Brand Management Notes

Brand Management Notes by Bilal Mustafa Khan
Brands: The important distinction is between a product and a brand. A product is

something with a functional purpose. A brand offers something in addition to its
functional purpose. All brands are products (including brand as Citibank and Air
India that are technically services) in that they serve a functional purpose.
But not all products are brands. In fact a brand and can be defined as, “A brand
is a product that provides functional benefits plus added values that some
consumer value enough to buy”. Added values form the most important part of
the definition of a brand.
We've all heard the story of the blind men and the elephant. Different
men examine different parts of an elephant. One examines the trunk and
concludes that "an elephant is like a vine". Another examines a leg and
concludes that "an elephant is like a pillar". A third examines the tail and
concludes "an elephant is like a rope". A fourth runs his hand across the
elephant's side and concludes "an elephant is like a wall'. All of them are correct.
All of them miss the essential truth. An elephant is much more than the sum of its
anatomical parts. It is a living, breathing being.
Consumer taste differs so widely that no brand can be all things to all
people. Moreover any manufacturer who strives to cover too vide a filed will
produce a brand that is number two or number three over a wide range of
attributes, rather than number one over a Limited range of attributes (which
might enable it to become first choice to a Limited group of consumers, the
normal route to success.
P Emotional
B r Benefits Discriminators
r o
d
a u
n c
d t Functional Motivators
Benefits
The strongest brands are often the most distinctive. But in their distinctiveness
they are also generally well balanced between motivating benefits – those
(generally functional) benefits that prompt the consumer to use any brand in the
product field – and discriminating benefits - those prompting the consumer to buy
one brand rather them another. All brands are different from each other in the
obvious sense that the names and packaging are different. But distinctiveness
over and beyond this is highly desirable, although distinctiveness based so much
on discriminators that it neglects motivators is a recipe for a weak brand..
Event brands (periodic experiences, usually within the worlds of sports,

entertainment, or fine arts) achieve their promoters' goals by making the most of
the traditional approaches to brand building. While it can be argued that
professional golf's Master's tournament (and the other three "majors", as well)
Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

internal distribution and class discussion. The material may not be reproduced in
any form without prior permission either in parts or whole.
has been a brand of sorts for many years, it is only with the coming of enormous
television contracts that the financial value of the brand has been realized. The
same can be said of dozens of other athletic events. Geographical brands (cities,
countries, resorts) have become common because businesses in particular
areas have also recognized the value of selling their locales using some
traditional, and non-traditional, brand building methods. Tourism
directors from Orlando to Las Vegas, from Alabama to Bangkok, have created
brands to help sell their part of the planet.
The word "brand", when used as a noun, can refer to a company name, a
product name, or a unique identifier such as a logo or trademark.
In a time before fences were used in ranching to keep one's cattle separate from
other people's cattle, ranch owners branded, or marked, their cattle so they could
later identify their herd as their own.
The concept of branding also developed through the practices of craftsmen who
wanted to place a mark or identifier on their work without detracting from the
beauty of the piece. These craftsmen used their initials, a symbol, or another
unique mark to identify their work.
Not too long afterwards, high quality cattle and art became identifiable in the
consumer's mind by particular symbols and marks. Consumers would actually
seek out certain marks because they had associated those marks in their minds
with tastier beef, higher quality pottery or furniture, sophisticated artwork, and
overall better products. If the producer differentiated their product as superior in
the mind of the consumer, then that producer's mark or brand came to represent
superiority.
Today's modern concept of branding grew out of the consumer packaged goods
industry and the process of branding has come to include much, much more than
just creating a way to identify a product or company.
Branding today is used to create emotional attachment to products and

companies. Branding efforts create a feeling of involvement, a sense of higher
quality, and an aura of intangible qualities that surround the brand name, mark,
or symbol.
So what exactly is the definition of "brand"? Let's cover some definitions first
before we get too far into the branding process.
"If a product is something that is produced to function and exist in reality," says
Philip Durbrow of Frankfurt Balkind, an international design firm based in San
Francisco, "then a brand has meaning beyond functionality and exists in people's
minds." Part art, part science, brand is the difference between a bottle of soda
and a bottle of Coke, the intangible yet visceral impact of a person's subjective

experience with the product — the personal memories and cultural associations
that orbit around it.
The goal of branding is to convince the public that a brand is trustworthy and thus
worth paying a premium for. The buyer is assured that the branded product will
perform as expected. But that is not the only reason why people are willing to pay
a premium for some brands.
Consider the differences that exist between a Rolex watch and one made by
Timex. Trust in their respective abilities to accurately keep track of time is not
what justifies that one can cost 100 to 500 times more than the other. Sure, the
Rolex watch is well made and is truly waterproof, whereas the Timex may only
be "water-resistant," a lower standard of water-tightness. A few SCUBA divers
may wear Rolex watches but I am ready to bet that the majority of Rolex wearers
have never seen a decompression table...
People are willing to pay a premium price for brands that help define their self-
image and their social image.
Successful brand marketers can convince you that their brands are worth paying
a little more for because "you are worth it," and because there are brands that
someone with your standing in society should prefer over others. This effect of
branding can be felt in every category of product or service, from automobiles to
floor cleaners. It is more likely to be apparent where the product is worn or used
for all to see, but it exists everywhere.
A brief history of branding

The phenomenon of branding has roots running deep into economic history.
Stone Age toolmakers undoubtedly had trademark styles that signaled potentially
greater success in the hunt. Particularly accomplished Viking shipbuilders may
have had valuable brands of vessels. Certainly silversmiths over the centuries,
including Paul Revere, the American colonial patriot, included marks on their
wares to indicate both the purity of the metal and the craftsmanship embodied in
the product.
The English word “brand” is derived from “burning,” a reference, in the word's
business sense, to the embers once used to burn the mark of the owner onto
livestock, casks, timber, metal, or other goods.
Indeed, branding—the use of symbols to concisely convey information about a

product or service—can be seen as a quintessential human activity. It is also a
fundamental building block of commerce: Without information about a producer’s
or a seller’s reputation, trade would grind to a halt. (The seller ratings on the
eBay Internet auction site represent just one conspicuous contemporary
example.) The real power of brands, however, dates to the time when this
indicator of reputation was transferred from the individual to a larger business
enterprise. The shift magnified brands’ impact, extended their geographic reach,
and resulted in wealth creation for numerous employees.
Josiah Wedgwood is often cited as the father of the modern brand. Beginning in
the 1760s, Wedgwood placed his name on his pottery and china to indicate their
source—his state-of-the art factories—and therefore their quality. But the

Wedgwood name came to stand for something more. Nearly two hundred years
before the advent of mass media, and without using conventional advertising,
Wedgwood used royal endorsements and other marketing devices to create an
aura around the name of his company that gave the brand a value far beyond the
attributes of the product itself. His business design of mass production and
distribution enabled him to capture the value created by his calculated
association of his product with a rich and famous lifestyle and his exploitation of
customers’ social aspirations.
In many ways, branding has stepped away from Wedgwood’s precepts during
the latter part of this century. With the development of new media, particularly
television, and the huge post- World War II boom in consumption and birthrates,
a mass market was born. Rising demand and standards of living created an era
where market share was king: The player with the leading share would have the
lowest cost and the highest profitability.
Quite simply, a brand is a promise to the customer — a mirror in which the

customer sees a reflection of him or herself and identifies with, or rejects, the
promise he or she sees. Likewise, a brand is also a reflection of your
organization. Your brand serves to define your organization and influences every
aspect of your operation, right down to corporate culture. Whether measured in
SKU per second shopping, margins or shareholder value, the power of your
brand has far-reaching impact. On stock valuation. On marketing costs. Even on
employee retention rates.
For customers, branding plays two important roles:
In a world with lots of choices, it tells them which choice is right. It serves as a
customer’s compass out of the chaos of competing choices. “What’s best for
me?”
In a world full of change and confusion, it helps them define who they are — it
gives them a badge. Good Mother, Dedicated Athlete, Hip Teenager.
BRANDS and Added Values:

The important distinction is between a product and a brand. A product is
something with a functional purpose. A brand offers something in addition to its
functional purpose. All brands are products (including brand as Citibank and Air
India that are technically services) in that they serve a functional purpose.
But not all products are brands. In fact a brand and can be defined as, “A
brand is a product that provides functional benefits plus added values that some
consumer value enough to buy”.

Added values form the most important part of the definition of a brand.
Before we discuss added values two general points must be discussed briefly.
First, the strongest brands are often the most distinctive. But in their
distinctiveness they are also generally well balanced between motivating benefits
– those (generally functional) benefits that prompt the consumer to use any
brand in the product filled – and discriminating benefits - those prompting the
consumer to buy one brand rather them another. All brands are different from
each other in the obvious sense that the names and packaging are different. But
distinctiveness over and beyond this is highly desirable, although distinctiveness
based so much on discriminators that it neglects motivators is a recipe for a weak
brand.
Second, consumer taste differs so widely that no brand can be all things to
all people. Moreover any manufacturer who strives to cover too vide a filed will
produce a brand that is number two or number three over a wide range of
attributes, rather than number one over a Limited range of attributes (which
might enable it to become first choice to a Limited group of consumers, the
normal route to success).
Most brand have a known and restricted range functions and added
values are non-functional the manufactures benefits over and beyond these.
The major sources of added values can be listed as:
1. Added Values that come from Experience of the Brand :-
These include familiarity, known reliability and reduction of risks. A brand
becomes an old friend. This includes the important notion of brand personality
the personality of the brand itself – its functional and non-functional features
as they might be described in quasi – human terms.
2. Added Value that come from the sort of people who use the brands:-
Rich and snobbish, young or glamorous or masculine or feminine. There are
enormous examples of brands which have these user association, most of
which are fostered by advertising. Association can be with our individual or an
entity or it can be user groups also.
3. Added values that come from the belief that the brand is effective:-
This is related to the way in which some brands work on peoples belief and
there is sufficient evidence to prove that branding in such product affects the
mind’s influence over body processes. Belief in effectiveness also plays an
important role with cosmetics with their ability to make their users feel more
beautiful with generally beneficial results.
4. Added value which come from the apperance of the brand:-
This is the prime role packaging two identical products with different
packaging may not be equally attractive to consumers. There is strong
evidence which points out that in many product categories the physical
appearance of the brand plays a major in purchase decision (e.g. white
goods). If a consumer if offered a choice between two products having similar
features and attributes, but different styling: e.g. one is extremely sleek and

the other is just a basic covering than the consumer would prefer the first
alternative.
5. Added values that come from the manufacturers name and reputation:-
This is another source of added value which results from an established and
reputed manufacture quality of product and service quality. But in certain
situations these may not make an impact and they are:
a) When the consumers do not known who the manufacturer of a particular
brand they use, then obviously there are no role of added value which result
from reputation etc.
b) A familiar brand name is no longer needed as a guarantee of new products
homogeneity and quality. Branded goods are known to be homogenous and
to perform their function well. Yet there have been instance where brands
spell different (e.g. Philips produced average quality as well as high quality
goods) hence there no guarantee that a new product by Philips would be of
average or high quality.
The contribution of added values to consumer choice is easily demonstrated
by the commonly used technique of matched product tests. In these tests, a
sample of consumer use and judge brands in coded but unnamed package
and a second and similar sample of consumers uses and judges those same
brand in their normal containers. The invariable pattern is that the preferences
among identified brands are quite different from preferences among those
same brands in coded but unidentified containers.
The subject of added values is quite alluring by in conclusion, added
values in a brand arise from people’s use and familiarity from the advertising
and associations and from packaging. If follows that added values are not
immediately available to manufacture of new brand but are built over time and
therefore initially a brand must solely survive on its superior functional
performance.
.
FACTORS THAT SHAPE A BRAND DURING ITS CONCEPTION & BIRTH
Five influences on a new brand: The following are the five major forces,
which shape a brand: -
1. FUNCTIONAL PERFORMANCE:
A new brand is like a newborn child, which comes naked in this world. Without
superior competitive functional performance in at least some respect it has little
chance of succeeding; it will not persuade a person who buys it on a trial basis or
who receive a free sample to buy it again. One of the key roles of the pack
design, the introductory promotions and the advertising is to communicate this
functional performance clearly and forcefully.

The pack as an advertising medium and the advertising itself should also begin
to build those added values that are vital to protect the brands often rather fragile
franchise, once competitors have moved towards functional parity with it. That is
the new brands need the edge of added values to maintain its position when as
often happens, it loses within months the advantage of its initial functional lead.
If when enters the market, the brand is to be bought more than once, the
decision is essentially based on its functional properties.
Evidence points out that the functional superiority of a potentially
successful brand also provides under pining and support for the other factors
contributing to success, notably the effort of sales force. So, if the first and most
important thing, its functional performance, is recognized, synergy will lend a
hand to boost its effect. But when a brand is not going to succeed efforts of the
sales force alone are not enough to compensate for it functional weaknesses.
Competitive functional performance is not something that is important to
new brands and unimportant to mature brands, because the added values that
these brands have acquired over the years cannot provide a permanent bulwark
against functionally superior newcomers.
The first question for the manufacturer of a new brand to ask is “from
which brands do we want to take business “ once this question has been
answered, the firm can direct R&D efforts to the specific functional performance
with the new brand characteristics (i.e. the new brand that is being developed
should be superior functionally/or in terms of functional performance). Once the
competing brands are know better and superior functional product/brand can be
developed.
2. POSITIONING:
This is another major variable which influence the eventual outcome (failure &
success) of a brand. Positioning should be in tune with the brand objective and
target market.
The positioning strategies can be classified into two brand groups. Price
based and non-price strategy. Price based implies that the product is positioned
in terms of high price/premium, value priced or economically priced/low priced.
Non-price strategies refer to nemours positioning strategies like positioning by
user, by symbol, competitor etc.
The key to successful positioning lies in identifying a key USP, which the
firm should focus on and hammer away on it trying to become no. one brand for
a Ltd. no. of consumers (e.g. Mercedes Engineered like no other car).
3. NAME:
Many marketing guru’s feel that choice of brand name is a less substantial matter
when viewed in comparison to making sure that the brand is functionally effective
and is properly positioned in the market. Many marketers feel that the added
values of a brand are embodied with name, that there values an be transferred to
another product by using the brand as a common property this is the rational for
the strategy of using and umbrella brand name for number of different products
(a strategy often described as range extensions or line extensions).
The most obvious point is that the danger of cannibalization is likely to be

greater where the products with the umbrella name are in competition with each
other (e.g. Rin bar & Rin Powder) than when they are not (Gillette Blades and
Gillette after shave).
The only major advantage of using umbrella naming is within the same
segments ((e.g. segments using one product like Denim After Shave can easily
try Denim soap), that is people who use one product under a brand name can,
presumably easily be persuaded to sample a second perhaps different category
of product using that same brand name. Usually the advantage is in term of
reduced promotional and advertising costs and efforts.
In fact market research data indicates that basically the success of a
brand in a new product category depends primarily on functional performance.
The economic advantage of umbrella naming are substantially illusory in the
short and medium term. Umbrella names are in general no worse on better than
new names. As general rules the level of success of a new brand is much more
dependent on support levels than on name. It is possible that umbrella names
provide greater staying power, by enabling greater addition to added values,
which is essentially a long-term process.
In the long-term, an umbrella naming is really a part of a manufacturers
corporate policy an act of faith, and one of the basic elements on which his
business is based and on which the firm might be included to attribute its long-
term success in the marketplace.
4. PRICE:
In perhaps two-third of all cases, a new brand enters an existing market at
a premium price. The firm justifies this high price on the basis of innovation and
functional superiority of the brand over its competitors. In reality, the premium
prices are charged to fund the high cost of achieving sampling. The costs are
usually at a high level to compensate for the established position of existing
brands with their stock of added values, which have been acquired over the
years and while a new brand only rarely makes a profit during its first two years
or so, deficit budgeting puts an automatic upward pressure on the consumer
price. There is also a good deal of evidence that, although new and different
brands will normally command a significant price premium, this premium tends to
narrow during the first few years of a brands life.
There are also facts to support the contention that premium prices are
reasonably well accepted as justification for functional improvement, although
consumers are heartennigly skeptical about manufacturer attempts to charge a
premium price for no obvious functional advantage at all.
Stephen king (developing new brands) suggests a useful investigative and
pragmatic approach to the question of initial pricing. The technique
recommended is research into consumer attitude based on direct and indirect
questions, which will provide guidance to the feasibility of “skimming” or
“penetration pricing”.

On the other hand basing prices on derivation of production costs will tell
the manufacturer whether he will cover costs at a given level of output, it will give
little about whether the company will in fact be able to sell that output.
5. DISTRIBUTION:
One key factor influencing the immediate success (failure) of a new brand
is the ability of the manufacturers sales force to get it into distribution.
Expanded distribution is a result of success. If the brand goes well in the
early stages, the public demands it, retail branches hear from the head office.
The word gets around and more retailers want to stock it.
But a functional performance is not important to the consumer alone.
Retailers themselves, and even more importantly the sales force, are conscious
of functional superiority and its contribution to a brands success. Functional
superiority will provide conviction to the salesman and draw commitment from the
retailer.
Brand Associations - A brand association is anything mentally linked to the

brand. An association can affect recall, provide a point of differentiation, provide
a reason to buy, create positive attitudes and feelings, and serve as the basis for
trial.
Overall quality ratings, technological leadership, newness and associations with
customer benefits are the strongest. The combination of all associations supports
the price which can be charged. The relative price position often is central.
Whether the brand is in the luxury, mid-price or budget, being at or near the top
or bottom of the selected category is often most advantageous.
This safety-pin print ad for Volvo,

created in Japan, positions the car
so perfectly. So simply and quickly.
Volvo is “Safety.”
Importance to marketers and consumers.

Brand associations are the category of a brand's assets and liabilities that include
anything "linked" in memory to a brand .Brand associations can also be defined
as informational nodes linked to the brand node in memory that contain the
meaning of the brand for consumers. Brand associations are important to
marketers and to consumers. Marketers use brand associations to differentiate,
position, and extend brands, to create positive attitudes and feelings toward
brands, and to suggest attributes or benefits of purchasing or using a specific

brand. Consumers use brand associations to help process, organize, and

retrieve information in memory and to aid them in making purchase decisions.
Brand Image
Simply put, brand image is how your customers, potential customers, suppliers,
and the general public sees you. It’s how you are positioned in their minds. Large
enterprises spend a great deal of time and money on making sure that their
brand projects exactly what they want about the company. When they’re
successful in branding themselves, the payoff can be huge.
Take the global brands—Honda, MacDonald’s, Nike, Coke—they all have very
strong brand franchises. Now pay attention here. Their brand franchises don’t
focus on product features. Products can change. Features can change. Brands, if
successful, can last decades because they center on more enduring values.
Think Honda and you think reliability. You don’t think power steering or antilock
brakes. MacDonald’s? You don’t think cheeseburger or shakes. MacDonald’s is
the place to take your family. Just do it with Nike and you’ll be a winner. High-
performance plastic is the furthest thing from your mind. Do people buy Coke
because it tastes sweet? No, they buy Coke because it brings the world together.
The key to having a good brand image is to have a consistent perception of your
company as it relates to important customer values. Once you strike the right
chord, customers will keep coming back. Ask two-time Honda owners what car
they’ll buy next. Try to get a Coke drinker to switch to Pepsi. What’s more
customers will pay for brands. Just check out your local supermarket. Look at the
price of the no-name cereal compared to one put out by Kellog’s. Brands always
cost more. They command a premium.

Having a good brand image is important to small businesses as well. Customers

look for the same things from large or small companies. They want to deal with a
reputable and trustworthy business. They want good value. They want quality.
They'll choose a company that projects that over one that doesn't any time any
where.
Brand Loyalty
Loyalty is an important concept in strategic marketing. Loyalty provides fewer
reasons for consumers to engage in extended information search among
alternatives. Researches also indicates that purchase decisions based on loyalty
may become simplified and even habitual in nature and this may be a result of
satisfaction with the current brand(s). A base of loyal customers will be
advantageous for an organisation as it reduces the marketing cost of doing
business. In addition, loyalty can be capitalised on through strategies such as
brand extension and market penetration. Finally a large number of loyal
customers is an asset for a brand, and has been identified as major determinant
of brand equity .
Repeat Patronage: High
Spurious
Loyalty Loyalty
Relative High
Attitudes: Low
Latent
No Loyalty Loyalty
Low
Brand Loyalty is a crucial goal and result of successful marketing programs,

sales initiatives and product development efforts. At the core of every successful
brand is a nucleus of loyal customers. These "true believers" understand the
brand better, purchase more often and recommend the brand to others. Loyal
customers can be and should be the foundation for marketing strategy. Beyond
the profit they generate, loyal customers provide the basis for brand development

and improvement. The brand that loses sight of its loyal customers has lost its
direction, and is vulnerable to losing market share.
As a brand's percentage of loyal customers goes up, market share increases and
the brand becomes more profitable. Share rises because those customers who
become repeat purchasers are no longer lost to the competition. In addition,
repeat customers are more profitable than new customers - attracting new
customers involves investing far more marketing and promotional funds. To
some extent, brand loyalty is being developed and managed by all successful
brands. But in many cases loyalty itself is considered simply the result of well
executed marketing programs. The best way to achieve greater brand loyalty is
by managing the brand loyalty process. This involves measuring the drivers of
brand loyalty, selecting high impact loyalty improvement projects, and quickly
carrying them out.
Brand Extensions
Traditionally the Indian market has seen extensions which are merely line
extensions by using the same brand name to launch new forms, flavors, variants
or colors of the existing product. Santro and Santro Zip Drive, Close-Up Red and
Green, Colgate Gel and Colgate toothpaste, Surf & Surf Ultra, are not brand
extensions in the true sense, but merely line extensions. Barring a handful of real
extensions, like Denim soap & talcum powder, Dettol antiseptic & floor cleaner,
Anchor switches and toothpaste, most of the marketing giants like HLL, P&G and
Reckitt Coleman use multi-branding strategy.
It is only recently that the Indian marketers have realized the full potential of
brand extensions. And going by number of companies adopting the brand
extension concept it looks like the idea has taken root in the mind of brand
strategists as a viable growth strategy in the Indian market.
Why Brand Extensions:
Introduction of a new product with an established brand name can

dramatically reduce the investment required and improve the likelihood of its
success. It is therefore not surprising that brand extensions have been the
strategy of growth for many firms during the past decades. Brand extensions
provide a vehicle to exploit brand name recognition and brand image. A strong
brand name can provide consumers with the familiarity and knowledge of a
reputable brand. Additionally, brand extensions can decrease the cost of
accessing distribution channels and make promotional efforts more efficient. One
researcher defines brand extension as "using a brand in one category to
introduce products in a totally different category."
Brands are basically a promise to the consumers underlying the trust,

familiarity, risk reduction and provide emotional benefits. Strong brands are
therefore enormously attractive to senior managers, whose interest is fed by any

number of books and articles on how to get and keep them. But anyone who
thinks seriously about branding soon realizes that there are basically two kinds of
strong brands: those that are focused and those that are diversified.
Focused like IBM concentrating on personal computers and accessories

or diversified like Wipro which includes vanaspati, lighting, soaps, healthcare,
computers, and baby diapers. On one hand, IBM has maintained a focused link
between its brand and its core product line: personal computers. At the other end
is Wipro. IBM has decided to remain focused for now, while Wipro elected — and
managed — to diversify. The crucial question for confronting strategists is
whether to extend the brand or stay focused. As these examples show, a strong
company can do well in either.
Benefits of Brand Extensions
At least four factors appear to be driving the brand extensions. First,

leveraging a brand widely tends to lower brand management support costs.
Second, the tendency to leverage the franchise with existing consumers is
another major attraction. Third, relationship benefits seem to have growing
importance for customers; relationship building (through loyalty programs, better
service, and a better understanding of customers) may now count for more than
functional benefits. As relationships outstrip products in importance, leveraging
brands makes more and more sense. Fourth the prospects of extending the
brand in a new and growing market imply supernormal profits and opportunities
for growth.
A critical assumption underlying the use of brand extensions is that strong
brands offer greater leverage for extension than weaker brands. Brand strength
has been implicitly defined in terms of consumer predispositions towards the
brand. Established brands tend to be used as quality cues. A recognizable brand
is often relied upon by consumers as a strategy for dealing with perceived risk.
Placing a trusted brand name in a new category is less expensive and
risky than creating a new brand, particularly with new products failure rates
exceeding 90%; entering a new category generates increased exposure for the
brand across the store, and therefore may serve to strengthen the base brand.
Extensions across venues are less likely than traditional line extensions
(i.e. new flavors, varieties, models, etc.) to cannibalize sales of the original brand;
and Most importantly, extensions (particularly licensing) can provide an additional
revenue stream with little extra effort or expense.
Core brand associations are conveyed to extensions

Consumer evaluation of a brand extension is frequently described by a
transfer process in which core brand associations are conveyed to the extension.
As we have seen, brand associations can vary among consumers, across usage
situations, and in different competitive environments. Potentially, the core brand
may provide a group of salient, positively evaluated, relevant associations which
are valid within or across product categories. Ideally, a core brand's associations

can contribute a complex, yet well-defined image to an extension. A well-

established brand usually has a well-defined brand image. A great benefit of
brand extension is the instant communication of a salient image.
In addition to brand associations, extension can convey quality
associations. To avoid advertising battles based on product specifications, one
can compete on the basis of perceived high quality. Hewlett-Packard has used
this strategy by extending its name to numerous products and thereby has
extended its umbrella of quality to them. When quality is perceived to be high it is
valuable to share the benefits of a core product with an extension. Without
perceived high quality, however, the task is impossible.
Another benefit of extension is the cross fertilization which advertising the core
brand can bring. That familiarity also provides consumers with another benefit in
the form of reduced risk with a new product. Consumers confronting Diet Coke
for the first time would know that it was a Coca-Cola product of assumed high
quality. In reported tests of new products, most support the fact that an
established brand name enhances initial consumer reaction, interest, and trial.
Enhancing the core product
The final benefit of extension is enhancing the core product. Like a
successful offspring, an extension may reinforce the core product's brand image
instead of weakening it. Diet Coke is clearly positioned as a tasty, low-calorie
soda and reinforces Coke's association with cola and good taste.
Brand Extension Strategies:
Fit and Similarity
Several authors have suggested that an effective brand extension must be

perceived as a "fit" with the original. Fit has been defined as the extent to which a
consumer accepts the new product as a logical and expected extension of the
brand. A poor fit between the original brand and the extension may diminish the
appeal of the new product. Positive attributes may not transfer from the brand to
the extension..
Three aspects of fit are:
(1) complementarity, defined as the extent to which two products can

be utilized in common usage situations or can together satisfy some
need, (e.g., cricket bats and cricket balls);
(2) substitutability, or the extent to which the two products can

replace the other in satisfying the same need (i.e., pizza and burger);
(3) transferability, defined as the extent to which manufacturer's

expertise in one category transfers to the extension product. This
expertise includes production facilities, employees, and the skills of the
firm.

Neither complementarity nor substitutability had significant main effects in rating

the brand extensions. Rather, the complementarity and substitutability measures
interacted with the perceived quality of the original brand to predict brand
extension evaluation. Transferability (i.e., perceived expertise of the
manufacturer to make the extension product) had a direct impact on the
evaluation of brand extensions. For example McDonald's photo processing
caused some subjects to comment that McDonald's should remain in the food
business and had no credibility as a photo-processor.
Positive ratings of a brand seem to transfer to brand extensions. Further,

there seems to be greater transfer of affect from the brand to the brand extension
when the brand extension was very similar to the original brand product.
Correlations between attitude toward the original brand and attitude toward
extensions decreased as the degree of similarity decreased. The process of
affect generalization from the brand to the brand extension may not take place
when the extension is insufficiently similar to the original brand.
Successful brand extension depends on consumer perceptions of how it "fits"

both in terms of similarity and consistency with the brand concept. Take two well
known brand names, Timex and Rolex. Both brands are in the watch category
but convey very different meanings to consumers. Rolex is associated with the
concept of luxury and prestige, while Timex 'is associated with product
performance. Both product feature similarity and brand concept consistency were
found to be important predictors of favorable reactions to brand extensions.
Further, the authors suggest that concept consistency may have a greater effect
on the prestige brand than on the functional brand.
Extensions Should Support Brand Positioning
Extensions are even more powerful when linked back to the customer
relationship and how it has been used as a basis for brand positioning. This
means ensuring that the extension builds off one or more of the following
positioning components:
• It extends the target market: Gillette’s Sensor for Women
leveraged the definition of the business Gillette’s in and its
brand benefit of the clean shave,” effectively extending its
target market from only men to all adults who shave.
• It extends your business definition: In launching IBM Consulting,
IBM changed the definition of the business it was in from
“technology-based” to “technology-based solutions.”
• It extends your point of difference: By introducing the benefit of
“faster relief,” Dispirin grown its points of differentiation. So has
Bluedart by establishing a new drop-off time for packages of
midnight in some locations.
• It extends the entire positioning. This usually occurs when a
business is trying to enter a new market for the first time with a

brand whose strengths are recognized beyond its current target

market and current definition of the positioning. This can be risky,
but done right, it allows a company to diversify its range of branded
products and take a true portfolio approach to managing its brand.
Creating a category
This may be one of the ways in which brand extension can be successful.
A brand that is moved into an existing product or service category may end up as
a me-too unless it is able to achieve significant differentiation from the
competitors. The new variant must be able to promise something different such
as simplicity or sustained added value compared with existing brands in the
sector. Nokia’s development of a fashion element within the mobile phone sector
moves the brand into a potentially lucrative area.
Extending to revitalize
Brand extensions can be one way in which the brand is kept modern and
alive. Nescafé is an example of a strong parent brand that has used brand
extension to develop a series of variants that are able to target different coffee
drinking occasions, consumer types and price sectors. In turn these are able to
strengthen the Nescafé parent brand. The addition of a service or experiential
element such as Café Nescafé can also strengthen the brand by moving it
beyond mere imagery to the provision of genuine consumer engagement.
Nescafé can thus be equally an established and modern, up-to-date brand.
Extensions Should Support Brand Positioning
Extensions are even more powerful when linked back to the customer
relationship and how it has been used as a basis for brand positioning. This
means ensuring that the extension builds off one or more of the following
positioning components:
• It extends the target market: Gillette’s Sensor for Women
leveraged the definition of the business Gillette’s in and its
brand benefit of the clean shave,” effectively extending its
target market from only men to all adults who shave.
• It extends your business definition: In launching IBM Consulting,
IBM changed the definition of the business it was in from
“technology-based” to “technology-based solutions.”
• It extends your point of difference: By introducing the benefit of
“faster relief,” Dispirin grown its points of differentiation. So has
Bluedart by establishing a new drop-off time for packages of
midnight in some locations.
• It extends the entire positioning. This usually occurs when a
business is trying to enter a new market for the first time with a
brand whose strengths are recognized beyond its current target
market and current definition of the positioning. This can be risky,

but done right, it allows a company to diversify its range of branded

products and take a true portfolio approach to managing its brand.
Creating a category
This may be one of the ways in which brand extension can be successful.
A brand that is moved into an existing product or service category may end up as
a me-too unless it is able to achieve significant differentiation from the
competitors. The new variant must be able to promise something different such
as simplicity or sustained added value compared with existing brands in the
sector. Nokia’s development of a fashion element within the mobile phone sector
moves the brand into a potentially lucrative area.
Brand Equity and Brand Valuation
Brand equity has received considerable attention in the marketing literature in

recent years. Much of this attention has focused on developing alternative
theoretical definitions of brand equity; as a result, some confusion surrounds the
implications of brand equity issues in marketing research applications. The
authors discuss the role of brand names in consumer purchase decision-making
processes and provide a framework within which brand equity issues can be
examined by marketing researchers.
In 1988, Lance Leuthesser concluded that there was no precise definition of

brand equity nor even common agreement on what it is." More recently, however,
several definitions of brand equity have been published, including:
• "Broadly stated, brand equity refers to the residual assets resulting from
the effects of past marketing activities associated with a brand."
(Rangaswamy et al. 1990)
• Brand equity is added value that "is attributable to the brand name itself
which is not captured by the brand's performance on functional attributes."
(Sikri 1992)
• "Brand equity can be measured by the incremental cash flow from
associating the brand with the product." (Farquhar 1989)
• "Brand equity is defined in terms of the marketing effects uniquely
attributable to the brands -- for example, when certain outcomes result
from the marketing of a product or service because of its brand name that
would not occur if the same product or service did not have that name."
(Keller 1993)
• "A consumer perceives a brand's equity as the value added to the
functional product or service by associating it with the brand name."
(Aaker 1993)
A brand is a name or symbol used to identify the source of a product. When

developing a new product, branding is an important decision. The brand can add
significant value when it is well recognized and has positive associations in the
mind of the consumer. This concept is referred to as brand equity.
What is Brand Equity?
Brand equity is an intangible asset that depends on associations made by the

consumer. There are at least three perspectives from which to view brand equity:
• Financial - One way to measure brand equity is to determine the price

premium that a brand commands over a generic product. For example, if
consumers are willing to pay $100 more for a branded television over the
same unbranded television, this premium provides important information
about the value of the brand. However, expenses such as promotional
costs must be taken into account when using this method to measure
brand equity.
• Brand extensions - A successful brand can be used as a platform to
launch related products. The benefits of brand extensions are the
leveraging of existing brand awareness thus reducing advertising
expenditures, and a lower risk from the perspective of the consumer.
Furthermore, appropriate brand extensions can enhance the core brand.
However, the value of brand extensions is more difficult to quantify than
are direct financial measures of brand equity.
• Consumer-based - A strong brand increases the consumer's attitude
strength toward the product associated with the brand. Attitude strength is
built by experience with a product. This importance of actual experience
by the customer implies that trial samples are more effective than
advertising in the early stages of building a strong brand. The consumer's
awareness and associations lead to perceived quality, inferred attributes,
and eventually, brand loyalty.
Strong brand equity provides the following benefits:
• Facilitates a more predictable income stream.

• Increases cash flow by increasing market share, reducing promotional
costs, and allowing premium pricing.
• Brand equity is an asset that can be sold or leased.
However, brand equity is not always positive in value. Some brands acquire a
bad reputation that results in negative brand equity. Negative brand equity can
be measured by surveys in which consumers indicate that a discount is needed
to purchase the brand over a generic product.
Different perspectives of brand valuation
Brand valuation has been viewed from a variety of perspectives. The first
perspective has used the concept of brand equity in the context of marketing

decision-making. The second perspective is financially based and views brand

equity in terms of incremental discounted future cash flows that would result from
a branded product revenue, in comparison with the revenue that would occur if
the same product did not have the brand name (Simon & Sullivan, 1993).
MARKETING PERSPECTIVE
Aaker (1991) has provided the most comprehensive definition of brand

equity to date: “A set of brand assets and liabilities linked to a brand, its name
and symbol, that adds to or detracts from the value provided by a product or
service to a firm and/or to the firm's customers.”
Aaker has also synthesized some contemporary thinking about marketing

and depicted a comprehensive yet parsimonious set of factors that contribute to
the development of brand equity (Aaker, 1996b). He has contemplated that, to a
greater extent, the equity of a brand depends on the number of people who
purchase it regularly. Hence, the concept of brand loyalty is established as a vital
component of brand equity. Strong effects of brand recognition on choice and
market share are discussed and documented extensively in marketing literature.
That is why Aaker regards the concept of brand awareness as a second
component of brand equity. Considering the PIMS findings (Buzzell and Gate,
1987), perceived quality is included as another significant component. Other
proprietary brand assets - such as patents, trademarks, and established channel
relationships - constitute the final component.
Loyalty
Price Premium
Aaker(1996) suggest that one of the most effective approaches to the
valuation of a brand is the premium that it commands in the market. A basic
indicator of loyalty is the amount a customer will pay for a product in comparison
to other comparable products. A price premium can be determined by simply
asking consumers how much more they would be willing to pay for the brand?
According to him if the price premium for a brand can be obtained, then the value
of the brand in a given years will be the price differential (premium) times the
number of units sold. For Example, if a firm’s brand commands a premium of Rs.
5 per unit and it has sold 2,50,000 units, then the brand’s value is Rs.12,50,000.
A consumer may be willing to pay more for brand A than brand B. this is
the price premium associated with brand loyalty. It could be high or low, and
positive or negative. While measuring price premium, it is necessary to divide the
market into loyalty segments. Premium is always with respect to one or a set of
competitors, which must be specified. A simple question put to the customers
measures price premium, e.g. how much more would you pay so as to buy Sony
TV instead of Videocon TV? According to Chunawalla(1999), a sophisticated
approach would be to conduct conjoint analysis or trade-off analysis. A drawback
of this approach is its reference to a competitor or set of competitors. It is

necessary to arrive at several sets of price premiums when there are a number of
brands in the market. Even then an emerging competitor might be missed.
Customer Satisfaction: Satisfaction or preference for a brand shows how loyal

the consumer is likely to be to a brand. A direct measure of customer satisfaction
can be applied to existing customers. The focus can be the last use experience
or simply the use experience from the customer's view.
Consumers are asked about their experience with the brand, and whether
the brand met their expectations. Preference is measured by asking them
whether they assessed whether the usage of the brand caused some
inconvenience. There can be direct questions about loyalty to the brand, e.g., are
you loyal to this brand? Satisfaction model is very useful in service industry like
airlines and banks. One drawback of this model is that it can be applied only to
the users and customers.
Perceived Quality and Leadership Measures
Perceived Quality is one of the key dimensions of brand equity and has been
shown to be associated with price premiums, price elasticities, brand usage and
stock return. It can be calculated by asking consumers to directly compare similar
brands.
Leadership/Popularity has three dimensions. First, if enough consumers are

buying into the brand concept it must have merit. Second, leadership often taps
innovation within a product class. Third, leadership taps the dynamics of
consumer acceptance. Namely, people are uneasy swimming against the tide
are a likely to buy a popular product. This can be measured by asking consumers
about the product's leadership position, its popularity and its innovative qualities.
Associations/ Differentiation Measures

Perceived Value: This dimension simply involves determining whether the
product provides good value for the money and whether there are reasons to buy
this brand over competitive brands. We can ask consumers how much more
valuable the product in question is than another can. In other words, we have to
assess what percentage rise in the preferred product will make him switch to the
less preferred one. Another dimension is to put priced products before the
consumers. Then they are asked how much of each product they are willing to
buy. Prices can then be varied, and the same exercise is repeated. It assesses
the relative value of different products in the perception in the perception of the
consumers.
Brand Personality: This element is based on the brand-as-person perspective.

For some brands, the brand personality can provide links to the brands emotional
and self-expressive benefits.

Organizational Associations: This dimension considers the type of organization

that lies behind the brand.
Awareness Measures
Brand awareness reflects the salience of the product in the consumer's mind and
involves various levels including recognition, recall, brand dominance, brand
knowledge and brand opinion.
Alternative Means to Brand Equity
Building brand equity requires a significant effort, and some companies use
alternative means of achieving the benefits of a strong brand. For example,
brand equity can be borrowed by extending the brand name to a line of products
in the same product category or even to other categories. In some cases,
especially when there is a perceptual connection between the products, such
extensions are successful. In other cases, the extensions are unsuccessful and
can dilute the original brand equity.
Brand equity also can be "bought" by licensing the use of a strong brand for a
new product. As in line extensions by the same company, the success of brand
licensing is not guaranteed and must be analyzed carefully for appropriateness.
Brand Experience
Brand experience is the process of taking the values of a brand and extrapolating
them to create an environment where the consumer becomes immersed,
surrounded by colours, shapes, sounds and sensations which embody what the
brand is all about.
Through the creation of the "brand world", everything reflects and reinforces the
brand. No longer do consumers just consume a brand: with brand experience,
they can dive into the brand world and live their favourite brand.
Brand experience can take the product or service further into the consumer's
psyche than the more traditional uses of brand values alone, and so opens up
new areas of association and engagement for the consumer.
The creation of the brand experience represents an area that companies will
have to address in order to provide sustained differentiation for their brands. At a
time when consumers are becoming increasingly disenfranchised from many
marketing activities and many marketers are finding it difficult to differentiate their
brands through "conventional" means, the brand experience can represent the
way forward.

Brand Experience is a wide concept that runs close to event marketing at one
end and relationship marketing at the other extreme. It looks beyond the brand to
identify and develop values that have a greater degree of relevance for the
consumer. In doing this, it moves much close to the consumer in terms of
immersion, engagement or individual relationships.

This is where brands can start to develop a competitive edge. Brand experience enables marketers to provide genuine and
sustainable differentiation which, in turn, provides a strong defence against "me-toos" and other competitive threats. Meanwhile it
enables products and services to be transferred into unrelated categories.
Important Brand
Brand B
awareness
Bilal Mustafa Khan© 2008. Department of Business Administration. Only for internal distribution and class discussion. The material may
not be reproduced in any form without prior permission either in parts or whole.
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Brand Management Notes by Bilal Mustafa Khan

Brands: The important distinction is between a product and a brand. A product is

Event brands (periodic experiences, usually within the worlds of sports,

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

Branding today is used to create emotional attachment to products and

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

A brief history of branding

Indeed, branding—the use of symbols to concisely convey information about a

source—his state-of-the art factories—and therefore their quality. But the

Quite simply, a brand is a promise to the customer — a mirror in which the

For customers, branding plays two important roles:

BRANDS and Added Values:

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

FACTORS THAT SHAPE A BRAND DURING ITS CONCEPTION & BIRTH

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

The most obvious point is that the danger of cannibalization is likely to be

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

Brand Associations - A brand association is anything mentally linked to the

This safety-pin print ad for Volvo,

Importance to marketers and consumers.

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

brand. Consumers use brand associations to help process, organize, and

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

Having a good brand image is important to small businesses as well. Customers

Repeat Patronage: High

Brand Loyalty is a crucial goal and result of successful marketing programs,

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

Why Brand Extensions:

Introduction of a new product with an established brand name can

Brands are basically a promise to the consumers underlying the trust,

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

Focused like IBM concentrating on personal computers and accessories

Benefits of Brand Extensions

At least four factors appear to be driving the brand extensions. First,

Core brand associations are conveyed to extensions

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

can contribute a complex, yet well-defined image to an extension. A well-

Fit and Similarity

Several authors have suggested that an effective brand extension must be

Three aspects of fit are:

(1) complementarity, defined as the extent to which two products can

(2) substitutability, or the extent to which the two products can

(3) transferability, defined as the extent to which manufacturer's

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

Neither complementarity nor substitutability had significant main effects in rating

Positive ratings of a brand seem to transfer to brand extensions. Further,

Successful brand extension depends on consumer perceptions of how it "fits"

Extensions Should Support Brand Positioning

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

brand whose strengths are recognized beyond its current target

Bilal Mustafa Khan© 2008. Department of Business Administration. Only for

but done right, it allows a company to diversify its range of branded

Brand Equity and Brand Valuation

Brand equity has received considerable attention in the marketing literature in

In 1988, Lance Leuthesser concluded that there was no precise definition of

A brand is a name or symbol used to identify the source of a product. When

What is Brand Equity?