detecon opinion paper international brand positioning and insight from brain research

8/8/2019 Detecon Opinion Paper International Brand Positioning and Insight from Brain Research

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InternationalBrand Positioning

and Insight from Brain Research

2009 / 08


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International Brand Positioning and Insights from Brain Research

Opinion Paper 1 Detecon International GmbH

Table of Contents

1 Executive Summary.............................................................................................22 Power of the Brands from Errors in Perception? .............................................. 33 Importance of Brands on Technology Markets....................................................44 Internationalization and Export of Brands............................................................65 The Non-Rationality of the Decision and the Dominance of the Implicit..............96 Understanding the Implicit System Levels and Processes.............................137 Differing Evaluations and Decisions According to Culture and Age .................. 188 Case Study: Export of an Emotional Positioning............................................... 209 Recommended Reading....................................................................................2310 The Author.........................................................................................................2411 The Company....................................................................................................25


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1 Executive Summary

Are buying decisions made consciously and rationally, optimizing the benefits realized by the

purchaser? No in actual fact, the rational actor who decides consciously and economically

is a myth. We rarely make our decisions on the basis of strictly rational deliberation. 95% ofour decisions are made at the sub-conscious level, catalyzed and steered by our emotions.

Evolution has allowed itself the luxury of control by the conscious mind for only a few

decisions.

What influence do brands have on buying decisions? If an established brand is available,

brain activity for making a rational decision is restricted even further because the decision-

maker has already found a "good" solution. Complex buying decisions in particular are made

in the sub-conscious because the capacity of the conscious mind for processing information

is limited.

The telecommunications market is characterized by rapid transformation and a large number

of complex products of similar quality, often requiring explanation. The complexity andrelatively high price of the products heighten the significance of the corporate brand for the

buying decision which is made primarily at the sub-conscious level. The corporate brand

anchors the company in this changeable market it stands for stability and consistency.

A global corporate brand must offer consistent recognition value across national borders. In

other words, the brand positioning must be consistent over time, geographic regions, and

brand expansions during the internationalization process. The brand must not "feel" different

in the various countries; it must be positioned consistently when incorporating emotional

values, especially with respect to the sub-conscious decision-making system.

The article describes the emotional value positioning of the brand of one of theinternationally leading mobile network companies in its national companies. Over the course

of time, these companies before their acquisition had established differing emotional

focal points for their brands. But a mishmash of value positions in the different national

companies must not be allowed to continue under an international brand.

Taking as his example the market entry of an internationally successful provider into

emerging markets, the author analyzes the difficult brand positioning of a newcomer while

facing the competition. Findings from neurology offer valuable information. The values of the

international brand must promise the national consumers a better reward than the brands of

the competitors do.


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2 Power of the Brands from Errors in Perception?

Human perception does not provide an exact picture of reality. Incoming stimuli are

perceived and immediately interpreted in their perception. Although this lightens the

cognitive burden, it implicitly allows room for errors in interpretation. In fact, the perception ofa stimulus is dependent on the context in which it is received. The perceived attributes of a

stimulus are a mixture of the actual attributes of the stimulus and the past and

simultaneously perceived other stimuli.

There are simple experiments which reveal the interpretation errors in perception. The

results of such an experiment were used by Daniel Kahneman in his Nobel Prize speech in

2002. He demonstrated the limited rationality of human judgment and decision-making.

Figure 1 shows the effect of framing on the left-hand side. Two small, gray squares, each of

them embedded in larger squares of a different color, are shown here.

Source: Daniel Kahneman, Nobel Prize Speech 2002, Detecon 2008

Optical Illusion Used in the NobelPrize Speech by Daniel Kahneman in

2002

Framing Illustrated by the Example ofTwo Mobile Network Operators in

Great Britain

Pay as you goPay as you go Pay as you goPay as you go

Figure 1: The Framing Effect

The graphic causes the viewer to make two errors in his perception: the inner squares

appear to lie in front of the large squares, and they appear to be different shades of gray.

Neither of these perceptions is correct! The color of the inner squares is the same, and the

squares are not raised. Our perception, our brain interprets these graphics on the basis of

our experience and attributes meanings and features to the inner squares that they do not

possess at all. The background in this case, the large squares really does influence our

perception of the figures in the center. The background radiates effects onto the figure, the

inner square.

This figure-background principle serves as an analogy to the effect of brands. Brands havethe effect of a background. A corporate brand in the background radiates an effect onto the

products offered by this firm. A product brand influences the perception of the product

properties.

The right-hand side of Figure 1 illustrates the interpretive perception of products. A fictitious

mobile network product line in Great Britain, easymobile, is shown on the far right. People

who know the British market will attribute a higher value to the Vodafone product than to the

product of the same name from easymobile, even though the product names are identical!

And yet the person who knows the brand prefers the Vodafone product, provided the price is

the same. This decision is a consequence of the radiant effect of the corporate brand in the

background.


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3 Importance of Brands on Technology Markets

Fa soap, Palmolive dishwashing liquid, or Kellogg's Corn Flakes are products which have

been available in the categories soap, dishwashing liquid, or corn flakes for decades.

Product categories for consumer goods develop very slowly; the creation of new categoriesis rare. That is why brands in this sector are derived above all from product categories.

Proctor & Gamble, for example, one of the most successful consumer goods companies in

the world, prefers a "house of brands" brand architecture. The spotlight is clearly on product

brands such as Pampers, Ariel, Duracell, Head & Shoulders, or Gillette. But people rarely

know that these brands all belong to Proctor & Gamble. The corporate brand is relatively

unimportant for the purchase.

This permanence of product categories and of the related quality products does not exist on

technology markets, which are characterized by rapid transformation and progress. Product

categories come and go, frequently within a period of just a few years. And even if the

categories remain relatively stable, e.g., broadband Internet access, the products belonging

to the category quickly become obsolete. Only a few years ago, access of the thirdgeneration in mobile networks was still regarded as the non plus ultra; today, the marketing

of products trumpets the advantages of 3.5G or 4G almost exclusively.

The corporate brand dominates telecommunications

The rapid transformation and continuous innovation on technology markets lead to

enormous importance of the corporate brand for technology companies. "Branded house"

brand architectures have become established on these markets. The corporate brand

dominates. Virtually no one has any associations with the prominent product brands "Callya",

"Pay as you talk anynet", "Best for texter", or "Best for talker" apart from the corporate brand

Vodafone. So it is not surprising to find that many of the most valuable corporate brands inthe world are those of technology companies.

The corporate brand anchors the company on technology markets it stands for stability and

consistency. It represents the important umbrella brand, and its constant, representative

brand value puts its stamp on the company products. More dynamic sub-brands oriented to

transformation and change are developed at lower levels of the brand hierarchy. They

provide the ability to deal with leaps in technology, changes in customer behavior, and the

addressing of selected customer segments. The essential point is that the positioning of the

umbrella brand opens the way to flexibility in the sub-brand positioning. Otherwise, an

umbrella brand will not be able to host various sub-brands at the same time. Moreover, the

umbrella brand must remain sharp enough in its focus to guarantee sustained differentiation

from the competition.

No unequivocal determination of brand value

The value of a corporate brand is inherent in its commercial benefits. The "background" of

the brand alone makes it possible for the company to charge higher prices for its products in

comparison with a no-brand provider. The brand can also be regarded as an intangible asset

in a company's balance sheet. Although accounting principles do not allow a corporate brand

which has grown organically to be disclosed as an asset, it is permitted to show the

intangible value of an acquired company's brands.


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There are many different ways to determine the value of a corporate brand. They are just as

varied as the differences in their results.1

The results of the company Interbrand are often

used for the evaluation of global brands. Among the ten most valuable brands shown in its

study "Best Global Brands 2008", six of them are technology brands: IBM, Microsoft, GE,Nokia, Intel, and Google. The corporate brand IBM is said to have a value of $59 billion,

corresponding to about 50% of the IBM market capitalization in the middle of 2009.

If you change from one brand evaluation model to another, you may find substantial

differences in the corporate brand value. According to Millward Brown Optimor and its study

"Brandz Top 100 Most Powerful Brands" from 2007, IBM, for example, had a brand value of

$33 billion. The difference in brand value between this and the Interbrand result is a hefty

$26 billion. These differences as a consequence of the different models must be taken into

account when interpreting the results. Cross-model interpretations must generally be

regarded with more than just a grain of salt.

Brands of telecommunications operators among the most valuable in the world

Is it surprising that not one telecommunications company is to be found among the top 10

brands worldwide in the Interbrand study? In terms of brand value at any rate! Interbrand

introduced a "global criterion" during its preliminary brand selection: at least 33% of the

company's revenues must be generated outside of the home market. Not a single

telecommunications company exceeded this threshold value.

Brand values of mobile networks providers can be found in other studies. Millward Brown

Optimor has calculated the following brand values:

China Mobile $41 billion

Vodafone $21 billion

NTT Docomo $19 billion

Verizon Wireless $16 billion

Orange $10 billion

TIM $8.5 billion

Movistar $4.6 billion

In Russia, Interbrand evaluated Beeline at $5.5 billion in 2006 and MTS at $4.8 billion,

making the two brands of these mobile network operators the most valuable brands of any

kind in Russia.

1 Several hundred different evaluation models are mentioned, ranging from strictly finance-oriented approaches to

behavior-oriented and complex combination models. The descent into a description of the methods employed in

these models is not necessary for the purposes of this article.


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4 Internationalization and Export of Brands

The internationalization of a telecommunications operator generally leads to the

internationalization of its brands. Vodafone, T-Mobile, Orange, or Telefnica's mobile

network spin-off movistar are well-known examples. After a number of acquisitions, Zainholds management control over mobile network providers in 21 countries. The brand Zain

was introduced across the board in all of the countries in 2008. Even strong corporate

brands such as Celtel which had been absorbed disappeared in the course of the acquisition

and restructuring. Why is that? The commercial benefits of a brand are decisive. If the

"global value" of the corporate brand is greater than the sum of the benefits from various

corporate brands at the national level, the internationalization of the corporate brand is called

for. Having a global brand can make it possible to realize synergies. Effects of scale result in

cost reductions, e.g., in the use of media and brand production. Besides the potential for cost

savings in various areas, increased demand from the use of the global brand causes a

relevant rise in sales. Another major factor can be seen in the discounting synergies

resulting from the reduction of the business risk when a globally strong brand is used.

Trend to using corporate brands internationally

After decades of slumber in the monopolistic structures of state-owned companies, the

activities of international telecommunications providers today are heavily influenced by

international capital markets, and the significance of financial parameters such as a high

brand value has risen enormously.

= 0%


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Source: Burmann und Meffert 2005

BrandCommunica-

tion

Vision

Brand Identity

Competences Origin

Personality Values

Performance

Brand Benefit Promise

Dos and don'ts for the internationalization of brands

Important fundamental principles of global brand management have been distilled from the

experience gained during the internationalization of brands. A global corporate brand must

offer internationally consistent recognition value. The brand must not "feel" different in the

various countries. During the internationalization process, the brand positioning must be

consistent over time, geographic regions, and brand expansions. The positioning can be

localized for the particular market, but the global brand message must remain credible.

Consumers expect more from a global brand than from a national brand:

Higher quality in the products. If the consumers do not determine any

difference to the national brand, the brand will not be successful;

Leadership in innovation. Global brands must be the innovation leaders in the

categories they occupy: first and best on the market.

Price strategies are best drawn up locally; after all, the price-benefit advantage over direct

competitors must be clearly discernible. In summary, the brand management must bestandardized globally to achieve consistency and credibility. At the same time, it must be

supported by localization of the pricing, in sales, and the integrated marketing approach so

that the required flexibility in competition is assured.

Brand identity and the export of its elements

What elements of a corporate brand must be left untouched when it is "exported" to new

markets? And in what areas can and must fine adjustments be made so that the consistency

of the brand positioning will not be questioned by consumers?

Let us look at the market

entry of an operator into amarket on another

continent as an example.

The brand promises the

customer a selected

target position in the

market context. That is

why the brand identity is

communicated to the

consumers.

Figure 3: Brand Identity Promise of Brand Benefit


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What makes up a brand identity of this kind? In the related literature, a distinction is made

among a number of dimensions:

Brand origin: "Where does the company come from?" The regional, cultural, and

institutional brand origin and company history are illuminated, creating credibility and

authenticity. A reference to good regional performance such as the success story of

Dubai as the showcase for successful Arabic economic policy boosts the standing of an

Arabian brand. However, cultural origin frequently proves to be ambivalent because

there are few role model cultures which are perceived exclusively in positive terms.

Religions differ from one another, and in developing countries in particular, tribal

affiliations shape daily life. So the market entry of an Arabian company in an African

country was welcomed by the Islamic part of the population, while the Christian

participants in discussion groups expressed skepticism and mistrust at the very mention

of the Arabian name of the company.

Brand management: "In what areas is the company competent?" Expectations for an

international brand are high. In particular, successes which are evidence of the

company's capabilities as a high-quality service provider are used in the brand

communication.

Brand vision: It describes the long-term development of a brand. Innovation and

technological leadership are usually highlighted. This is appropriate for the export of the

brand, especially since the competition on emerging markets frequently struggles with

quality problems.

Brand personality: "If the company were a person, how could it be described?" People

have a tendency to anthropomorphize inanimate objects, leading to a simplification of

interaction. The image campaigns for corporate brands in particular realize this personal

representation. Certain character traits often used can be transferred to the international

level: calm, firm, likable, and successful are pleasant traits of the representative figures.

Such traits can often be used across cultural boundaries. But the advertising materialwhich is used generally changes fundamentally owing to differences in clothing, skin

color, and appearance. The thoughtless use of picture material in other cultures and

regions can be disturbing and create distance.

Brand performance describes the functional customer benefits of the products offered on

the market. If an international provider with high ambitions enters a mobile network

market with a low-quality product for the poorer classes of the society, this will

undoubtedly undermine his global brand positioning.

Brand values are the emotional components of the brand identity. The latest findings

from psychology and brain research prove that they are of great, perhaps even

dominant, importance for the buying decision. Just like decisions made for non-rational

reasons, interpreting human perception results from emotionally based processes in the

brain. That is why a neural evaluation system based on emotions is the key to

understanding the way a brand functions and what power it has.

Important rules for brand management will be derived from this understanding in the

following chapters.


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5 The Non-Rationality of the Decision and theDominance of the Implicit

Is there a relationship between emotions and buying behavior? Buying decisions are made

consciously and rationally, optimizing the benefits realized by the purchaser aren't they?

No; in actual fact, the rational actor making conscious, economic decisions is nothing more

than a unreliable simplification by economists for the purposes of their work. During the last

two decades, a number of different experiments have thrown more light on the way the

decision-making process works. People tend to avoid losses, risks, and uncertainties to a

degree which is not rationally explainable. They also tend to make decisions according to the

framework of the particular situation the concept of framing.2

The discovery of just how much people tend to be fair and reject unfairness is

groundbreaking in this respect. Experiments have been conducted in countries with a low

per capita income. People are willing to do without a substantial amount of money if, by

doing so, they can prevent an unknown and unfair opponent from receiving a larger sum of

money. If the opponent were obviously a computer, they would accept the money even if thismeant that the computer would win. This is completely illogical in the sense of optimization of

benefits by an economic actor.

The economic actor who decides rationally is a myth

For a long time the observation of this "anomaly" was not enough to replace the image of the

rational agent. It was not until insights from behavioral research and into the actual

processes taking place in the brain became available that the necessary foundation for the

latest research and revolutionary postulates was laid. We rarely make our decisions on the

basis of rational deliberation. The reality is that we have brain structures in which catalyzed

and steered by emotions decisions are made without us consciously noticing.

How can such a decision-making process be described if not as rational? What are the

driving factors, and what predictions can be made? Putting it differently, how can this new

knowledge be utilized to predict and influence buying decisions through brand management?

The hypothesis, based on empirical facts derived from behavioral experiments, has been put

forward that there are at least two different systems2

in the human brain which play a role in

making decisions: the implicit and the explicit system.

Two systems in the brain making decisions: implicit and explicit

The explicit system is the controlling consciousness known to us which rationally on thebasis of analytical capabilities makes decisions. So what is the implicit system which

makes decisions? It is a system which allows decision-making processes to run

automatically in our brains, faster than any conscious deliberations. We human beings do

not have any conscious access to these processes and therefore do not have any control

over them.

2Kahneman calls them System 1 and System 2.


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This implicit system has developed over the course of our evolution and is also found in

animals. It became a part of our being because it enabled living creatures to make decisions

vital for survival rapidly and to solve problems quickly. It was not important during this

evolutionary development to implement logic in its pure form or to follow normative axioms.

So when a person makes a decision without the participation of his or her controlling, rational

consciousness, reason in its pure form is not reflected in that person's behavior. That is whywe find inconsistencies between empirically observed decisions and predictions made on the

basis of an assumption that people act economically and reasonably.

We make 95% of our decisions without conscious thought

How does this implicit system work? Using neurological technologies such as functional

magnetic resonance imaging or positron emission tomography, researchers have succeeded

in revealing more of the secrets of the "black box" known as the human brain. The implicit

system our autopilot functions through emotions. Emotions are specific, consistent

conditions in the brain. Feelings are the personal perception of these emotions. But not all

emotions induce feelings. Many emotions remain below the threshold of perception. In fact,

the greater part of the implicit control system works below the perception level, as described

above. Studies show that 95% of our decisions are made sub-consciously, i.e., by the

implicit system.

Why has evolution allowed itself the luxury of accepting control by the conscious mind in only

a few cases? The answer is simple: it is above all an issue of energy efficiency and capacity.

The conscious mind has a capacity problem when processing information. Every second, the

brain receives 10 million bits from the eye, 1 million bits from the ear, 100,000 bits from the

olfactory organ, and another 100,000 bits from the senses of touch and taste combined. So

in total a person perceives about 11 million bits of information per second. The estimated

capacity for the conscious mind for information processing is 40 bits per second. In other

words, 10,999,960 bits per second must be processed, filtered, then sorted and evaluatedaccording to relevance in the brain without "bothering" the consciousness. These stimuli

which come in lead to a large number of sub-conscious decisions, and only 0.0004% of the

information is actually "escalated up" owing to its assessed importance to the

consciousness.

The conscious mind has limited capacity, is slow, expensive, and unique

Yet the consciousness gobbles up enormous amounts of energy for this low capacity of

information processing.3

From an energy technology viewpoint, it is efficient to ask the

expensive consultant "consciousness" for advice only in selected situations and otherwise to

be sparing in its use. Nevertheless, the development of the consciousness has paid for itself

for human beings from an evolutionary viewpoint.

3The brain makes up about 2% of our body weight and consumes about 5% of the body's own energy when in

"automatic mode", i.e., when the consciousness is not being used. But if a person is thinking consciously and

intensively about something, the brain suddenly consumes 20% of the body's energy. In terms of energy

management, this is a catastrophe for an organism. This increased expenditure of energy must be compensated

by a corresponding increase in the intake of food, and food is a rare resource. So the consciousness plays the

role of a very expensive, high-class consultant for the body. When it is utilized, asked for advice, the answer is

usually helpful, but the costs of its engagement are also a burden.


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Ultimately, this is what has made it the most powerful, dominating living being on the planet.

But is also true that the majority of decisions are made at "low cost" from an energy

technology view without the consciousness.

Figure 4 depicts the decision-making process from perception to information processing. The

pyramid shape has been selected to illustrate roughly the large number of decisions made

sub-consciously in contrast to the low number of decisions made consciously.

Information Processing/Decision-making Strategy

5% made by the consciousness

Perception

Decisions

Conscious Feelings

Analytical

Evaluation

Emotions/Sub-consciousFeelings

Stimuli

11 million bits/s

40 bit/s

95% ofdecisions

are made by

the implicitsystem

Extrinsic

Factors

(e.g., Situation)

Intrinsic

Factors

(e.g., Mood)

5% made by the consciousness

Perception

Decisions

Conscious Feelings

Analytical

Evaluation

Emotions/Sub-consciousFeelings

Stimuli

11 million bits/s

40 bit/s

95% ofdecisions

are made by

the implicitsystem

Extrinsic

Factors

(e.g., Situation)

Intrinsic

Factors

(e.g., Mood)

Source: Detecon analagous to Plassmann, Kenning: "How Brands Twist Heart and Mind"

Figure 4: Perception, Information Processing, and Decision-Making

What influence do brands have on the decision-making process? Subjectively strong brands

relieve the burden on the consciousness when decisions are being made. The brain activity

of rational decision-making is restricted if a "good" solution has already been found. The

more strongly a brand is perceived subjectively, the more the implicit system takes over the

decision.

Subjectively strong brands lighten the load on our consciousness

In 2004, a distinct negative correlation between familiarity with a brand and the time required

for a buying decision was proved. The more familiar a brand is, the more quickly the buying

decision was made. This observation is also an indication of how the consciousness is

relieved of unnecessary burdens because sub-conscious processes run substantially faster.

A surprising finding was that the response time became longer the simpler the buying

decision was. The simplicity of a buying decision is a function of the number of product

properties which are to be compared. Why should the consciousness be consulted more

frequently when the comparison involves fewer product properties?


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It appears that the limited capacity of the conscious mind for information processing means

that complex decisions are increasingly left up to the implicit system. Research shows that

the more people are under time pressure, overwhelmed by the information, have little

interest, or the more uncertain they are about a decision, the more the implicit system takes

charge. Psychology teaches that a maximum of five bits of information can be processed

simultaneously by the consciousness. This makes it especially suitable for making simpledecisions for which time is not critical and in which the person is interested.

Stress during the purchase weakens the role of the consciousness in making the

decision

What does all of this mean when transferred to technology markets? The markets are

characterized by rapid transformation and by a large number of complex products, requiring

explanation in part, of similar quality. Moreover, the high acquisition prices of products such

as cell phones and the related cards mean that they have the nature of investment goods.

They are expensive in comparison with other products such as food or cleaning agents

which are in demand. The high price puts stress on people because of the financial

significance of the decision. Extrapolating from the comments above, we can expect the

implicit system to become more deeply involved in such buying decisions than would be the

case for consumables with simpler products. So the owner of a strong brand may well find it

to be strategically sensible to step away from the comparability of the products. Greater

complexity of the decision weakens the position of the consciousness and strengthens the

brand as a decision criterion during selection through the implicit system.

The results are surprising because the importance of the consciousness for us human

beings is appraised as higher. Since we subjectively experience only the tip of the iceberg

through our consciousness, namely, the explicit decision-making system, we automatically

overplay the significance of this system and, with it, the significance of conscious control and

decision-making.


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6 Understanding the Implicit System Levels andProcesses

Source: Analagous to Scheier, Held: "Was Marken erfolgreich macht", 2007

Implicit and Explicit System Iceberg Analogy

Explicit System Above theConsciousness Surface

Conscious

Implicit System Below theConsciousness Surface

Psychology

Culture

Neurology

Opinion

Reflection

Rationalization

Personality

Concept of Self

Mood

Imprints

Symbolic Meanings

Context

Brain Structures

Hormones

Neurotransmitters

Consciousness Threshold

Explicit System Above theConsciousness Surface

Conscious

Implicit System Below theConsciousness Surface

Psychology

Culture

Neurology

Opinion

Reflection

Rationalization

Personality

Concept of Self

Mood

Imprints

Symbolic Meanings

Context

Brain Structures

Hormones

Neurotransmitters

Consciousness Threshold

Figure 5: Components of the Implicit System

How does this powerful implicit system work? Understanding the way it functions opens the

doors to possible manipulation. If strong brands have the proven effect of lightening the

cortical load, how can they be placed best and structured in their significance for the implicit

system?

Figure 5 shows the essential components of the implicit system as described by

Scheier/Held. It is determined by three levels: neurology, culture, and psychology.

Everything builds on the recognition of patterns and attribution of meaning

The neurological view of the implicit system shows brain structures, hormones, and

neurotransmitters. Stimuli are perceived at the neuronal level and their meaning is

determined. When we speak of determining meaning, that first includes the recognition of

patterns. Are the perceived stimuli congruent with patterns which have previously been

recognized and stored? If the stimulus combination does not fit stored patterns, the

consciousness is called in.

If patterns, such as color, are recognized, a meaning is attributed to them neuronally. This

meaning is attributed implicitly, i.e., without conscious thought. The meanings of these

patterns are mostly established in early childhood. The particular culture is especially

important in attributing an implicit meaning to patterns. Patterns established specifically to a

culture and their meanings have been analyzed by cultural studies authorities such as

Hofstedte. Examples of such patterns include the frequently quoted symbols, rituals, and

heroes which are indications of cultural values and imprintings at a deeper level.

There are significant interpretation differences between cultures. Meanings specific to the

culture can even be attributed to colors, for example. The color red is a warning signal in theUnited States of America, while in China it stands for happiness.


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Carriers of Meaning

Symbolic

Status symbols

Persons (real or fictional)such as heroes, role models

Rituals and gestures Images

Words and foreign words

Accent and dialect

Sentences and idioms

Names

Context of the experience

Stories

Sensory

Noises

Colors

Shapes

Structure

LinguisticTemporal (contexts)

Carriers of Meaning

Symbolic

Status symbols

Persons (real or fictional)such as heroes, role models

Rituals and gestures Images

Words and foreign words

Accent and dialect

Sentences and idioms

Names

Context of the experience

Stories

Sensory

Noises

Colors

Shapes

Structure

LinguisticTemporal (contexts)

Figure 6: Carriers of Meaning

Learning meanings through personal experience and in cultures

Meanings are also learned through personal experience; after all, the Pavlov reflex is simply

the recognition of a pattern with a learned attribution of meaning and its (positive there is

something to eat) evaluation. The carriers of meaning, which are also used in brand

management, are shown in Figure 6. Besides simple sensory stimuli as in the case of the

Pavlov reflex, language, symbols, and contexts are relevant.

Scheier/Held determine: "The decoding of the entire cultural meaning compressed into one

signal takes a mere 1.7 seconds." The decoding here is a completely implicit process, that is,

one that runs automatically without any involvement of the consciousness. Reading an

advertising slogan in a picture advertisement usually takes much longer. The implicit

meaning of the picture is already known when the viewer begins to read, so the message is

understood against the background of the cultural meaning. The functional process of the

implicit system is broken down neurologically in Figure 7. Once the meaning of a pattern has

been decoded, the next step in making a decision in the implicit system is to follow up the

meaning with an evaluation. Are the pattern and its meaning positive or negative? Is it a

reward or a punishment? In terms of a brand, the question comes down to this: Is this brand

a reward for me?

A subjectively good brand is a reward for the brain

Experiments have determined a correlation between positive decisions and increased

activity in the reward centers of the brain, the same centers which become active when, for

example, a person eats a piece of chocolate. No activation of the reward centers is observed

in the case of negative decisions and negative stimuli; there may even be an activation of

pain centers such as the amygdala in the limbic system. So spending money really does

cause pain.

In the implicit system, the opportunity costs of spending money are evaluated in the

perception of pain. In the end, a buying decision in the implicit system comes down to the

question of whether the weighing of the factors shows a net balance of a reward. A brand is

effective when it promises a reward to the implicit system.


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Visual

Acoustic

Taste

Odor

Touch

Perception &Recognitionof Pattern

Interpretation& Evaluation

Effect

Pattern recognition

Comparison withprevious experience

Attribution of meaning

Examination of rewards

Decision

Attitude

Stimulus

Source: Based on Dr. Christian Scheier, Dirk Held: "Was Marken erfolgreich macht"

Figure 7: Stimulus, Perception, Interpretation, Effect

The third level of the implicit system, the psychology, is important during evaluation. The

analysis of the potential for a reward is conducted simultaneously with the evaluation of thegeneral mood. If the person is in a bad mood or if he or she is under stress, the stimulus of a

brand, for example, encounters a "negative preset" in the evaluation system. The probability

that a positive buying decision will be made under these conditions is undoubtedly lower

than in a person with a positive attitude who has already evaluated the situation itself as

rewarding.

The motive systems are the jurors in making the decision

During the subsequent evaluation to put it in simple terms various evaluation systems

are consulted, each of which can for itself produce a degree of reward or pain. There are a

number of different so-called motive systems, independent of one another, which are

consulted at the same time. Motive systems have been given this name because they havethe task of creating a specific emotional condition in the body. One example of such a motive

system is the fear-flight safety system, which we will describe below as the balance system,

analogously to literature. Over the course of evolution, this motive system, the most

important one, has developed to assure the organism's survival and health. The goal of the

system is to protect the organism from injury, risks, threats, and, in the worst case, death.

The emotional condition it seeks to bring about is security and calm. Values which are

accordingly evaluated by the balance system as positive or desirable and therefore as

rewarding are stability, safety, home, family, friendship, a feeling of security, loyalty, and

tradition.

If a German traveler arrives at her home airport in a positive mood, eagerly looking forward

to seeing her loved ones again, and she sees a Deutsche Telekom ad with the slogan,

"Home, sweet home", the following process is triggered: once the slogan has been

perceived, it is recognized as a well-known stimulus pattern.

The cultural use of the phrase in situations of returning home and relaxation after arrival are

reflected in its meaning and forwarded to the motive systems for evaluation. The balance


17/26



system will evaluate the situation, the ad, and consequently the brand associated with it as

rewarding because it addresses many of the values which are regarded as positive.

Value models generate a map of motive systems and attributed values

Stimulation Dominance

Balance

Fun Type

Curiosity

Pleasure

Ease

Tolerance

Dreaming

Poetry

Sociability

Creativity

ExtravaganceImpulsivity

Risk-willing

Courage

Justice

Fraternity Precision

Fidelity

Tradition

Thrift

Family

Freedom Fame

Status

Variety

SpontaneityIndividualism

Friendship

Openness

Flexibility

Trust

Nature

Nostalgia

Adventure Thrill

Sincerity

FunctionalityDiligence

Logic

Obedience

MoralAsceticism

Health

Power

Ambition

Quality

Reliability

Cleanness

Hygiene

DutyDiscipline

Obstinacy

Efficiency

HonourPride

Elite

Performance

Enforcement

Fight

Autonomy

Victory

Rebellion

Sensuality

Discipl

ine

Control

FantasyPleasur

e Security

Homeland

Accomplished, CapableIntelligent, Discerning

Precise, Methodical

Considerate, ThoughtfulTrustworthy, Dependable

Quiet, Cautious

Carefree, Fun-lovingCheerful, Lively

Free-spirited, Outgoing

Active, EnergeticAdventurous, Risk-taking

Unconventional,Open-minded

Friendly, Approachable,Practical, Down-to-earthOpen, Honest

Ambitious, SuccessfulAssertive, DeterminedImpressive, Respected

Discovery

ControlStability

Freedom

Empower-ment

Harmony

IllustrationofRewardsModel

BasedonTNS


BasedonHusel


Balance

Fun Type

Curiosity

Pleasure

Ease

Tolerance

Dreaming

Poetry

Sociability

Creativity


Risk-willing

Courage

Justice


Fidelity

Tradition

Thrift

Family

Freedom Fame

Status

Variety


Friendship

Openness

Flexibility

Trust

Nature

Nostalgia

Adventure Thrill

Sincerity


Logic

Obedience

MoralAsceticism

Health

Power

Ambition

Quality

Reliability

Cleanness

Hygiene

DutyDiscipline

Obstinacy

Efficiency

HonourPride

Elite

Performance

Enforcement

Fight

Autonomy

Victory

Rebellion

Sensuality

Discipl

ine

Control

FantasyPleasur

e Security

Homeland


Balance

Fun Type

Curiosity

Pleasure

Ease

Tolerance

Dreaming

Poetry

Sociability

Creativity


Risk-willing

Courage

Justice


Fidelity

Tradition

Thrift

Family

Freedom Fame

Status

Variety


Friendship

Openness

Flexibility

Trust

Nature

Nostalgia

Adventure Thrill

Sincerity


Logic

Obedience

MoralAsceticism

Health

Power

Ambition

Quality

Reliability

Cleanness

Hygiene

DutyDiscipline

Obstinacy

Efficiency

HonourPride

Elite

Performance

Enforcement

Fight

Autonomy

Victory

Rebellion

Sensuality

Discipl

ine

Control

FantasyPleasur

e Security

Homeland


Precise, Methodical


Quiet, Cautious







Discovery

ControlStability

Freedom

Empower-ment

Harmony


Precise, Methodical


Quiet, Cautious







Discovery

ControlStability

Freedom

Empower-ment

Harmony


BasedonTNS


BasedonHusel

Source: Scheier, Held "Was Marken erfolgreich macht", 2007; Husel, Brainscript 2006; TNS 2008

Figure 8: Examples of Value Maps

A specific situation is evaluated in its significance by a motive system along with the

"promised reward potential" of other motive systems:

Reward potential determined individually in the motive system how positively

is the situation evaluated by the balance system, for example?

Importance of the individual motive system how important is the balance

system in comparison with other systems?


18/26



Value models make it possible to describe the motive systems in their entirety.4

Figure 8 shows an overview of the reward systems used in research. The Husel

model and the Needscope model from TNS are shown in graphic form. Taking

these models as a basis, we can work out the value-related, emotional position of a

brand in comparison with competing brands as well as rules for emotional

positioning.

Value maps are cross-cultural because genetically determined

In the same situation, different motive systems will conduct evaluations on the basis of

differing analysis criteria. Each motive system answers for itself the question, "How closely

does the meaning of the recognized stimulus pattern correspond to the emotionally desired

condition or promise to achieve this condition?"

Values which are neighbors in these models address certain motive systems in similar ways,

while they do not address at all other motive systems which are farther away. If values on

the value map are located at positions across from each other, they will lead to reward

promises only in differing motive systems. From the standpoint of a motive system, a "close"value is rewarding while the "far away" value repels. Since these types of reward models

have been developed primarily on a neurological basis, the value map is applicable across

all cultures because of its genetic determination.

4Generally, three basic rewards or the three most important motive systems are used as the overarching axes for

a value space. In the Zurich model of Bischof, the three basic rewards are labeled as security, autonomy, and

arousal, while the illustrative model of Hans Georg Husel calls them balance, stimulance, and dominance.

Frequently quoted reward models and their authors:

Kenneth Davies, Jaak Panksepp, Larry Normansell:

"Affective Neuroscience Personality Scales (ANPS)", 110 points;

Norbert Bischof: "Zricher Modell mit KISMET", 90 points;

Hans Georg Husel: "LIMBIC", 50 points;

Edmund T. Rolls: Emotion explained";

TNS: "Needscope-Model"


19/26



7 Differing Evaluations and Decisions According toCulture and Age

Cultural differences are found not only in the meaning of interpreted patterns such as heroes

or symbols, but also in the importance of the motive systems. Figure 9 depicts the

distribution of consumer types and their value focus when making decisions on an emerging

market and in Germany.

Adventurer

Controlseeker

Traditionalist,security seeker

Dominance,status seeker

Stimulation,freedom seeker

Pleasure seeker

Harmony seeker

6%3% 20%

6%

19%

10%

13%32%

13%13%

22%24%

8%11%

Source: Emerging Market Primary Market Analysis 2007, Detecon Research 2008, Hans Georg Husel 2008, LIMBIC in TWDI 2006/2007

= Proportion of consumer types in Germany according to used value, motive system focuswhen making decisionsaccording to Husel

= Proportion of consumertypes in emergencymarket example according to used value, motive system focuswhen making decisions

Legend:

= Proportion of consumer types in Germany according to used value, motive system focuswhen making decisionsaccording to Husel

= Proportion of consumertypes in emergencymarket example according to used value, motive system focuswhen making decisions

Legend:

Figure 9: Consumer Types According to Value Focus When Making Decisions in Various Countries

The variance in focus can be clearly seen. The example of the emerging market, according

to the culture studies of Hofstedte, is host to cultures of a highly collectivist nature. Belonging

to a group is important, and private life is strongly oriented to family and the social

framework. Nevertheless, the part of the population with the emotional focus "social

relationships, friendship, family, and tradition is lower than in Germany. This is largely a

consequence of the differences in the age curve of the population.

The population in the example of the emerging market is younger. Finding a partner and

competition are more important for the population in comparison with Germany because of

their age. Finding the best partner and securing the most resources for the young are the

main drivers of people's behavior there. That is why 20% of the consumers on the emergingmarket make their decisions primarily with the aim of achieving their own goals and

improving their own status. The short-term focus is more pronounced because the social

position is not as high. It is important to have control over scarce resources. Consequently,

the number of people seeking this control in the emerging market example is higher than in

Germany.


20/26



Culture, age, and sex determine the importance of the motive system

Age has a major influence on the emotional orientation and the way decisions are made in

our lives. The sharp rise in the levels of the stress and fear hormone cortisol as people grow

older means that resistance to stress declines. This encourages in turn decisions

emphasizing security, e.g., the higher quality of services demanded of mobile networks.

The relationship between the concentration of the stimulating dopamine and interest in

innovation or the utilization of innovative products is also clear. The older a user is, the more

rarely he will utilize innovative services. Such striking characteristics of usage behavior in

mobile networks based on age have been conclusively demonstrated.

As a consequence, mobile network providers have long been using the criterion of age and

the related changes in hormonal balance and behavior for market segmentation. Figure 10

shows the frequent use of the parameter "age" as a segmentation dimension. When the

significance of hormonal balance on the making of decisions is presented so clearly, it

comes as no surprise when it is pointed out that the evaluations differ between men and

women as well.

Source: Detecon Research 2008

Dimension age dominant Values & usage dominant

Usage

Work status

Values

Income

Age

Segmentcriterion

Providers

MisrMisr

Unused segmentation criterion Prim ary s egmentation criterion

Figure 10: Age as Determining Variable in Making Decisions


21/26



8 Case Study: Export of an Emotional Positioning

What conclusions for the positioning of an internationally successful mobile network provider

brand on a major emerging market can be drawn from all of this? Valuable recommendations

can be derived on the basis of our knowledge about the function and importance of theimplicit system in decision-making, the awareness of local, cultural conditions, and the

insights from international brand management.

At the start, the positioning of the international brand must be worked out. As described

above, elements of the brand identity can be transferred to the target country. The

consistency of the brand in its international identity must be preserved, but local relevance

must also be included. The "imported" emotional values of the international brand promise a

reward to the consumers. This reward must be analyzed in a national context. The emotional

target values in this example are energy, openness, optimism, care, simplicity, reliability, and

making things possible. In the region of origin, they enable a solid brand position as a former

monopolistic provider. What does this mean? Former monopolists cannot credibly claim

many of the values. In particular, values from the area of "stimulance" and "adventure"simply do not fit. Former monopolists do not introduce new impetus and the feeling of a new

age to the market, but instead cultivate the less exciting, conservative image, but one of

strong performance, which they have always had. As a consequence, the balance and

dominance motive systems are addressed during their brand positioning. How important are

the above-mentioned emotional values on the new market? Reference has been made to the

cultural differences in the importance of motive systems and their values. So the first step is

the analysis of the relevance of the values for the local target population. Figure 9 shows that

the values imposed by the international brand are relevant for the majority of the people in

the target country.

Second place is not enough!

Does this emotional position also work for newcomers with respect to the competition?

Answering this question requires the analysis of the positioning of the competitive brands

with respect to implicit meanings and reward promises. The brain is dominated by pigeon-

hole thinking. One pigeon hole is set up for a product category, another is dominated by a

brand.

In the pigeon hole "mobile communication", the new brand competes with the established

competitors. Each of these competitors has charged his brand emotionally, promising the

implicit system a reward for the decision in favor of his product. It has been noticed during

neurological studies that only the preferred brand the first choice has the effect of

reducing cortical levels. The preferred brand is like the sheet of paper on top in the pigeonhole: the buyer sees it first and takes it or makes a decision, but the sheet underneath is

hidden and relatively unimportant. There is ample verification that only the first-choice brand

influences the buying decision. Being second in the pigeon hole is unimportant. It has also

been verified that the brand preference remains fairly stable over time. Once a brand has

positioned itself as rewarding in the implicit system, this brand can be pushed aside and

replaced only by a great effort.

What does that mean for our brand positioning?


22/26



Me-too strategy leads to failure! Differentiation is absolutely essential.

To begin with, a newcomer does not benefit at all from the pursuit of a me-too strategy and

solely the emotional occupation of the same values as established competitors. In this case,

consumers are not enticed by the promise of any new or better potential rewards and the

temporal stability of the originally preferred brand will dominate.

The promise of a reward must include prospects of substantial improvement if the brand

preference is to be changed. Differentiation in the positioning on the value map is necessary.

Nor can a newcomer credibly occupy emotional values such as tradition, reliability, and

loyalty owing to the brevity of his presence on the market and his innovative character.

Figure 11 depicts the positioning of the brands of the three relevant competitors on the

mobile network market which is to be penetrated; the interpreting perception of the emotional

values of the new provider's brand by the population is shown at the same time.

This presentation illustrates the complexity of the positioning task. There is little maneuvering

room for creation of a differentiating position if one follows solely the emotional values of the

international brand.

Order

Diligence

DisciplineJustice

Functionality

AsceticismFlexibility

Trust

Poetry

Sincerity

Sociability

Cleanness

Efficiency


Balance

Fun Type

Curiosity

Pleasure

Ease

Tolerance

Dreaming

Creativity

Extravagance

Impulsivity

Risk-willing

Courage

Precision

Fidelity

Tradition

Thrift

Homeland

Family

Security

FreedomFame

StatusVariety


Friendship

Openness

Sensuality

Nature Nostalgia

AdventureThrill

Fantasy

Pleasure Disc

ipline

Control

Logic

ObedienceMoral

Health

Power

Ambition

QualityReliability

Hygiene

Duty

Obstinacy

Honour

Pride

Elite

Performance

Enforcement

Fight

Autonomy

Victory

Rebellion

Enabling

Simplicity

= Emotional brand

positioning

of third provider

= Emotional brand

positioning

of first provider

= Emotional brand

positioning

of second provider

= Interpretation of theemotional values of the

international corporate

brand of the new mobile

network operator by the

population on the new

market

Source: Depiction in value map acording to Husel 2008, MLI Ltd 04/2008, Detecon

Figure 11: Brand Positioning and Emotional Values of the Newcomer's International Brand

The challenge for brand management is also great when an international brand is drawnover a recently acquired company which is already well established on a national market. In

the worst case, the emotional position of the original brand is diametrically opposed to the

focus of the new brand. This means that current customers will feel repelled by the new

brand owing to their emotional value preference. The first step here will frequently be to

leave the original focus of the emotional positioning untouched.


23/26



The consistency commandment forbids a mishmash of emotional positionings under

one brand

Figure 12 depicts the emotional value positioning of the brand of one of the internationally

leading mobile network companies in its national companies. The emotional focus of the

positioning of the national companies results from their history.

Discovery

ControlStability

Freedom

EmpowermentHarmony

Brand positioningCountry A

BrandpositioningCountryB

Brand positioningCountry D

Goal of thebrand positioning

international

BrandpositioningCountry C

Discovery

ControlStability

Freedom

EmpowermentHarmony

Brand positioningCountry A

BrandpositioningCountryB

Brand positioningCountry D

Goal of thebrand positioning

international

BrandpositioningCountry C

Source: TNS, Detecon

Figure 12: Disjunct Positioning of an International Corporate Brand in Wireless Networks in Various

National Companies

This sort of mishmash of value positions in the different national companies must not be

allowed to continue under an international brand as the consistency of the international

brand would otherwise be violated and its credibility would suffer, especially if there are few

barriers in terms of language and culture among the various countries. The drafting of an

internationally desirable emotional target positioning of the brand must, in this case, follow

an intensive national analysis. Finally, migration strategies for the emotional positioning must

be developed at the national level so that the synergy opportunities which are concomitant

with the international use of a brand can actually be realized in their full scope. The

inevitable negative consequence of a radical migration is a loss of current customers.

The goal must be for the brand essence of an international brand to generate a relevant,

emotional tie to the consumers across national boundaries. if the brand essence is

consistent and credible, there will be maneuvering room allowing slight adjustments of thepositioning on a local market.

Once the brand target position with the desired reward promises has been defined, the next

step, taking into account any migration which may be necessary, is the preparation of the

brand messages so that they can be communicated to the target segments.


24/26



9 Recommended Reading

Ambler; Braeutigam; Stins; Rose; Swithenby "Salience and Choice: Neural

Correlates of Shopping Decisions", 2004

Bargh, John: "Losing Consciousness: Automatic Influences on ConsumerJudgment, Behavior, and Motivation, Journal of Consumer Research

Burmann, Christoph; Meffert, Heribert, "Theoretisches Grundkonzept der

identittsorientierten Markenfhrung" in Markenmanagement: Identitts-

orientierte Markenfhrung und praktische Umsetzung mit Best Practice-

Fallstudien, ed. Heribert Meffert, Christoph Burmann, and Martin Koers,

pp. 37-72, 2005

Camerer, Colin; Loewenstein, George; Prelec, Drazen "Neuroeconomics: How

Neuroscience Can Inform Economics, Journal of Economic Literature, Volume

XLIII, 2005

Cameron, Lisa A. "Raising the Stakes in the Ultimatum Game: ExperimentalEvidence from Indonesia, Economic Inquiry, 1999

Damasio, Antonio R. "Fundamental Feelings", Nature, 413 (6858), 781, 2001

Husel, Hans Georg "Brainview Warum Kunden kaufen!", 2008

Hardy-Vallee, Benoit: "Decision-Making: A Neuroeconomic Perspective", 2007

Interbrand Zintzmeyer & Lux, "Best Russian Brands 2007", 2007

Interbrand Zintzmeyer & Lux, "Best Russian Brands 2008", 2008

Kahneman, Daniel: "Maps of Bounded Rationality: A Perspective on Intuitive

Judgment and Choice", Nobel Prize Lecture, 2002

Kahneman, Daniel: "A Psychological Perspective on Economics", 2003

Kenning; Plassmann; Deppe; Kugel; Schwindt: "Die Entdeckung der kortikalen

Entlastung" 2002

Millward Brown Optimor, "2007 Brandz Top 100 Most Powerful Brands",

2007

Norretraders, T., "The User Illusion"

Plassmann; Kenning; Deppe; Kugel; Schwindt; Ahlert: "How Brands Twist

Heart and Mind: Neural Correlates of the Affect Heuristic During Brand Choice"

Sawhney, Mohanbir: "Branding in Technology Markets", Chaper 11, Kellogg on

Branding

Scheier, Christian; Held, Dirk: "Was Marken erfolgreich macht"

Slovic; Finucane; Peters; MacGregor: "Rational Actors or Rational Fools?

Implications of the Affect Heuristic for Behavioural Economics", 2002


25/26



10 The Author

Dr. Bert Kiel is Managing Consultant in the Competence Practice Strategy & Marketing at

Detecon. After obtaining his degree in physics at the University of Bonn, he earned a

doctorate in nuclear physics at the University of Erlangen-Nuremberg and, at the same time,a degree in business administration at the University of Hagen, focusing on marketing,

organization and planning, and environmental economics. He joined Detecon in 2000.

Dr. Kiel has had extensive experience in the establishment of mobile network operators and

interim management and has comprehensive expertise in corporate strategy, marketing and

sales, and wholesale for fixed and mobile network operators. He has worked for a large

number of international telecommunications providers and regulatory authorities.

He can be reached at: +49 228 700 1575 or [email protected]


26/26


11 The Company

Detecon International GmbH

Detecon International is a leading worldwide company for integrated management and

technology consulting founded in 2002 from the merger of consulting firms DETECON andDiebold. Based on its comprehensive expertise in information and communication

technology (ICT), Detecon provides consulting services to customers from all key industries.

The company's focus is on the development of new business models, optimization of

existing strategies and increase of corporate efficiency through strategy, organization and

process improvements. This combined with Detecon's exceptional technological expertise

enables us to provide consulting services along our customers' entire value-added chain..

The industry know-how of our consultants and the knowledge we have gained from

successful management and ICT projects in over 100 countries forms the foundation of our

services. Detecon is a subsidiary of T-Systems, the business customers brand of Deutsche

Telekom.

Integrated Management and Technology Competence

We possess an excellent capability to translate our technological expertise and

comprehensive industry and procedural knowledge into concrete strategies and solutions.

From analysis to design and implementation, we use integrated, systematic and customer-

oriented consulting approaches. These entail, among other things, the evaluation of core

competencies, modular design of services, value-oriented client management and the

development of efficient structures in order to be able to distinguish oneself on the market

with innovative products. All of this makes companies in the global era more flexible and

faster at lower costs.

Detecon offers both horizontal services that are oriented towards all industries and can entailarchitecture, marketing or purchasing strategies, for example, as well as vertical consulting

services that presuppose extensive industry knowledge. Detecon's particular strength in the

ICT industry is documented by numerous domestic and international projects for

telecommunications providers, mobile operators and regulatory authorities that focused on

the development of networks and markets, evaluation of technologies and standards or

support during the merger and acquisition process.

Detecon International GmbH

Oberkasselerstr. 2

53227 Bonn

Phone: +49 228 7000 E-mail: [email protected]: www.detecon.com

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