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Chapter 1 brands and brand management
- 1. Copyright © 2013 Pearson Education CHAPTER 1: BRANDS AND BRAND MANAGEMENT
- 2. Copyright © 2013 Pearson Education Learning Objectives Define “brand,” state how brand differs from a product, and explain what brand equity is Summarize why brands are important Explain how branding applies to virtually everything Describe the main branding challenges and opportunities Identify the steps in the strategic brand management process
- 3. Copyright © 2013 Pearson Education History of Branding The word BRAND is derived from the Old Norse brand meaning "to burn," which refers to the practice of producers burning their mark (or brand) onto their products. In ancient times, in order to identify the owner of the livestock, cattle breeders used hot ironing in to order to identify the owner of the cattle and differentiate it from others. 2 tricky words: identify and differentiate
- 4. Copyright © 2013 Pearson Education What is a brand? According to AMA (American Marketing Association) A brand is “ name, term, sign, symbol, or design or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition” 2 tricky words: identify and differentiate
- 5. Copyright © 2013 Pearson Education Even without the logo…
- 6. Copyright © 2013 Pearson Education Simply, Branding is a promise given to the customer; a promise that needs to be fulfilled every single time.
- 7. Copyright © 2013 Pearson Education In class reading: Coca Cola’s Branding Lesson Page 32 from textbook
- 8. Copyright © 2013 Pearson Education
- 9. Copyright © 2013 Pearson Education Q to the class Why do brands/branding matter? Why is it important? 1. Simplify decision making process (E.g. in a supermarket to pick up coca-cola, le cola, bi cola, pepsi) 2. Reduces risk 3. Set expectations
- 10. Copyright © 2013 Pearson Education What is a Brand? Brand Elements Brands versus Products Set of expectations, memories, stories and relationships taken together!
- 11. Copyright © 2013 Pearson Education Brand Elements Different components that identifies and differentiates a brand Name, logo, symbol, package design, or other characteristic Can be based on people, places, things, and abstract images
- 12. Copyright © 2013 Pearson Education Brand elements in many forms…
- 13. Copyright © 2013 Pearson Education Brand elements come together… https://www.youtube.com/watch?v=auEdEYY3ao4 Advertisement for Audi…
- 14. Copyright © 2013 Pearson Education Brand versus Product Brand Product Has dimensions that differentiate it in some way from other products designed to satisfy the same need Anything available in the market for use or consumption, that may satisfy a need or want Can be differentiated on the basis of: • Packaging • Services provided • Customer advice • Financing • Delivery arrangements • Warehousing • Other things valued by the customers Can be categorized into five levels namely: • Core benefit level • Generic product level • Expected product level • Augmented product level • Potential product level
- 15. Copyright © 2013 Pearson Education E.g. customer advice
- 16. Copyright © 2013 Pearson Education 5 product levels Core benefit: Fundamental need. A lady wants to enhance her beauty so buys a make up kit. Generic product: A basic version of the product with no distinguishing features. What the product is made up? Blush, eye shadow trays, lipsticks, mascara and so on. The expected product: Attributes and features that a consumer generally expect ( Quality first but in our makeup set case, the color of the eye shadows must have good pigmentation. Everything included must be able to stay on for hours. ) The augmented product: Adding extra features beyond expectations. The examples of augmented product for a makeup kit can be a surprise gift, samples, coupon for the next purchase, or adding an extra cosmetic inside not offered by other brands. Competition mostly takes place in this segment. Potential product level: all the transformations that the same product can undergo. The ultimate product. In make up, the continuous development in the make up like removing parabens or adding aloe-vera.
- 17. Copyright © 2013 Pearson Education But sometimes..
- 18. Copyright © 2013 Pearson Education Brand vs Product The new competition is not between what companies produce in their factories but between what they add to their factory output in the form of packaging, advertising, services, customer advice, financing, delivery arrangements, warehousing and other things.
- 19. Copyright © 2013 Pearson Education To Sum Up .... Through branding, organizations: Create perceived differences among products Develop loyal customers Create value that can translate to financial profits Tricky word PREMIUM PRICING
- 20. Copyright © 2013 Pearson Education Why Do Brands Matter? Consumers Firms
- 21. Copyright © 2013 Pearson Education Consumers Consumer: Encompass all types of customers, including individuals as well as organizations Functions provided by brands to consumers Identify the source or maker of the product Simplify product decisions Lower the search costs for products internally (thinking) and externally (looking around) Helps set reasonable expectations about what consumers may not know about the brand
- 22. Copyright © 2013 Pearson Education Consumers Signal product characteristics and attributes On the basis of attributes products can be classified as: Search goods (e.g. grocery products-visual inspection) Experience goods (e.g. automobile tires-experience needed) Credence goods (e.g. insurance coverage-rarely experienced) Reduce risks in product decision These risk can be categorised as Functional ,physical, financial, social psychological, and time
- 23. Copyright © 2013 Pearson Education E.g. Social Risk (embarrassment)
- 24. Copyright © 2013 Pearson Education Firms Brands provide valuable functions Simplify product handling and tracing Help organizing inventory and accounting records Offer the firm legal protection for unique features or aspects of the product (trade marks, patents, copyrights and designs) Provide predictability and security of demand for the firm (customer satisfaction leads to loyalty ends up with repeat purchase) Creates barriers of entry for competitors and provide a powerful means to secure competitive advantage
- 25. Copyright © 2013 Pearson Education Figure 1.3 - Roles that Brands Play
- 26. Copyright © 2013 Pearson Education Best Global Brands 2016
- 27. Copyright © 2013 Pearson Education Q: Can Anything Be Branded? To brand a product marketers should identify - WHO the product is - Provide meaning for the brand WHAT it stands for Since branding is about the perceptions of the consumer and rooted deeply in the minds of the consumers. Marketers benefit from branding whenever
- 28. Copyright © 2013 Pearson Education Can Anything Be Branded Physical Goods Services
- 29. Copyright © 2013 Pearson Education Physical Goods Business-to-Business Products High-tech Products Businesses put the fate of their company in the hands of another company E.g. aircraft engine vs. toothpaste Even commodities can be branded E.g. De Beers Many hi tech companies see branding as naming. But innovation is not solely enough for marketplace success. See the next slide!
- 30. Copyright © 2013 Pearson Education Example; Sony MP3 vs. Apple iPod
- 31. Copyright © 2013 Pearson Education Physical Goods: B2B Branding B2B brands E.g. INTEL (Intel Inside Campaign), Accenture (Tiger Woods Campaign) etc. • Guidelines for marketers of B2B brands • Ensure that entire organization supports branding and brand management. (especially salesforce since B2B requires more personal selling) • Adopt a corporate branding strategy if possible and create a well- defined brand hierarchy. • Frame value perceptions. (putting best foot forward) • Link relevant non-product-related brand associations (superior customer service, financial easiness) • Find relevant emotional associations for the brand. • Segment customers carefully both within and across companies.
- 32. Copyright © 2013 Pearson Education Brand Hierarchy of Toyota
- 33. Copyright © 2013 Pearson Education Services Role of Branding with Services Professional Services
- 34. Copyright © 2013 Pearson Education Can Anything Be Branded Retailers and Distributors Online Products and Services People and Organizations
- 35. Copyright © 2013 Pearson Education Personal Brands
- 36. Copyright © 2013 Pearson Education Can anything be branded Sports , Arts, and Entertainment Geographic Locations Ideas and Causes
- 37. Copyright © 2013 Pearson Education To Sum up.... Branding is universal and pervasive in different product categories Applicable to both tangible and intangible offerings of an organization Technological developments have impacted the way firms market their offerings Organizations reap financial benefits from positive brand images
- 38. Copyright © 2013 Pearson Education Strong Brands Brands that have been market leaders in their categories for decades Any brand is vulnerable and susceptible to poor brand management
- 39. Copyright © 2013 Pearson Education Factors Responsible for Branding Challenges Savvy customers Economic downturns Brand proliferation Media transformation
- 40. Copyright © 2013 Pearson Education Factors Responsible for Branding Challenges Increased Competition Increased costs Greater accountability
- 41. Copyright © 2013 Pearson Education Figure 1.9- Challenges to Brand Builders
- 42. Copyright © 2013 Pearson Education Brand Equity Brand equity is a phrase which describes the value of having a well-known brand name. Simply put brand equity = value of the brand
- 43. Copyright © 2013 Pearson Education Brand Equity Principles of branding and brand equity Differences in outcomes arise from the “added value” endowed to a product The added value can be created for a brand in many different ways (different branding strategies) Brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand There are many different ways in which the value of a brand can be exploited to benefit the firm (from customer loyalty to premium pricing)
- 44. Copyright © 2013 Pearson Education Strategic Brand Management Process 1. Identifying and Developing Brand Plans 2. Designing and Implementing Brand Marketing Programs 3. Measuring and Interpreting Brand Performance 4. Growing and Sustaining Brand Equity
- 45. Copyright © 2013 Pearson Education 1.Identifying and Developing Brand Plans Brand Positioning Model Brand Resonance Model Brand Value Chain
- 46. Copyright © 2013 Pearson Education 2. Designing and implementing Brand Marketing Program Choosing Brand Elements Integrating the Brand into Marketing Activities and the Supporting Marketing Program Leveraging Secondary Associations e.g. Made In Italy
- 47. Copyright © 2013 Pearson Education 3.. Measuring and Interpreting Brand Performance To manage brands profitably, managers must implement a brand equity measurement system Brand equity measurement system involves: Brand audits Brand tracking studies Brand equity management system
- 48. Copyright © 2013 Pearson Education 4. Growing and Sustaining Brand Equity Defining Brand Architecture Managing Brand Equity over Time Managing Brand Equity over Geographic Boundaries, Cultures, and Market Segments
- 49. Copyright © 2013 Pearson Education Figure 1.12 - Strategic Brand Management Process
- 50. Copyright © 2013 Pearson Education Pepsi Brand Portfolio Example
Editor's Notes
- But branding is BEYOND naming a product.
- Every single time concept is important because consistency is important in branding. Coca-Cola Mc Donalds
- For 1: assume that you are in a grocery and you have 10 seconds. Which coke will you pick up?
- Brand A name, term, sign, symbol, or design, or a combination of them. Intended to identify the goods and services of one seller or group of sellers. Differentiate goods and services from those of competitors. Creates a certain amount of awareness, reputation, prominence, and so on in the marketplace.
- Product Can be: Physical good - A cereal, tennis racquet, or automobile. A service - An airline, bank, or insurance company. A retail outlet - Department store, specialty store, super market. A person - Political figure, professional entertainer, athlete. A place - City or country. An idea or a social cause. Five levels of meaning for a product: Core benefit level: Fundamental need or want that consumers satisfy by consuming the product or service. Generic product level: Basic version of the product containing only those attributes or characteristics absolutely necessary for its functioning but with no distinguishing features. Expected product level: Set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. Augmented product level: Additional product attributes, benefits, or related services that distinguish the product from competitors. Potential product level: All the augmentations and transformations that a product might ultimately undergo in the future. Brand Dimensions may be rational and tangible—related to product performance of the brand—or more symbolic, emotional, and intangible—related to what the brand represents. A branded product may be: A physical good like Kellogg’s corn flakes cereal, Prince tennis racquets, or Ford Mustang automobiles. A service such as Delta Airlines, Bank of America, or Allstate insurance.
- Search goods Evaluated on the basis of attributes such as sturdiness, size, color, style, design, weight, and ingredient composition by visual inspection. Example - Grocery Experience goods Evaluated on the basis of features such as durability, service quality, safety, and ease of handling. Example - Automobile tires Credence goods Consumers may rarely learn attributes. Example - Insurance Risks Functional risk - Product does not perform up to expectations. Physical risk - Product poses a threat to the physical well-being or health of the user or others. Financial risk - Product is not worth the price paid. Social risk - Product results in embarrassment from others. Psychological risk - Product affects the mental well-being of the user. Time risk - Failure of the product results in an opportunity cost of finding another satisfactory product.
- B2B products Example of B2B brand – Caterpillar, FedEx Guidelines for marketers of B2B brands Ensure that entire organization supports branding and brand management. Adopt a corporate branding strategy if possible and create a well-defined brand hierarchy. Frame value perceptions. Link relevant non-product-related brand associations. Find relevant emotional associations for the brand. Segment customers carefully both within and across companies. High-tech Products Struggle with branding due to lack of branding strategy. Have realised that financial success is no longer driven by product innovation alone. Marketing skills play an important role in the adoption and success of high-tech products. Guidelines for high-tech branding: Understand your brand hierarchy and manage it appropriately over time. Know who your customer is and build an appropriate brand strategy. Realize that building brand equity and selling products are two different exercises. Brands are owned by customers, not engineers. Brand building on a small budget necessitates leveraging every possible positive association. Technology categories are created by customers and external forces, not by companies themselves. The rapidly changing environment demands that you stay in tune with your internal and external environment. Invest the time to understand the technology and value proposition and do not be afraid to ask questions.
- Role of branding with services Challenges in marketing services: Less tangible than products and vary in quality. Depend on the particular person or people providing them. Branding addresses problems related to intangibility and variability. Brand symbols help make abstract nature of the services more concrete. Provides competitive edge to the services. Professional services Offer specialized expertise and support to other businesses and organizations. Combination of B2B and traditional consumer services branding. Challenges: Greater variability Harder to standardize Threat from greater equity of employees
- Retailers and distributors Retailers can introduce their own brands by using their store name, creating new names, or some combination of the two. Brand enables retailers and other channel members: Generate consumer interest, patronage, and loyalty in a store. Create their own brand image by associating quality with their service , product assortment, and merchandising. Yield higher price margins, increased sales volumes, and greater profits. Online product and services To build successful brands, online marketers should Create unique aspects of the brand on dimensions that are important to consumers. Example - Convenience, price, and variety Perform satisfactorily in areas, such as customer service, credibility, and personality. Find unique ways to satisfy consumers’ unmet needs. Offer unique features and services to consumers. Offer unique value propositions to geographically dispersed customer groups. People and organizations Product category is people or organization competing for public approval or acceptance. Have well-defined images that are easily understood and liked (or disliked) by others. The idea of brand in this category is not limited to famous and well known personalities, an individual who builds his name and reputation in a business context is essentially creating his own brand. Right awareness and image is invaluable in shaping the way people treat and interpret words, actions, and deeds.
- Sports, arts, and entertainment Sports teams Market themselves through a creative combination of advertising, promotions, sponsorship, direct mail, digital, and other forms of communication. Build awareness, image, and loyalty, to meet ticket sales targets regardless of the team’s actual performance. Art and entertainment An example of experience goods i.e. prospective buyers cannot judge quality by inspection and must use cues such as the particular people involved, the concept or rationale behind the project, and word-of-mouth and critical reviews. A strong brand is valuable in the entertainment industry because of the fervent feelings that names generate as a result of pleasurable past experiences. Geographic locations Increased mobility of people and businesses and growth in the tourism industry have contributed to the rise of place marketing. Refers to actively promoting cities, states and countries through advertising, direct mail, and other communication tools. Aim is to create awareness and a favorable image of a location that will entice temporary visits or permanent moves from individuals and businesses. Ideas and causes Branding helps make ideas and causes more visible and concrete.
- Savvy customers It has become increasingly difficult to pursue consumers because: Consumers and businesses have become more experienced with marketing, more knowledgeable about how it works, and more demanding. Current marketing environment has vast number of sources of information that consumers may consult. Empowered consumers play an active role in a brand’s fortune. Economic downturns Changes in economy impact consumers’ purchasing power. Research suggest that during recession consumer switch to less expensive products. Brand proliferation Marketers have increasingly added new products under their brand umbrella. Multiple product brands complicate the decision making process for marketers. As large number of brands engage in expansion, channels of distribution become clogged, and brands struggle to get products on the shelf. Media transformation Erosion or fragmentation of traditional advertising media and the emergence of interactive and nontraditional media, promotion, and other communication alternatives. Marketers are spending more on nontraditional forms of communication.
- Increased competition Both demand and supply factors have contributed to the increase in competitive intensity. Demand for many products and services has flattened and hit the maturity stage, or even the decline stage, of the product life cycle. On the supply side, new competitors have emerged due to factors such as globalization, low priced competitors, brand extensions, deregulations. Increased costs The cost of introducing a new product or supporting an existing product has increased rapidly, making it difficult to match the investment and level of support that brands received previously. Greater accountability Different organizational pressures often encourage quick-fix solutions which may have adverse long-run consequences.
- Strategic brand management process Design and implementation of marketing programs to build measure, and manage brand equity.
- Brand positioning model Describes how to guide integrated marketing to maximize competitive advantages. Brand resonance model Describes how to create intense, activity loyalty relationships with customers. Brand value chain Means to trace the value creation process for brands, to better understand the financial impact of brand marketing expenditures and investments.
- Choosing brand elements The best test of the brand-building contribution of a brand element is what consumers would think about the product or service if they knew only its brand name or its associated logo or other element. Integrating the brand into marketing activities and the supporting marketing program Although the judicious choice of brand elements can make some contribution to building brand equity, the biggest contribution comes from marketing activities related to the brand. Leveraging secondary associations Because the brand becomes identified with another entity, even though this entity may not directly relate to the product or service performance, consumers may infer that the brand shares associations with that entity, thus producing indirect or secondary associations for the brand.
- Brand equity measurement system A set of research procedures designed to provide timely, accurate, and actionable information for marketers so that they can make the best possible tactical decisions in the short run and the best strategic decisions in the long run. Brand audits: Comprehensive examination of a brand to, assess its health, uncover its sources of equity, and suggest ways to improve and leverage that equity. Brand tracking studies: Collect information from consumers on a routine basis over time, typically through quantitative measures of brand performance on a number of key dimensions marketers can identify in the brand audit or other means. Brand equity management system: Set of organizational processes designed to improve the understanding and use of the brand equity concept within a firm. Three steps that help implement a brand equity management system are: creating brand equity charters, assembling brand equity reports, and defining brand equity responsibilities.
- Defining brand architecture Provides general guidelines about branding strategy and the brand elements to be applied across all the different products sold by the firm. Two key concepts in defining brand architecture are: Brand portfolio: Set of different brands that a particular firm offers for sale to buyers in a particular category. Brand hierarchy: Displays the number and nature of common and distinctive brand components across the firm’s set of brands. Managing brand equity over time A long-term perspective of brand management recognizes that any changes in the supporting marketing program for a brand may affect the success of future marketing programs. Produces proactive strategies designed to enhance customer-based brand equity and reactive strategies to revitalize a brand that encounters problems. Managing brand equity over geographic boundaries, cultures, and market segments In expanding a brand overseas, managers need to build equity by relying on specific knowledge about the experience and behaviors of those market segments.