Strategic Marketing

1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control

Chapter 9

Strategic Brand Management

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

STRATEGIC BRAND MANAGEMENT

Strategic Brand Management
Strategic Brand Analysis Brand Equity Measurement and Management

Brand Identity Strategy

Managing Brand Strategy

Managing the Brand Portfolio

Brand Leveraging Strategy
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STRATEGIC BRAND MANAGEMENT A product is anything that is potentially valued by a target market for the benefits or satisfaction it provides, including objects, services, organizations, places, people, and ideas

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A brand is a name, term, design, symbol, or any other feature that identifies one sellers good or service as distinct from those of other sellers.
American Marketing Association

A compelling logic has been proposed that the distinction between goods and services should be replaced by a view that services are the dominant perspective in the 21st century, consisting of both tangible and intangible components.*
*Stephen LVargo and Robert F. Lusch, Evolving to a New Dominant Logic for Marketing, Journal of Marketing, January 2004, 1-17.

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Strategic Role of Brands

A strategic brand perspective requires managers to be clear about what role brands play for the company in creating customer value and share-holder value. FOR BUYERS, BRANDS CAN: reduce customer search costs by identifying products quickly and accurately, reduce the buyers perceived risk by providing an assurance of quality and consistency (which may then be transferred to new products), reduce the social and psychological risks associated with owning and using the wrong product by providing psychological rewards for purchasing brands that symbolize status and prestige.
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FOR SELLERS, BRANDS CAN FACILITATE: repeat purchases that enhance the companys financial performance because the brand enables the customer to identify and re-identify the product compared to alternatives, the introduction of new products, because the customer is familiar with the brand from previous buying experience, promotional effectiveness by providing a point of focus, premium pricing by creating a basic level of differentiation compared to competitors, market segmentation by communicating a coherent message to the target audience, telling them for whom the brand is intended and for whom it is not, brand loyalty, of particular importance in product categories where loyal buying is an important feature of buying behavior.
Source: Marketing Science Institute Report No. 97-422, 1997

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Brand Management Challenges*

Internal and external forces create hurdles for product brand managers in their brand building initiatives:
Intense Price and Other Competitive Pressures Fragmentation of Markets and Media Complex Brand Strategies and Relationships Bias Against Innovation Pressure to Invest Elsewhere Short-Term Pressures
*David A. Aaker, Building Strong Brands, 1996, 26-35.

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Responsibility for Managing Products

Product/Brand Management

Planning, managing, and coordinating the strategy for a specific product or brand

Product Group/Marketing Management

Product director, group manager, or marketing manager

Product Portfolio Management

Chief executive at SBU Team of top executives

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Strategic Brand Management

Brand Identity Strategy Identity Implementation Brand Strategy Over Time Managing the Brand Portfolio
Leveraging the Brand
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BRAND EQUITY MANAGEMENT

STRATEGIC BRAND ANALYSIS

GLOBAL FEATURE

Recharging Sonys Strategy Brand Management

Sir Howard Stringer, a Welsh-born American citizen, was appointed CEO of Sony, the troubled Japanese electronics giant in 2005. Sonys past strategic brand management initiatives had failed to close the digital gap between software/services/content/ devices. During the CEOs first year several cost reduction and portfolio initiatives were implemented to launch the turnaround strategy: The Aibo, a beloved robotic pet, was put to sleep. They shut down the Qualia line of boutique electronics that included a $4,000 digital camera and a $13,000 70-inch television. They eliminated 5,700 jobs and closed nine factories, including one in south Wales. (He took some flak back home for that). They have sold $705 million worth of assets. You probably dont know that Sony owned a chain of 1,221 cosmetics salons and the 18 Japanese outlets of the Maxims de Paris restaurant chain. Theyre gone. Gone, too, is a group of salary-men

in their 60s, 70s, and 80s who, after retiring from senior management positions, were
given the title of advisor, a tradition established by Sonys founders. That was very symbolic, says Hideki (Dick) Komivama, a Sony executive and key ally of Stringers. The 45 advisors each had a secretary, a car and driver, and worst of all, the ability to gum up decision-making and second-guess people doing real jobs. No more.
Source: Marc Gunther, The Welshman, the Walkman, and the Salary Men, Fortune, June 12, 2006, 72.

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STRATEGIC BRAND ANALYSIS

Analyses Product Product Line Portfolio of Product Lines

Market and Customer Competition

Brand(s)
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Tracking Brand Performance

Performance Objectives

Select Method(s) for Evaluation

Identify Problem Products

Decide How to Resolve the Problem

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Financial analysis

Product life cycle analysis

Analyzing Brand Performance

Research studies

Product performance analysis

Standardized information services

Brand positioning analysis

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Product Life Cycle Analysis

Relevant issues in PLC analysis include:
* *

Determining the length and rate of change of the PLC Identifying the current PLC stage and selecting the product strategy that corresponds to that stage Anticipating threats and finding opportunities for altering and extending the PLC

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Product Performance Analysis Managements performance criteria Strengths and weaknesses relative to portfolio Brand Positioning Analysis Perceptual maps for brand comparison Buyer preferences Other Product Analysis Methods Information Services Research studies Financial analysis
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BRAND EQUITY
Company/Customer Value of Brand Name and Symbol of a Product

Determined by the brands set of assets (and liabilities)

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Brand Equity
Effective strategic brand management requires that we understand brand equity and evaluate its impact when making brand management decisions:

Brand equity is a set of brand assets and liability linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firms customers.*

* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15. **Ibid, 102-120.

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Measuring Brand Equity. Several measures are needed to capture all relevant aspects of brand equity.** * loyalty (price premium, satisfaction/loyalty), * perceived quality/leadership measures (perceived quality, leadership/popularity), * associations/differentiation (perceived value, brand personality, organizational associations), * awareness (brand awareness), and * market behavior (market share, price and distribution indices). These components provide the basis for developing operational measures of brand equity.

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BRAND IDENTITY STRATEGY

Brand identity is a unique set of brand associations that the brand strategist aspires to create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members.*

Four Brand Identity Perspectives Product Organization

Person
Symbol
* David A. Aaker, Building Strong Brands, 1996, 68.

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Private Branding

Specific Product

Line of Products

BRAND FOCUS

Combination Branding

Corporate Branding
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MANAGING BRAND STRATEGY

Proactive efforts should be devoted to managing each brand over time.

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Strategies for Improving Product Performance

Cost reduction
Add new product(s)

Product improvement Product line Strategy

Alter marketing strategy Eliminate specific product(s)

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MANAGING THE BRAND PORTFOLIO

Leverage Commonalities to Generate Synergy

Allocate Resources

BRAND PORTFOLIO OBJECTIVES

Facilitate Change and Adaptation

Reduce Brand Identity Damage

Achieve Clarity of Product Offerings

Source: David A. Aaker, Building Strong Brands, New York: The Free Press, 1996, 241-242.

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Strategies for Brand Strength

Brand-Building Strategies

* Developing the brand identification strategy * Coordinate identity across the organization Brand Revitalization * Find new uses for mature brands * Add products related to heritage Strategic Brand Vulnerabilities * Brand equity can be negative * Retailer private brands compete with manufacturer brands * Major shifts in consumer tastes * Competitive actions * Unexpected events
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Product Mix Modifications Motivation for changing the product mix: * Increase the growth rate of the business * Offer a more complete range of products to wholesalers and retailers * Gain marketing strength and economies in distribution, advertising, and personal selling * Leverage an existing brand position * Avoid dependence on one product line or category
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STRATEGY FEATURE

Limited Brands Shifts its Focus from Apparel to Accessories

Ten years ago apparel represented 70% of Limiteds sales. By 2005 70% of sales were from skin-care products, cosmetics, and lingerie Clothes are increasingly out of fashionafter declines for 3 years, U.S. apparel sales increased only 4% in 2004 to $172.8 billion. Apparel $ sales declines are due to discount pricing and households spending more on electronics, home improvement, and spa services. Limited is trying to make itself over as a high-end Procter & Gamble. Victorias Secret is adding hair and cosmetics lines to its beauty business (has 3 of the top 10 selling fragrances in the U.S.).

Sources: Limited Brands 2005 Annual Report; Value Line; and Amy Merrick, For Limited Brands Clothes Become the Accessories, The Wall Street Journal, March 8, 2005, A1 and A14.

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 One new product is Tutti Dolci (all sweets), food inspired scents-lotion and lip gloss in fragrances like lemon meringue, angel-food cake, and chocolate fondue. Victorias Secret has also accelerated new product development. From 2003 through 2005 Intimate Brands (lingerie and beauty products) accounted for all the corporations operating income. Limited is also partnering with other companies to sell its brands and develop new products. Limited has three business groups: Beauty and Personal Care Lingerie Apparel Apparel is a continuing challenge with 2004 operating margins @ 1.4% compared to over 19% for Bath & Body Works and Victorias Secret. Limited has about 3700 stores. 2005 sales were nearly $9.7 billion with net profits at $51 million.

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BRAND LEVERAGING STRATEGY LINE EXTENSION

BRAND EXTENSION
Minor variants of a single product are marketed under the same brand name

Extensions of the brand name to other product categories

--Similar
--Dissimilar
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LEVERAGING ALTERNATIVES

LINE EXTENSIONS

BRAND EXTENSIONS
Another Product Class Range Brand

Horizontal Extension

Vertical Extension Up from Core Brand

CoBranding

Down from Core Brand

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BRAND LEVERAGING IN UPSCALE AND VALUE MARKETS Vertical Brand Extensions*

Core Brand

New Up-Market Brand

New Down-Market Brand

Core Brand

* ONE OF THE MOST DIFFICULT BRAND PORTFOLIO CHALLENGES

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MOVING DOWN IS EASY BUT RISKY

Affects perceptions of the brand perhaps even more significantly than other brand management options. We are influenced more by unfavorable information than by favorable information. The brands ability to deliver self-expressive benefits may be reduced. Potential cannibalization problem. Potential failure risk. Problem when the value entry is perceived to be inconsistent with the quality expected from the brand.
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MOVING A BRAND UP THE DRIVERS

Enhanced Margins at the High End Energy & Vitality Enhance Credibility and Prestige of the Brand

THE RISKS OF DAMAGING THE CORE BRAND

Lacks Credibility Lacks Self-Expressive Benefits

Falls Short of Expectations

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BRAND EXTENSION DECISIONS

Extending into Different Product Classes

THE PROCESS Identify product categories for which the product fits and adds value. Determine existing brand associations and the brand identity. Identify related product category opportunities Screening should be limited Evaluate each category Attractive Growing Good margins Competition Assets/Capabilities Select the most promising extension concept Develop a viable Brand Strategy
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CO-BRANDING
Co-branding (dual branding) involves two or more established brands making a joint offer of their product brands The participants brand names are identified on the good or service. Several different forms Component co-branding (Volvo and Michelin)

Same company co-branding

Alliance co-branding (Delta and American Express) Ingredient co-branding
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BRAND LEVERAGING EVALUATION CRITERIA

Brand Relevance/Differentiation Capabilities/Perceived Value Match Market/Segment Opportunity Cannibalization Risks

Potential for Core Brand Damage

Clarity of Product Offerings Estimated Financial Performance Brand Equity Impact
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SEVEN DEADLY SINS OF BRAND MANAGEMENT*

Failure to fully understand the meaning of the brand. Failure to live up to the brand promise. Failure to adequately support the brand. Failure to be patient with the brand. Failure to adequately control the brand. Failure to properly balance consistency and change with the brand. Failure to understand the complexity of brand equity measurement and management.
*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.

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