this is

exclusive of other aspects of the offer like price or feature.

BRAND STRENGTH

Brand strength measures the ability of the brand to secure the delivery of expected future earnings.

Interbrand – financial performance

FINANCIAL PERFORMANCE

Financial performance measures an organization’s raw financial return

to the investors. For this reason, it is analyzed as economic profit, a

concept akin to Economic Value Added (EVA).

To determine economic profit, we remove taxes from net operating profit

to get to net operating profit after tax (NOPAT). From NOPAT, a capital

charge is subtracted to account for the capital used to generate the

brand’s revenues; this provides the economic profit for each analyzed

year.

For purposes of the rankings, the capital charge rate is set by the

industry weighted average cost of capital (WACC). The financial

performance is analyzed for a five-year forecast and for a terminal

value.

The terminal value represents the brand’s expected performance

beyond the forecast period. The economic profit that is calculated is

then multiplied against the role of brand to determine the branded

earnings that contribute to the valuation total as noted earlier.

Interbrand – role of brand

FINANCIAL PERFORMANCE

Role of brand measures the portion of the decision to purchase that is

attributable to brand—this is exclusive of other aspects of the offer like

price or feature. Conceptually, role of brand reflects the portion of

demand for a branded product or service that exceeds what the demand

would be for the same product or service if it were unbranded.

Role of brand determinations for this study derive, depending on the

brand, from one of three methods: primary research, a review of

historical roles of brand for companies in that industry, or expert panel

assessment. The percentage for the role of brand is multiplied by the

economic profit of the branded products or services to determine the

amount of branded earnings that contribute to the valuation total.

Interbrand – brand strength

FINANCIAL PERFORMANCE

Brand strength measures the ability of the brand to secure the delivery

of expected future earnings. Brand strength is reported on a 0 to 100

scale, where 100 is perfect, based on an evaluation across 10

dimensions of brand activation. Performance in these dimensions is

judged relative to other brands in the industry, and in the case of

exceptional brands, relative to other world-class brands.

The brand strength inversely determines, through a proprietary

algorithm, a discount rate. That rate is used to discount branded

earnings back to a present value based on the likelihood that the brand

will be able to withstand challenges and deliver the expected earnings.

10 Principles of brand strength

1. Commitment

2. Protection

3. Clarity

4. Responsiveness

5. Authenticity

6. Relevance

7. Understanding

8. Consistency

9. Presence

10.Differentiation

10 Principles of brand strength

• 1 COMMITMENT

A measure of an organization’s internal commitment to or belief in its brand. Commitment is the extent to which the brand receives support in terms of time, influence and investment.

• 2 PROTECTION

This component examines how secure a brand is across a number of dimensions – from legal protection and proprietary ingredients to design, scale or geographic spread.

• 3 CLARITY

The brand’s values, positioning and proposition must be clearly articulated and shared across the organization, along with a clear view of its target audiences, customer insights and drivers. It is vital that those within the organization know and understand all of these elements, because everything that follows hinges on them.

• 4 RESPONSIVENESS

This component looks at a brand’s ability to adapt to market changes, challenges and opportunities. The brand should have a desire and ability to constantly evolve and renew itself.

• 5 AUTHENTICITY

This component is about how soundly a brand is based on an internal capability. Authenticity asks if a brand has a defined heritage and a well-grounded value set, as well as if it can deliver against customers’ expectations.

• 6 RELEVANCE

This component estimates how well a brand fits with customer needs, desires and decision criteria across all appropriate demographics and geographies.

• 7 UNDERSTANDING

Not only must customers recognize the brand, but there must also be an in-depth understanding of its distinctive qualities and characteristics, as well as those of the brand owner.

• 8 CONSISTENCY

This measures the degree to which a brand is experienced without fail across all touchpoints and formats.

• 9 PRESENCE

This measures the degree to which a brand feels omnipresent and how positively consumers, customers and opinion formers discuss it in both traditional and social media.

• 10 DIFFERENTIATION

This is the degree to which customers perceive the brand to have a positioning that is distinct from the competition.