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Session 5Building Strong Brands

Darlene Brannigan Smith, Ph.D.

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Learning Objectives

• This sessions goals are to help you gain an appreciation for:– the value of a strong brand, – the core components of a brand’s identity,– the elements of brand equity, and – brand extension strategies.

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Positioning Overview

• Remember . . .

• Positioning is the art of creating a meaningful and distinctive difference and personality for your product or service and consistently communicating this difference and personality to the consumer through ALL marketing elements.

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Brand Positioning: How is it used?

• The positioning of a brand should be the driving force behind all elements of the marketing plan . . .

Brand Positioning

Merchandising

PricingPromotions

Employees

Properties Service

Packaging

Advertising

PublicRelations

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Effective positioning creates brands with strong personalities. Brands - - - not products - - makes organizations prosper.

• A Brand . . .– Is selected and purchased by a

customer– Is unique– Can enjoy a long life span– Can command a premium

price– Has functional and

nonfunctional value.

• A Product . . .– Is made in a factory– Can be copied by competitors– Can be quickly outdated– Can only command a

commodity price– Has functional value

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Positioning and Branding Strategies

Product Positioning and Branding Strategies

Differentiation&

Product Positioning

Branding and Brand Management

Strategies

Brand andProduct-Line

Strategies

Product DifferentiationService DifferentiationBrand DifferentiationLow Cost of Purchase

Brand IdentityBrand Equity

Brand Leveraging

Umbrella and Flanker StrategiesProduct-Line Extensions

Bundling and UnbundlingProduct Elimination

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What is a Brand?

• Formally . . . – “A proprietary trademark for a specific product or

service”

• Conceptually . . . – A “contract” from the company to its customers.– A promise of specific benefits, quality and value.

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The Power of a Brand• What other brand name do you see tattooed on

people? Bob Drum, Harley-Davidson

• A brand that captures your mind gains behavior. A brand that captures your heart gains commitment? Scott Talgo, brand strategist

• Corporate brands will be the only successful area of new brand building in the future . . As technology increasingly functions as the great leveler, customers increasingly depend much less on their evaluation of a single product. Stephen King, JW Thompson

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Well-Positioned Brands

• Communicate a distinctive benefit that differentiates them

• Focus and sacrifice . ..they don’t try to be all things to all people.

• Develop an expertise that serves as a magnet to attract consumers.

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Brands which don’t Sacrifice are the Losers!

Brand• Michelob• Seventeen Magazine• Vaseline Intensive Care• Domino’s Pizza• Dove Beauty Bar• Marlboro• Sanka• Secret Deodorant

Sacrifice• Weekdays• Adult women / all males• Mild dry skin sufferers• Wise selection, quality• Men, all body usage• Women• Caffeine drinkers• Men

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Common Goals of a Branding Strategy

• Stake out a perceptual map position

• Control the target market

• Control the consideration set of customers

• Expand the consideration set of customers

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Strategic Brand Management

BrandEquity

BrandLeveraging

Strategy

BrandIdentification

Strategy

TM 9-5

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BrandIdentification

Strategy

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Brand Identification: Core Identity

• Timeless essence of the brand• Associations that will remain constant over new markets and products;

should be more resistant to change than elements of extended identity• Questions to be addressed:

– What is the soul of the brand?– What are the fundamental beliefs and values that drive the brand?– What are the organizational competencies behind the brand?– What does the organization behind the brand stand for?

• Examples of Core Identity:– Michelin -- advanced-technology tires for the driver who is knowledgeable

about tires– Johnson & Johnson -- trust and quality in over the counter medicines– Rubbermaid -- value and innovation, plus a heritage of making practical plastic

products for the home– Saturn -- world class quality; treating customers with respect and as a friend

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Brand Identification: Extended Identity

• Elements that provide texture and completeness• Includes important elements of the brand’s

marketing program that have become or should become visible associations– the product itself, scope– slogan and/or logo– brand personality– basis for customer relationships (e.g., endorsers,

organizational associations)

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Brand Identification: Value Proposition

• A statement of the benefits delivered by the brand that provide value to the customer. Benefits can be:– Functional: benefits based on a product attribute that

provides functional utility (e.g., cavity prevention, safe/durable car)

– Emotional: adds richness and depth to experience of owing/using the brand

– Self-Expressive: provides a way for a person to communicate his/her self-image

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BuildingBrandEquity

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Why Is Equity So Important?

• Increased competitiveness of most markets– Little technological differentiation

• Increased cost of new product introduction and support

• Consolidation / Deregulation of markets

• Emergency of better and more efficient communications

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Top Ten Global Brands (2002)

Rank Brand Value* Business Week Comment• Coca-Cola $70 Still the best brand; growth in developing world . . .

• Microsoft $64 Biggest challenge is stagnant PC purchases

• IBM $51 Good thing Big Blue was rebuilt on services—the most promising segment!

• General Electric $41 Jack Welch’s retirement took a toll on the GE name.

• Intel $31 “Intel Inside” put it on the map; faces tough competition and sluggish sales.

• Nokia $30 Still the cell phone of choice but overall sales of mobile handsets are weak.

• Disney $30 Even Monster hit Monster’s Inc. couldn’t offset a post 9/11 fallout at theme parks.

• McDonald’s $26 Global expansion continues.

• Marlboro $24 Line extensions and merchandising clout overcome court challenges and rising prices.

• Mercedes $21 The leading luxury car brand; but its low-end models suffer from poor review.

(Business Week, 2002)* $ billions

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Key Components of Equity

• Brand Positioning– Company’s brand must be different in some real and valuable way

from all competitors– Difference must be obvious in 30 seconds– Points of Difference

• Unique to the brand that are strongly held and favorably evaluated by customers

• The more abstract, the more likely it is to be a sustained source of brand equity

• Brand Awareness– What is the strength of the brand in memory?– Reflected by customers’ ability to identify the brand under

different conditions– Key Idea: familiar brands are chosen brands!

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Key Components of Equity

• Brand Image– What are the perceptions about the brand in customers’

memory?– Reflected by brand associations– Key idea: differentiates product – reason to buy; Helps

in retrieving information, brand extensions

• Brand Loyalty– Reduces marketing costs– Enhances trade leverage– “Buys” time to respond to competitive threats

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Brands Vary in Power

• Levels of Power– Brand awareness– Brand acceptability– Brand preference– Brand loyalty--customer devoted to brand

• 5 Levels of Customer Attitudes toward Brand1. Customer will change brands, especially for price. No loyalty.2. Customer is satisfied. No reason to change the brand.3. Customer is satisfied and would incur costs by changing.4. Customer values the brand; sees it as a friend.5. Customer is devoted to the brand.

• Brand Equity: How many customers in classes 3, 4 or 5.

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Prescription for Building Brand Awareness (Fortune, 6/22/98)

1. Develop creative advertising2. Sponsor well-regarded events.3. Invite customers to join a club.4. Invite the public to visit your factory or offices.5. Create your own retail units.6. Provide well appreciated public services.7. Give visible support to some social causes.8. Be known as a value leader9. Develop a strong spokesperson or symbol to represent the

company.

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BrandLeveragingStrategies

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Brand Leveraging: Product Line Development and Brand Extensions

• Umbrella Brand– Core product of a business such as Ivory (soap_,

American Express (credit cards), Betty Crocker (cake mix), Gerber (baby food), Kodak (film).

– Core product is the most visible embodiment of the brand name (from the customer’s perspective)

– Accumulated exposure and experience with the core product solidifies a certain image and quality expectation

– Umbrella branding involves the transfer of quality perceptions derived from a core product or brand to product line extensions that use the same brand name.

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How Umbrella Brands impact the Performance of Flanker Brands

Benefits an Umbrella Provides Flanker Brands

Brand Awareness: The high level of market awareness attained by the core brand creates an umbrella which related product can be introduced at a much lower cost.

Known Quality: The quality image of the core product is conferred to brand line extensions.

Market Reach: Retailers more inclined to give precious shelf space to well-known brands; brand extensions gain easier access.

Product Mix: Provide customer with more variety and the opportunity to buy variation of the core brand without having to switch to competing brands.

Performance Impact

Lowers a flanker brand’s advertising expenses

Allows for premium pricing (higher margins)

More volume with more retail shelf space

More sales volume and higher customer retention

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Product-Line Extensions

• Vertical Brand-Line Extension– Brand extended to other versions of the product– Provides variety

• Horizontal Brand-Line Extension– Adding complementary products.

• New Product-Market Brand Extensions– Extend brand to new product category– Honda: motorcycle auto lawn movers, snow blowers,

pumps, generators, skimobiles and jet skis.• Co-Branding

– Takes advantage of two brands that share a common market space.

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Honda Product Line for Multiple Product Markets

Autos Motor-cycles

Scooters JetSkis

ATVs Lawn,Garden

SnowBlowers

Pumps Gener-ators

Engines

Accord Touring SilverWing

Aqua TraxF-12

Utility Lawn Movers

Wheel Drive

Construction

Hand-held GX Series

Civic Sedan

SportTouring

Reflex Aqua-TraxF-12X

Sport Tillers TrackDrive

De-Watering

Economy GC SeriesMini 4Stroke

Civic Coupe

Sport Elite 80 Trimmer LightWeight

Multi-Purpose

Industrial

Civic Hybrid

Cruiser Metro-Politan

Sub-mersible

SuperQuiet

Insight Standard Metro-Politan II

Deluxe

Odyssey Moto-Cross

Pilot Off-Road

S-2000

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Bundling and Unbundling Strategies

• Product bundling serves to create a complete customer solution that has the potential to create a superior customer value and attract customers.

• Product Bundling:– Involves the sale of two or more products at an overall price lower then

the total price that would be paid if the products were purchased separately.

– More likely in the early evolution of a market or in less fragmented markets.

• Product Unbundling:– Typical in many complex industrial and commercial purchases– Customers may want to purchase individual products or components and

integrate them into a certain configuration that best serves their needs.– More likely in mature markets or highly fragmented markets.

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Brand Extension Strategies

• What a strong BE can buy you:– An ability to have an immediate strength in new categories

• Barnes & Noble on-line• Kodak lenses for eyewear• Amazon Auctions

• But it carries risks!– Minor: It simply doesn’t work– Moderate: Dilution of the core brand image– Severe: Harms the core image

• General Rule: Extend the brand name if the extension category fits with a brand’s desired association

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Key Lessons in Brand Extensions

• Market research is vital to test fit and power in a new category

• “Fit” is driven by a few image elements, and not necessarily in a straightforward manner

• Inappropriate extensions may erode the core brand

• Brand equity alone is not enough to assure success

• Never extend a weak brand

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Final Thoughts on Brand Equity

• Equity implies a long-term commitment to the brand.

• Brands must be managed and updated to remain relevant to constituencies.

• Your communication strategy plays a key role in success.

• The brand is your only truly unique and sustainable competitive advantage . . . treat it as such!