types of brand

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INTRODUCTION TO BRANDING Chao O 20/12/2012

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Page 1: Types of brand

INTRODUCTION TO BRANDINGChao O20/12/2012

Page 2: Types of brand

Why Brand?Why do companies such as Coca-Cola,

Microsoft, IBM and Disney seem to achieve global marketing success so easily? Why does it seem such an effort for others?

Why do we, as consumers, feel loyal to such brands that the mere sight of their logo has us reaching into our pockets to buy their products?

Page 3: Types of brand

The meaning of brandsBrands are a means of differentiating a

company’s products and services from those of its competitors.

There is plenty of evidence to prove that customers will pay a substantial price premium for a good brand and remain loyal to that brand. It is important, therefore, to understand what brands are and why they are important.

Page 4: Types of brand

The Importance of Brands

McDonalds sums this up nicely in the following quote emphasizing the importance of brands:

“…it is not factories that make profits, but relationships with customers, and it is company and brand names which secure those relationships”

Businesses that invest in and sustain leading brands prosper whereas those that fail are left to fight for the lower profits available in commodity markets.

Page 5: Types of brand

Coca-Cola “If Coca-Cola were to lose all of its production-related

assets in a disaster, the company would survive. By contrast, if all consumers were to have a sudden lapse of memory and forget everything related to Coca-Cola the company would go out of business.”

Coca-Cola

Page 6: Types of brand

What is a brand?One definition of a brand is as follows:“A name, term, sign, symbol or design, or a

combination of these, that is intended to identify the goods and services of one business or group of businesses and to differentiate them from those of competitors”.

Interbrand - a leading branding consultancy - define a brand in this way:

“A mixture of tangible and intangible attributes symbolized in a trademark, which, if properly managed, creates influence and generates value”.

Page 7: Types of brand

“Brand equity” refers to the value of a brand. Brand equity is based on the extent to which the brand has high brand loyalty, name awareness, perceived quality and strong product associations. Brand equity also includes other “intangible” assets such as patents, trademarks and channel relationships.

Brand Equity

Page 8: Types of brand

Brand image

“Brand image” refers to the set of beliefs that customers hold about a particular brand. These are important to develop well since a negative brand image can be very difficult to shake off.

Page 9: Types of brand

Brand extension

“Brand extension” refers to the use of a successful brand name to launch a new or modified product in a new market. Virgin is perhaps the best example of how brand extension can be applied into quite diverse and distinct markets.

Page 10: Types of brand

Branding gives the seller several advantages

Seller’s brand name and trademark provide legal protection of unique product features

Branding gives the seller the opportunity to attract a loyal and profitable set of customers.

Branding helps the seller segment markets.Strong brands help build corporate image, making it

easier to launch new brands and gain acceptance by distributors and consumers.

Page 11: Types of brand

Benefits of Branding to A BUYER

Help buyers identify the product that they like/dislike. Identify marketer Helps reduce the time needed for purchase. Helps buyers evaluate quality of products especially if

unable to judge a products characteristics. Helps reduce buyers perceived risk of purchase. Buyer may derive a psychological reward from owning the

brand, IE Rolex or Mercedes.

Page 12: Types of brand

BRANDS - BUILDING A BRAND

What factors are important in building brand value?

Professor David Jobber identifies seven main factors in building successful brands, as given next:

Page 13: Types of brand

Quality

Quality is a vital ingredient of a good brand. Remember the “core benefits” – the things consumers expect. These must be delivered well and consistently. The branded washing machine that leaks, or the training shoe that often falls apart when wet, or a watch which needs frequent adjustments will never develop brand equity.

Research confirms that, statistically, higher quality brands achieve a higher market share and higher profitability than that of their inferior competitors.

Page 14: Types of brand

Positioning

Positioning is about the position a brand occupies in a market in the minds of consumers. Strong brands have a clear, often unique position in the target market.

Positioning can be achieved through several means, including brand name, image, service standards, product guarantees, packaging and the way in which it is delivered. In fact, successful positioning usually requires a combination of these things.

Page 15: Types of brand

Repositioning

Repositioning occurs when a brand tries to change its market position to reflect a change in consumer’s tastes. This is often required when a brand has become tired, perhaps because its original market has matured or has gone into decline.

Page 16: Types of brand

Communications

Communications also play a key role in building a successful brand. We suggested that brand positioning is essentially about customer perceptions – with the objective to build a clearly defined position in the minds of the target audience.

All elements of the promotional mix need to be used to develop and sustain customer perceptions. Initially, the challenge is to build awareness, then to develop the brand personality and reinforce the perception.

Page 17: Types of brand

First-mover advantage

Business strategists often talk about first-mover advantage. In terms of brand development, by “first-mover” they mean that it is possible for the first successful brand in a market to create a clear positioning in the minds of target customers before the competition enters the market. There is plenty of evidence to support this.

Page 18: Types of brand

Long-term perspective

The need to invest in the brand over the long-term is utmost essential. Building customer awareness, communicating the brand’s message and creating customer loyalty takes time. This means that management must “invest” in a brand, perhaps at the expense of short-term profitability.

Page 19: Types of brand

Internal MarketingFinally, management should ensure that the brand is

marketed “internally” as well as externally. By this we mean that the whole business should understand the brand values and positioning. This is particularly important in service businesses where a critical part of the brand value is the type and quality of service that a customer receives.

Think of the brands that you value in the restaurant, hotel and retail sectors. It is likely that your favorite brands invest heavily in staff training so that the face-to-face contact that you have with the brand helps secure your loyalty.

Page 20: Types of brand

An Effective Brand Name● Is easy to pronounce

● Is easy to recognize and remember

● Is short, distinctive, and unique

● Has a positive connotation

● Reinforces the product image

● Is legally protectable

Page 21: Types of brand

Branding Strategies

BrandBrand No BrandNo Brand

Manufacturer’s Brand

Manufacturer’s Brand Private BrandPrivate Brand

IndividualBrand

IndividualBrand

Family Brand

Family Brand

Combi-nation

Combi-nation

IndividualBrand

IndividualBrand

Family Brand

Family Brand

Combi-nation

Combi-nation

Page 22: Types of brand

Manufacturers’ Brands VersusPrivate Brands

Manufacturers’ Manufacturers’ BrandBrand

Manufacturers’ Manufacturers’ BrandBrand

Private Private BrandBrand

Private Private BrandBrand

The brand name of a manufacturer.The brand name of a manufacturer.

A brand name owned by a wholesaler or a retailer. Also known

as a private label or store brand.

A brand name owned by a wholesaler or a retailer. Also known

as a private label or store brand.

Page 23: Types of brand

Types of brandThere are two main types of brand – manufacturer

brands and own-label brands.Manufacturer brandsManufacturer brands are created by producers and

bear their chosen brand name. The producer is responsible for marketing the brand. The brand is owned by the producer.

By building their brand names, manufacturers can gain widespread distribution (for example by retailers who want to sell the brand) and build customer loyalty (think about the manufacturer brands that you feel “loyal” to).

Page 24: Types of brand

Private Label brands

Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as “distributors”.

Often these distributors are retailers, but not exclusively. Sometimes the retailer’s entire product range will be own-label. Own-label branding – if well carried out – can often offer the consumer excellent value for money and provide the distributor with additional bargaining power when it comes to negotiating prices and terms with manufacturer brands.

Page 25: Types of brand

Advantages of Private Brands Earn higher profits

Less pressure to mark down prices

Ties customer to wholesaler or retailer

Page 26: Types of brand

Advantages of Manufacturers’ Brands

Develop customer loyalty

Attract new customers

Enhance prestige

Ensure dealer loyalty

Page 27: Types of brand

Individual Brands Versus Family Brands

Individual Individual BrandBrand

Individual Individual BrandBrand

Family Family BrandBrand

Family Family BrandBrand

Using different brand names for different products.

Using different brand names for different products.

Marketing several different products under the same

brand name.

Marketing several different products under the same

brand name.

Page 28: Types of brand

Branding PoliciesFirst question is whether to brand or not to brand.

Homogenous products are difficult to brand Branding policies are:

Individual Branding: Naming each product differently P&G, facilitates market segmentation and no overlap.

Overall Family Branding: All products are branded with the same name, or part of a name, IE Nokia, promotion of one item also promotes other items.

Line Family Branding: Within one product line. Brand Extension Branding: Use one of its existing brand

names as part of a brand for an improved or new product, usually in the same product category.75% new products are brand extensions!!

Page 29: Types of brand

1. Coca-Cola

$67,000 million Based in U.S. Flagging appetite for soda has cut demand for Coke, but the

beverage giant has a raft of new products in the pipeline that could reverse its recent slide.

Page 30: Types of brand

2 Microsoft

$56,926 million Based in U.S. Threats from Google and Apple haven't yet offset the power of its

Windows and Office monopolies.

Page 31: Types of brand

3 IBM

$56,201 millionBased in U.S. Having off-loaded its low-profit PC business

to Lenovo, IBM is marketing on the strategic level to corporate leaders.

Page 32: Types of brand

4.GE

$48,907 million Based in U.S. The brand Edison built has extended its reach from ovens

to credit cards, and the "Ecomagination" push is making GE look like a protector of the planet.

Page 33: Types of brand

5.Intel

$32,319 million Based in U.S. Profits and market share weren't the only things

slammed by rival AMD. Intel's brand value tumbled 9%, as it loss business from high-profile customers.

Page 34: Types of brand

6.Nokia

$30,131 millionBased in Finland .Fashionable designs and low-cost models

for the developing world enabled the mobile phone maker to regain ground against competitors.

Page 35: Types of brand

7.Toyota

$27,941 million Based in Japan. Toyota is closing in on GM to become the world's

biggest automaker. A slated 10% increase in U.S. sales this year will help even more.

Page 36: Types of brand

8. Disney

$27,848 million Based in U.S. New CEO Robert Iger expanded the brand by buying

animation hit-maker Pixar and beefing up digital distribution of TV shows through the Internet and iPods.

Page 37: Types of brand

9.McDonald's

$27,501 million Based in U.S. A new healthy-living marketing campaign—and the

premium-priced sandwiches and salads that came with it—have led to a fourth year of sales gains.

Page 38: Types of brand

10.Mercedes-Benz

$21,795 million Based in Germany The new S-Class sedan and M-Class SUV are

helping repair a tarnished quality reputation. High costs and weak margins will take longer to fix.

Page 39: Types of brand

Here's how we calculate the power in a name

INTERBRAND TAKES lots of ingredients into account when ranking the world's most valuable brands. To even qualify for the list, each brand must derive about a third of its earnings outside its home country, be recognizable outside of its base of customers, and have publicly available marketing and financial data. One or more of those criteria eliminate such heavyweights as Visa, Wal-Mart, Mars, and CNN. Interbrand doesn't rank parent companies, which explains why Procter & Gamble doesn't show up. And airlines are not ranked because it's too hard to separate their brands' impact on sales from factors such as routes and schedules.

Page 40: Types of brand

Evaluation BUSINESSWEEK CHOSE Interbrand's methodology because it

evaluates brands much the way analysts value other assets: on the basis of how much they're likely to earn in the future. The projected profits are then discounted to a present value, taking into account the likelihood that those earnings will actually materialize.

THE FIRST STEP IS figuring out what percentage of a company's revenues can be credited to a brand. (The brand may be almost the entire company, as with McDonald's Corp., or just a portion, as it is for Marlboro.) Based on reports from analysts at J.P. Morgan Chase, Citigroup, and Morgan Stanley, Interbrand projects five years of earnings and sales for the brand. It then deducts operating costs, taxes, and a charge for the capital employed to arrive at the intangible earnings. The company strips out intangibles such as patents and management strength to assess what portion of those earnings can be attributed to the brand.

Page 41: Types of brand

SummaryFINALLY, THE BRAND'S strength is assessed to

determine the risk profile of those earnings forecasts. Considerations include market leadership, stability, and global reach—or the ability to cross both geographic and cultural borders. That generates a discount rate, which is applied to brand earnings to get a net present value. BusinessWeek and Interbrand believe this figure comes closest to representing a brand's true economic worth.