new strategic brand management chapter 2-3

https://www.youtube.com/watch?v=By9m3UBiRZM

Chapter 2 & Chapter 3PRESTON AND SNOW

Chapter 2: Strategic Implications of BrandingWHAT DOES BRANDING REALLY MEAN?

Branding transforms the product category

How does the brand do this?◦ Brands organize the market◦ Gives the products their own identity

A brand is weak when products are transparent (Coke keeps its recipe secret)

A brand is a long term vision Brands are not just about market share, but shape product category◦ Brands hold certain positions in product category◦ “What would the market last if we did not exist?”

Strategy is needed to unite the brand◦ What is the brand vision?◦ What are the core values?

Permanently nurtures the difference Brands protect the innovators

◦ Grants exclusiveness◦ Rewards risk-taking attitude

Brands act as a genetic program Serves as the memory and the future Acts like fast-setting concrete

Respect the brand contract Brands are built through a consistent message Once established, customers use brands as a benchmark Satisfied customers become loyal customers Brand requirements:

◦ Forecast the needs and expectations of potential buyers◦ React to technical and technological progress◦ Provide product/service quality and quantity simultaneously◦ Control supply quantity and quality◦ Deliver products to distributors◦ Give meaning to the brand and communicate it to consumers◦ Increase the experience of consumption or interaction◦ Remain ethical and ecology-conscious

Halo Effect

https://www.youtube.com/watch?v=fxyAYTieXlQ

The product and the brand

Halo effect: Kernel and Peripheral values

How does a brand have influence? Cue Messages:

◦ Search cues: factors readily accessible (price, label information)◦ Experience cues: sample the product or service◦ Credence cues (aka belief cues): long term fulfillment of promises

Influence buyers if:◦ Immediately available◦ Firmly believed◦ Highly valued◦ Highly differentiated

Halo effect: Kernel and Peripheral values

Kernel Traits◦ Unconditional, signify the brand◦ If the brand does not have X or Y, is it still the brand?

Peripheral Traits◦ Conditional, depends on the product range or segment

◦ Samsung products differ depending on what category they’re in◦ Long term may become kernel traits

Brands need a flagship product “Prototype” product Specific product most representative of the brand Reveals direction and focuses brand Problems arise when products are too similar

Advertising products through the brand prism Brands can guide perceptions like a magnifying glass Products can reflect like a prism to help build the brand Details change the picture depending on how they are presented

◦ Volvo and BMW would promote ABS differently to fit their strategies

Brands versus other signs of quality

Brands often coexist with other signs of quality This promotes and protects the brand

◦ Certifications of origin protect the heritage of the brand◦ Quality seals act as a promotional tool

Obstacles to the implementation of branding

Branding is a long term process requiring repetition and consistency Corporate accounting is often short term

◦ Focus on the bottom line and ROI◦ Fast measurable results are preferred

Turnover with agencies and within brands results in new directions Innovations quickly become the status quo

Asia’s branding culture Paradoxical

◦ Asian brands enjoy high market share, but are not intrinsically desired◦ Asians have a love affair with brands, but mostly Western brands (fashion and

luxury)

Samsung◦ Successful but needs more branding◦ Focus on products, not brand◦ Innovations are not disruptive◦ No capitalization, just distribution◦ Highly centralized management and communication

Summary Time is often overlooked, but pivotal The brand needs focus

◦ Say no to products that change the brand

The essence of the brand creates is◦ A flagship product embodies the idea of the brand◦ Kernel traits identify products within the brand

Brands guide perceptions and promote products

Chapter 3: Brands and business models

Are brands for all companies? YES An instrument for growth and profitability Essentially another business tool

The benefits of being a brand Brands lend personality, influence, value, and innovation that forms a community

Enhance exclusivity Act as a springboard for diversification Magazines are a great example

◦ Vogue, Elle, GEO, etc.

Differentiating a commodity by the brand A commodity market is runs on optimal price alone

◦ Consumers pay for the value of the good◦ Long term differentiation between products suffers◦ Hints of classical liberalism

Brands disrupt the commodity market◦ Perception of brand product having more value◦ Examples: Coke, Evian

YelloYello Strom has developed a meter that makes electricity visible and offers customers an entirely new transparency around their energy consumption.

Yello

Building a market leader without advertising

Brand needs to do the following◦ Have enough volume/sufficient supply◦ Have a stable quality to reduce risk◦ Have a mainstream price◦ Be end-user driven◦ Create barriers to entry for other brands◦ Have a strong national sales force

Example: Jacob’s Creek Wine

Jacob’s Creek Wine

https://www.youtube.com/watch?v=STnrf0w33wg

Brand building: From product to values, and vice versa

From product to value◦ Focus on product attributes◦ Starting point for most goods◦ As the product becomes more recognized, the name gains attention

From value to product◦ Focus on the name behind the product◦ Starting point for luxury and licensed goods◦ Initially name alone is worth the money, but the product needs to support

Brand names are important and should NOT be descriptive◦ Descriptive becomes generic, and the brand is lost

Are leading brands the best products or best value curve? What’s a value curve?

Paradox that the number one brands are not the best products Value curve: what does it mean to be the best?

◦ Meet the needs of consumers in the best way possible◦ Have added intangible values, such as personality

Bacardi: easy to mix, appeals to casual partygoersBREAK THE RULE AND ACT FAST Strong brand awareness is enough to catch the attention of consumers unaware of product differences

What to learn from branding and the value curve?

Starting a brand means finding a disruptive innovation Creating a market is the best way to lead the market Winners start first and move fast Reach critical size rapidly Focus on the customer’s values

Example: Insead MBA

Backing the brand by a business model

Competition between brands is often a competition between business models

To grow through expansion, strategy relies on three factors◦ Availability◦ Accessibility◦ Attractiveness

Case StudyThe Cola Wars: Coke vs. Pepsi

Coke:◦ “Put Coke at arm’s reach”◦ Able to be sold cheaply, at the same price as tea in the East◦ Coke’s image is not a product, but a bond

Pepsi Challenged◦ Cheaper to consumers◦ Focus on the product: better taste and started line extensions◦ Image was for the new “young” generation

Virgin Cola Failure◦ Didn’t have the distribution◦ Only one core product with no portfolio for support◦ Small sales force

Summary Brands are necessary for all companies and products Brands foster differentiation in the market Branding can be a chicken or egg debate: product or value?

◦ Either way you get a chicken

The value curve identifies the “best” brand Brand competition is often business model competition

Questions Thank you