466318580-BRANDING

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Boston University**We aren't endorsed by this school

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QST MK 487

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Marketing

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Dec 28, 2024

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Uploaded by JudgeWorld4311

4/20/2015CREATING ANDMAINTAININGPOWERFULBRANDSBY: ABRAHAM REDI

CERATING AND MAINTING POWERFUL BRANDSABSTRACTBranding has become one of the most important aspects of business strategy. Yet it isalso one of the most misunderstood. Branding is sometimes considered to be merely anadvertising function. And many managers and business writers hold the view thatbranding is about the management of product image, a supplementary task that can beisolated from the main business of product management. This paper provides analternative perspective, arguing that:1Branding is a strategic point of view, not a select set of activities. 2Branding is central to creating customer value, not just images. 3Branding is a key tool for creating and maintaining competitive advantage. 4Brands are cultures that circulate in society as conventional stories. This paper develops a set of concepts and frameworks to guide the design of brand strategies.2 | P a g e

CERATING AND MAINTING POWERFUL BRANDSTABLE OF CONTENTS1.What is Branding?.......................................................................................................42.Branding Strategy: building strong brands..................................................................52.1Brand Equity.........................................................................................................52.2Brand Positioning.................................................................................................62.3Brand Name Selection.........................................................................................82.4Brand Sponsor......................................................................................................92.5Brand Development..............................................................................................93Why Brands Fail?......................................................................................................104Brand Myths:.............................................................................................................115Winning the Brands Battle:.......................................................................................126Branding and Ethics:.................................................................................................137Evaluating Brands:....................................................................................................147.1Behaviors............................................................................................................147.2Attitudes..............................................................................................................147.3Relationships......................................................................................................157.4Equity..................................................................................................................158.References:...............................................................................................................163 | P a g e

CERATING AND MAINTING POWERFUL BRANDS1.What is Branding?A brand is a name, term, sign, symbol, design or a combination of these, that identifiesthe maker or seller of the product or service. Consumers view a brand as an importantpart of a product, and branding can add value to a product.Branding has become so strong that today hardly anything goes unbranded. Salt ispackaged in branded containers, even fruit and vegetables are brandedSome products, however, carry no brands. ‘Generic’ products are unbranded, plainlypackaged, less expensive versions of common products ranging from such items asspaghetti to paper towel, whose prices as much as 40 per cent lower than those of mainbrands. The lower price is made possible by lower-quality ingredients, lower-costpackaging and lower advertising costs.Despite the limited popularity of generics, the issue of whether or not to brand is verymuch alive today. This situation highlights some key questions: Why have branding inthe first place? Who benefits? How do they benefit? At what cost?Branding helps buyers in many ways:Brand names tell the buyer something about product qualityBrand names also increase the shopper’s efficiency. Imagine a buyer going intoa supermarket and finding thousands of generic products.Brand names help call consumers’ attention to new products that might benefitthem.Branding also gives the supplier several advantages:The brand name makes it easier for the supplier to process orderThe supplier’s brand name and trademark provide legal protection for uniqueproduction features that otherwise might be copied by competitors.Branding enables the supplier to attract a loyal and profitable set of customers.Branding helps the supplier to segment markets.4 | P a g e

CERATING AND MAINTING POWERFUL BRANDSIn addition, branding adds value to consumers and society:Those who favor branding suggest that it leads to higher and more consistentproduct quality.Branding also increases innovation by giving producers an incentive to look fornew features that can be protected against imitating competitors.Thus, building and managing brands represents one of the most important marketingtasks.2. Branding Strategy: building strong brandsBrands are viewed as the major enduring asset of a company, outlasting the company’sspecific products and facilities. John Stewart, co-founder of Quaker Oats, once said ‘Ifthese businesses were split up, I would give you the land and bricks and mortar, and Iwould keep the brands and trademarks, and I would fare better than you’. The brand ismore valuable than the totality of all these assets!Thus, brands are powerful assets that must be carefully developed and managed. Inthis section, we examine the key strategies for building and managing brands.2.1 Brand EquityBrand equity is the positive differential effect that knowing the brand name has oncustomer response to the product or service. Brands have higher brand equity to theextent that they have higher brand loyalty, name awareness, perceived quality, strongbrand associations and other assets such as patents, trademarks and channelrelationships. A measure of the brand’s equity is the extent to which customers arewilling to pay more for the brand. One study found that 72 per cent of customers wouldpay a 20 per cent premium for their brand of choice relative to the closest competingbrand; 40 per cent said they would pay a 50 per cent premium.A brand with strong brand equity is a valuable asset. Companies have sought to put avalue on their brands. Brand valuation is the process of estimating the total financial5 | P a g e

CERATING AND MAINTING POWERFUL BRANDSvalue of a brand. Measuring the actual equity of a brand name is difficult.21 However,according to one estimate, the brand value of Coca-Cola is $69 billion, that of Microsoftis $65 billion, and IBM’s is $53 billion.High brand equity provides a company with many competitive advantages. A powerfulbrand enjoys a high level of consumer brand awareness and loyalty, and the companywill incur lower marketing costs relative to revenues. Because consumers expect storesto carry the brand, the company has more leverage in bargaining with retailers.Because the brand name carries high credibility, the company can more easily launchline and brand extensions.Marketers need to manage their brands carefully to preserve brand equity. In order tomaintain or improve brand awareness, perceived brand quality and usefulness, andpositive brand associations over time, they need to work with R&D to provide a constantflow of improved and innovative products to satisfy customers’ changing needs.Yet, behind every powerful brand stands a set of loyal customers. Therefore, the basicasset underlying brand equity is customer equity – the value of the consumerrelationships that the brand creates. This suggests that the proper focus of marketingplanning is that of extending loyal customer lifetime value, with brand managementserving as an essential marketing tool.2.2 Brand PositioningMarketers need to position their brands clearly in target customers’ minds. Branding hasbecome one of the most important aspects of business strategy. Yet it is also one of themost misunderstood. Branding is sometimes considered to be merely an advertisingfunction. But a brand is a complex symbol that can convey several levels of meaning:1.Attributes. A brand first brings to mind certain product attributes. For example,Mercedes suggests such attributes as ‘well engineered’, ‘well built’, ‘durable’,‘high prestige’, ‘fast’, ‘expensive’ and ‘high resale value’. The company may useone or more of these attributes in its advertising for the car. For years, Mercedesadvertised ‘Engineered like no other car in the world’. This provided a positioningplatform for other attributes of the car.6 | P a g e

CERATING AND MAINTING POWERFUL BRANDS2.Benefits. Customers do not buy attributes, they buy benefits. Therefore,attributes must be translated into functional and emotional benefits. For example,the attribute ‘durable’ could translate into the functional benefit ‘I won’t have tobuy a new car every few years.’ The attribute ‘expensive’ might translate into theemotional benefit ‘The car makes me feel important and admired.’ The attribute‘well built’ might translate into the functional and emotional benefit ‘I am safe inthe event of an accident.’3.Values. A brand also says something about the buyers’ values. Thus Mercedesbuyers value high performance, safety and prestige.4.Culture. A brand also represents a certain culture. Consider a new product thathas just been introduced by a new company. While the product has a name anda trademarked logo, and perhaps other unique design features—all aspects thatwe intuitively think of as “the brand”—in fact the brand does not yet exist becausethe product does not yet have a history, these markers are “empty.” They aredevoid of meaning. Now think of famous brands. What is different is that thesemarkers have been filled with customer experiences, with advertisements, withfilms and sporting events, with magazines and newspaper articles that evaluatethe brand, with conversations with friends and colleagues that mention the brand.Over time, ideas about the product accumulate and “fill up” the brand markerswith meaning. A brand culture is formed. The Mercedes represents ‘Germanculture’: high performance, efficient, high quality.5.Personality. A brand also projects a personality. Motivation researcherssometimes ask ‘If this brand were a person, what kind of person would it be?’.Consumers might visualize a Mercedes automobile as being a wealthy, middle-aged business executive. The brand will attract people whose actual or desiredself-images match the brand’s image.All this suggests that a brand is a complex symbol. If a company treats a brand only asa name, it misses the point of branding. Promoting the brand on one or more of itsbenefits can be risky. Suppose Mercedes touts its main benefit as ‘high performance’. Ifseveral competing brands emerge with as high or higher performance, or if car buyers7 | P a g e

CERATING AND MAINTING POWERFUL BRANDSbegin placing less importance on performance as compared to other benefits, Mercedeswill need the freedom to move into a new benefit positioningThe most lasting and sustainable meanings of a brand are its core values andpersonality. They define the brand’s essence. The company must build its brandstrategy around creating and protecting these values and personality .e.g. Marketingless expensive models might dilute the personality that Mercedes has built up over thedecades.When positioning a brand, the marketer should establish a mission for the brand and avision of what the brand must be and do. A brand is the company’s promise to deliver aspecific set of features, benefits, services and experiences consistently to the buyers. Itcan be thought of as a contract to the customer regarding how the product or servicewill deliver value and satisfaction.2.3Brand Name SelectionSelecting the right name is a crucial part of the marketing process. A good name canadd greatly to a product’s success. However, finding the best brand name is a difficulttask. It begins with a careful review of the product and its benefits, the target market andproposed marketing strategies.Desirable qualities for a brand name include the following:1.It should suggest something about the product’s benefits and qualities. Examplesare Oasis (a refreshing fruit drink), and TimeOut (a chocolate biscuit to go withcoffee or tea breaks).2.It should be easy to pronounce, recognize and remember. Short names help.Example Dove (soap). But longer ones are sometimes effective, such as ‘I Can’tBelieve It’s Not Butter’ margarine.3.The brand name should be distinctive. Examples are Shell, Kodak and Virgin.4.The name should translate easily (and meaningfully) into foreign languages. Forexample, in Chinese Ferrari is pronounced as ‘fa li li’, the Chinese symbols forwhich mean ‘magic. On the other hand, Toyota’s Fiera car proved controversial8 | P a g e

CERATING AND MAINTING POWERFUL BRANDSin Puerto Rico, where ‘fiera’ translates to ‘ugly old woman’. Ford didn’t have thereception they expected in Brazil when their ‘Pinto’ car flopped. Then theydiscovered that in Brazilian Portuguese slang, ‘pinto’ means ‘small penis’Many companies stick with the same marketing campaign and brand message inevery country. However, this occasionally creates difficulties. For instance, inTaiwan Pepsi’s advertising slogan ‘Come alive with the Pepsi generation’ wastranslated as ‘Pepsi will bring your ancestors back from the dead.’2.4Brand SponsorA manufacturer has four sponsorship options. The product may be launched as amanufacturer’s brand (or national brand), as when Nestlé and IBM sell their outputunder their own manufacturer’s brand names. Or the manufacturer may sell tointermediaries that give it a private brand (also called retailer brand, distributor brand orstore brand). Although most manufacturers create their own brand names, othersmarket licensed brands. For example, some clothing and fashion accessory sellers paylarge fees to put the names or initials of fashion innovators such as Calvin Klein andGucci on their products. Finally, companies can join forces and co-brand a product:Thepractice of using the established brand names of two different companies on the sameproduct.2.5Brand DevelopmentA company has four choices when it comes to developing brands. It can introduce lineextensions (existing brand names extended to new forms, sizes and flavors of anexisting product category), brand extensions (existing brand names extended to newproduct categories), multi brands (new brand names introduced in the same productcategory) or new brands (new brand names in new product categories).9 | P a g e

CERATING AND MAINTING POWERFUL BRANDSProduct CategoryExistingNew Brand nameExistingLine extensionBrand extensionNewMulti brandsNew Brands3Why Brands Fail?According to Matt Haig’s book brand failures, “…products were responsible for the fateof a company. When a company noticed that its sales were flagging (declining), it wouldcome to one conclusion: its product was starting to fail. Now things have changed.Companies don’t blame the product, they blame the brand.”This is not always the fault of the company, as some things really are beyond theirimmediate control (global recession, technological advances, international disastersetc). However, more often than not, when brands struggle or fail it is usually due to adistorted perception of the brand. This altered view is a result of one of the followingseven deadly sins of branding:1.Brand amnesia. For old brands, as for old people, memory becomes anincreasing issue. When a brand forgets what it is supposed to stand for, it runs into trouble. Themost obvious case of brand amnesia occurs when a venerable, long-standing brand tries to create a radical new identity, such as when Coca-Cola tried to replace its original formula with New Coke. The results were disastrous2.Brand ego. Brands sometimes develop a tendency for over-estimating theirownimportance, and their own capability. This is evident when a brand believes it cansupport a market single-handedly, as Polaroid did with the instant photographymarket. 3.Brand megalomania. Egotism can lead to megalomania. When thishappens, brandswant to take over the world by expanding into every product category imaginable.Some, such as Virgin, get away with it, lesser brands, however, do not.10 | P a g e

CERATING AND MAINTING POWERFUL BRANDS4.Brand deception. ‘Human kind cannot bear very much reality,’ wrote T SEliot.Neither can brands. Indeed, some brands see the whole marketing process as anact of covering up the reality of their product. In extreme cases, the trend towardsbrand fiction can lead to downright lies. 5.Brand fatigue. Some companies get bored with their own brands. You cansee thishappening to products which have been on the shelves for many years, collectingdust. When brand fatigue sets in creativity suffers, and so do sales. 6.Brand paranoia. This is the opposite of brand ego and is most likely tooccur when abrand faces increased competition. Typical symptoms include: a tendency to filelawsuits against rival companies, a willingness to reinvent the brand every sixmonths, and a longing to imitate competitors. 7.Brand irrelevance. When a market radically evolves, the brands associatedwith itrisk becoming irrelevant and obsolete. Brand managers must strive to maintainrelevance by staying ahead of the category, as Kodak is trying to do with digitalphotography. 4Brand Myths:When their brands fail companies are always taken by surprise. This is because theyhave had faith in their brand from the start, otherwise it would never have beenlaunched in the first place. However, this brand faith often stems from an obscuredattitude towards branding, based around one or a combination of the following brandmyths:1.If a product is good, it will succeed. This is blatantly untrue. In fact, goodproductsare as likely to fail as bad products. Betamax, for instance, had better picture andaudio quality than VHS video recorders. But it failed disastrously. 2.Brands are more likely to succeed than fail. Wrong. Brands fail every singleday.According to some estimates, 80 per cent of all new products fail uponintroduction, and a further 10 per cent die within five years. By launching aproduct you are taking a one in ten chance of long-term success. As RobertMcMath, a former Procter & Gamble marketing executive, once put it: ‘it’s easier11 | P a g e

CERATING AND MAINTING POWERFUL BRANDSfor a product to fail than it is to survive.’ 3.Big companies will always have brand success. This myth can be dismantledwith two words: New Coke. Big companies have managed to have at least asmuch failure as success. No company is big enough to be immune to branddisaster. \ main paradoxes of branding – namely, that as brands get bigger andmore successful, they also become more vulnerable and exposed. 4.Strong brands are built on advertising. Advertising can support brands, butitcan’t build them from scratch. Many of the world’s biggest brand failuresaccompanied extremely expensive advertising campaigns. 5.If it’s something new, it’s going to sell. There may be a gap in the market, butitdoesn’t mean it has to be filled. This lesson was learnt the hard way for RJRNabisco Holdings when they decided to launch a ‘smokeless’ cigarette. ‘It tookthem a while to figure out that smokers actually like the smoke part of smoking,’one commentator said at the time. 6.Strong brands protect products. This may have once been the case, but nowthesituation is reversed. Strong products now help to protect brands. As the casesshow, the product has become the ambassador of the brand and even theslightest decrease in quality or a hint of trouble will affect the brand identity as awhole. The consumer can cause the most elaborate brand strategy to end infailure.5Winning the Brands Battle:Brand building and retention involves planning to ensure consistent brand values overtime, adopting a holistic perspective. Competitive positioning needs to be understood tosustain brands against competitors.There are two broad types of brand competitive advantage, cost driven or value-added,and value chain analysis can help to identify the sources of competitive advantage.Strategies for developing different brands in relation to the competition are reviewed.Winning brands have certain characteristics and a structured approach to brandextensions is outlined. Through the analysis of environmental opportunities and threats,12 | P a g e

CERATING AND MAINTING POWERFUL BRANDSand the nature of the brand’s competitive advantage, marketers are able to developstrategies which position their brands. The lifespan of brands will depend on thesustainability of competitive advantage.The broad competitive advantages inherent in successful brands are based on eitherdelivering similar benefits more cheaply than competitors, i.e., cost driven brands,and/or delivering superior benefits than competitors at a price premium, i.e., value-added brands. A useful device for identifying the competitive advantages of particularbrands is the framework of Porter’s value chain. Porter’s generic strategies matrixidentifies two dimensions of competition – cost and differentiation. In a commoditymarket a company can lead only on lowest cost. In a differentiated market, achievinglow relative cost gives the company market advantage and a high relative cost demandsa niche marketing strategy.A more advanced method developed for brand strategy is to consider the type ofcompetitive advantage inherent in the brand and the competitive scope of the market itwill be targeting. The profitability of a brand will come from a long-term brandinvestment program based on the factors that drive brand success and profitability.6Branding and Ethics:Branding is one of the most powerful tools in the marketing arsenal. So brandishing thistool comes with a responsibility to use it ethically. Recently, branding has come undersignificant criticism, particularly in Naomi Klein’s popular book No Logo(Picador, 2001).Klein argues that firms use branding in an imperialist manner, feeding on consumers’base desires while ignoring issues of social welfare. Such critiques have a long historyacross the globe. Beneath such criticism is the question of power. Branding is a form ofrhetoric—an instrument to persuade people to think differently. Branding can createconsiderable value. But it can also be used in an exploitative manner. For branding tobe a benevolent activity, four conditions need to hold:1.Firms and consumers are equipped with equal information about the product. 2. Firms and consumers have equivalent sophistication in understanding how13 | P a g e

CERATING AND MAINTING POWERFUL BRANDSbranding works. When these conditions do not hold, there is potential for abuse. For example:•Branding products with information asymmetries •Stealth branding •Branding to populations lacking rhetorical literacy, such as children In such conditions, managers must vigilantly watch over the ethics of their brandingpolicies, assuring the activities create value rather than take advantage of customerweaknesses.7Evaluating Brands:How do managers know if their brand strategies are working? Managers use fourprimary measures to “read” the brand’s health and evaluate marketing effectiveness.7.1Behaviors When the brand increases in value, one expects—all other factors beingunchanged—that customers will purchase the brand more regularly and will beless likely to switch away from the brand. Thus, one way to measure the strengthof a brand is to measure behavioral loyalty. Measurements of loyalty behaviorsalone can be misleading, though, because so many factors influence purchasebehavior. So marketers commonly look at additional indicators.7.2Attitudes Valued brands tend to share certain consumer attitudes: they are well knownamongthe relevant customers for delivering particular benefits, they areassociated with influential users, and they are personally relevant. Attitudinalmeasures are gathered from traditional market research as well as other informalfeedback mechanisms (Web sites, customer centers, retailers) to makebenchmarked comparisons on attitudinal strength.7.3Relationships 14 | P a g e

CERATING AND MAINTING POWERFUL BRANDSWhen brand value is high, customers tend to rely heavily on the brand in theirdaily life and, so, develop deep relationships with the brand. Like a personalrelationship, people come to depend on the brand and exhibit strong emotionsand feelings about the brand. Hence, measures of relationship strength canprovide accurate indicators of brand value.7.4Equity The ultimate measure of brand value is the brand’s reservation price (the price atwhichconsumers are indifferent between the brand and competitive offerings). Ifthe demand curve shifts outward, all other factors being equal, the brand is morevalued by customers. Successful branding allows firms to charge more for theirproducts or to sell more at the existing price, or some combination thereof. Thefuture stream of earnings produced by this shifting of the demand curve attributedto branding is called brand equity. For many companies, branding has atremendous impact on profits. Thus, brands are some of the most importantassets owned by the corporation.And finallyAccording to Leslie, de C. & Malcom, H.. M., (2003).“Successful brand building helpsprofitability by adding value that entices customers to buy…And last but not least, theyhelp transform organizations from being faceless bureaucracies to ones that areattractive to work for and deal with.”15 | P a g e

CERATING AND MAINTING POWERFUL BRANDS8.References:1.Daglous b.Holt, Brands and Branding,Available at: www.bookza.com2.Des Dearlove, 2007. Business the Richard Branson Way- 10 secrets of theWorld’s Greatesr brand builderThird., Available at: www.wileyeurope.com.3.Haig, M., Brand Failures- The Truth about 100 Biggest Brand Failures,4.Kotler, P. et al., 2005. Principles of MarketingFourth Eur., Available at:www.pearsoned.co.uk/kotler.5.Leslie, de C. & Malcom, H.. M., 2003. Creating Powerful BrandsThird edit.,Available at: www.biddles.co.uk.16 | P a g e