Brand Management

Brand management

1. Introduction

Definition of a brand(American Marketing Association): A brand is a name, term, sign or symbol or design or a combination of them intended to identify the goods or services of seller and to differentiate them from those of competition. Too restrictive

Optimal brand definition: A name, a sign or a symbol which serve to identify and differentiate a product versus other ones and that is registered in the minds of consumers as a set of tangible and intangible benefits.

Brand is a name that influence buyers and create mental associations

Example: Apple: tangible benefits: design, innovation, intangible benefits: fashionable, part of a group…

HP, Fanta, Sony different personalities, quality perceptions, attitudes toward the brand, different feelings from consumers…

Other definition (Keller): Is a set of mental associations, held by the consumer, which add to the perceived value of a product or service. The association should be unique (exclusivity), strong (saliency) and positive (desirable).

Example: Nike is unique and strong but there are negatives associations due to child labor. BP has negative associations too.

A brand is more than a product: added value given to a product, creation of perceived differences among products

The power of a brand resides in the mind of consumers

The world’s top 3 brands?? Coca-Cola, IBM and Microsoft

Rank / Brand / Brand Value ($Millions)
1 / Belgacom / 1.145
2 / Proximus / 763
3 / Colruyt / 737
4 / Mobistar / 733
5 / Delhaize / 247
6 / Quick / 226
7 / Spa / 185
Rank / Brand / 2010 Brand Value ($Millions)
1 / Coca-Cola / 70.452
2 / IBM / 64.727
3 / Microsoft / 60.895
4 / Google / 43.557
5 / GE / 42.808
6 / McDonald’s / 33.578
7 / Intel / 32.015
8 / Nokia / 29.495
9 / Disney / 28.731
10 / HP / 26.867

The World’s 10 best Global Brands The Belgian’s 7 Strongest Brands

Belgacom has two strong brands (number 1&2)

Country of origin makes a large role in certain cases.

When do we have brands?

Reduction of the risk

Perceived risk Brands

They are two types of risks. When you buy a certain brand, you buy a guarantee. It’s not easy to create brand.

Brand or not brand?

-Need of important communication support

-Need R&D support

-Need trade support

Firms using brand management

Consumer goods (Swatch)

Services (Base)

Industrial Products (ArcelorMittal)

Industrial components (Intel) => in the ad we can see more the logo of Intel than the logo of HP. Intel becomes stronger in the negotiations versus HP.

What can be branded?

Consumer goods, geographic location, high-tech products, online products, retailers and distributors, services, people and organizations, perishable products, B to B products, causes, sport, arts and entertainment…

Everything can be branded but giving a brand is more than giving a name. You need also to innovate, it’s essential.

Evolution of brands

1. 1990’s: Retailers brands and competition among national brands$

End of brands?

1. 2000’s: Success of brands continue

Advantages of brands

Firms / Consumers

• Differentiation
• Consumer loyalty
• Possibility of premium price
• Financial capitalization
• Legal protection

Creation of a barrier to entry /

• Identification
• Origin, traceability
• Reduced risk
• Guarantee
• Constant quality
• Value of sign/part of a community

Difficulties of today’s branding

-High cost of brand creation and brand support

-Increased power of consumers

-Less controllable brand image

-Aggressive private labels competition

-Importance of global brand

-Fragmentation of media

-Brand responsibility given at a high level

-Brands important for financial analysts

New challenges of brand building

1. End of new brand proliferation /Increased use of brand extension

• Increased use of brand extension
• Capitalization on existing brand

1. Brands in social networks and internet

• Marketers do not control anymore the brand image
• Power of bloggers
• Power of social networks

How to keep the brand strategy without being too quickly influenced?

1. Optimization of brand portfolio

• Complex portfolio
• Reduction of the number of brands
• Difficulty to select the right ones

1. Brand architecture build up

• Which name to give to a brand?
• Which name to build or to eliminate?
• What branding strategy (House of brand or branded house)?

1. Capitalization on global brands

• Creation of mega brands
• Important economies of scale
• Brand localization?

1. Sustaining brands with innovation

• Not communication management
• Creation by innovations
• Rejuvenated by products, not by advertising

1. Addressing diversity

• Fragmentation of markets
• Many sub-segments
• Customization needed

1. Challenge of ethics

• New stakeholders: non-governmental organizations
• Pension funds interested
• Difficulty in the virtual world, info spread very fast

1. Brands do not belong to marketing anymore

• CEO’s responsibility
• Need for continuity
• Need for brand management across business unit

The enlarged scope of brand management

1. From transactions to relationship

• Focus on keeping clients, on building long lasting relationship
• Relationship marketing: financially driven concept => banking world is an example
• Long relationship with the consumer, loyalty group. Be close to ours consumers

1. Bonding through aspirational values

• Aspirational brands. Concept of CEO Saatchi&Saatchi
• Non product related values of the brand
• You inspire your consumers

1. Importance of communities

• Before, consumers: individuals, eventually market segments
• Now, consumers belong to groups, tribes or communities
• Need to build brand communities

1. Activation the brand at contact
2. Too much media fragmentation
3. All brands must think of their activation plan
4. Acting within communities
5. Acting on premises, at the point of consumption
6. Acting with prescribers
7. Acting with virtual communities

Brand legal definition: a sign or set of signs certifying the origin of a product or service and differentiating it from the competition.

1. Building brand equity

1. Brand equity

What is brand equity? Is a new concept and you have different way to define this concept

Customer brand equity: from the consumer point of view

Financial brand equity: from the financial point of view

Customer brand equity (Keller)

= Differential effect that brand knowledge has on consumer response to the marketing of that brand.

If the brand is much known, you have two different reactions:

1. Brand knowledge

Brand awareness:

-brand recognition

-Brand recall

Brand image:

-Brand benefits

-Brand attributes

1. Strong customer brand equity

-High level of awareness

-Strong image: associations are strong, unique and favorable.

Financial brand equity

Strong brand equity => high brand value

Brand equity models

DDB survey among marketing directors: What is strong brand equity?

-Brand awareness (65%)

-Strength of brand positioning, concept, personality (39%)

-Strength of signs of recognition (logo, code, packaging) (36%)

-Brand authority with consumers, brand esteem, perceived status, loyalty (24%)

1. Aaker (1991,1996: Brand equity 10)

Brand equity:

-Brand loyalty :

1. Price premium
2. Satisfaction/loyalty

-Brand awareness

1. Brand awareness

-Brand associations

1. Perceived value
2. Brand personality
3. Organizational associations

-Perceived quality

1. Perceived quality
2. Leadership

-Other proprietary assets

1. Market share
2. Price and distribution indices

1. Keller (1992)

-Indirect approach

• Brand awareness
• Brand image

Brand equity

-Direct approach

• Mix marketing

1. Martin and Brown (1990)

Brand equity:

-Perceived quality

-Brand image

-Perceived value

-Trust

-Commitment

1. Lassar, Mittal & Sharma (1995)

Brand equity:

-Performance

-Social image

-

-Perceived value

-Trust

-Commitment

1. Thomas (1993)

Brand equity: leadership, brand awareness, satisfaction, brand loyalty, price premium, brand extension, brand image

1. Landor Associates

Image Power:

Brand equity: Awareness and esteem

1. Feldwick (1996)

Sources of brand strengths: Brand strength:

-Brand awarenessLeadership

-Brand imagePrice premiumBrand value

-Perceived qualityBrand loyalty

-Perceived valueMarket share and distribution

-Brand personality

-Organizational associations

There is a distinction between cognitive and affective variables.

1. Millward Brown International (1996) : Brand Dynamics Pyramid

1. Srivastava and Stocker
2. Interbrand
3. Kish, riskey &Kerin (2001)
4. Tocquigny
5. Total research Corporation
6. Young and Rubicam

1. Brand identity, positioning and image

Brand identity integrates also the personality of the brand. Identity goes further than the positioning.

Brand equity and positioning:

• Not enough brands know who they are

Reason of being and what they stand for

• Essential to define the brand’s positioning and identity

Need of a brand charter

Brand positioning: The firm identifies the advantages or benefits that will differentiate the brand versus other brand. No integration of the personality

Brand identity: It gives information on what the brand is, its personality, its history, its values. There are more intangible values integrated. More complete concept. You give more info about the brand.

Kapferer’s 6 Facets Brand identity prism

-Physique: The key physical qualities, product and brand attributes that make the brand recognizable

Example (Lacoste): shirt, croco, outstanding quality, comfortable

-Personality: The way in which the brand speaks of its products. The kind of person it would be if it were human

Example (Lacoste): optimistic, without excess, touch of class

-Culture: a brand has its own set of values

Example (Lacoste): French elegance, individualist, aristocratic

-Relationship: A brand is often at the crux of transactions and exchanges between people.

Example (Lacoste): social conformity

-Reflection: The desired image of the brand user, the consumer’s outward mirror

Example (Lacoste): neither hyper-masculine, neither hyper-feminine, trans-generation

-Self-Image: The consumer’s internal mirror, how people see themselves when consuming the brand.

Example (Lacoste): be a member of a chic club.

How to develop a good identity prism?

-Few words to each facet

-Not the same words on each facet

-All words have strength and are not lukewarm

Facets are not filled with traits image: identity is not image. Identity is selected by the company and image is perception of consumer.

Some firms have their own identity models:

-“Brand key” for Unilever

-“Footprint” for Johnson&Johnson

Brand essence

Brand essence is the summary of the brand positioning and/or identity

Example: in 1 or 2 words, try to define the brand essence

• Dove: feminity restored
• Benetton: tolerance & friendship

Brand image

All the associations held in consumer memories that characterized one brand versus another. (Dobni and Zinkhan 1990)

1. Launching the brand

Choose a name is important; sure that selection of name is well done.

Brand creation

1. Defining the brand’s platform

= Creation of the brand’s identity and positioning.

Why must this brand exist?

1. Choosing the right name

More than 10 million of protected brand names in the world. A consumer knows +/- 5000 brand names. There are so many names in the market. It has to be short, that could be better. It has to be international name, clear link or not with the product.

A name should be:

-Simple Example : Dash, OMO, Ikea, Lipton, Kodak

-Short

-Easy to pronounce : Non good example: Head & Shoulders, Hoegaarden

-Not descriptive : Non good example: Banque directe, Optic 2000, New man

-International: Non good example: Pschitt!, Nova

-Not linked to time

• Protecting the name
• In one country
• In Europe

No possibility to protect a brand in the world (one country after one)

• Only protected in one product category
• New brands are not too close to existing brands

Example: Netium used by a company of micro-computer (versus Pentium). “Deep Valley” for clothes versus “Sun Valley”

• Testing the name
• Can last several months and be very costly
• Some companies are specialized (Nomen)

How do you test name?

-First you establish a list

-You make a first ranking

- You test with some clients

• Association tests
• Wording tests
• Memorization tests
• Preference tests

1. Choosing the right logo

-Need to communicate the values of the brand

-Need to modernize regularly (Coca-Cola every 10 years

-Can be associated with a typo (like LU)

-Shorter life cycle for the slogan

Key advantages of strong brands

-Large share of market

-Higher price and less elastic (price premium, low price sensitivity)

-Larger margins (like Apple)

-Good quality perception

-Higher trust (you want to go and buy this brand again)

-Greater consumer loyalty

-Stronger vs. competitive marketing actions

-Better defense in case of marketing crisis

-Greater trade cooperation (more power)

-Brand extension opportunities

-Less risks

Growth in mature market through

-Existing customers:

• Building volume per capita
• Building volume by addressing the barriers to consumption
• Growth through new uses and situations

-Line extension : offering different product forms

-Innovations (P&G and L’Oreal: 3.2% sales, Unilever: 1.8%; Nestlé: 1.2%). In food business, innovation seems less important than in other sector.

-Internationalization

Creation of entry barriers

-Mastering technology and quality. Example: P&G, L’Oreal and 3M

-Domination through image and communication. Example: Coca-Cola, Nike, Adidas

-Costs of production. Example: Dell and Decathlon

-Range extension. Example: Dim

-Putting a name to a product; Example: all chemical firms produce elastone, only DuPont produce Lycra

-Controlling relationship with opinion leaders

-Controlling distribution (McDonald’s)

-Legality (protection against counterfeit products)

1. Growth through brand extension

Brand extensions:

= Transfer the name and the image of a brand to gain a competitive advantage in a new category

-Most firms exploit today brand extension: when they can to extend the brand they try to do it.

-Industrial and luxury brands have traditionally extended their brands (Siemens, Philips, Accessories, jewelry and watch)

-Systematically used by Japanese brands (Mitsubishi: shipyards, nuclear plants, cars, high fidelity, banks…)

Example of brand extension: - Virgin (in different categories), Mars (to ice-cream business), Vitalinea (to biscuits and drinks), HP (to digital photo), Mercedes ( to vertically with class A), Salomon (to surfboards).

Key reasons for brand extension

-High costs of launching brand, so extend brand is a way to reduce costs

-Less risky of a brand extension if it’s worth

-A way to become stronger and bigger

-High costs of supporting several brands

-Need to build mega brands in face of retailer brands

-Escape from declining market segment

Advantages of brand extension

-Avoid the costs of launching a brand

-Lower brand support costs, especially in advertising

-Use of existing awareness

-Use of existing image

-Revitalize the brand

-Better accepted with trade

-Enhance the parent brand image

Risks of brand extension

-Dilution of the mother brand image

• No fit between both product categories

-Innovation is hidden by the existing brand name

-Destruction of the existing brand capital

-Cannibalization of the mother brand if the different categories are too close.

Possibilities of fit: same target group, same benefit, same technology

Example:

-Bic launched a perfume and it didn’t not work

• Bic: practical, cheap, disposable
• Perfume: dream, feminity, pleasure

-Bic phone

-Pierre Cardin had dilute his brand image

-Fit: Evian : water and cream=> same benefit, Salomon: involved the brand => same target group and same technology

Different classification of brand extension

1. Brand or line extension

Line extension: Launch of products under the same name in the same category

Brand extension: Launch of products under the same name in other category

1. Horizontal or vertical extension

Horizontal: we keep the same price bracket

Vertical: upward or downward extension

Specifities of vertical brand extensions:

-Extension to the low-end of the market : frequent in the fashion category

Examples: Mercedes (class A), Giorgio Armani (Emporio Armani), Donna Karan (DKNY)

-Extension to the high-end of the market

Examples: Volkswagen (Phaeton, not a success), Maybach (Mercedes, competitors are Rolls Royce and Bentley)

-Extension to both sides

Examples: Accor Group: cover all segments with Formula 1, Ibis, Novotel, Mercure and Sofitel)

1. Continuous or discontinuous extension

Continuous extension: a sport brand can cover another sport.

Discontinuous extension: real diversification (Yamaha: piano and motorbikes)

Research on brand extension

-Early brand extension research (Aaker and Keller 1990)

• Fit: feeling or perceived similarity between the core product and the extension

-The results were determined by the method, very conservatives results

-In the real world, consumers are more informed and can better evaluate extension

New research

An extension is considered acceptable if it “fits” the idea that consumers have of the parent brand:

-High perceived similarity with the parent brand

-High coherence between the extension and the brand concept

Key to successful brand extension

-The brand has strong equities (assets)

-These assets are transferable

-Included in a long term vision, not on an ad hoc basis

-The brand benefits and values are very relevant to the new category

-The new products will deliver a perceived competitive advantage

-The company has the resources on the long run

-We have the right name

-The new category is really attractive

-There are limits to brand extension research

Brand extension process

1. What are brand equities?
2. What is the intrinsic attractiveness of likely extension categories?
3. Can the brand assets be transferred?
4. What is the relevance of these assets?
5. What is the ability of the company to deliver the expected benefits?
6. What is the perceived superiority of the extension to existing competitors?
7. What is the ability of the firm to sustain competition in the extension?
8. What are the feedback effects on the parent brand?

1. Building brand architecture

Find the right name for the different products that you have in your portfolio.

Key questions

-What is the branding strategy?

-What brand name and symbols should we give to different products (corporate name, product name??)

-How many levels of branding do we need to give?

Brand architecture