dani1
TRANSCRIPT
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GEA COLLEGE OF ENTREPRENEURSHIP
DIPLOMA PAPER
DANIELA MILOSHESKA
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GEA COLLEGE OF ENTREPRENEURSHIP
HOW THE BRAND AFFECTS THE VALUE OF THE PRODUCT
diploma thesis
MENTOR: Andrej Pompe AUTHOR: Daniela Milosheska
Ljubljana, April 2009
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Acknowledgment
“Sometimes our light goes out but is blown into flame by another human being. Each of us
owes deepest thanks to those who have rekindled this light.”
By unknown author
Someone far cleverer than I am spoke these words a long time before. I use them now to show
to all of those who have really rekindled this light that my gratitude goes far beyond these
words.
I would like to show special thanks to those who have brought me to this stage, supporting
each and every step along the way, no matter how wrong or right it might had been.
My parents, who had offered their help unconditionally and unselfishly whenever I found
myself in the abyss, the same ones who have stood beside me each and every step along the
way deserve more than my words of appreciation. Unfortunately these words are only thing I
can offer, for now. Thank you for being there whenever I needed you.
My sister who is the most important thing in my life, for showing me such love and support
that one could only dream of. I am lucky to have her. I want to thank you from the bottom of
my heart, but for you my heart has no bottom.
Another thank you goes to Rinalda Klemencic, who was my mentor during the internship.
Thank you for showing me the basics.
Finally, my special thanks go to my mentor Andrej Pompe, who has widely opened the doors
of his company so that I can gain some experience. Not a lot of people are willing to do that.
Thank you.
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SUMMARY/ABSTRACT
Brand… What does it mean? Some define it as the “f” word of marketing (Mark Di
Soma, Audacity Group), some compare it to onion with its layers and core content (Edwin
Artzt), while others consider it as a product of a thousand small gestures (Michael Eisner,
CEO Disney). I define it as the very beginning and the very end of the golden era of
corporations, the backbone of each and every flourishing company, the aorta of the heart of
one successful organization and the engine of the exquisite machine for profitability in
today’s competitive market.
Since its appearance from 1200 AD up until today its impact on society is immense. It
has created a world where innovation and creativity are the basics for a successful
performance and sustainable growth, a place where there are no boundaries, just simple
relationships between the customers and companies. This tremendous impact is composed of
loyalty, innovativeness, mutual relationship, emotional bonding and several different
elements. This huge impact is also the reason behind the choice of my topic for thesis.
I’ve always been intrigued by the phenomenon of the brands and how they are
managing to capture attention from its audience, but most important to how they determine
the value of the product. In order to prove that the brand has a tremendous impact on the value
of the product I will try to define the word brand, travel a bit throughout its history, establish
the criteria for the choice of the brand elements, identify the marketing communication
options that might help in strengthening the brand, etc.
In this thesis I will provide a lot of case studies and examples about world’s well
known brand names so that I can prove my one and only objective which is THE BRAND
AFFECTS THE VALUE OF THE PRODUCT. The main objective and purpose for
doing this thesis is to analyze how the brands affect a particular product and why completely
same products have different values on the market, even though they might contain the same
ingredients, or have equivalent tastes, or even possess same odor. I am going to explore the
reasons behind this phenomenon and provide facts for why is this happening, as well as the
methods of its achievement. In order to demonstrate that this is right I will try to explain the
complexity that the brand incorporates, by going deeper into the processes of creating and
establishing, as well as maintaining the brand as strong as possible.
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Keywords: brand, brand equity, branding, strongest brands, brand perception
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POVEZETEK
Blagovna znamka … Kaj ta izraz sploh pomeni? Nekateri blagovno znamko definirajo
kot »besedo na f v marketingu« (Mark Di Soma, Audacity Group), nekateri pravijo, da je kot
čebula, saj je jedro z vsebino obdano z mnogimi plastmi (Edwin Artzt), spet tretji jo
označujejo kot izdelek s tisočerimi majhnimi potezami (Michael Eisner, CEO Disney). Sama
jo definiram kot začetek in konec zlate dobe korporacij, hrbtenico čisto vsakega cvetočega
podjetja, aorto do srca vsake uspešne organizacije in motor dovršenega stroja za doseganje
donosnosti na sodobnih konkurenčnih trgih.
Vse od pojava znamk okoli leta 1200 je njihov vpliv na družbo ogromen. Tržne
znamke so ustvarile svet, v katerem sta inovativnost in kreativnost osnovi za uspešno
poslovanje in trajnostno rast, svet, v katerem ni mej, ampak le preprosti odnosi med
potrošniki in podjetji. Ta izreden vpliv je skupek lojalnosti, inovativnosti, vzajemnih odnosov,
čustvenih povezav in številnih drugih elementov. Prav ogromen vpliv blagovnih znamk je
razlog, da sem si za diplomsko delo izbrala prav to temo.
Že dalj časa me navdihuje pojem blagovnih znamk in to, kako jim uspe pridobiti
pozornost svojega občinstva in kako vplivajo na vrednost izdelka. Da bi dokazala, da ima
blagovna znamka ogromen vpliv na vrednost izdelka, bom skušala opredeliti izraz tržna
znamka, se nekoliko spustila v njeno preteklost, določila kriterije za izbiro elementov tržne
znamke, prepoznala možnosti tržnega komuniciranja, ki lahko pomagajo pri krepitvi znamke
itd.
V svoje delo bom vključila veliko študij primerov v svetu najbolj znanih blagovnih
znamk, da bom s tem dokazala svojo edino tezo naloge, ki se glasi: TRŽNA ZNAMKA
VPLIVA NA VREDNOST IZDELKA. Da bi dokazala pravilnost te trditve, bom skušala
pojasniti kompleksnost blagovne znamke, in sicer s podrobnim raziskovanjem tako procesov
ustvarjanja in uveljavljanja kot tudi ohranjanja blagovne znamke močne, kot se le da.
Čeprav so blagovne znamke stare že nekaj stoletij, pa je veda, ki jih preučuje, še
razmeroma mlada. To je sicer lahko ovira, vendar je o tej temi na voljo vsak dan več
informacij, tako v objavljenih publikacijah ter študijah primerov prihajajočih in uveljavljenih
znamk, kot tudi na internetu. Druga možna ovira bi lahko bila moja neizkušenost na področju
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marketinga. Čeprav sem prebrala veliko število knjig na to temo, do sedaj še nisem delala za
kakšno blagovno znamko ali sodelovala pri projektu znamčenja.
Kot sem že omenila, bo v diplomsko delo vključeno veliko število primerov in študij
primerov. Za tak način namesto klasičnega, pri katerem bi raziskavo delala samo na primeru
enega podjetja, sem se odločila, ker želim v raziskavo vključiti širši spekter podjetji, da bi
lahko učinkoviteje izdelala dokaz svoje teze in dobila bolj trdne rezultate.
Glavni cilj in namen te diplomske naloge je analizirati, kako tržna znamka vpliva na
določen izdelek in zakaj imajo enaki izdelki na tržišču različno ceno, čeprav lahko vsebujejo
enake sestavine, imajo enake okuse ali celo enak vonj. V nalogi bom poiskala vzroke za tak
pojav in navedla dejstva, zakaj se to dogaja, in seveda metode, po katerih sem to ugotovila.
Za predvidene raziskovalne metode sem izbrala iskanje po internetu s pomočjo
iskalnikov ter raziskovanje bogate knjižnične literature in strokovnih del. Ker bom pisala o
največjih svetovnih podjetjih, ki so ustvarili in ohranili močno tržno znamko, telefonski
intervjuji v moji nalogi ne pridejo v poštev. S pregledom zgodovine teh podjetij bom skušala
najti elemente, ki jim zagotavljajo vodilni položaj na trgu in jih razlikujejo od ostalih podjetij.
Kot rečeno, bom to naredila predvsem s pomočjo informacij na spletnih straneh in v
objavljenih publikacijah.
Ključne besede: blagovna znamka, vrednost blagovne znamke, znamčenje, najmočnejše
znamke, percepcija blagovne znamke
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TABLE OF CONTENTS
1. INTRODUCTION………………………………………………….4
2. WHAT IS BRAND?
2.1. Definition and different opinions………………………………..7
2.2. Brand brief history………………………………………………9
2.3. Strongest brands………………………………………………..15
3. MAKING STRONG BRAND
3.1. Brand equity……………………………………………………22
3.2. Four steps of brand building……………………………………26
3.3. Benefits of a strong brand………………………………………31
4. BRAND ELEMENTS
4.1. Brand positioning………………………………………………32
4.2. Brand mantras and brand audits………………………………..35
4.3. Brand elements which affect the human perception…………....36
5. HOW BRAND AFFECTS THE VALUE OF THE PRODUCT
5.1. Product strategy………………………………………………...39
5.2. Pricing strategy…………………………………………………41
5.3. Channel strategy………………………………………………..43
5.4. Market communication options………………………………..45
5.5. How do consumers perceive and choose brands………………..49
6. CONCLUSION…………………………………………………….56
7. BIBLIOGRAPHY………………………………………………….58
8. APPENDIXES ……………………………………………………..61
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LIST OF TABLES
1. Table 1: Calculating the brand value (The 100 most powerful brands: BrandZ
top100 brand ranking)……………………………………………………………28
2. Table 2: The 30 most powerful brands in 2008 according to their brand….....29
3. Table 3: Top 10 brands with highest brand contribution (The 100 most powerful
brands: BrandZ top100 brand ranking)……………………………..30
4. Table 4: Top 10 brands with highest brand momentum (The 100 most powerful
brands: BrandZ top100 brand ranking)……………………………..31
5. Table 5: Projective technique……………………………………………………84
LIST OF GRAPHS
1. Graph 1: “BLAKE PROJECT”……………………………………………….42
2. Graph 2: Keller’s customers’ based brand equity model…………………….45
3. Graph 3: Keller’s model for Calvin Klein’s brand…………………………….49
4. Graph 4: Brand positioning……………………………………………………...53
5. Graph 5: The basic perceptual map……………………………………………..55
6. Graph 6: Porter’s value chain…………………………………………………...63
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1. INTRODUCTION
Brand… What does it mean? Some define it as the “f” word of marketing (Mark Di
Soma, Audacity Group), some compare it to onion with its layers and core content (Edwin
Artzt), while others consider it as a product of a thousand small gestures (Michael Eisner,
CEO Disney). I define it as the very beginning and the very end of the golden era of
corporations, the backbone of each and every flourishing company, the aorta of the heart of
one successful organization and the engine of the exquisite machine for profitability in
today’s competitive market.
Since its appearance from 1200 AD up until today its impact on society is immense. It
has created a world where innovation and creativity are the basics for a successful
performance and sustainable growth, a place where there are no boundaries, just simple
relationships between the customers and companies. This tremendous impact is composed of
loyalty, innovativeness, mutual relationship, emotional bonding and several different
elements. This huge impact is also the reason behind the choice of my topic for thesis.
I’ve always been intrigued by the phenomenon of the brands and how they are
managing to capture attention from its audience, but most important to how they determine
the value of the product. In order to prove that the brand has a tremendous impact on the value
of the product I will try to define the word brand, travel a bit throughout its history, establish
the criteria for the choice of the brand elements, identify the marketing communication
options that might help in strengthening the brand, etc.
In this thesis I will provide a lot of case studies and examples about world’s well
known brand names so that I can prove my one and only objective which is THE BRAND
AFFECTS THE VALUE OF THE PRODUCT. The main objective and purpose for
doing this thesis is to analyze how the brands affect a particular product and why completely
same products have different values on the market, even though they might contain the same
ingredients, or have equivalent tastes, or even possess same odor. I am going to explore the
reasons behind this phenomenon and provide facts for why is this happening, as well as the
methods of its achievement. In order to demonstrate that this is right I will try to explain the
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complexity that the brand incorporates, by going deeper into the processes of creating and
establishing, as well as maintaining the brand as strong as possible.
Keywords: brand, brand equity, branding, strongest brands, brand perception
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1. WHAT IS BRAND?
1.1.Definition and different opinions
Brand… Some define it as the “f” word of marketing (Mark Di Soma 2006), some
compare it to the onion with its layers and core content (Edwin Artzt 2004), while others
consider it as a product of a thousand small gestures (Michael Eisner, CEO Disney 2000). I
define it as the very beginning and the very end of the golden era of corporations, the
backbone of each and every flourishing company, the aorta of the heart of one successful
organization and the engine of the exquisite machine for profitability in today’s competitive
market.
“Any damn fool can put on a deal, but it takes genius, faith and perseverance to
create a brand.”
Here is how David Ogilvy, a notable advertising executive, who has often been called,
“The father of advertising” defined the term brand. It is clearly seen from the definition that to
create a brand does not only require good product, but it also requires lethal skills to package
it, skills that include faith and obstinacy.
“I don’t design clothes, I design dreams.”
A huge name in the fashion industry, Ralph Lauren defines the term brand by this
sentence only. The truth about branding lies in those dreams and how one interprets them in
the society, how they are shape to constitute the reality.
This definitions offer an insight to the overall perception of the word brand. But what
about those definitions which are commonly known? What exactly represents the word
branding and how this word is defined by the marketing associations around the globe?
I have found out how the American Marketing Association (AMA) and the European
Marketing Confederation (EMC) perceive the world of brand.
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“A brand is 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 and to
differentiate them from those of competition.”
This definition actually explains the set of the, so called, elements of the brand, the
same ones which are incorporated in the decisive process of the complexity infused in the
consumers’ purchasing procedure. It clearly states that in order for one to run a successful
business, great attention must be paid to the uniqueness of the products and services he or she
offers. The emphasis here is put on that exceptional difference that distinguishes the products
and services offered from the ones of the competition. This difference is of an extreme
importance if one wishes to establish a strong brand and maintain it for a long period of time.
Even though I strongly agree with this definition, there is something that is lacking.
This difference which is the essential is not just something that might contribute for the brand
to become the next big thing, but it must be something which the people will actually need.
For this reason, I think that brand is something that lives in the mind of each and every one
who consumes it. As, Allen P. Adamson puts it “a brand is a promise that links a product or
a service to a consumer, by creating words, or images, or emotions, or any combination of
the three in order to provide mental associations that get stirred up when one thinks about a
particular item, person or even a country.”
It basically says that in order for the brand to be a success story, it must capture not
only the minds of the people who purchase it, but the hearts as well. Once that emotional
bond is formed, there is nothing and no one strong enough to break it, except for lowered
quality and unsuccessful deliverance of the promise that a brand creator makes.
This mental associations created in the minds of the people who purchase them can
cause very significant bonds or pacts between the brand and the consumers. Those bonds
within time can either strengthen or weaken due to the higher or lower quality of the product
or service offered, as well as more or less engagement of the people’s needs and wants.
Above are just a few of the definitions for brand. There are a lot of opinions regarding
this topic, since brand is more psychological item and therefore relies a lot on the people’s
perception. This means that the idea of the definition of brand and branding can always
change due to the subjectivity of the people.
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Another eminent question that cripples here is, how to distinguish between what’s a
brand and what’s just a product. A simple answer would be provided by Geoffrey Randall,
who in his book “Branding, a practical guide to planning your strategy” differs them in the
following way:
“A brand has an existence that is more than an actual product or service: it has a
life of its own that feeds on the original product, but can also carry its values and identity
into new product areas.”
For instance Coca Cola, as the oldest example of all, is a brand, but if you take out the
packing and the design of its bottle, the magic of its success will vanish and will only stay the
product itself, the beverage inside the bottle.
Having a well known established brand can help in the process of reducing the risk
involved in the buying decisions (Roselius 1971,56-61). People’s perception dominates their
decision for purchasing certain product or service, therefore the quality provided by a branded
product or service positions it much higher and makes it safer for a lot of consumers. In
today’s fast moving society, a guaranteed safety is a big plus for one product or service, since
the consumers don’t have time to check all the options that they might find on the
marketplace, instead they go with the one which name is familiar and clearly associated with
quality. So, you see the brand is the king today, because it rules the world and helps people to
make up their minds faster.
However, for better understanding of the word brand and the process branding, in this
thesis, I will provide a brief journey throughout the centuries, so that it can be clear from
where the term was derived and how long ago it was established.
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2.2 Brief history of the brand
PICTURE1: START OF BRANDING
Source:http://experiencecurve.com/archives/brief-history-of-branding, 28.03.2009.
This fairytale of innovation and creativity, infused with sparkles of faith and obstinacy
started a long time ago, with the first trading among the nations. Some claim it to be way back
in 3000 B.C., in Babylon, where the evidence of the first advertising was found. Even though
it has a happy ending like almost every fairytale before it, somehow it has a very awkward
start. That is what makes this story different from all the others, and the difference the very
first root of the tale itself. Yes, I am talking about the king that rules the world, the one and
only, THE BRAND.
As I said before the tale takes place in the Ancient times, in the Indus valley, the home
of the Sumerians and Akkadians. The Indus Valley, or the so called Harappan civilization,
was a place where the foundations of the first economy had been laid in the 2250BC. This
same place was the cradle of the earliest example of branding, according to the UCLA
Indianologist Stanley Wolpert. He believes that the magnificent seals of tigers, the Brahma
bulls, elephants, and other Indian animals “were probably made from merchants who used
them to ‘brand’ their wares”.
However a lot of textbooks, which primary topic is the theme of branding, promote a
different story, probably due to the fact that there are no written records found that this
Harappan society ever existed. Aside from a number of seals found from the excavation
written in as yet encrypted script, and the clues provided by the overlap of the Indian and
Sumerian artifacts, there is no other facts found that can testimony otherwise. I am thinking
that this is the main reason why a lot of textbooks claim that the actual start of the brand was
around 1300 B.C.
This is where the bad start initiates. It is commonly believed that the word “brand”
comes from an Old Norse word “brandr” which means “to burn”. At these times there were no
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organizations such as “PETA” to protect the animal’s rights, so the Vikings took advantage of
this fact and started to brand their animals in order to identify them. I wonder what “PETA”
will think if this happens nowadays. Probably they would end up being slaughtered or
crucified. Anyway, there were also other countries which started with this tradition. Countries
such as ancient Greece, China, and Rome branded the porcelain, the pottery jars and goods
such was the bread (P.Adamson 2006, 29).
On the other side not only animals were branded, but people as well. Yes, you’ve read
correctly. All those criminals who were committing crimes were marked, as well as slaves in
England back in the 1200s. I guess there is no limit to how far the people’s cruelty would go.
For instance, in England the criminal would get S on his or her cheek and in France they
would be “honored” with the fleur de lis on their shoulder.
Goldsmiths, silversmiths were up next. They were required to mark their goods with a
signature or personal symbol and with the sign of the quality of the metal. They were even
convicted if they used false marks and therefore harshly punished (Lane Keller 2008,43).
This tradition followed throughout the centuries, with no significant change, up until
the sixteenth centaury when the brand names started to develop further, so that they appeared
to be very familiar or some even the same as we know of them nowadays. It started by
patenting the medicines and tobacco, followed by the whiskey producers. In the eighteenth
centaury, the brand names were used to actually make the products easier to remember and
put an emphasis on the differences that they posses.
By the nineteenth century, the brand names were commonly used to improve the
perception of a product, increase sales volumes, as well as boost the actual performance of the
product or the service offered in the market place (P. Adamson 2006,29).
The branding concept for promoting the product or service offered was brought in the
United States of America by the Europeans. It started by patenting the medicines and the
tobacco by promoting them in various ways. It is here where the process of promotion and
publicity first appears. The packaging, the posters, the ads and a lot of other techniques
developed and the new dawn, the dawn of advertising was born (P. Adamson 2006,30).
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With the railroads being the primary mode of transportation and distribution, the
availability of the products advanced to the point of being reachable nationwide. This marked
the beginning of the mass production, as well as the rise of the newspapers and magazines as
communication channels, and the laying down of the foundations of advertising, creating
again another concept of the media buyer (P. Adamson 2006,30).
The creativity and the innovation gave another side to the business. It showed that it
can contribute to the successfulness and enhancement of the core business, by creating
emotional bonding with customers and developing designs which can attract them and
maintain them for longer period of time. Nowadays, it has reached the point to which the
business can not exist without the assistance of the two. They are coexisting and together they
make the competition more entertaining and fun to watch.
For instance, in 1970 the America Express developed a product which putted an
emphasis on the emotions of their core target customers. They had based their product on
simple promise which everybody needed to hear, the promise of security. They had used
notable and respective person such was the actor Karl Malden who played a detective on a
show called “The Streets of San Francisco”. He was used as a branding signal because he
created powerful associations of security in people’s minds. Being the voice of authority he
provided strong images in the consumer’s minds accentuating the idea of protection and
security, the two most important pillars of the brand. He provided the American Express with
an excellent communication tool of safety associated with carrying the American Express
Travelers Cheques. The slogan which helped this idea being widely accepted was “Don’t
leave home without it” (P. Adamson 2006,34).
PICTURE2: BASS & COMPANY LOGO
SOURCE:http://www.sportingcollectibles.com/adagdt/ad9924bass.jpg ,28.03.2008.
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Among the first trademarks in the world was one named Bass & company, the British
brewery which claims that their red triangle brand, was actually the first trademark in the
history of branding. A lot of other companies, among which the Campbell soups, the Coca
Cola and Quaker Oats, followed the lead of the Bass and company, by investing into
developing something that can testify and stand for the quality which they represent and the
impeccable promise for infallibility they were and still are delivering.
Brands, such were Procter & Gamble, H.J. Heinz and Coca Cola, achieved their
success through production innovations and spectacular promotions, as well as successful
development of the distribution channel. As the mass production developed further so did
these brands. They managed to do this through aggressive promotion, personal selling,
specialized marketing techniques, enhanced design, advertising, as well as increased and
improved legal protection.
PICTURE3: COCA COLA LOGO
SOURCE:http://weblogs.newsday.com/entertainment/tv/blog/coca-cola-logo.jpg
,28.03.2009.
From 1940s on manufacturer started recognizing just how big of an impact the
consumers had in determining their volume sales. Therefore, the phrases
“brand identity” and “brand personality” were introduced and more and more attention was
put into their building. This was the beginning that marked the so called era of the new
phrases. In 1960 once the emotional bonding was created and together with it similar brands
were perceived as different due to the emotions attached to their image. Pepsi and Coca Cola
for instance.
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PICTURE4: PEPSI LOGO
SOURCE:http://blog.fleka.me/wp-content/uploads/2008/12/pepsilogos.jpg, 28.03.2008.
In 1980s focus was directed upon the trend of buying the brand instead of the product.
Phrases, such were brand value and brand equity were established and elaborated. As a
consequence the corporation standing behind the brand became the brand. The fact the Philip
Morris purchased Kraft for six times what the company was worth on paper in 1988,
point to one thing only and that was just how much the word “brand” started to contribute to
the business value. This tremendous impact started to take a huge swing and all the companies
should do was learn how to differentiate and maintain that difference by shaping their
products or services according to people’s needs and wants.
A decade later during the 1990s the brand is stronger than the physical dimension of
the product. This period was an important milestone in the following history of the brand and
the branding process. Everything has changed and so did the creativity. It evolved in a way
that it became the only thing that mattered in establishing the brand, besides the creating of
the emotional bond.
PICTURE5: PHILIPS LOGO
SOURCE: http://cln.natureterch.com/products/phone/philips/philips_logo.jpg, 29.03.2008.
This emotional relationship led to consumers overtaking the ownerships of the brands.
The products and services offered at that time started to take another side. They were tailor
made and designed to satisfy the customers’ needs and wants. Anything that was designed out
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of this pattern was doomed to failure. Example for this was the Philips flat screen TV with a
special light source that projected various colors of ambient light onto the wall behind the TV
to add depth to a specific scene (Allen P. Adamson 2006, 6). However, although this was
cool, Philips failed to see that the people don’t actually need this TV. What was most
important was that Philips failed to recognize the huge power that the customers began to
hold in the decision making process of purchasing something, that will be exactly what they
want and deliver exactly the same expectation they had.
PICTURE6: McDONALDS LOGO
SOURCE:http://www.scrapetv.com/News/News%20Pages/Business/images/mcdonalds%20lo
go.jpg ,0l. 04.2009.
Having a loyal customer base means to have established a great relationship and find a
way to satisfy the needs and wants, by capturing their attention with quality. Once established
this base all one has to do is maintain it and nurture it. These loyal customers buy more than
products; they buy trust, friendship, reliability and any number of other intangibles which
have value. And those are some of the core components that built brand.
PICTURE7: PLAYBOY LOGO
SOURCE:http://www.transport.polymtl.ca/civ1120/etud_h08/EL_KAOUSSI/playboy_logo_s
ex.jpg ,02.04.2009.
However this difference was not the only thing that the companies should focus on in
order to be successful. There was still one thing more that they should develop. In order to
have the kind of deep bonding with their loyal customers the only thing that was lacking was
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the creating and developing of some phrase which will be instantly recognizable. This was
where the highest level of achievement in the world of branding was established.
Soon afterwards signs such were “the swoosh” (Nike), “the golden arches”
(McDonalds), “the bunny” began to emboss in people’s minds, creating associations and
linkages which strengthened the perception constituted towards the product or services. This
creation of signs and names or even phrases continues to capture the attention of hundreds of
people who are searching for the best offer in the marketplace. The idea behind each and
every one of them was to find a way how to communicate the right branding signals and with
their help to develop competitive advantage, by creating awareness in the human mind, not
burdening the consumers with facts and figures. In this time the only most important thing
was to learn how to emboss a personality in what one sells, in the simplest way possible
which was focusing on the simplicity of the brand idea and thus bringing it into effectiveness.
We all know the phrase “Diamonds are forever”. It was invented in the 1948, when the
De Beers Group wanted to add more emotion and symbolic meaning to the purchase of the
diamond jewelry. This slogan was so powerful that it soon became one of the most recognized
slogans in advertising and helped the further development of the diamond industry, generating
more than $25 billion per year in the United States only (Kevin Lane Keller 2008, 12). This
slogan remains one of the most successful and the most used one in the history of branding. It
is the most suitable example that provides an insight of the tremendous impact that the
phrases or words have on their customers.
PICTURE8: DeBEERS LOGO
SOURCE: http://edevangelista.com/debeers/debeers_logo.jpg ,01.04.2009.
Another example of successful slogans is Nike, with its tagline “Just do it”. The company
Nike was established in 1964 in Santa Monica, California and was named after the Greek
Goddess of victory. It’s a company that operates in the field of sportswear and sports
equipment. Its famous tagline was created in 1988 for an ad campaign by Dan Wieden. This
23
slogan was chosen to be one of the top five slogans in the 20th century and helped Nike to
expand in more countries by putting out more and more products.
PICTURE9: NIKE LOGO
SOURCE:http://www.cellphonemessagesender.com/blog/wp-content/uploads/2008/11/nike-
logo.gif ,02.04.2009.
Similar to this “Yes we can” phrase embroidered in the Obama’s speech became
something that the people recognize and use daily. The hope and faith that Obama brought to
the world, gave the people something to believe in, it made people optimistic in a time when
everything seemed to fall. The timing, the speeches delivered, the promises made, infused in
people something long forgotten, long gone, something that reminded them what faith really
means. A lot of people identify with him, since his story is closer to mortals, than to the tales
of political Gods. These mental associations that he created in the people’s minds made him
the most powerful man in the world today. Because of him being different and unique, he was
voted and according to researchers today his name is one of the best known brand names.
(Erwin 2008)
PICTURE10: OBAMA AS BRAND
SOURCE: http://www.bizzia.com/brandcurve/files/2007/07/logos.jpg ,03.04.2009.
But what happens to those brands which can not deliver the promise they had made?
Do they simply fail in the attempt to bring more customers to the table and are doomed
forever, or can they actually find their way back to the top? The answer is simple. Once
broken, the emotional pack cannot be rebind. The disappointment incurred is just too much to
24
bear, so the customers move on with the new hottest promise on the market, hoping that this
time their feeling will not be hurt.
This happened with the Country Time lemonade. The promise which they delivered
was that this lemonade had a taste of an old fashioned one, bringing back the memories once
tasted. They developed an ad campaign that featured a white-haired grandfather, sitting on a
porch on a summer day with ice-cold lemonade in hands. This campaign formed strong
relationships with the customers. Everything was going smooth up until the moment when
new lemonade emerged with a shocking statistics. The Minute Maid lemonade campaign was
an ad which stated that the Minute Maid was made from the juice of twenty lemons, Wyler’s
was made from the juice of two lemons and Country Time was made from the juice of no
lemons. This statement ruined the relationship between the customers and the company which
produced the lemonade. The trust was broken and the people felt that they had been betrayed.
This marked the end of the production of the old-fashioned lemonade (P. Adamson
2006,42).
The previously elaborated brief history of branding emphasizes the needs from which
the branding originated. Whether they are to identify the source or ownership, to insure
honesty, to provide quality assurance, to hold producers responsible, to differentiate, or to
create emotional bonding, each and every one contributes equally to the complicated process
of branding. Each and every one of them is eligible for creating on added value to the core
product or service.
2.3.Strongest brands
PICTURE11: STRONGEST BRANDS
SOURCE: http://www.bizzia.com/brandcurve/files/2007/07/logos.jpg ,02.04.2009.
25
They say dreaming can get you nowhere, yet there are so many outstanding examples
which prove just about the opposite. Starting with Martin Luther King and ending with Bill
Gates, the conclusion is quite different of what people claim to be. They had a dream, a vision
that made them the most powerful and well-known people in the history of the world. So I
couldn’t help but wonder what do all the celebrities, best brands, and successful companies
have in common?
The answer is lying hidden under the layers of their own success, which are different
in each case. However what they do have in common is the core they all share, the pillar of
their own existence and triumph, something that made them so powerful. Yes, the vision and
the dream in various forms infused in the heart of the one who builds their system of added
values and core competences. Something which is same for everyone and yet different to the
extent that makes them unique and lifts them on the pedestal as winners.
It all starts with developing the vision, by creating images that will capture the
costumers’ attention, by bringing back the lovable memories, by creating something that can
relate to the values, hopes, fears and the different emotions clouding the people’s minds. In
that way the creators of the brands are developing something more than a product. They are
developing a dream, a fantasy world in which every human wants to take part. They create
magical place in which the consumers are active participants. They create pieces of art which
are not only beautiful but can relate to the needs and wants of the purchasers.
By adding emotions in the mix it makes it extremely seductive and addictive, so the
buyers will develop loyalty and will never want to leave or relinquish, because the emotional
bonding is too strong and won’t let them. If this becomes permanent practice than the brand
developer has a winner. And these, according to me are the components which are
contributing to the constitution of a strong brand.
The strong brands are unique and always stand behind the promises which they make.
They are authentic, and have embedded integrity, which means that they are internally and
externally consistent. These brands offer the customers benefits of great magnitude, benefits
such as functionality, emotionality, experience, and self expressiveness. Their existence is
merely based on deeply fulfilling the human needs in unique and superior ways (VanAuken
2006).
26
An example of strong brand is the Heinz Ketchup. Its ingredients for success include
the sweet tasting product, a carefully monitored price gap with competitors and aggressive
packaging, product development and promotional efforts. 1
The strength of the brand is valued upon two things: consumer sentiment and the
company’s ability to translate that sentiment into shareholder value (Seddon 2008, 1).
According to this, BrandZ which is the largest repository of brand equity data has
done a research of the top 100 most powerful brands in 2008. They have been evaluated
according to their brand value, brand contribution and brand momentum.
The brand contribution is the degree to which brand equity plays a role in generating
earnings. It is measured on a scale from 1 to 5, 5 being the strongest brand contribution.
The brand momentum represents the expected growth of the brand in short term
period. It’s an index from 1 to 10 where 10 indicate the brands with the highest short term
growth potential.
The brand value represents the financial value of the brand, defined as the sum of all
earnings that a brand is expected to generate. Its calculation is shown in Table1.
1 www.heinzketchup.com
27
Table 1: Calculating the brand value (The 100 most powerful brands: BrandZ top100
brand ranking)
SOURCE: Brown 2009.
In the following table, there are the results of the research of the first thirty
28
Table 2: The 30 most powerful brands in 2008 according to their brand
SOURCE: Brown 2009.
Since the research was done according to three components. I will also include the
table which positions the brands regarding their brand contribution and brand momentum.
29
Table 3: Top 10 brands with highest brand contribution (The 100 most powerful
brands: BrandZ top100 brand ranking)
SOURCE: Brown 2009.
This table shows the rankings according to the brand contribution, the degree to which
the equity plays a role in generating earnings. The first place belongs to Louis Vuitton, a
French brand operating on the fashion market. This means that Louis Vuitton’s outcomes of
its marketing effects are very high. The marketing team knows exactly how to portrait an
image of the products they have and attach to it a dose of emotions to make it immortal in
people’s minds. This applies to all of the other brands listed in the table.
My personal favorite is Chanel, which is number 7, but with the same brand
contribution as Louis Vuitton. Although they are both a part of the fashion industry, still my
preferences are directed towards Chanel. The fact that I love this fashion brand is due to the
design of their clothes and a great part to their commercials. There is something within it that
makes it so special in my eyes. They don’t just make clothes, but they create pieces of art
which are worth every single euro spent on them.
30
Table 4: Top 10 brands with highest brand momentum (The 100 most powerful brands:
BrandZ top100 brand ranking)
SOURCE: Brown 2009.
As presented in the table above, a lot of brands that have great expected growth of the
brand in short term are a part of the fashion industry. It seems like the people’s awareness of
the fashion has increased significantly throughout the years. Clothes are not only seen as
things which are covering you body, but a way of expression of the personality which one
holds. These great brand names know this and thus use it as their incentive to keep making
dreams, which will not only bring them higher revenues and profit margins, but will enhance
their personal satisfaction and the overall happiness and fulfillment of their customers,
simply due to the fact that they deliver the promises made. In this way they are not just
designing items of clothing, but they are fulfilling one’s dream of contentment.
Another interesting brand division is that of the division among the 10 country brands:
31
PICTURE12: AUSTRALIA AS A BRAND
SOURCE: http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
1. Australia
"Australia has strong branding. Tourists can access a wide range of offerings:
adventure, relaxation, pure scenery and mouthwatering gastronomy."
PICTURE13: CANADA AS A BRAND
SOURCE: http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
2.Canada
"Canada is an exceptional country and has all of the assets to be a great brand:
natural and urban beauty, quality of life, diversity, culture, entertainment,
gastronomy, business infrastructure, stability and openness."
32
PICTURE14: USA AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
3. USA
"The US continues to be a tourist magnet for its fun spirit and because it is the giant of
entertainment and business, delivering a large variety of rich and diverse experiences."
PICTURE15: ITALY AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
4. Italy
"Italy is a country that markets the best of itself: the cradle of gourmet cuisine and art, the
romance of Venice, the history of Rome and even the beauty of its men and women."
33
PICTURE16: SWITZERLAND AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
5. Switzerland
"Switzerland is established, has successfully developed a clear attractive profile and is
consistent in its brand promise and delivery."
PICTURE17: FRANCE AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
6. France
"France has a strong local identity (wine, music, fashion, language, tradition and culture)
and the ability to load its brand with emotion: beauty, quality of life, romance."
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PICTURE18: NEW ZEALAND AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
7. New Zealand
“New Zealand delivers what it promises. Its destination branding has used strong emotional
effects: quality, well-being, safe operation, cultural interaction and pristine and pure
scenery.”
PICTURE19: UK AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
8.UK
“The UK is a well thought out and executed brand that effectively utilizes all of the natural
and cultural resources of the country.”
35
PICTURE20: JAPAN AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
9. Japan
"Japan already has a high brand profile, but we've found that traveller expectations are
always exceeded by the country. The diversity, culture and quirkiness of Japan — and the
lower yen — are a powerful combination."
PICTURE21: SWEDEN AS A BRAND
SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.
10. Sweden
"Sweden has the charm of Europe but an intriguing sense of mystery and otherness about it. It
offers the traveler a variety of adventures and is proving to be a strong destination."
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3. MAKING STRONG BRAND
3.1. Brand Equity
The “brand equity” as a concept arose in 1980s, and ever since than it has become one
of the most popular and paramount conceptions in marketing. However simple it may seems
to be it still represents enigma for most of the observers, mostly due to the fact that there are a
lot of different opinions surrounding the concept. Here is how the opinions vary and even
though all of them agree about the definition of the “brand equity” yet they disagree when it
comes to its measurement.
“Brand equity refers to the marketing effects or outcomes that accrue to a product
with its brand name compared with those that would accrue if the same product did not
have the brand name.”
“A brand is a name or symbol used to identify the source of a product. When
developing a new product, branding is an important decision. The brand can add
significant value when it is well recognized and has positive associations in the mind of the
consumer. This concept is referred to as brand equity.”
“Brand equity is an intangible asset that depends on associations made by the
consumer.”
“The term Brand equity is used to describe both the value of the brand and the
brand's component values.”
“Brand Equity is the accumulated value of the brand image or identity in the
consumer's mind.”
All of the definitions above are providing different aspects of the term “brand equity”.
What they all have in common is the fact that this concept is composed of marketing effects.
Each of these marketing effects contributes something to the brand. As a conclusion to the
previously said, the “brand equity” is a kind of an explanation for why different outcomes
37
result from marketing a branded product or service compared to those products and services
which are not branded (Lane Keller 2008).
Another attempt has been done by Aaker, who tried to define the brand equity as “a
set of assets and liabilities linked to a brand, its name and symbol that add value or subtract
from the value provided by a product or service to that firm’s customers.” (Aaeker 1991, 51)
According to his opinion this set is grouped under five categories which include brand
loyalty, name awareness, perceived quality, brand associations to perceived quality and other
proprietary brand assets such as patents, trademarks, channel relationships etc. There is still
one issue that remains up until today. There’s absolutely no evidence that these categories are
related systematically to the brand equity.
A series of unsuccessful attempts have been made, yet helpful. In 1998 Ambler and
Barwise defined the brand equity as “the marketing asset that exists in the customer’s mind
and is of continuing value to the brand owner because it influences future purchases by the
buyer and the buyer’s social network through word of mouth”. This definition is helpful
because it puts an emphasis on the key aspects of consumers, future purchasing and profits.
However it can be also used as a definition for brand, since it doesn’t contain any measure for
the brand equity.
Nowadays, brands are considered to add value to the products and services, therefore
emphasizing the difference between the variety of similar products and services that appear on
the marketplace. This cognizance enables the products and services to command the higher
prices on the market, thus generating significant amounts of profits for those who make them.
This measurement of the added value spawned for the observers represents the equity of the
brand.
There is still no common viewpoint to how to measure this added value that the brands
give to an ordinary product or services. Some have developed measurements such was the
Millward Brown measure. The “brand voltage” as it was called was actually a measure used
to detect the ability to convert the customer awareness into bonding and loyalty. The research
was done among 400 British adult grocery buyers and was intended for the examination of the
top 9 U.K. supermarkets and grocery stores. This measure was based upon five indicators:
38
Admiration for a brand
Affinity to a brand
Perceptions of the brand innovation
Popularity
Price
A result of 3.0 was considered strong and therefore regarded as an indicator of future
behavior. Among the ones who had this kind of result and even bigger were Tesco and
Sainsbury. 2
Others say that the brand equity is measured according to the level it operates on.
According to this claim there are three levels and those are the firm level, the product level
and the consumer level. 3
The firm level is measuring the brand regarding the financial aspect. This aspect
measures the brand equity regarding how much the brand is worth as an intangible asset.
VALUE OF THE FIRM (by the market capitalization) – TANGIBLE ASSETS AND
“MEASURABLE” INTANGIBLE ASSETS
=
RESIDUAL VALUE OF THE FIRM
(BRAND EQUITY)
According to this calculation one private company measures its brand equity by
discounting the projected profits to a present value. The discounted rate is a subjective rate
determined by the Wall Street journal equity specialists. It reflects the risk profile, market
leadership, stability and the global reach of the brand.
The product level consists of comparing the price of a no name or private label
product to an “equivalent” branded product, taking the “ceteris paribus” into consideration.
PRICE OF NO NAME PRODUCT – PRICE OF THE BRANDED PRODUCT (equivalent)
=
2 The article regarding this you will find attached in the appendix 3 http://en.wikipedia.org/wiki/Brand_equity
39
BRAND EQUITY
The consumer level is measured by mapping the mind of consumers to find out what
associations are created with the brand. It measures the BRAND AWARENESS and the
BRAND IMAGE.
The BRAND AWARNESS is the realization by a consumer of the existence and
availability of a particular product. It is consisted out of to parts: the brand recognition which
is the consumers' ability to recognize and make associations with a firm's brand image, and
the brand recall which is the simple, immediate recognition and memory of a brand.
Among the brands which have established this kind of level of brand equity are Coca
Cola, Corona beer, Starbucks, Harley Davidson, Chanel, Disney. When one thinks about
drinks, coffee, motorbikes, high fashion, or entertainment, they always pop up in the minds.
All of these have discovered a way to make their name more appealing and therefore always
recognizable.
PICTURE22: CORONA LOGO
SOURCE: http://www.stirnyc.com/images/beers/corona_20logo.jpg ,03.04.2009.
Let’s take as an example the Corona beer. In the 1980s, this beer was one of the
cheapest beers to be found in Mexico. During this time the idea of riotous spring-break
vacations was developed around the colleges in the U.S. and all the time aired in the media.
This vacations were major gatherings which usually tended to grow into excesses such were
the 24/7 drinking, wet T-shirt contests, dirty dancing, as well as sexual escapades. The
striking point for the Corona Beer was its cheapest price due to which it was the most
appealing for the students. It was also noticeable because of the distinctive package design
and also somewhere along the way someone thought of a mix with a lime. The popularity of
the beer increased when the students returned to the colleges. The stories told usually included
40
the mentioning of the Corona as well. Their success story was delivered completely by the
word of mouth. Distributions followed the students as they entered into their professional
lives and soon the Corona Beer wasn’t just a beverage that was associated with students’
holidays, but it became the drink of choice among young professionals as well (Holt 2004).
This was one story where a strong brand recognition and brand recall were created.
Although later on the Corona producers had some difficulties due to their lack of advertising
and promotion, still the fact remains that they had established huge brand recognition and
brand recall in very short period of time, and it was only thanks to the students with whom a
strong emotional bond was made (Holt 2004,16).
Another measurement is the so called “Blake project”. According to it the consumers’
attention is directed towards five components (awareness, relevant differentiation, value,
accessibility and emotional connection) which are working with joined forces in order to
create that added value within the brand, all with one goal in mind: TO ENHANCE THE
INTENSITY IN THE CONSUMERS’ DECISION.4 In continuation there is a picture of the
“Blake project” graph
Graph 1: “BLAKE PROJECT”
SOURCE:http://www.brandingstrategyinsider.com/2007/02/exploring_brand.html,
03.04.2009.
41
The other brand source is the creation of the brand image. The brand image represents
the sum of all the unique associations constructed in the minds of the consumers. Whether the
perception of the brand is superior or just average depends on how strong these linkages are.
These linkages can be developed in number of ways. Except for the marketing activities they
can also be formed as a result of prior experience, word of mouth (which tends to work the
best), as well as the assumptions consumers make when looking at the logo, the slogan, the
country of production, the people involved in the company, and a lot of other different things
that can contribute significantly to the establishment of positive or negative thoughts
surrounding the brand image (Keller 2008).
These were the elements which the brand equity is composed of. However, there still
remains one question that hasn’t been answered up until now and that is whether there is such
thing as negative equity. The answer is not that simple as it may seem, because in this case is
both yes and no.
We all know that a positive brand is a result of effective marketing through
advertising, public relations and promotion.
On the other side, if we take as an example the “Democrat” brand in the politics, to a
Republican this brand will be always associated with negativity and therefore generate
negative brand equity. Or let’s take peanuts for example. For someone who loves peanuts,
they will always generate strong, constructive associations. However, for someone who is
allergic to them a brand specialized for peanuts will always produce depressing memories and
emotions.
Ever since the appearance of this phenomenon people whose domain was in the
branding field started to develop the concept of the brand equity. Some used “hard” measures
such were the market share and the relative price and others used “soft” measures such as
liking and perceived quality. Still the fact remains that there is such thing which creates value
for a given product or service. All these people have failed in the attempt to explain this term
and find a suitable measurement formula which will incorporate all of the necessary elements.
However the experts stay optimist thinking that all of this systematic collections and analysis
may at the end bring enlightenment. Well, good luck with that one is all I can add.
42
3.2. The four steps of brand building
A significant step forward in the building and measuring of the brand equity is the
Keller model. It was made by Kevin Keller in 1993 and ever since than has been used as a
trustworthy and highly appreciated concept in the branding theory mainly due to its power to
define and structure the steps for achieving elevated position for the brand within a company.
What Kevin Keller did was create and develop a model which determined what
exactly makes a brand strong and how one should build it. The model is called THE
CUSTOMER BASED BRAND EQUITY MODEL (CBBE), because it approaches the brand
equity from the customer’s perspective. According to him the CBBE occurs when the
consumer has a high level of awareness and familiarity with the brand and holds some strong,
favorable and unique brand associations in his/her memory (Keller 2003,67).
In continuation you will find enclosed the pyramid for the customers’ based brand
equity model.
Graph 2: Keller’s customers’ based brand equity model
SOURCE: http://buildingstrongbrands.com/14121980/images/006/004.jpg, 05.04.2009.
If one takes the “rational route” than the steps leading the brand creator towards the
peak will be:
Brand identity
Brand meaning
Brand response
43
Brand relationships
Starting with these steps, marketers need to convince consumers that there are differences
between brands and thus create brand equity. Consequently, this model represents a “branding
ladder” with each step dependent on achieving the previous one (Keller 2001).
These four steps consist of six brand building blocks and in order for the brand to be
highly successful it needs to reach the pinnacle of the pyramid where the relationships with
the customers are already built with mutual respect and common language.
The first step is answering the question “Who are you”, which is the most basic in
determining and identifying the brand and the associations made with a specific product or
service class or need (Keller, 2003). This step is called the brand salience due to the fact that
its pillars are founded on the basis of the outstanding elements that are distinguishing one
brand from another. The key elements on which this step is build upon are the category
identification and which needs are satisfied.
Let’s take as an example the brand Disney. People know this brand very well because of
the fact that they have established a perfect, unmistakable category identification
(entertainment park) and recognition of which needs are satisfied (the need for having fun,
enjoyment, relaxation). Its name is the first that pops up in the minds of the people who seek
this kind of amusement and all of those who want to find a place where the level of
entertainment is derived to maximum.
By creating, developing and nurturing the brand depth (influences the likelihood that a
brand comes to mind) and brand breadth (describes the different types of situations in which
the brand might come to mind) the brand creators find a successful way to establish a highly
salient brand. Although the salience of the brand is the essential rule for creating the
successfulness of the brand still it isn’t sufficient.
That’s why the second step is created which answers the question “What are you”. In
order for this question to be answered the “brand meaning” must be established by creating
strong linkages of brand associations with certain properties (Keller, 2001). In this section
there are two brand building blocks, the brand performance and the brand imagery.
44
The brand performance basically points out that the product itself is in the heart of the
brand equity. It describes how well the product or the service meets the customers’ more
functional needs, as well as putting an emphasis on the extent of the brand which satisfies
utilitarian, aesthetic and economic customer needs and wants in the product or service
category. It creates dimensions which inflict prominent difference to the brand, by making it
something that stands out in the human minds. These dimensions are the actual attributes and
benefits which contribute to the significance of the brand, as well as increasing the strength of
the product or service offered (Keller 2008,67).
The brand imagery refers to the way people think about a brand abstractly, making the
scenery more appealing and concentrated towards the intangible aspects of the brand such as
the user profiles, the purchase and usage situations, the personality and values and the history,
heritage and experiences. According to this the brand imagery reflects the extrinsic properties
of the product or service.
Disney has established perfect brand performance and brand imagery. It satisfies the
customers’ functional needs for relaxing by offering variety of amusing ways to increase the
level of their enjoyment and entertainment, and thus evoke personal satisfaction. As far as the
brand imagery goes, Disney has managed to create suitable history enriched by the customers’
personal experiences all of these wrapped in a package that says entertainment only, with a
ribbon which conveys a message that screams out loud about leaving all the worries outside
the park.
The third step emphasizes the proper customer responses to the brand identification
and meaning (Keller, 2003). This step is the result of the people’s opinion, to be more precise
it states the responses which are coming from the customers’ identification with a certain
brand. It is divided among two dimensions: the brand judgment and the brand feelings.
The brand judgment is the sum of all the customer’s personal opinions and evaluations
derived from the symbiosis of different brand performances and imagery associations. The
types of judgment made by the consumers are dependent on the brand quality, credibility,
consideration, as well as superiority (Keller, 2008).
The other component which inflicts the responses of the people is the brand feeling,
derived from the strength of the brand as well as the relationships incorporated in its essential
45
being. The brand feelings evoked can be mild or tense and positive or negative. Whenever
there are negative feelings generated, the brand creators always work on changing them into
positive ones. This is done through the transformational advertising which is designed to
change consumers’ perceptions of the actual usage experience with the product. At the end all
that matters is how positive the brands are (Keller , 2008).
The forth step in the CBBE is asking the question “What about you and me”. Here the
relationships formed with the consumers are all that is relevant. The focus is the level of
identification that the customer has with the brand and the extent to which the relationships
are evolved. Here brand resonance is all that matters. This term illuminates the type of
relationships formed, and the extent to which they had been developed. In order for it to be
established it requires strong personal attachment, as well as fierce intensity (the depth of the
psychological bond) and high level of activity engendered by the loyalty (the repeat purchase
rates).
There are four categories all of which are extremely important for the establishment of
this step. The first one is the behavioral loyalty which clarifies questions such as how often
the customers are making their purchase and how much do they often purchase. The creating
of a deeper attitudinal attachment through marketing programs can contribute to the actual
enhancement of the brand loyalty. The second one is the attitudinal attachment which is the
customer’ going beyond viewing the brand as something special, thus making statements such
as “love” or “little pleasure”. The third category is the sense of community. A stronger sense
of community among loyal users can engender favorable brand attitudes and intentions.
The forth one is the active engagement where the strongest affirmation of the brand is
established. Here relationships between the customers themselves are formed, so they can act
as brand evangelist and ambassadors. Examples of this category are joining clubs which focus
is the brand itself, receiving updates, visiting brand-related web sites, taking participations in
chat rooms etc. (Keller, 2008). When combined together these categories are shaping the
intensity (measures the strength of the attitudinal attachment and sense of community) and the
activity of the brand (behavioral loyalty and active engagement).
46
Graph 3: Keller’s model for Calvin Klein’s brand
SOURCE: www.pvh.com ,05.04.2009.
In conclusion, the ultimate value of the brand depends on the customers decisions
only. Even though the marketers are often seen as the ones who are responsible for the value
still they have to oblige the terms imposed by the customers under which they create the
power of the brand. After all they shaped the marketing activities accordingly to what people
need and want, even though usually they create an illusion where the customer often thinks
that he needs something, rather than he wants that something. Therefore it is usually said that
the length of time to build a brand is directly proportional to the amount of time it takes to
create sufficient awareness and understanding. Thus it may not come as a surprise that firmly
held and felt beliefs and attitudes about a certain brand are the foundation to brand equity.
Strong brands have clarity which is derived from both the head and the mind, which means
that the loyalty and the resonance are build on the foundation of the “emotional route” and
“rational route” of the CBBE pyramid. Accordingly, rational concerns can only satisfy what
one calls utilitarian needs, but the question is whether they can satisfy the emotional or
psychological needs as well. The answer is that they can not, so emotional concerns are
developed in order to fulfill these needs.
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3.3. The benefits of a strong brand
There are a lot of advantages that can arise from having and maintaining a strong
brand. The fruits from the harvest amount to:
Those creating a financial value for the company (both for the growth and for
profitability performance of the company)
Less vulnerability to competitive marketing activities
Creating greater customer loyalty
Enhanced the effectiveness of the marketing communications
Greater licensing opportunities, which bring with them higher profit and
greater legal protection, as well as improvement in the image and awareness
of the brand
Increased number of new customers
Contribute to the increase of the brand equity of the company
All of these above contain equal importance in expanding of the company and the
brand. These benefits are essentials not just for creating stronger brand but for the overall
performance of the company as a whole. So the advantages provided by strengthening the
brand are not only ordinary things that can contribute to the company’s performance, but they
are complex things which make the world an interesting place to operate in. The loyalty
developed towards the brand enhances the likelihood for the increased demand for the
company’s products or services, at the same time making it difficult for new companies to
penetrate the market
It’s funny how a little bit of innovation can create a world in which everything is
possible, and people want to believe in those created myths, because deep inside they know
that they make them better persons, as well as ease the decisions making processes they are
faced with every single day, knowing that having something to rely on is extremely helpful in
the ever moving fast society. That’s why they rely on the experiences of their friends and they
believe in the power of the brand, simply to make their lives a little bit less stressful.
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4. BRAND ELEMENTS
PICTURE23: BRAND AS ICEBERG
SOURCE: qualisysindia.com/images/srs1.gif, 05.04.2009.
Long time ago, the brand was perceived as and compared to the iceberg, since it has
components which are extremely important, but somehow hidden and not seen by the wider
audience. As presented in the picture above, the components beneath the surface are the ones
who actually build the foundation of the brand. These components determine whether the
brand will establish positive associations or negative ones. The brand loyalty, likeability, and
brand confidence are beneath the surface, and above it are elements such as size,
communication, uniqueness, vividness, content, and appeal.
This metaphor is still alive today, ensuring that the meaning of the brand and brand
building concept is properly understood and enforced. It makes the companies to try and think
before they react. It makes them understand that building a strong brand is of great
importance when trying to gain power and increase the volume of the sales.
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4.1. Brand positioning
“Brand positioning is the heart of marketing strategy. It is the act of designing the
company’s offer and image so that it occupies a distinct and valued place in the target
customer’s minds”
Kim R. Robertson
The brand positioning is the essential issue which arises when creating a strong and
recognizable brand. The position that each brand takes will depend on the knowledge
gathered by the marketers on four most important topics, the first being the determinacy of the
target customers, which leads to the next issue of establishing the core competitors, to
describing the similarity of the brand with those of the competitors and last, the most
important step, creating and describing the difference which makes the brand a unique item
worthy of possession.
Graph 4: brand positioning
SOURCE: http://www.gfk.si/eng/2_3_brand_pos.php ,05.04.2009.
According to the graph shown above the brands are positioned due to whether the
customers have heard of them or not. There are two types of brand: the ones which are
recognized by the consumer and the ones that are not, that is the ones that have established
brand unawareness and those that have established brand awareness. The ones that have failed
to create any kind of associations in the consumers mind are doomed to collapse. On the other
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hand the ones that have managed to develop certain images in the consumers’ minds are
divided further on recalled brands and recognized brands. Among both of the groups there are
three sub-groups, the accepted brands, which are brands commonly used and widely accepted
from the consumption crowd, than neutral brand which are known but don’t have any
importance whatsoever in the consumers’ daily life decisions and there are the rejected ones,
which are the ones who failed to develop a relationship with the customers and therefore are
claimed to be irrelevant and not taken into consideration while making the consumption
decision (http://www.gfk.si/eng/2_3_brand_pos.php ,05.04.2009 ).
There is another interesting division of the brand positioning. According to me it’s a
very amusing one. It divides the brands according to the quality they possess and the prices
they have. In this way the brands are compared to the competing ones on a perceptual map.
GRAPH 5: THE BASIC PERCEPTUAL MAP
SOURCE: http://tutor2u.net/business/images/perceptual%20map.gif ,05.04.2009.
The map shows the types of brands created when dividing them among their price and
quality. Let’s start with the basic ones which have both low quality and low price, they are
called the economy brands. Than there are the ones with the low quality and high price,
followed by the bargain brands which have high quality and low price, and at the end there
are the premium brands with both high quality and high price.
The fashion brands, like Chanel, Gucci, Prada, Dolce&Gabanna, Louis Vuitton are
considered to be premium brands. Bershka and Zara are considered to be bargain brands.
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4.2. Brand mantras and audits
SOURCE: Formitas BBDO Pleon 2008.
The word “mantra” originates from a Sanskrit word, which means a chant in a form of
a tip that would lead to the fulfillment of what is desired. In marketing terms this word is
defined as “an articulation of the ‘heart and soul’ of the brand, a short three to five phrase
that captures the irrefutable essence or spirit of the brand positioning.”
As it is can be seen in the picture above the pillar of the brand is the brand mantra. It is
the promise made by those who nurture the very beginning of the simple product, as well as
the later stages of its development. It is the core for the essence of the brand. Consequently,
this part should never change. Since it is extremely important, one should not try to alter it.
Once made, the promise can not be broken, otherwise there are unlikable outcomes to be
faced, and for some of them the price to be paid is just too costly. Disappointment of the
customers is one of the outcomes, and believe it or not it’s the one which is avoided by all
means.
The general purpose of the phrase is to provide the employees, as well as external
partners, with a crystal clear picture of what the essential meaning of the brand is. It is
consisted of three dimensions: the brand function, the emotional modifier and the descriptive
modifier. The brand function describes the purpose of the brand. For instance, for Nike the
purpose of the brand is the performance. The descriptive modifier clarifies the purpose of the
The brand audit 2
The brand audit 1
The brand mantra
DNA
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brand. For Nike that is athletic. And the third is the emotional modifier which puts an
emphasis on the benefits provided by the brand. For Nike, that is authentic (Keller 2008).
These phrases are important because they are targeting the benefits provided by the
brands and the uniqueness derived from the performance of the brand. They are established so
that they can create a clarity and deeper knowledge of what the brand is all about. Therefore,
they are extremely helpful in constructing vivid pictures in the minds of the employees so that
they can continue the legacy of the company and enhance the performance.
However, the core is nothing without its attributes. Whether it is the design, the
package, a successful marketing tool and strategy, or a high level of perceived quality, it
makes no difference. When the foundation is firmly set, meaning when the mantra (the
promise) of the brand is determined than the marketers can elaborate the brand attributes,
which can develop further and strengthen the brand image, as well as create and educe
positive associations in the humans’ minds. This is achieved through the brand audits. They
can be altered based on the preferences of the consumers.
The brand audit represents a comprehensive examination of a brand to discover its
sources of brand equity.
The brand audit is a customer based practice which contributes to the increase of the
health of the brand, elaborates the sources of brand equity, as well as improves the equity. It is
created so that both the company and the consumer understand the sources of the brand
equity.
It is consisted out of two parts the brand inventory and the brand exploratory. The
brand inventory provides an insight of how the products and the services sold are marketed
and branded. This segment is very important because it summarizes all the essential and
significant marketing activities as well as clearly develops the unique approaches towards
establishing a strong and different brand from ones already developed on the market. The
other part focuses on the results of the research done in order to better understand the
consumers’ sentiment and their thoughts regarding the performance, as well as the quality and
pricing. This part is called the brand exploratory (Keller 2008).
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4.4. Brand elements which affect the human perceptions
According to Kevin Keller, there are six criteria for brand elements which are divided
among two dimensions. The first dimension is composed out of the first three memorability,
meaningfulness and likeability. Each of these three is representing the marketer’s offensive
strategy and brand equity and puts essential emphasis on the brand awareness and salience.
The second dimension focuses on the defensive strategy of the marketers for leveraging and
maintaining brand equity. It is consisted out of transferability, adaptability and protectability
which are significant determinants of the brand image and positioning.
The memorability incorporates elements that are extremely helpful in establishing
clarity and attracting attention. An easy recognizable brand name, slogan, jingle, controversial
ad, poster or even a mascot can aid in the process of creating the memorability in the minds of
the consumers. For instance the “Code Red” name for one of the Pepsi drinks contributed a
lot to its recognition and recall. It became so recognizable and easy to remember that even a
computer virus that infected more than 700 000 computers was named after it.
PICTURE24: CHANEL LOGO
SOURCE:http://1.bp.blogspot.com/_KF833Bz_TNk/ScME2GV_QRI/AAAAAAAAAGA/bx
Wzqad3-Tg/s320/chanel-logo.jpg ,07.04.2009.
The meaningfulness must contain elements such as descriptive and persuasive.
Therefore, it must contain something that incorporates the general information about the
product category as well as its content and specific information about the attributes and the
benefits it brings to the table. Let’s say the fashion luxury brand Chanel, named after the
designer Coco Chanel is a name which bristles with perfection due to the fashion icon’s
persuasive and impeccable image.
The last category in this first dimension is the likeability. This category inflicts the
brand to be fun and interesting, with well developed visual and verbal imagery and all of this
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wrapped with aesthetically pleased design. The likability helps each and every time when the
possible benefits of the future are a little bit blurred, so the creativity must take its place
instead. Whenever in this situation, the brand creators must concentrate on developing the
intangible characteristics of the brand so that they can increase the awareness and improve the
overall performance of the brand.
PICTURE25: HALLMARK LOGO
SOURCE:http://www.nbcf.org.au/content/upload/images/corp/partners/hallmark/Hallmark-
plum-and-gold-logo.jpg ,07.04.2009.
The other set of brand elements as Keller explained are relevant when the company is
facing with competitors, so they are extremely helpful when dealing with the maintenance of
the brand equity. The first one is the transferability which measures the extent to which the
brand elements add to the brand equity of new products for the brand. The term
transferability relates to brand extensions as well as enlarging the brand on global level. The
vaguer the name is the more transferable it is on foreign markets. Let’s say Hallmark for
instance, or Amazon brand. These names don’t put boundaries for the companies, so that they
can enlarge in every category they want. There are a lot of funny examples of transferability
mistakes. For instance, when Coors translated its slogan “Turn it loose” into Spanish it
sounded like “Suffer from diarrhea”. Pretty funny, isn’t it? Another example of such hilarious
brand mishap is when Pepsi translated its slogan in Chinese market “Pepsi Brings Back To
Life”. It meant “Pepsi Bring Your Ancestors Back from the Grave”. And my personal favorite
is when a hair product company, Clariol introduced the “Mist Stick” a curling hair iron in
Germany. The word mist was a German slang for manure. Now, imagine putting that on your
hair.
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PICTURE26: AMAZON LOGO
SOURCE:http://www.watsonwyatt.com/images/database_uploads/13027/figure1_porters.gif
,08.04.2009.
The adaptability targets the issues that arise regarding the flexibility over time as
well as the updating process. The logos and the characters on the posters, or ads are usually
updated so that they can relate to the current times with a little flick that reminds of the old
times as well, bringing back the memories, endured in those times when the company started
to operate.
The third component of the second dimension is the protectability, which is one of
the most important segments when building and maintaining strong brand equity. It refers to
the legally protected brand elements on an international level, registering them with the
appropriate legal bodies and defending them against any competitive intruders. Accordingly,
the name, the package, or any other attribute of the brand should be developed so that it can
not be easily copied, because than the uniqueness which the brand possesses will vanish
completely. Let’s take for example the Louis Vuitton brand. Its purses are copied everywhere
in the world and sold for insignificant price, a value which doesn’t correspond to the
perfection they are creating. Although it might sound as an easy solution to the problems
connected to creating counterfeits, it is becoming more and more difficult because it has taken
a great swing and strives for globalization.
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5. HOW THE BRAND AFFECTS THE VALUE OF THE PRODUCT?
This chapter is the most important, since here I will prove my thesis by examining
different brand strategies which have great effects on the value of the product. After that I will
show how the customers perceive and choose brands. As the core of my thesis this part will
be filled with creative solutions which all bring with them a dose of value to the products and
services.
5.1. Product strategy
As the Bible says and first there was God, in marketing terms the God is the product.
It is the very core of the brand, its heart and its impulse. What makes the brand successful is
the product, which stands as a pillar for the value. Therefore, in order for a brand to be
victorious, the product must at least meet the customers’ expectations and if the brand tends to
develop strength further on than it must surpass those expectations.
From the customers perspective the perceived quality and value of the product are
what shape their opinion about the brand. According to the consumers the perceived quality is
how they see the brand regarding the quality and superiority surrounding it. The
improvements through the years made on certain products have made it difficult to surpass the
customers’ expectations. There are few segments which help in the enhancement of the
perceived quality and value. If the performance of the product is increased, the features are
better shaped, the conformance quality is improved, the reliability, the durability and
serviceability are all upgraded, and if the style and the design are enhanced than one can brag
about its brand having high perceived quality and value.
However, the performance level of the product doesn’t necessarily always depend
only on the product quality. It has other dimensions as well, such as the speed, accuracy, the
promptness etc. Thus, by improving the functional benefits, the process benefits and the
relationship benefits, a brand can easily find its way one step higher on the latter of success.
In order for a value of a brand to be established, consumers usually combine the
quality performance with the cost perception, which doesn’t necessarily refer to monetary cost
but also include opportunity costs such as time and energy spent. Therefore, Michael Porter
developed a model called the value chain according to which the level of the customers’
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perceived value depends on the primary value creating activities (inbound logistics,
operations, outbound logistics, marketing and sales, and services) , as well as on the four
support activities which occur through the primary activities (firm infrastructure, human
resources management, technology development, and procurement). If the costs are reduced
and the performance improved in any of these activities, than the brand has created a
substantial value.
Graph 6: Porter’s value chain
SOURCE:http://www.watsonwyatt.com/images/database_uploads/13027/figure1_porters.gif
,08.04.2009.
PICTURE27: HARLEY DAVIDSON LOGO
SOURCE:http://www.jacksonmshog.com/chapter2496/Images/HarleyDavidsonLogo.gif
,10.04.2009.
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From the marketers’ point of view creating relationship marketing is what creates
the value. It is based on the premise that current customers are the key to log term success.
One of the segments here is the mass customization which is based on the customers’
preferences assembled in a product. These preferences nurture the dreams that customers’
have and according to that it increases the level of the perceived quality of the brand. An
instance of this mass customization is that of Dell Company which is creating built-to-order
computers. Another example is that of Harley Davidson which customizes its motorcycles
according to its customers’ wants.
“Customization addresses the need for individuality”
By an unknown analyst
Creating this process the customers can clearly distinguish themselves from others.
According to this they can add to the product they purchase their personality and this is what
they are appreciating the most. To them it feels like they are treated specially.
All of this being said, it is natural for one to think that the concept is applied to
products only. However, the concept can be applied to services as well, usually in the banks
or travel agencies. They can tailor their services accordingly to what people want.
The “second moment of truth” as it is called the result from the actual experience is
the most powerful and strongest association that a brand can make with its customers. The
after-marketing activities are just as important as the marketing activities. They are
reminding the businesses of the importance of building relationships with customers and
points out to the crucial need to balance the advertising activities. Among some of these after-
marketing activities are the conducted customer surveys, formulating and managing
communication programs, and hosting special customer events or programs.
“Loyalty programs reduce defection rates and increase retention. You can win more of a
customer’s purchasing rate.”
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PICTURE28: VICTORIA’S SECRET LOGO
SOURCE:http://callitout.com/quotes/wp-content/uploads/2008/03/victorias-secret-logo.gif
,10.04.2009.
Another segment which relates to the marketers is the creating of the loyalty or
frequency programs. These programs are often created through the establishment of
different mixture of newsletters, discounts. They are obliged to change the performances,
since they can not stay static. They must listen to their loyal customers’ suggestions and
complaints, as well as engage people in the programs. For instance Victoria’s secret offers
discounts to each customer that has made a prior purchase on a regular basis. It also gives a
card which enables the customer to purchase more and more, due to the fact that the customer
is the member of the club.
5.2. Pricing strategy
These strategies relate to the price perception of the people regarding the value of the
product and the different pricing strategies which might be used to create brand equity.
“The customer is smart. They recognize a really good value when they see one and the
really appreciate transparent prices.”
By one GM executive
The range of the acceptable prices is called the price bands. The perceptions of the
consumers are shaped according to the price of the brand. If the brand is tagged with a price
label that says expensive, than the people’s perception of it is that the brand conveys a
massage which says that it contains a great quality. Another thing which affects the value is
how frequently the brand is discounted. In order for consumers to buy the offered product or
service the performances and advantages attached must exceed their expectations. That being
said, it is only natural that the consumers’ perception of value must exceed the cost of the
company of making and selling the product, so that it can operate with a profit. For both terms
to be satisfied, marketers must find a way to learn about the consumers’ perceptions regarding
60
the price, so that the companies can establish a certain price level, and for the market leaders
to even establish price premiums (Keller 2008).
The most important determinants while setting the price of the product are the costs
derived from making and selling them, as well as the prices verified by the competitors.
Accordingly, there are two pricing strategies which are the most relevant to this issue. The
first one is the value pricing. Its objectives refer to establishing the right mix of product
excellence, product costs and the product prices so that the customers’ needs and wants are
put on the first place, as well as the profit goals of the company are being met. As a
conclusion, the strong brands can command price premiums, but if they go too far than they
may loose the loyalty developed with their customers, and may find a pretty damaging
consequence as a result. If they underestimate the power of the customers, there is a price to
be paid at the end. This kind of consequence experienced the gigantic company Philip Morris
with its cigarette brand, Marlboro.
PICTURE29: TACO BELL LOGO
SOURCE:http://statenislandnyhomes.com/Taco_Bell_logo2%5B1%5D.gif, 10.04.2009.
The price strategy may also be enforced as a result of the reduced operating costs, in
order to gain competitive advantage. The chain of Mexican restaurants “Taco Bell” did this so
that it can lower prices for many items which appeared on their menu to under $1. So in order
for the companies to make profits they must make the right product in the right way and sell it
at a right price.
PICTURE30: NIVEA LOGO
SOURCE: http://www.cosmetico.ro/images/800px-Nivea_logo.png ,10.04.2009.
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This strategy incorporates in it the product design and the product delivery segment, as
well as product costs and product prices. Accordingly, the consumers are willing to pay
premium prices when they are a hundred percent sure that they really are worth it. The worth
is due to the added value which the product must possess so that it can conduct the price on
the marketplace. An example of this can be Nivea. The company always strives for
introducing new or improved added value products, so it is only natural that it increases the
prices, since the products are fresh. This enables the people to be more comfortable with the
higher prices, having in mind that they pay for something which is fresh and advanced
cosmetically.
The other part of the value-pricing strategy is the lowering of the costs as much as
possible, in order for the companies to manage to generate higher profits. However this
reduction cannot be on the basis of lower quality, effectiveness or efficiency, since they are
the only things for which the customer is ready to pay more.
The last key to successful performance of the value pricing strategy is to understand
how much value consumers perceive in the brand and to what extent they will pay a premium.
A great starting point in determining the price is to estimate the perceived value adjusted by
cost and competitive prices. This can be done by directly asking the customers to propose
their insight in the determination of the prices (Keller 2008).
As a conclusion, the perceptions of the consumers are shaped according to the benefits
offered by the promoted product. As said before, the consumers are very cunning people and
if there is something wrong with a certain product it doesn’t take them much so that they can
exchange it with other. It’s that easy for them, just like they turn off the light in their homes
they can also turn off the light future of the product. That is why this is the most important
part for the marketers when launching a product.
5.3. Channel strategy
“Marketing strategy is the sets of interdependent organizations involved in the process of
making a product or service available for use or consumption”
By Kotler and Keller in Marketing Management
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Accordingly, the channel strategies have embedded in themselves the design and the
management of the intermediaries, which help to conduct a business. There are two most
important channel strategies: the direct channels and the indirect channels.
The indirect channels are consisted out of a number of different types of
intermediaries. However, the most used form is the retail form, since they have established the
most direct contact with the potential customers and existing ones. In this way they have
greater chance in affecting the value of the brand equity. There are many types of indirect
channels and here are some of them.
The first one is the push and pull strategy. The push strategy refers to pushing the
product through the distribution channel due to the fact that the manufacturer wants to reach
the customer. The pull strategy on the other hand is employed by the manufacturers who are
obliged by the customers’ demand or preferences towards some brand.
The other one is the retail segmentation. Here the greatest part is played by the
branded variants which are items created by the manufacturers for entering changes in color,
design, style, features etc. (Keller 2008). Examples of this are Sony, Panasonic, and on the
other side Acer and Hewlet Packard. They all make the same product with small alterations
which can be of great importance.
The third part is the cooperative advertising. Here a portion of the advertising is paid
by the manufacturer due to the retailers’ efforts for promotion. However, as almost
everywhere, there is a disadvantage. The image intended to be shown may alter and at the end
the result may be completely opposite to the one wanted to be achieved. The creators of the
brand may run on thin ice, due to the fact that the store might get more attention than the
brand itself.
The direct channels offer variety of selling alternatives, but all of them have the
personal contacts as their core. They are conducted either by mail, e mail, phone, in person
visits, but what remains unaltered is the fact that they are selling directly from the company to
the prospective customers. The companies are usually using these options of personal selling
when dealing with either high information need or high product customatization.
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PICTURE31: DISNEY STORE
SOURCE:http://www.passporter.com/articles/Hilton/HiltonDisneyStore.jpg ,22.04.2009.
As for the indirect channels here too the possibility of various mutant forms exists.
The first one is creating company owned stores. For instance Victoria’s secret company
owns each and every one of its shops, as well as Hallmark and Nike. The primary reason
behind these shops is to emphasize the depth and the breadth of the brand. However there are
still limitations and consequences surrounding this form. One of them is that the retailers lack
skills, as well as resources and contacts so that they can effectively and efficiently operate as
“intermediaries”. As was the case with Disney shops when they struggled to find the right
retail formula, so at the end their shops were sold to The Children’s Place. From another point
of view another issue may arise, such as the potential conflict with existing retail channels and
distributors (Keller 2008).
PICTURE32: HALLMARK STORE
SOURCE:http://media.merchantcircle.com/28039404/20logo_medium.jpeg ,22.04.2009.
The second way of enforcing this direct channel strategy is by creating shops within
major department stores. The advantage lays in the dual benefits provided by gaining brand
loyalty due to the retailer’s well known brand image and at the same time the company has a
control over the design and implementation of the product presentation.
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PICTURE33: ORIFLAME LOGO
SOURCE: http://logotypes.designer.am/t/oriflame.png ,22.04.2009.
The final way is the channel option which arises from the necessity to create greater
and more efficient bond with the customers by nurturing their needs to feel special and by
incorporating vigorous emotions in their products. This is done by selling the products
through catalogs, videos, or physical sites in order for the customers to feel appreciated and
closer to the company’s agenda of creating an excellence and perfection. There are companies
which are conducting their business for years in this way. Some of the examples are Oriflame
and Avon.
PICTURE34: AVON LOGO
SOURCE:http://media.merchantcircle.com/28039404/avon%20logo_medium.jpeg
,22.04.2009.
Faced with the age of the Internet, the web strategies of selling the goods are
becoming more and more attractive for all the people around the world. First of all they are
practical and less time consuming that the actual physical purchase in the stores. Due to the
fact that we live in a world where no one has time for anything, anymore, the people need
something that will lessen the burden of the spent time in the stores searching for the right
and perfect merchandise. Therefore the number of consumers buying online is drastically
increasing. That’s why the companies have found how to make the customers unleashed from
that burden by offering to sell and ship their goods wherever they are required. Such
companies are Amazon.Com, as well as Victoria Secret and Women’s Secret and in the past
few years their number is constantly increasing.
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PICTURE35: WOMEN’S SECRET LOGO
SOURCE:http://www.larocavillage.com/common/graphics/logos/Womensecret.gif
,23.04.2009.
Companies do not limit themselves to only one channel. They often enforce some kind
of mixture of the previously elaborated channel strategies. However, there is often a risk
involved in this mixture, due to the fact that having too many channels can lead to conflict
between the channel members, and than again having too few can result with missing the
market opportunities. Therefore, retailers must be careful when mixing the strategies, to avoid
facing a chaos.
5.4. Marketing communication options
In this craft like any other craft there are artistic strategies which dazzle the customers
by completely changing the views of a particular brand, with just one look at the TV, or one
eavesdrop to the radio, or by just one glance on a billboard. This is a powerful tool which
helps marketers to play a little bit with the customers’ minds.
There are many communication options, among which is my personal favorite, the
advertising. This is the venue where the magic of the business is conducted. It represents the
creative way of conducting a business based on customers’ preferences and tastes in certain
category.
“Advertising is the art of convincing people to spend money they don't have for something
they don't need.”
By William Rogers
The essence of the advertising is exactly this maneuvering the people. It plays with
their heads by projecting beautiful promises, painted by the most skillful people in the
industry and wrapped up with a dose of reality. That’s why they say that “Advertising is the
art of making whole lies out of half truths”.
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Various researches have shown that the advertising boosts the sales of a company.
(How to turn junk mail into goldmine – or perhaps not; The economist; 1995) Their finding
claim that advertising does not just boost the sales, but it helps facing the difficult economic
times, as well. Examples of this boosting are the advertising done in the period of 1989-1991
recession, for the brands such were Bud Light beer and L’Oreal. With the help of the
advertising the volume of the sales has increased, thus making the companies more profitable.
Since, it is all about grasping the thoughts of the human mind and the mysticism
surrounding it, is quite difficult to establish some detailed managerial guidelines. There are
several options where advertising as a process can be conducted. Among them are the
television, the radio, the print media, place advertising, and the interactive advertising.
Ever since the TV was invented the advertising began. So, I can say that the pioneer in
the advertising industry is the television set. Consequently, the TV advertising has a
tremendous impact on the brand equity, due to the fact that it vividly demonstrates the
ingredients of the product and emphasizes their consumers’ benefits, as well as enhancing the
brand awareness. However, as everything in life, the TV advertising has its downsides as
well. If the ad is something which is not connected to the product, than the consumers will
have trouble with grasping the concept of the ad. The other issue arising is the proliferation of
new TV channels, which enables them to switch the program, whenever there is some
commercial. On the other hand, the cost of TV ads is very high. For instance a 30-second spot
on a popular television show, during the 2007-2008 cost as much as $400 000 for shows such
as Gossip Girl, and Desperate Housewives. In Slovenia, however, these rates are significantly
lower and they vary from 3 500 € to 4500 € for 30-second spot during a hit Slovenian show or
during the news (24ur) on Pop TV, the most popular television, from 19 until 22, which is the
prime time (Formitas BBDO Pleon 2008).
PICTURE36: ABSOLUTE AD
SOURCE: www.absolute.com ,24.04.2009.
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The challenge in the advertising is arriving at the best creative strategy, by figuring out
how to break the clutter to attract the attention of the consumers and at the same time deliver
the wanted message. (Keller, 2008)
PICTURE37: THE MOST FAMOUS ABSOLUTE AD
SOURCE: www.absolute.com ,24.04.2009.
Even though there are disadvantages to this concept, still the fact remains that well
designed and well executed TV ads can affect sales and profits. As was the case with the
Chanel No.5 2005 perfume ad with Nicole Kidman, the “1984” Apple commercial and the
Catherine Zeta Jones’ Visa commercial5. The sales for this two brand skyrocketed when they
were shown. 6 The art within them just bristles out and captures the consumers’ attention, as
well as it transfers the intended message. 7
The print medium is a marketing communication option which provides more
passive approach. The two main print media are the newspapers and the magazines. As shown
on the left side the most famous print ad is the Absolute’s print campaign.
In order for a brand to have a successful print ad it is necessary for it to create a
clarity, consistency and branding. This means that if the print is not packaged in this way than
the ad will not be noticed at all, since the consumers only glance through the ad.
Web sites are seen as low cost marketing options. Despite that they offer high range
of customization, they also don’t are not molesting the customers with unnecessary
information. Designing a web site is not as easy as it seems. There must be information
relevant to customers’ needs and wants, and all of the information must be presented in a eye-
5 http://www.youtube.com/watch?v=rFs7j5X1Ljs (VISA TV ad) 6 http://www.youtube.com/watch?v=yTO4FHf8MBs (Chanel TV ad) 7 www.absolute.com
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catching pages with suitable colors, fonts and effective deliverance of the corporate message.
This is the challenge they must overcome in order for the consumers to visit the page. An
excellent example of how to create a successful webpage is the Victoriasecret.com.
PICTURE38: THE WEBPAGE OF VICTORIA’S SECRET
SOURCE:http://1.bp.blogspot.com/_-
rsjhJ_kZsI/R1SxdBAWOTI/AAAAAAAACe8/0Ddebm7cI4Y/s1600-R/VS.jpg (24.04.2009)
The last, but not least category of advertising is the so called place advertising, which
is defined as advertising outside the traditional media. This category focuses on targeting the
people in the places where they shop, eat, play, and work. That’s why there are some options
according to which this category is conducted, such as billboards and media, movies, airlines,
restaurants and shopping centers. The purpose of each and every one of them is to capture the
consumers’ attention in the most unexpected ways and on the most unexpected places.
Billboards are all over the places, and nowadays they even appear to be on busses, airlines,
subways and trains. To make this whole situations a little bit more bizarre, advertisers can buy
spots on garbage cans, gasoline pumps, elevators. The fact that this category is enlarging is
due to the common belief of the advertisers that creating such ads in unconventional places
can better meet the consumers’ expectation. The picture is representing a billboard for the
Gillette razors campaign.8
8 More funny and creative billboards, you will find enclosed in the appendix. www.gilette.com
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PICTURE39: GILLETE BILLBOARD
SOURCE: www.gillette.com ,24.04.2009.
A recent common practice has emerged and changed completely the movie industry.
This practice is called the product placements. Here the companies pay in order for their
brands to be used by the people in the movie. An example of such effective product placement
is the BMW in the James Bond film “Goldeneye”. This however is not limited only to the big
companies, but to the small ones as well, at least those ones who can pay the enormous
amount of the product placement. This kind of approach helped them significantly to increase
the sales, thus profits as well, and enhance the brand awareness. With other words those who
were not known after revealed in successful shows such as Sex and the City, Gossip Girl and
Prison Break soon became well known brands, and achieved overnight success.
PICTURE40: APPLE COMPUTER
SOURCE: http://www.butterboom.com/wp-content/uploads/jul08/mikimoto2.jpg, 24.4.2009.
As shown above, nowadays ads can be present everywhere, and this increases the
effect that they have among the people. The fact that the people have little time to notice them
contributes to the notion that the marketers must convey certain messages in simple and direct
way. Consequently, this outdoor advertising is also called “15 – second sell”. The point of all
this is that there will always be ways for creative presenting of the brands in front of the
consumers.
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The other successful marketing option is the sale promotions. It differs from the
advertising in a way that it offers incentive to buy, rather than a reason. Carefully designed
promotions can help in increasing the brand equity, by providing more information, as well as
product experience in that way creating unique and constructive associations. However, these
promotions can also decrease the brand equity, by deducting from the brand loyalty and
quality perceptions. Therefore for achieving success in the brand building the promotion
strategy must reflect the attitudes and behaviors of the consumers. Another form of promotion
is the trade promotion, which gives discounts to retailers, distributors and other members
included in the sale process.
PICTURE41: NASCAR COMPETITION
SOURCE:http://www.biggameexperiences.com/nascar/images/nascar2.jpg ,25.04.2009.
Next is the event marketing and sponsorship. The event marketing represents public
sponsorship of events or activities related to sports, art, entertainment, or social causes. It has
become one of the most used forms of marketing. The industries which are the most involved
in the sponsorship are cigarette producers, beer industry, and auto companies, even though
nowadays there are companies from different backgrounds. This particular marketing option
has become one of the most attractive ones due to the fact that marketers want to identify with
the particular target market and lifestyle, as well as to increase the awareness of the company
or product name, improve the corporate image, establish experiences and evoke feelings, etc.
As for every single option above, this too has its disadvantages which are ranging from the
unpredictability of the event to the fact that this unpredictability can not be under the
sponsor’s control. On the picture there is shown an example of sponsorship. The floor is
painted with the American Airlines logo, which is the sponsor of the NBA league. The other
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picture is showing a NASCAR competition where all the cars are painted with the sponsor’s
logo.
PICTURE42: NBA COMPETITION
SOURCE:https://www.ibmilw.com/images/items/AVTSN13896_1_1.JPG ,25.04.2009.
Public relations and publicity had gained a lot of attention during the 1983 when the
Johnson & Johnson’s product has been successfully handled, after losing most of the brand
loyalty, due to the lethal consequences. 9 The publicity represents a non personal
communications such as press releases, media interviews, press conferences, feature
articles, newsletters, photographs, films and tapes, whereas the public relations except for
these things may also include annual reports, fund-raising, and membership drives,
lobbying, special event management and public affairs. The public relations are the essential
part of every enforced brand strategy. Although they are especially handy in times of crises,
still in order to contribute to the successfulness they need to be performed on daily basis.
PICTURE43: CHEERIOS LOGO
SOURCE:http://www.babiestravellite.com/mm5/graphics/00000001/Cheerios-Cup-large.jpg
,25.04.2009.
9 Brand Focus 11, Strategic brand management by Kevin Lane Keller
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These were the marketing options which can contribute to increased and improved
overall performance not just to the brand, but to the company’s health as well. A lot of
companies enforce them and not just one, but a mixture of all of them. They are a valuable
asset to the enterprise and the brand as well, since the advantages they offer are of great
magnitude and carry with them a lot of success and power. That’s why giant companies such
as Coca Cola, Cheerios, Pepsi, Ford, Philip Morris and others are creating their strategies on
the principles of these options.
This is how the created brand can affect the value of the product. By successfully
understanding the customers’ needs and tailoring the products based on them, the value of the
product can and will be effectively increased. On the other hand, once you get that
competitive advantage of having a successfully established brand name, than you have to
work hard on maintaining the loyalty and the image. The most helpful tools in the process are
these marketing options, and not just when it is established but for creating of the brand name,
as well.
5.5. How do consumers perceive and choose brands
The truth is that there is no common applicable formula to how the consumers
perceive and form opinions about certain brands. Being as mystical as it could be, the human
mind is a complex place where confusion is always present. Each one of us is an individual
with their own thoughts and feelings. Therefore there is no generality when talking about the
reflections which are coming out of the human’s mind. However, more and more companies
are convinced in the contrary. They believe that they can influence the people’s behavior by
understanding how they make the decisions.
There still remain some commonly believed facts regarding this issues which can be
summarized as follows (Randall 1997).
First of all the people perceive the brand as a whole, which means that every
single segment is being analyzed, so that consumers can make their final
decision. This means that aspects such as quality, design, price, promotional
efforts are all taken into consideration.
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The second thing is that the perception is based upon selection, which is
determined by information filtered through experiences, beliefs an attitudes
formed.
The third segment is that no mater how illogical and stupid based upon no
rationality whatsoever, the consumers’ perception might seem, it is
meaningless to argue with it. Usually the reasons for consumers’ perception
are not correspondent to suppliers’ expectations.
The forth one, and the most true, according to me is the claim that processes
may not be conscious. The fact that the consumers can produce rational
explanations of their thinking does not assure that these justifications can
accurately reflect reality. A common example is the research done by De
Chernatony and McDonald in 1992 based on beers’ labels (DeChernatony,
McDonald 1993). When the labels were removed from the bottle, the
consumers’ could not tell which beer they were drinking. However, when the
labels were putted back to the bottles the same people that could not tell apart
the beers, at this point bragged about the differences that each beer had in taste.
As said in the study, when brands showed, the people used the brand names to
recall brand images, as well as their perspectives about how the brands tastes.
The last one is that the brand has a personality. This means that the consumers
can actually associate the brand with the characteristics which they can
describe.
As I said before, there are no valid models for calculation of how the consumers will
react to given marketing actions such as particular campaign. Although, most of the marketing
experts will say that the conducted researches show a lot about the consumers’ perceptions,
there are allot which will tell you that the researches will force answers, but those generated
answers may or may not represent consumer’s reality. And here is the catch, there is no way
of telling whether they are or they are not. This conducted techniques, can also bring with
them issues, one among which is that we as a people believe the results, just because we don’t
understand them. We believe in them because they look impressive.
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“One wonders how many marketing pipe dreams and wasted resources are generated each
year on the basis of such endorsements as, ‘It was gangbusters in the focused group
sessions.’”
By Weilbacher, 1993
PICTURE44: VIRGIN LOGO
SOURCE:http://www.virginlifecare.co.za/assets/images/AboutVirginLogo.jpg ,24.04.2009.
This being said, the market research is reactive, meaning that it only measures past
responses and what is hypothetically asked from the respondents. Consequently, some
entrepreneurs with power of great magnitude don’t believe in doing market research, but
instead rely completely on their instincts and gut feelings. One of them is Richard Branson,
the CEO of the Virgin Records and the 236th richest man in the world, according to Forbes
magazine. These feelings are what make people like him so successful and powerful.
There are still some techniques which might help in determining how the people
respond and they are based on psychological practices. The first one is the conducting of the
qualitative research which explores how consumers talk about the product field, what
concepts and words they use and how they feel about certain product. This is usually done in
Japan where the companies are sending their senior executives with a local consultant to
spend couple of hours in consumer’s homes in order to ask questions and observe the
responses. This kind of research offers a variety of results embellished with suggestions
which can help a lot in forming the branding process of the company.
Another really helpful technique is the projective technique in which there are
exercises that project the consumers’ unconscious feelings about products and brands
(Randall 1997). In continuation there are several examples to how they are conducted.
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TABLE 5: PROJECTIVE TECHNIQUE
You are at a party, and the brands come through the door.
Describe the person each brand would be.
If the brand were an animal, what would it be?
If this brand were a car, what would it be?
Draw a picture (or tell a story) about the brand
SOURCE: Randall, 1997.
The third technique which might be helpful is the preparatory grid where people are
asked to sort the brand into groups and explain what characteristic sets them apart (Randall
1997).
After the qualitative research is done the quantitative follows so that one can be
confident about what the target market thinks and feels about the brand. Accordingly,
marketers can influence the penetration and the frequency of the brand, by persuading the
people to buy the product more often than the other competitive products. Therefore the
distinguishing brand attributes should be established amongst the core buyers and not the
whole market.
As an example of these researches is the analysis of car brand perception on Slovene
market in 2004, conducted by the advertising agency Formitas BBDO Pleon. They have
performed a small sample quality research with determining a clear and accurately defined
target group, which covered ten drivers of nine chosen brands plus ten other drivers. It lasted
21 days, with 105 correspondents out of 200. The brands were chosen on the basis of reached
market shares in period from 2002 to 2004. There were nine brands, as following, Citroen,
Fiat, Ford, Opel, Toyota, Skoda, Peugeot, Volkswagen, and Renault. The perception of these
brands is divided among three segments, the first one being the distinctive attributes, the
second one represents different values, and the third one portraying the drivers with their
pictures accompanied.
The test subjects were asked to unite the attributes, values and drivers with suitable car
brand. The results should have included the positioning of the brand and individual brand
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perception. They have shown that when it comes to the ascribed attributes and values the
brands Peugeot, Renault and Toyota were the ones which elicit the most positive associations.
This means that the brands are strong and stable. Those that tend to generate negative
associations are Ford, Opel, Skoda and Fiat.
According to the analysis made for the car brand perception, each one of the brands
had its profile done, based on their attributes, values and which drivers generation tends to
purchase them. As an example I will only mention four of them.
PICTURE45: FIAT LOGO
SOURCES: http://www.uniquebuilders.in/images/fiat-logo.jpg ,24.04.2009.
The first one is the Fiat brand. This brand has the worst reputation among all of them.
Negative feeling have been generated by the attributes connected to this brand, attributes such
as outthrust, out fashioned design, high fuel consumption, high frequency of troubles, as well
as weak technological combination. The driver image 10sums to younger population which
have limited income abilities, therefore limited choices when picking the brand of the car. As
a result of these negative generated connections to the brand, Fiat has no perspective,
therefore no bright future on the Slovene market.
PICTURE46: FORD LOGO
SOURCE:http://ceoworld.biz/ceo/wp-content/uploads/2009/02/ford-logo-big.jpg ,24.04.2009.
77
The second one is the Ford brand. Here the rule of the “bad reputation follows” is
applied. This brand has a bad image, due to the perception that it is mainly man car, and more
convenient for older people than younger ones. The attributes such as high fuel consumption,
not enough developed dealers’ network, old, and traditional contribute only more to the fact
that this brand must work on its brand image, if it wants to be successful on the Slovene
market. The drivers’ imagery is one proof more that they need to do something n order to
reach the younger population.
PICTURE47: VOLKSWAGEN LOGO
SOURCE:http://www.blogcdn.com/www.autoblog.com/media/2007/08/vw-logo-jpeg.jpg
,24.04.2009.
The third one is the Volkswagen brand. Strong attributes have been generated by the
brand. Durability, reliability, safety, stability and excellence are just a few of them. However,
judging by the drivers’ imagery they are mostly preferred by the men and older people.
Comparing to the previous years this brand had lost in perception due to its high price and
traditionalism, as well as expensive car maintenance. The only positive attribute which have
been improved throughout the years was the low fuel consumption. However, the fact still
remains that VW is strong and recognizable brand on the Slovene market.
PICTURE48: CITROEN LOGO
SOURCE:http://www.geocities.com/MotorCity/5866/citroen_logo3.gif ,24.04.2009.
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The last one is the Citroen brand. This brand is perceived to be mainly a female brand,
due to attributes such as comfortable, fun, romantic, sympathetic and young. The perception
of the car refers to its comfort and frolic, appropriate price, frequent brand recall, and good
advertising.
In continuation, in the research there are perception maps which are based on different
criteria, such as attributes, values, and personality. The first map is the perception map of
attributes. It divides the car brands among four different segments. Ford and Opel are
considered to be out of date, VW and Toyota are considered to be technologically advanced,
Skoda and Fiat are considered to be cheap, and Renault, Citroen and Peugeot are considered
to have great shape.
According to the perception map of values, the VW and Toyota are the strongest
positioned ones, followed by Opel and Ford. According to this, Citroen is and I quote above
all pleasant, youth, good looking and comfortable, likable, gentle, and cute car.
As far as the perception of personality goes, Citroen is more family brand, since it can
offer variety of designs targeting the youth people raging from 18 – 40 young, educated, and
active people, which is the most stable part of population. This is the reason for the wide
recognition and recall of the brand, as well as its strong brand image and awareness on the
Slovene market.
In theory these practices work, however, in reality things are a little bit shabbier. For
instance, you’ll never know whether the responses you get by people will tell you everything
you need to know about the potential market. Similarly, as putted by one department store
pioneer, John Wanamaker “Half of my advertising budget is wasted. Trouble is, I don’t
know which half”. This testifies for the fact that the human brain is a mystery to the
marketers.
One of the most advanced and largest neuromarketing (referred to as a marriage
between neuroscience and marketing) studies ever made is that by Martin Lindstrom, a
Danish advertiser and researcher. He started doing the research concentrated on the people’s
“buyology”. It was conducted among 2000 volunteers from five countries, USA, UK,
Germany, Japan, and China, all of which were smokers.
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The research was based upon the neuromarketing, which is symbiosis of science and
marketing, a research discipline which is still in its infancy. For the purposes of conducting
brain, scan technique such as fMRI was used, the most advanced brain-scanning technique,
nowadays. It represents a functional magnetic resonance imaging, a machine worth around
$4million. During the fMRI, the portion of the brain being used lights up like a red-hot flash.
By tracking this, the neuroscientists can determine which areas are working at a given point of
time. Accordingly, this study helps find out how our unconscious minds control our behavior,
by revealing the hidden truths behind our purchasing habits, branding and advertising
(Lindstrom, 2008).
As putted in his book, Martin Lindstrom putted an emphasis on just how insignificant
the warnings on the cigarettes are. He says, and I quote “cigarettes companies seem to come
up with innovative ways to kill us” , as he offers the example of the Marlboro intense
cigarettes, which are small, high tar cigarettes, which can be consumed during brief moments
between meetings, presentations and phone calls. Further on, each one of the participants
were asked several questions, regarding whether or not the warning labels putted on the
cigarettes have effect on them. Majority of the answers were not surprising, the people who
were surveyed answered confirming this statement, and yet the results of the research were
pretty shocking as they reveled the truth hidden in the subconscious level of the human mind.
The results showed that not only the warnings failed to have any affect whatsoever on
smokers, but instead they activated the “craving spot” which persuaded the smokers to light
up. And that is how the lethal marketing skills began to develop in the world of the cigarettes’
corporations.
Before this study was conducted, there have been similar ones from the previous
years. One of them was performed in 2003, by revising the famous “sip” test for Coca Cola
and Pepsi. The “sip” test was a study performed in the 1975, by the name “the Pepsi
Challenge”. The people were trying the both beverages and were asked for their preferences.
More than 50% of them claimed that they liked the taste of Pepsi better. According to this,
Pepsi should have been the market leader in the industry, yet Coca Cola was still keeping the
throne. What the study of 2003 showed was the reason for this divergence (Lindstrom 2008).
The first part of the study was the simple question “What do you prefer Coke, Pepsi or
no preferences?” The results were the same as the one in 1975, with no deviations
whatsoever.
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The second part was to let the test subjects know whether they were sampling Pepsi or
Coke before they taste it. The results were 75% of the subjects claimed to prefer Coke.
The reason for this was that during the study two areas of the brain were engaged in a
fight between the rational thinking and the emotional one. The strong, positive associations
connected to the Coke brand made it to overrule the Pepsi brand, and eventually claim
triumph. As Lindstrom put it “Emotions are the way in which our brains encode things of
value, and a brand that engages us emotionally will win every single time”.
There were other studies conducted as well, based on this technique, however they
were also based on one particular brand too. The study performed by Martin Lindstrom
differentiated from the previous ones due to the unlimited range of brands, in order to grasp
the meaning of the brand in consumers’ minds. As every successful researcher before him,
Lindstrom had too troubles with the financial part. He had to find 8 multinational corporations
and 2081 volunteers which will support his project, and the article “Orwellian” in the New
York Times Magazine, was not of any substantial help, since it compared the technique with
“kind of super mind reading device” that messes up with the citizens’ privacy and “mental
freedom”. 11 Although it was very hard and exhausting process, still he managed to find them
and conduct the research at the end.
Among some of the shocking results found were that the product placement doesn’t
work, there is a mirror neuron, which says “I’ll have what he/she has” , the subliminal
massaging is still taking place today, even though it was banned in the 1957. In continuation,
many of the rituals habitually performed are actually manufactured by companies and
marketers to attract the consumers to purchase their brands and products. Than, faith and
religion have enormous impact on the purchasing decision making process, as well as the
smell, the sight, the touch, the taste and the sight. Another disturbing common myth dragged
through years was seriously shaken with the findings, and that is that sex doesn’t sell. Yes
you’ve read correctly it DOESN”T (Lindstrom, 2008).
So the question remains, what is next helpful tool for marketing? The answer,
according to Lindstrom is pretty clear, as he thinks that by the end of 2012, the marketers will
11 The article is concluded in the appendix
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completely abandon the quantitative and qualitative research and concentrate on the fMRI
instead. All I can add to that is that we’ll see how it plays out.
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6. COCLUSION
As I said before, people want to use the sentence “Dreaming can get you nowhere”, but
somehow in the branding world is the vision that can take you places, you’ve never been
before, and you can achieve heights that are only within the Gods range. Having a well
established and simple vision is something which builds the core of the brand and something
which stands out in the crowd, screaming on the top of the lungs.
In this blurred world of values and principles, there’s no one to rely on, so that you can
feel safe, and not robbed and deprived from the necessities which you eagerly must have.
Nowadays, the security which one lacks can be provided by the simple deliverance of a
promise made by product or service, which strives for endless perfection and enhanced
satisfaction.
The recognition and recall of that promise gives immortality to that product or service,
infusing power that can convince the customers to believe in those values. Whether these
strong associations are made based on merits, marketing activities or strategies, the fact still
remains that the successfulness of their execution is what makes them special and at the same
time is what shapes the value of the simple brand.
Leading you through the centuries, I have created a clear mosaic of history, embezzled
with the brilliance and unique entities of a product or service, enriched with marketing
activities. I have provided a clear image of how the value and the fate of the product depend
on the excellence of the brand. From exploring the consumers’ minds, through determining
variety of strategies, all the way to establishing tools for achieving increased value of the
product, this thesis captures the essence of the brand and its importance for the future
performance of a company.
As I said before, people are in love with the promise of security and safety. They adore
avoiding the risk involved in the decision making process at all costs, and that’s why they
make their purchase based on the confirmation from other people, recommendation from
experts, as well as the perceived quality incorporated in the core of the brand.
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In this thesis I have provided fresh and new information. The revolutionary part was the
fMRI technique, which shattered the way we feel about brands, and how our subconscious
minds are far more important in the process of deciding what and why we buy.
All of these segments give the product and service power to elicit suitable associations,
recall appropriate images, as well as create emotional bonding with their customers. This is
the reason why the branding process infuses added values in the product, thus making it more
desirable and preferable than an ordinary product with no labels attached.
The various evidences provided in my thesis are as firm facts which can only contribute to
the acknowledgement that the thesis cannot be shattered. The proofs are as follows:
Success stories of the world’s first brands that emerged, as well as the ones which
appeared later on (Bass and company, Coca Cola, DeBeers, Nike, Chanel, Apple,
Louis Vuiton, Corona beer, and variety of others)
The explanation of the various models for measuring the brand equity (the
Customer Based Brand Equity model and the Blake’s model)
The introduction of various strategies for how the value of the product depends on
the brand (product, placement, pricing, channel)
The emphasis of the importance of the marketing communication tools (such as
advertising, promotions, public relations and publicity, etc)
The provided analysis about the brands from Formitas BBDO Pleaon’s archive
The introduction of the most effective and efficient way of capturing the human
thoughts, the fMRI technique which results are published in 2008
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7.1. BIBLIOGRAPHY (LITERATURE)
1. Keller, Kevin. 2008, Strategic brand management 3rd International Edition.
Darthmouth: Pearson Education.
2. Randall, Geoffrey. 2000. Branding. 2nd edition. England: Kogan Page.
3. Martin, Lindstrom. 2008. Buyology; Truth and Lies about why we buy. England:
Broadway Business.
4. Allen P., Adamson. 2007. Brand Simple. England: Palgrave Macmillan.
5. D.B. ,Holt. 2004. How the brands become icons. USA: Harvard Business School
Press.
6. Roselius, Ted. 1971. Consumers Ranking of Risk Reduction Methods. Journal of
Marketing 1971 (35): 17.
7. The 100 most powerful brands: BrandZ top 100 brand ranking. England: Milward
Brown optimor.
8. Citroen research 2000. Ljubljana: Formitas.
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7.2. BIBLIOGRAPHY (SOURCES)
1. http://www.sportingcollectibles.com/adagdt/ad9924bass.jpg (28.03.2008)
2. http://weblogs.newsday.com/entertainment/tv/blog/coca-cola-logo.jpg (28.03.2009).
3. http://blog.fleka.me/wp-content/uploads/2008/12/pepsilogos.jpg (28.03.2008)
4. http://cln.natureterch.com/products/phone/philips/philips_logo.jpg (29.03.2008).
5. http://www.scrapetv.com/News/News%20Pages/Business/images/mcdonalds%20logo
.jpg (0l. 04.2009) .
6. http://www.transport.polymtl.ca/civ1120/etud_h08/EL_KAOUSSI/playboy_logo_sex.
jpg (02.04.2009).
7. http://edevangelista.com/debeers/debeers_logo.jpg (01.04.2009).
8. http://www.cellphonemessagesender.com/blog/wp-content/uploads/2008/11/nike-
logo.gif (02.04.2009).
9. http://www.bizzia.com/brandcurve/files/2007/07/logos.jpg (03.04.2009).
10. http://www.bizzia.com/brandcurve/files/2007/07/logos.jpg (02.04.2009).
11. http://adage.com/globalnews/article?article_id=132398 (02.04.2009).
12. http://www.stirnyc.com/images/beers/corona_20logo.jpg (03.04.2009).
13. http://www.brandingstrategyinsider.com/2007/02/exploring_brand.html (03.04.2009).
14. http://buildingstrongbrands.com/14121980/images/006/004.jpg, (05.04.2009)
15. www.pvh.com (05.04.2009).
16. qualisysindia.com/images/srs1.gif, (05.04.2009).
17. http://www.gfk.si/eng/2_3_brand_pos.php (05.04.2009).
18. http://tutor2u.net/business/images/perceptual%20map.gif (05.04.2009).
19. http://1.bp.blogspot.com/_KF833Bz_TNk/ScME2GV_QRI/AAAAAAAAAGA/bxWz
qad3-Tg/s320/chanel-logo.jpg (07.04.2009).
20. http://www.nbcf.org.au/content/upload/images/corp/partners/hallmark/Hallmark-
plum-and-gold-logo.jpg (07.04.2009).
21. http://www.watsonwyatt.com/images/database_uploads/13027/figure1_porters.gif
(08.04.2009).
22. http://www.watsonwyatt.com/images/database_uploads/13027/figure1_porters.gif
(08.04.2009).
23. http://www.jacksonmshog.com/chapter2496/Images/HarleyDavidsonLogo.gif
(10.04.2009).
24. http://callitout.com/quotes/wp-content/uploads/2008/03/victorias-secret-logo.gif
(10.04.2009).
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25. http://statenislandnyhomes.com/Taco_Bell_logo2%5B1%5D.gif (10.04.2009).
26. http://www.cosmetico.ro/images/800px-Nivea_logo.png (10.04.2009).
27. http://www.passporter.com/articles/Hilton/HiltonDisneyStore.jpg (22.04.2009).
28. http://media.merchantcircle.com/28039404/20logo_medium.jpeg (22.04.2009).
29. http://logotypes.designer.am/t/oriflame.png (22.04.2009)
30. http://media.merchantcircle.com/28039404/avon%20logo_medium.jpeg (22.04.2009).
31. http://www.larocavillage.com/common/graphics/logos/Womensecret.gif (23.04.2009).
32. www.absolute.com (24.04.2009).
33. http://1.bp.blogspot.com/_-
rsjhJ_kZsI/R1SxdBAWOTI/AAAAAAAACe8/0Ddebm7cI4Y/s1600-R/VS.jpg
(24.04.2009).
34. www.gillette.com (24.04.2009).
35. (25.04.2009).
36. https://www.ibmilw.com/images/items/AVTSN13896_1_1.JPG (25.04.2009).
37. http://www.babiestravellite.com/mm5/graphics/00000001/Cheerios-Cup-large.jpg
(25.04.2009).
38. http://www.virginlifecare.co.za/assets/images/AboutVirginLogo.jpg (24.04.2009).
39. http://www.uniquebuilders.in/images/fiat-logo.jpg (24.04.2009)
40. http://ceoworld.biz/ceo/wp-content/uploads/2009/02/ford-logo-big.jpg (24.04.2009).
41. http://www.blogcdn.com/www.autoblog.com/media/2007/08/vw-logo-jpeg.jpg
(24.04.2009).
42. http://www.geocities.com/MotorCity/5866/citroen_logo3.gif (24.04.2009).
87
LIST OF APPENDIXES
1. Article 1: Tesco losing brand loyalty………………………………………………1
2. Article 2: The Virgin brand : LETTERS TO THE EDITOR…………………...3
3. Article 3: THE SMOKE CLEARS AT MARLBORO…………………………..4
4. Article 4: Parade Magazine: How Subliminal Advertising Works……………...8
5. Article 5: Orwellian Dream Come True: A Badge That Pinpoints You………...11
6. Article6: The Porter’s value chain model…………………………………………14
7. Interesting billboards………………………………………………………………16
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ARTICLE 1
Tesco losing brand loyalty
Signs of a consumer backlash against the dominance of Tesco are growing, with
declining brand loyalty among shoppers, according to new research.
A study of consumer attitudes to the top nine UK supermarkets and food retail chains,
carried out by brand market research consultancy Millward Brown, found that while Tesco
remains the most popular brand in its sector, it is not keeping customers loyal.
Peter Walshe, the global brand director of Millward Brown, said Tesco was
experiencing "the first signs of the downside of dominance".
The attitude of consumers to Tesco was "you are big and powerful and we don't
necessarily like you", he said.
"The whole issue of about being dominant and taking over corner shops and being a
one-stop-shop is slowly getting into people's conscience. They have got to be confident and
humble at the same time if they can possibly do that."
The WPP-owned research agency found the supermarket giant's "brand voltage" - its
ability to convert customer awareness into bonding and loyalty - fell sharply from 5.7 in 2003
to just 1.9 last year.
A "brand voltage" measure of 3.0 is considered strong and the reading is regarded as
an indicator of future behaviour.
In contrast, brand voltage figures for both Waitrose and Sainsbury's have risen above
Tesco's in the past couple of years.
Waitrose rose from 3.4 in 2004 to 4.2 last year, while Sainsbury's rose to 2.7.
Sainsbury's marketing campaign had laid a solid foundation for long-term success, Mr
Walshe said.
"Sainsbury's is beginning to turn the corner. Sainsbury's strategy to build brand equity
will help it battle with Asda for the spot as second leading grocery store brand."
89
Asda, which relies primarily on price to bond with consumers, fell from 3.4 in 2003 to
0.7 last year on the Millward Brown measure.
Millward Brown's brand voltage study measures consumer awareness of a brand and
how that awareness converts into loyalty or bonding to a brand.
The study examines five indicators: admiration for a brand, affinity to a brand,
perceptions of brand innovation, popularity and price.
"If the quality of that brand is in decline, it's easier for people to slip off and bond with
someone else," Mr Walshe said.
The research, part of the Millward Brown BrandZ brand equity study, monitored the
opinions of 400 British adult grocery buyers.
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ARTICLE 2
The Virgin brand : LETTERS TO THE EDITO
Published: THURSDAY, JUNE 13, 2002
Regarding the report "Branson ready to tread the IPO path again" (May 27):
Having spent my working life building Virgin into a global brand name, I was saddened to
read about the achievements of all of our people at Virgin in tones surprisingly negative.
Since we started the business in the early 1970s, Virgin has evolved into a unique
organization. It is not a faceless corporation or conglomerate, but instead what we call a
"branded venture capital" organization. We look at business sectors around the world and
apply the strength of the brand name developed by Virgin Records to sectors that are fat, lazy
or oligopolistic and do not serve consumers well.
Our new businesses are ring-fenced from each other and raise their own capital from myself
and various partners. By anyone's standards this model of doing business has led to some
remarkable successes, such as Virgin Records, Virgin Atlantic, Virgin Mobile, Virgin Radio
and Virgin Megastores.
We have a No. 1 brand in Britain for 20- to 30-year-olds and the No. 3 brand across the whole
population. Interbrand Corporation's recent survey of brands with the most impact in 2001 put
us at No. 11 across the whole world. Not bad for a business that has grown from an empty loft
space above a shoe shop in Oxford Street, London.
We have had and will continue to have some failures, but Virgin has achieved a huge amount
to popularize business acumen in a country that is traditionally anti-business.
Sir Richard Branson, London, chairman of the Virgin Group
ARTICLE 3
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BusinessWeek: January 31, 1994
THE SMOKE CLEARS AT MARLBORO
Ralph Lauren, watch out. Philip Morris Cos. is staking a claim for Marlboro in the urban-
cowboy fashion landscape. Sometime this spring, Philip Morris USA, the company's $12
billion tobacco division, will roll out the Marlboro Country Store, a mail-order promotion that
will enable smokers to exchange their empty Marlboro packs for Western wear such as boots,
cowboy hats, belt buckles, denim shirts, and leather jackets, discreetly stenciled with the
Marlboro brand logo.
Some deal, right? But it's even better for Philip Morris. The campaign is expected to build the
company's data base of smokers and turn millions of Americans into walking Marlboro ads.
Whoa, there. Aren't brands supposed to be dead? That was the conventional wisdom in the
wake of "Marlboro Friday" last Apr. 2. Then, Philip Morris announced it was slashing the
price of Marlboros by 40 per pack to stanch the brand's market-share deterioration. Philip
Morris' stock sank 14 points and pulled down the stocks of other consumer-goods companies.
It became the biggest marketing story of 1993--a symbol of the vulnerability of big brands in
the price-conscious, value-minded '90s. By yearend, analysts estimate, the strategy had cut
Philip Morris' domestic tobacco unit's earnings by $2.3 billion, to $2.84 billion.
But nine months later, it's clear that as a market-share gambit, the price-cutting maneuver
worked. Marlboro's share of the $47 billion U.S. cigarette market, which fell to 20% before
Marlboro Friday, has rebounded to 25%--higher than it has been since 1989 (chart). The
stock, which cratered at 45, has crept back up to around 57.
Now, Philip Morris is embarking on Phase Two. Philip Morris executives declined to
comment. But tobacco analysts, consultants, distributors, and sources familiar with the
company say that Philip Morris is preparing a methodical offensive to secure the competitive
gains it has made. It is stepping up consumer promotions such as Marlboro Country Store. It
is working on a series of new products, including a shorter cigarette, dubbed the Marlboro
Express, for time-pressed smokers. And observers also expect Philip Morris, which raised its
cigarette prices by 4 per pack in November, to continue nudging up prices.
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If Philip Morris can pull it off, Marlboro's managers will have proven that they can keep their
brand strong--and begin to command premium prices once again--even in an era when
consumer loyalty is waning. "I would not want to gloss over the degree of pain that it has
taken to get here," says Marc Cohen, a tobacco analyst at Goldman, Sachs & Co. "But I think
we're at a stage where Philip Morris can begin to build its brands again."
The architect of the plan is James J. Morgan, who took over as senior vice-president for
marketing at Philip Morris USA in April after a three-year stint as vice-president for
marketing planning at the parent company. A strong performance could catapult Morgan into
position to succeed William I. Campbell as chief executive of Philip Morris USA. "From what
we hear, Jim Morgan is really calling the shots over there," says Gary Black, a tobacco
analyst at Sanford C. Bernstein & Co.
He'll have to make those shots count, because he's fighting with less ammo. Thanks to the
earnings drop, Black estimates, Morgan's $1.1 billion 1994 promotional budget is $500
million lower than last year's total. The $400 million advertising budget is flat, Black says. It's
a marked change from the 1980s, when price hikes funded seemingly bottomless marketing
war chests. "Philip Morris raised prices on Marlboro twice a year for 10 years, and those easy
profits were able to mask their marketing inefficiencies," says Murray Hillman, president of
the Strategy Workshop, a New York consulting firm.
A lot is riding on Marlboro's ability to do more with less. The brand accounted for 60% of
Philip Morris USA's sales and 75% of its operating income in 1993. Largely because of
Marlboro Friday, analysts estimate the parent company's worldwide operating income slipped
to $9.3 billion in 1993 from $11 billion in 1992. In November, Philip Morris Cos. announced
plans to eliminate 8% of its work force--roughly 14,000 people--close 40 plants, and take a
$457 million charge against earnings. And the pain isn't over: Domestic tobacco's operating
income may fall 31% in the first quarter of 1994, says Black. But unit volume should be up
10%, and he expects earnings to start to recover in the second quarter.
ROLL 'EM. Morgan's strategy is to win consumers' loyalty with promotions such as Country
Store while using new products to respond to the industry's new challenges. In anticipation of
the Clinton Administration's plans to raise excise taxes by up to 75 per pack in 1995, Philip
Morris has considered roll-your-own cigarettes in the U.S.--because loose tobacco and rolling
93
paper are taxed at a lower rate than cigarettes. Philip Morris already markets such a product in
Germany. It also has studied selling cigarettes loose in a carton, which could cut the price of a
carton by roughly 60 .
Marlboro Express, the shorter smoke, would be about 15 millimeters shorter than a
conventional 85-millimeter-long cigarette. A Philip Morris insider says the company has been
considering this demi-cigarette as an option for people who must take quick smoking breaks
while at work. The idea is to reduce the size of the cigarette but deliver the same amount of
nicotine and tar. "Express is supposed to be a fast smoke so you can get a quick fix," says Rob
Huberman, general manager at Starkman Distributors in Atlantic City, N.J.
Philip Morris won't comment on the status of Express, but an executive familiar with the
project says advertising for Express has been created. One ad depicts a horse running across
the plains, conjuring up the Pony Express. Will Express make it to market? It's not a sure
thing. Launching a new product could interfere with the existing Marlboro line's momentum.
Still, "the advertising means it's a high priority," says the executive. Consultants believe
smokers would be receptive. "How many times have I seen people in their office lobbies
exhausting their cardiovascular systems trying to down a cigarette between breaks?" asks
Jeffrey Hill, a managing director at Meridian Consulting Group in Westport, Conn.
Just as Express would offer smokers the same nicotine fix in a smaller package, Marlboro's
brand managers are viewing promotions as a way to get more bang from a smaller marketing
budget. Country Store is slated to replace the Marlboro Adventure Team, which began in
October, 1992, and ends in February. Adventure Team, a $200 million direct-mail and ad
effort, worked much like a catalog: Smokers saved up empty Marlboro packs, sent them to
Philip Morris, and received free merchandise from a Marlboro catalog. For 130 packs, for
instance, smokers could get a Weber charcoal grill. The program gave Philip Morris a data
base of more than 2 million smokers.
Marlboro isn't the only smoke to benefit from Philip Morris' faith in premium brands. More
advertising and promotions are also expected for Virginia Slims at the expense of Basic,
Philip Morris' high-riding discount cigarette. Much of Basic's $10 million ad budget will be
shifted to Virginia Slims, says one insider. The reasoning: Premium-priced cigarettes, which
start at $1.90 per pack, are three times as profitable as discount smokes, at around $1.35.
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CAREER MOVES. In another move to shift smokers into premium-priced cigarettes, Philip
Morris and R.J. Reynolds Tobacco Co. this month cut in half the 60 per carton they give
tobacco wholesalers to push discount brands. And smokers barely seemed to notice when
Philip Morris and its rivals raised prices by 4 per pack in November. A year ago, premium-
priced cigarettes accounted for 61% of the domestic market; Black expects that figure to stand
at 66% by the end of the first quarter. Analysts and tobacco distributors believe another price
hike is imminent. That would bolster Philip Morris' earnings. The trick is to raise prices
without undermining the company's efforts to position its cigarettes as good value--and
without triggering a price war.
Morgan's career could depend on the outcome. At Philip Morris' Dec. 16 holiday party at New
York's Metropolitan Museum of Art, Michael H. Miles, Philip Morris' somber CEO, milled
around, chatting amiably about the company's tobacco business. "He's normally not very
personable," says one partygoer. "But he was very congenial, telling people how happy he
was with Marlboro's increased share in convenience stores. It was his way of saying that even
though he's a food guy, he's watching tobacco." It's a good bet Miles is watching Morgan
pretty carefully, too.
REIGNITING MARLBORO
PRICING Philip Morris uses price as an aggressive marketing tactic. Last spring's 40 -per-
pack cut grabbed consumers' attention, narrowed the gap with discount brands, and squeezed
rivals. Step Two: The company is expected to nudge prices back up quietly this spring.
PROMOTION Relying less on broadbrush image ads. "Continuity" programs such as the
Marlboro Adventure Team and the upcoming Country Store campaign--with their offers of
Marlboro merchandise--build consumer loyalty and data bases.
NEW PRODUCTS The shorter Express, aimed at the time-pressed and price-conscious, is
being considered. Other options: cartons of loose cigarettes and roll-your-own smokes.
ARTICLE 4
Parade Magazine:
How Subliminal Advertising Works
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By Martin Lindstrom
Publication Date: 4th of January, 2009
"Make it bigger," the executive suggested as I scrambled to sign off on an ad on behalf of a
major fashion brand. I wasn't the slightest bit surprised. For as long as I can remember, the
size and placement of a product's logo has been the holiest grail of branding.
But considering that by retirement age the average American has watched roughly 2 million
TV commercials (and no doubt been exposed to an equivalent number of billboard ads), has
the logo overstayed its welcome? In a multimillion-dollar global neuro-marketing study
dubbed Project Buyology, I decided to peer inside consumers' brains to find out.
Over the years I've been perplexed by the fact that despite worldwide tobacco-advertising
bans and astronomical government investment in anti-smoking initiatives, global consumers
continue to inhale 5,765 billion cigarettes a year--and that's not even including the huge duty-
free or international black market trades.
The World Bank projects that the number of tobacco users is only going to shoot up further--
from a current level of 1.4 billion smokers to roughly 1.6 billion by 2025. Four-year-old kids
know about the health dangers of smoking; so why, pray tell, do brands like Marlboro and
Camel still rank as among the most powerful in the world?
If experts generally agree that 85% of everything we do takes place in our subconscious
minds, it seemed only fitting to target the human brain. Project Buyology, the largest project
of its kind, enlisted roughly 2,000 volunteers worldwide, who agreed to submit themselves to
functional magnetic resonance imaging (fMRI), a type of brain scan, while viewing various
cigarette-marketing related imagery.
Over the years, I've turned down numerous entreaties from tobacco companies to work for
their cause (if you want to call killing people a cause). For ethical reasons, I've always said
no. But that hasn't kept me from distantly--and, admittedly, perversely--admiring these
companies' tricks and strategies.
My question was this: Can the desire to smoke be triggered by images merely associated with
a brand: images of a camel, a windswept desert, a rugged-looking cowboy or Marlboro's well-
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known sponsorship of the European Formula One racing circuit, which has forged an
inextricable link between smoking and the company's bright red Ferraris? Do smokers even
need to process the logos "Marlboro" or "Camel" for the craving spots in their brains to
become activated?
Over a two-month period, Project Buyology exposed both social and long-time smokers, as
well as non-smokers, to a raft of suggestive images as the fMRI painstakingly scanned their
brains.
First, both groups were shown subliminal images that had no overt connection to cigarette
brands--those he-man cowboys, sunsets, camels and deserts. Next, they were shown explicit
cigarette advertising images including the Marlboro Man and Joe Camel hunched over his
motorcycle, as well as the Marlboro and Camel logos. Our goal was to determine if the
subliminal images would generate similar cravings to those generated both by the logos and
by the clearly marked Marlboro and Camel packs.
Not surprisingly, as they viewed the actual cigarette packs, the MRI scans revealed a
pronounced response in our smokers' nucleus accumbens, a small region in the brain
associated with reward, craving and addiction. Far more intriguing was that when the smokers
were briefly exposed to the subliminal imagery, their nucleus accumbens lit up even more
pronouncedly in the same regions they had when they viewed the explicit images of the packs
and logos.
In other words, the iconic imagery merely associated with Camels and Marlboros, such as the
Ferrari and the Western sunset, brought on a higher craving activation than either the logos or
the actual pictures on the cigarette packs themselves.
But wait a second--why? Well, whether it's due to brand boredom, increased media
sophistication or consumers' by-now cast-iron defense mechanisms, when we're exposed to
logos, our guards go up. We know we're being manipulated, and we'll do anything in our
power to prevent that logo from winning.
So in practical terms, what does our research experiment portend? Think about this: Nearly a
century ago, when the first-ever Coca-Cola bottle was in the planning stages, the designer
received his marching orders. Company executives wanted him to develop a bottle so
distinctive that if you smashed it against a wall, you'd still be able to recognize the pieces as
part of a Coke bottle. The designer did what he was told, and to this day it works.
97
For obvious reasons, I call this philosophy "Smash Your Brand." Even back in 1915, Coke's
aim was to replace its logo with a "smashable" component. Today, "smashable" could mean
anything from a color, a shape, a sound, a fragrance, a design or any other indirect signal that
tells a subtle, suggestive and logo-free story.
See that new iPod Touch over there? Where, on its front, is the word "Apple" spelled out?
Nowhere. Did you happen to catch Disney's Pixar's latest flick, Wall-E? Did the white,
gleaming female robot heroine put you in mind of anything in particular (such as any one of
several Apple products)? That familiar sloping roof, that robin's-egg-blue box--are you
thinking, as I am, of McDonald's and Tiffany?
Instead of flashing another logo, or bringing out yet another forgettable movie product
placement--all of which will only induce consumers to respond defensively and critically--in
the future the simple power of suggestion will entice customers to accompany advertisers on a
journey, at the same time engaging their subconscious minds.
No, the logo isn't dead yet, but it's on life support. My prediction? That the battle for
consumer loyalty and cash will no longer take place in our conscious minds. The ultimate
decision-making process of whether we buy something will happen at the deepest levels in the
human brain. Until recently, these places were out of reach. But thanks to the unlikely pairing
of neuroscience and marketing, we're beginning to understand the secrets of our own human
Buyology.
ARTICLE 5
Orwellian Dream Come True: A Badge That Pinpoints You
By LEONARD SLOANE
Published: Saturday, September 12, 1992
Is Big Brother your boss?
98
Another tool that lets "them" check up on "us" -- where we are and with whom we are -- is on
the way. It is the active badge, a small clip-on microcomputer, about the size of an employee
I.D. card, that transmits signals to a central system. As long as you wear the badge, the system
can track your movements around an office building or even a larger area.
"When different people need to be found, I can ring directly to where they are," said Roy
Want, who invented the active badge while at the Olivetti Research Laboratory in Cambridge,
England, and who is now a member of the research staff at the Xerox Research Center in Palo
Alto, Calif. "It's in your interest as a professional to stay in touch with your colleagues."
Andy Harter, a research engineer at the Olivetti lab, added: "I get my communications so
much faster when I carry the badge. And it's all completely hands-free."
For many people, however, privacy issues overwhelm any technological virtues of active
badges. They see the badges as an intrusion into the lives of employees, eroding workplace
privacy. And they compare the badges with the already widely used electronic monitoring
devices that can quantify the number of keystrokes on a terminal, peek at voice and computer
mail messages or listen to employees transact business on the phone.
"George Orwell would have been pleased," said Donald A. Norman, chairman of the
cognitive science department at the University of California at San Diego. "This technology
makes snooping easy. Especially intrusive technology should be under the control of the
person using it, not of management."
Evan Hendricks, editor of the Privacy Times newsletter, said: "There's a lot of surveillance in
the workplace these days. They could say you were in the men's room or the cafeteria too long
or that you were sitting in so-and-so's office too long. It has the potential of changing the
modern office into an electronic sweatshop."
Mr. Harter of Olivetti said that although active badges were still being tested, there were plans
to make them available commercially starting next year.
The target market includes not only office workers who are away from their desks, but also
doctors and patients in hospitals or nursing homes, lawyers and laboratory scientists.
In addition to being worn by people, badges can be attached to objects, like luggage in
airports or raw materials in factories, to track their progress.
99
Olivetti officials say active badges were initially developed about four years ago as a means
of making telephone communication more effective. Scientists at the laboratory found that
with a badge emitting an identification code every 15 seconds -- in the form of an infrared
beam --to a network of wall-mounted sensors around a building, information about the
location of the person wearing it could be constantly updated. The badge functions the same
way that a remote control device does in transmitting a code to a television set.
The second generation of active badges is now being tested, with researchers in England and
the United States wearing them for the purpose. This version, called the authenticated badge,
is designed to assure that the signal is authentic, to prevent tampering with the system.
Currently, the information provided by active badges worn at a particular site is shown on a
central computer screen in the form of five columns in a table: the badge wearer's name, the
telephone extension nearest the present position, the room where the person is, the number of
other badge-wearing people in the room and the approximate length of time the badge wearer
has been at that location.
The data from the badges can also be displayed on a screen showing a model of an entire
office floor, thus visually indicating where each badge-wearer is in relation to everyone else.
Anyone with access to the computer screen can then quickly get in touch with the badge
wearer by telephone or electronically.
"In the environment in which we work, people are not always in their offices," said Veronica
G. Falcao, who helped to develop active badge software while employed by Olivetti in the
United States. "Active badges are the most useful thing to round people up for a meeting, to
go out to lunch or celebrate someone's birthday."
Murray Mazer, a member of the research staff at the Digital Equipment Corporation, which
helps to finance the Olivetti laboratory in England, said: "I view this technology as interesting
in itself. It allows the acquisition of dynamic location information."
Other computer experts see active badges in a far different light, however. "We're saying that
they are a form of computer monitoring," said Gary Chapman, director of the Cambridge,
Mass., office of the Computer Professionals for Social Responsibility, an organization that
has studied electronic monitoring. "They can keep a diary of how long you've been talking to
Joe Blow."
100
And legislation pending in both houses of Congress would require that employees be given
notice of the forms and frequency of monitoring being used by an employer. "There's such a
strong potential for abuse because employers are allowed to spy at will on their employees,"
said one Congressional staff member who requested anonymity.
Professor Norman, who is writing a book called "Things That Make Us Smart," summed up
that view succinctly: "Active badges are a really excellent example of the horrible trade-off
technology gives us. This technology makes snooping easy, and what technology makes easy,
we tend to do."
ARTICLE 6
The Porter’s value chain model
The Value Chain framework of Michael Porter is a model that helps to analyze specific
activities through which firms can create value and competitive advantage.
Inbound Logistics
Includes receiving, storing, inventory control, transportation scheduling.
Operations
Includes machining, packaging, assembly, equipment maintenance, testing and all other
value-creating activities that transform the inputs into the final product.
101
Outbound Logistics
The activities required to get the finished product to the customers: warehousing, order
fulfillment, transportation, distribution management.
Value Chain model of Michael Porter: Marketing and Sales
The activities associated with getting buyers to purchase the product including channel
selection, advertising, promotion, selling, pricing, retail management, etc.
Service
The activities that maintain and enhance the product's value, including customer support,
repair services, installation, training, spare parts management, upgrading, etc.
Procurement
Procurement of raw materials, servicing, spare parts, buildings, machines, etc.
Technology Development
Includes technology development to support the value chain activities, such as Research and
Development, Process automation, design, redesign.
Value Chain model of Michael Porter: Human Resource Management
The activities associated with recruiting, development (education), retention and
compensation of employees and managers.
Firm Infrastructure
Includes general management, planning management, legal, finance, accounting, public
affairs, quality management, etc.
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INTERESTING BILLBOARDS
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104
AUTHORSHIP STATEMENT
“I truthfully declare that the entire content of this diploma paper is my own copyrighted work which I produced independently with the aid of listed/cited bibliography and sources, under the guidance of my mentor.” Location and date: Daniela Milosheska
22.05.2009 (Signature)