1. Imperatives for Market-Driven Strategy
2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
Strategic Marketing
Chapter 9Chapter 9
Strategic BrandStrategic BrandManagementManagement
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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STRATEGIC BRAND MANAGEMENT
Strategic Brand Management
Strategic Brand Analysis
Brand Equity Measurement and Management
Brand Identity Strategy
Managing Brand Strategy
Managing the Brand Portfolio
Brand Leveraging Strategy
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A product is anything that is potentially A product is anything that is potentially valued by a target market for the benefits valued by a target market for the benefits or satisfaction it provides, including or satisfaction it provides, including objects, services, organizations, places, objects, services, organizations, places, people, and ideaspeople, and ideas
STRATEGIC BRAND MANAGEMENT
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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.
American Marketing Association
A compelling logic has been proposed that the distinction between goods and services should be replaced by a view that services are the dominant perspective in the 21st century, consisting of both tangible and intangible components.**Stephen LVargo and Robert F. Lusch, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, January 2004, 1-17.
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Strategic Role of Brands
A strategic brand perspective requires managers to be clear about what role brands play for the company in creating customer value and share-holder value.
FOR BUYERS, BRANDS CAN:• reduce customer search costs by identifying products quickly and accurately,
• reduce the buyer’s perceived risk by providing an assurance of quality and consistency (which may then be transferred to new products),
• reduce the social and psychological risks associated with owning and using the “wrong” product by providing psychological rewards for purchasing brands that symbolize status and prestige.
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FOR SELLERS, BRANDS CAN FACILITATE:
• repeat purchases that enhance the company’s financial performance because the brand enables the customer to identify and re-identify the product compared to alternatives,• the introduction of new products, because the customer is familiar with the brand from previous buying experience,• promotional effectiveness by providing a point of focus,• premium pricing by creating a basic level of differentiation compared to competitors,• market segmentation by communicating a coherent message to the target audience, telling them for whom the brand is intended and for whom it is not,• brand loyalty, of particular importance in product categories where loyal buying is an important feature of buying behavior.
Source: Marketing Science Institute Report No. 97-422, 1997
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Brand Management Challenges*
Internal and external forces create hurdles for product brand managers in their brand building initiatives:
Intense Price and Other Competitive Pressures
Fragmentation of Markets and Media
Complex Brand Strategies and Relationships
Bias Against Innovation
Pressure to Invest Elsewhere
Short-Term Pressures
*David A. Aaker, Building Strong Brands, 1996, 26-35.
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TM 5-1
Product/Brand ManagementProduct/Brand Management Planning, managing, and coordinating the Planning, managing, and coordinating the
strategy for a specific product or brandstrategy for a specific product or brand
Product Group/Marketing ManagementProduct Group/Marketing Management Product director, group manager, or Product director, group manager, or
marketing managermarketing manager
Product Portfolio ManagementProduct Portfolio Management Chief executive at SBUChief executive at SBU Team of top executivesTeam of top executives
Responsibility for Managing ProductsResponsibility for Managing Products
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Strategic Brand Management
Brand Identity Strategy
Identity Implementation
Brand Strategy Over Time
Managing the Brand Portfolio
Leveraging the Brand
BRAND EQUITY
MANAGEMENT
STRATEGIC BRAND
ANALYSIS
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GLOBAL FEATURE
Recharging Sony’s Strategy Brand Management
Sir Howard Stringer, a Welsh-born American citizen, was appointed CEO of Sony, the
troubled Japanese electronics giant in 2005. Sony’s past strategic brand management
initiatives had failed to close the digital gap between software/services/content/
devices. During the CEO’s first year several cost reduction and portfolio initiatives
were implemented to launch the turnaround strategy: The Aibo, a beloved robotic pet,
was put to sleep. They shut down the Qualia line of boutique electronics that included
a $4,000 digital camera and a $13,000 70-inch television. They eliminated 5,700 jobs
and closed nine factories, including one in south Wales. (He took some flak back home
for that). They have sold $705 million worth of assets. You probably don’t know that
Sony owned a chain of 1,221 cosmetics salons and the 18 Japanese outlets of the
Maxim’s de Paris restaurant chain. They’re gone. Gone, too, is a group of salary-men
in their 60s, 70s, and 80s who, after retiring from senior management positions, were
given the title of “advisor,” a tradition established by Sony’s founders. “That was very
symbolic,” says Hideki (Dick) Komivama, a Sony executive and key ally of Stringer’s.
The 45 advisors each had a secretary, a car and driver, and worst of all, the ability to
gum up decision-making and second-guess people doing real jobs. No more.
Source: Marc Gunther, “The Welshman, the Walkman, and the Salary Men,” Fortune, June 12, 2006, 72.
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STRATEGIC BRAND ANALYSIS
AnalysesAnalyses ProductProduct Product LineProduct Line Portfolio of Portfolio of Product LinesProduct Lines
□ □ Market andMarket and
CustomerCustomer
□ □ CompetitionCompetition
□ □ Brand(s)Brand(s)
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Tracking Brand PerformanceTracking Brand Performance
Performance Objectives
Select Method(s) forEvaluation
Identify Problem Products
Decide How to Resolve the Problem
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Analyzing Brand
Performance
Product life cycleanalysis
Financialanalysis
Product performance
analysis
Researchstudies Standardized
informationservices
Brandpositioning
analysis
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Relevant issues in PLC analysis include:Relevant issues in PLC analysis include:
* Determining the length and rate of change of the PLCDetermining the length and rate of change of the PLC* Identifying the current PLC stage and selecting the Identifying the current PLC stage and selecting the
product strategy that corresponds to that stageproduct strategy that corresponds to that stage* Anticipating threats and finding opportunities for altering Anticipating threats and finding opportunities for altering
and extending the PLCand extending the PLC
Product Life Cycle AnalysisProduct Life Cycle Analysis
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* Product Performance AnalysisProduct Performance Analysis Management’s performance criteriaManagement’s performance criteria Strengths and weaknesses relative to portfolioStrengths and weaknesses relative to portfolio
* Brand Positioning AnalysisBrand Positioning Analysis Perceptual maps for brand comparisonPerceptual maps for brand comparison Buyer preferences Buyer preferences
* Other Product Analysis MethodsOther Product Analysis Methods Information ServicesInformation Services Research studies Research studies Financial analysisFinancial analysis
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BRAND EQUITYBRAND EQUITY
Company/Customer Value of Brand Name and
Symbol of a Product
Determined by the brand’s set of
assets (and liabilities)
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Brand Equity
Effective strategic brand management requires that we understand brand equity and evaluate its impact when making brand management decisions:
“Brand equity is a set of brand assets and liability linked to a brand, its name,and symbol, that add to or subtract from the value provided by a product orservice to a firm and/or to that firm’scustomers.*
* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15.**Ibid, 102-120.
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Measuring Brand Equity. Several measures are needed to capture all relevant aspects of brand equity.**
* loyalty (price premium, satisfaction/loyalty),* perceived quality/leadership measures (perceived
quality, leadership/popularity),* associations/differentiation (perceived value, brand
personality, organizational associations),* awareness (brand awareness), and* market behavior (market share, price and
distribution indices).These components provide the basis for developing
operational measures of brand equity.
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BRAND IDENTITY STRATEGY
Brand identity is a unique set of brand associations that the brand strategist aspires to create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members.*
Four Brand Identity PerspectivesProduct
Organization
Person
Symbol* David A. Aaker, Building Strong Brands, 1996, 68.
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SpecificProduct
Lineof
Products
PrivateBranding
CorporateBranding
BRAND FOCUS
CombinationBranding
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MANAGING BRAND MANAGING BRAND STRATEGYSTRATEGY
Proactive efforts should be devoted to
managing each brand over time.
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Strategies for Improving Product Strategies for Improving Product PerformancePerformance
Product lineStrategy
Addnew
product(s)
Costreduction
Productimprovement Alter
marketingstrategy
Eliminatespecific
product(s)
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MANAGING THE BRAND PORTFOLIOMANAGING THE BRAND PORTFOLIO
LeverageCommonalities to Generate Synergy
Allocate Resources
Reduce Brand
Identity Damage
Facilitate Change and Adaptation
Achieve Clarity of Product Offerings
Source: David A. Aaker, Building Strong Brands, New York: The Free Press, 1996, 241-242.
BRAND PORTFOLIO OBJECTIVES
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Strategies for Brand StrengthStrategies for Brand Strength
Brand-Building StrategiesBrand-Building Strategies
* Developing the brand identification strategyDeveloping the brand identification strategy
* Coordinate identity across the organizationCoordinate identity across the organization Brand RevitalizationBrand Revitalization
* Find new uses for mature brandsFind new uses for mature brands
* Add products related to heritageAdd products related to heritage Strategic Brand VulnerabilitiesStrategic Brand Vulnerabilities
* Brand equity can be negativeBrand equity can be negative
* Retailer private brands compete with manufacturer brandsRetailer private brands compete with manufacturer brands
* Major shifts in consumer tastesMajor shifts in consumer tastes
* Competitive actionsCompetitive actions
* Unexpected eventsUnexpected events
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Motivation for changing the product mix:Motivation for changing the product mix:
* Increase the growth rate of the businessIncrease the growth rate of the business
* Offer a more complete range of products Offer a more complete range of products to wholesalers and retailersto wholesalers and retailers
* Gain marketing strength and economies Gain marketing strength and economies in distribution, advertising, and personal in distribution, advertising, and personal sellingselling
* Leverage an existing brand positionLeverage an existing brand position
* Avoid dependence on one product line or Avoid dependence on one product line or categorycategory
Product Mix ModificationsProduct Mix Modifications
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STRATEGY FEATURE
Limited Brands Shifts its Focus from Apparel to Accessories
Ten years ago apparel represented 70% of Limited’s sales.Ten years ago apparel represented 70% of Limited’s sales.
By 2005 70% of sales were from skin-care By 2005 70% of sales were from skin-care
products, cosmetics, and lingerieproducts, cosmetics, and lingerie Clothes are increasingly out of fashion—after declines for 3 years, U.S. apparel Clothes are increasingly out of fashion—after declines for 3 years, U.S. apparel
sales increased only 4% in 2004 to $172.8 billion.sales increased only 4% in 2004 to $172.8 billion. Apparel $ sales declines are due to discount pricing and households spending Apparel $ sales declines are due to discount pricing and households spending
more on electronics, home improvement, and spa services.more on electronics, home improvement, and spa services. Limited is trying to make itself over as a high-end Procter & Gamble.Limited is trying to make itself over as a high-end Procter & Gamble. Victoria’s Secret is adding hair and cosmetics lines to its beauty business (has 3 Victoria’s Secret is adding hair and cosmetics lines to its beauty business (has 3
of the top 10 selling fragrances in the U.S.).of the top 10 selling fragrances in the U.S.).
Sources: Limited Brands 2005 Annual Report; Value Line; and Amy Merrick, “For Limited Brands Clothes Become the Accessories,” The Wall Street Journal, March 8, 2005, A1 and A14.
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One new product is “Tutti Dolci” (all sweets), food inspired One new product is “Tutti Dolci” (all sweets), food inspired scents-lotion and lip gloss in fragrances like lemon meringue, scents-lotion and lip gloss in fragrances like lemon meringue, angel-food cake, and chocolate fondue.angel-food cake, and chocolate fondue.
Victoria’s Secret has also accelerated new product development.Victoria’s Secret has also accelerated new product development. From 2003 through 2005 Intimate Brands (lingerie and beauty From 2003 through 2005 Intimate Brands (lingerie and beauty
products) accounted for all the corporation’s operating income.products) accounted for all the corporation’s operating income. Limited is also partnering with other companies to sell its brands Limited is also partnering with other companies to sell its brands
and develop new products.and develop new products. Limited has three business groups:Limited has three business groups:
• • Beauty and Personal CareBeauty and Personal Care• • LingerieLingerie• • ApparelApparel
Apparel is a continuing challenge with 2004 operating margins @ Apparel is a continuing challenge with 2004 operating margins @ 1.4% compared to over 19% for Bath & Body Works and 1.4% compared to over 19% for Bath & Body Works and Victoria’s Secret.Victoria’s Secret.
Limited has about 3700 stores. 2005 sales were nearly $9.7 Limited has about 3700 stores. 2005 sales were nearly $9.7 billion with net profits at $51 million.billion with net profits at $51 million.
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BRAND EXTENSION
LINE EXTENSION
Extensions of the brand name to other product categories
--Similar
--Dissimilar
Minor variants of a single product are marketed under the same brand name
BRAND LEVERAGING STRATEGY
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LINE EXTENSIONS BRAND EXTENSIONS
HorizontalExtension
VerticalExtension
AnotherProductClass
RangeBrand
Co-Branding
Up fromCore
Brand
Down fromCore
Brand
LEVERAGING ALTERNATIVES
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BRAND LEVERAGING IN UPSCALE AND VALUE BRAND LEVERAGING IN UPSCALE AND VALUE MARKETSMARKETS
Vertical Brand Extensions*
Core Brand
NewUp-Market
Brand
NewDown-Market
Brand
CoreBrand
* ONE OF THE MOST DIFFICULT BRAND PORTFOLIO CHALLENGES
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MOVING DOWN IS EASY BUT RISKYMOVING DOWN IS EASY BUT RISKY
Affects perceptions of the brand –perhaps Affects perceptions of the brand –perhaps even more significantly than other brand even more significantly than other brand management options.management options.
We are influenced more by We are influenced more by unfavorable information than by unfavorable information than by
favorable information.favorable information.The brand’s ability to deliver self-expressive The brand’s ability to deliver self-expressive
benefits may be reduced.benefits may be reduced.Potential cannibalization problem.Potential cannibalization problem.Potential failure risk.Potential failure risk.
Problem when the value entry is perceived to Problem when the value entry is perceived to be inconsistent with the quality expected from be inconsistent with the quality expected from the brand.the brand.
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MOVING A BRAND UPMOVING A BRAND UP
THE DRIVERS•Enhanced Margins at the High End
•Energy & Vitality
•Enhance Credibility and Prestige of the Brand
THE RISKS OF DAMAGING THE CORE BRAND
•Lacks Credibility
•Lacks Self-Expressive Benefits
•Falls Short of Expectations
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BRAND EXTENSION DECISIONSBRAND EXTENSION DECISIONS
Extending into Different Product Classes
THE PROCESS
◊Identify product categories for which the product fits and adds value. Determine existing brand associations and the brand identity.◊Identify related product category opportunities Screening should be limited◊Evaluate each category Attractive Growing Good margins Competition Assets/Capabilities◊Select the most promising extension concept◊Develop a viable Brand Strategy
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CO-BRANDINGCO-BRANDING
Co-branding (dual branding) involves two or more established brands making a joint offer of their product brands —
The participant’s brand namesare identified on the good orservice.
Several different forms –
Component co-branding(Volvo and Michelin)
Same company co-branding
Alliance co-branding(Delta and American Express)
Ingredient co-branding
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BRAND LEVERAGING EVALUATION CRITERIA
Brand Relevance/Differentiation
Capabilities/Perceived Value Match
Market/Segment Opportunity
Cannibalization Risks
Potential for Core Brand Damage
Clarity of Product Offerings
Estimated Financial Performance
Brand Equity Impact
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SEVEN DEADLY SINS OF BRAND MANAGEMENT*
Failure to fully understand the meaning of the brand.Failure to live up to the brand promise.Failure to adequately support the brand.Failure to be patient with the brand.Failure to adequately control the brand.Failure to properly balance consistency and change with the brand.Failure to understand the complexity of brand equity measurement and management.*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.
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