KM Project

Demystifying
Branding
Group:
Aman Sachdev12DM016

Harsh Gupta 12DM054

Shikhar Gupta 12DM149

Sidharth Misra 12DM160

 Table of Contents

S.No Topic Page No

1 Introduction 2
2 Brand and Brand Value 2
3 Brand Hierarchy Model 3
4 A Move towards a Broader System of Category Management 4
5 Some examples from the real world 5

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Introduction: Branding, the topic itself encourages various perceptions and opinions.
Everybody has their own version of a concept which is not understood properly and as a
result implemented rather shabbily. Some attempts have proven to be correct but history has
proven that most of the companies have a largely confused approach towards the concept.
Companies new to the market may be excused for the conceptual mistakes committed but
even their larger and more established counterparts are no good when it comes to setting the
right example and paving a framework akin to the correct approach. A look back at history
and some of the more successful instances provide us with a sneak peek into an approach
towards branding which has proven to be more successful. This article does not describe an
invention in itself but certainly identifying the past and the present and connecting the dots
leads us to a discovery of an approach which should be more normative. The idea is to
develop a basic framework for understanding branding, its various forms and how a company
can make use of this framework for taking and implementing optimal branding decision. The
idea is to correctly identify the heuristics involved and develop an algorithmic approach
towards the idea.

Brand
•As per American Marketing Association (AMA), a brand is “a name, term, sign, symbol,
design, or combination of them, intended to identify the goods or services of one seller or
group of sellers and to differentiate them with the competitors.”

•It is thus a product or service whose dimensions differentiate it in some way from the others
products or services designed to satisfy the same need.
•These differences may be functional, rational, or intangible related to product performance
of the brand.

•Can be more symbolic, emotional, or intangible –related to what the brand represents

Brand Value
Brand value is the net present value of future cash flows from a branded product minus the
net present value of future cash flows from a similar branded product or from a
representative unbranded version, when such competition exists in the market. In simpler
terms, this value represents what the brand is worth to the firm. Brand value has to be
measured as the product of

a) Incremental quantity sold and

b) Incremental price both of which have to be considered in relation to the lowest priced
branded competitor or when unbranded competition is present in relation to the average price
of the unbranded offerings.

If company A sells 100,000 more units and the incremental price is Rs. 10/unit versus the
appropriate reference offering, the brand value works out to 100,000x 10= Rs. 1,000,000. It
also has to be accepted that a single product brand would if marketed and managed properly,
experience an increase in brand value initially but this value would progressively reduce and

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become zero when the product is “commoditized” which means that a brand as well as
other branded versions of the product are not able to sell incremental quantities at
differentiated i.e. premium price compared to the representative unbranded offering.

Brand Hierarchy Model

Most successful brands follow a 3 tier model:

Ø Corporate Brand

Corporate branding is giving a new product a company’s name or associating it with a well-
established and reputable company in order to give the product credibility. This helps
Consumers to familiarize with the company’s products which create brand loyalty. If the
public likes one product from this company, then they may seek out the brand name when
buying other products. Examples of Corporate brands are Tata (India), Disney, Microsoft,
Volkswagen(Global). Let’s now look at how corporate brands orginate, grow and enable new
brands(corporate, category and product brands) to come into existence, evolve to self
sustenance and thereafter contribute themselves to the mother brand.

Birth and Evolution of the Parent brand: Corporate brands often carry the name of the
founder/entrepreneur of a company and reflects the core values of this person. Thus the Tata
brand is associated with the founder of the group of companies that carry his name- Jamsetji
Tata whose core values reflected Indian corporate capabilities and were strongly associated
with trust and trusteeship. These values have transcended several generations of this leading
Indian business group. As the company/group grows and new companies are formed and each
company establishes and markets its distinctive products, the companies as well as their
offerings are strongly associated with the founding company and its brand identity which
would reflect the core values. If we consider Titan Company, a firm that was formed much
after the original Tata ventures into Textiles and Steel. While the company did not have the
Tata name or prefix, it was clearly associated with the Tata group and was able to gain a
foothold in what was then a monopoly of HMT(a public sector venture), this company gained
acceptance and recognition through its identification with the Tata group. This illustrates and
explains how corporate brands are born and grow and how they create a larger identity which
is leveraged by new companies who are a part of and benefit initially from it.

Evolution of the Child brands: The new companies in the group derive identity and strength
from the original corporate brand. Taking the case of Titan, the company gradually
established and built on its identity a strong competitor in the Indian watch market with its
namesake Titan brand of watches. As this identity intensified and expanded, the firm
launched new brands including Sonata and Fastrack. These brands were first identified as sub
brands of the parent brand Titan which had by now itself become a self sustaining corporate
brand. The Titan brand took the unique positioning of Watch as a Fashion accessory (which
has been a universal trend in the global watch industry) and a sub positioning as “a gifting
item” which was particularly attractive in the Indian context, where rites of passage including
reaching adulthood, graduation from college and most of all Marriage are seen as mandatory
gifting occasions. With the success of the Titan brand which focused on mid priced products,

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the firm was emboldened to launch sub brands including Sonata the “affordable Option”,
“Raga” meant exclusively for women multi occasion usage and spanning both the formal and
the informal, and recently Fastrack which is a racy, “cool” collection with considerable
appeal to youngsters.

Ø Category Brand

A category is a group or set of product/service offerings from a firm that have similar
characteristics. Category offerings are found often in personal consumption(food/grocery
products) and in customer durables. When the category brand is first established, it derives
its initial strength from the corporate brand. The popularity, credibility and the image of the
already prevalent corporate brand feeds the category brand and the consumers based on their
experience with the pioneer offering(Maggi noodles is an example) are willing and even
eager to try out, and sooner rather than later to adopt subsequent offerings of the category.
The category especially the pioneer offering takes support/sustenance from the corporate
brand, gradually builds its independent identity and grows in strength, with progressive
addition of new offerings. After the category establishes a standalone status, it feeds into the
corporate brand. Examples of Category brands include Titan (Raga, Nebula, Sonata, Fast
Track, Xylys) & Maggi (Noodles, Sauces, Pickles, Soups, Pasta & other salty snacking food).

Ø Product Brand

Product Branding is the use of a name, term, symbol or design to give a product a unique
identity in the marketplace. In addition, the company must consider whether to seek
trademark protection for their brand. The corporate brand comes first. In cases where it is
followed by a product brand as in the case of Maggi (the first instant noodle branded product
in India), the product brand initially derives strength from the corporate brand, gradually
develops a stand-alone status and from then on, it feeds into the corporate brand. Where a
product brand develops into a category brand with the same name as in the case of Maggi,
other products take advantage of the category brand and develop their own identity and
individual strength. At some point the "brand extension" product develops its own stand-
alone status and thereafter adds to the category brand as well as the product brand. This has
happened with Maggi tomato sauce which now enjoys a stand-alone status as a product brand
though initially it fed off the brand recognition of Maggi. Product brands are usually found in
the Personal Category space which includes hygiene and grooming sub spaces. Lux and
Dettol are two prominent product brands which have stood the test of time and competition in
the Indian Market place, as also Colgate and Pepsodent and most notably Lifebuoy soap and
Nirma detergent.

A Move towards a Broader System of Category Management

With the large increase in the number of brands and variants within brands, the question
arises for marketers: What is a brand manager actually managing today? Is he managing a
single brand or a proliferation of sub brands? Is he addressing a single target group, or a
collection of partly unrelated target groups?

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The above question has led to a realisation that brand management circuits have become
overloaded & that this has generated much wasteful & mutually destructive activity between
individual product brands, belonging to a corporate. This has initiated a shift towards
category management, a system that attempts to control a company’s complete brand
portfolio under different categories. Certain industries including those involved in durables
like refrigerators and watches, find that category branding is the next step following corporate
branding. On the other hand, in the personal care industry and in the personal consumption
industries, product brands are first built following corporate brands. Based on the success of
these product brands, extensions are developed and this leads to category branding. Apart
from Maggi the Nestle brand, we have Kissan the HUL brand which started off as a tomato
ketchup brand and developed into a category brand which featured Jams and preserves.

Types of Categorisation:

 Product related categorisation

More popularly called line extensions; the product categorisation extends to variants of the
same product in different flavours, fragrance, colour, shape or other similar characteristic.

Examples: Nirma detergent powder extending into detergent cake, Frooti mango pulp drink
extending into other fruit juice variants

 Image related categorisation

Image related categorisation is an extension of brand to a significantly different product,

which has some logical or emotional relationship with the existing product/ category brand.

Examples: Cinthol extending from toilet soap to talcum powders, deodorants & body washes;
Zodiac extending from shirts to belts, shoes & ties.

Brands in the market

The present situation of the various FMCG companies describes the extent to which the
system of categorisation has penetrated. For example, on one hand, ITC has successfully
created a premium personal care category brand “Vivel”, using both product & image related
extensions, while on the other, P&G is still selling numerous varieties of detergents
worldwide, which serve the same purpose of cleaning clothes effectively, & cannibalise sales
of each other.

Consumer durable brands tend to launch a variety of products progressively under a category
brand. In this way, they try to leverage the brand loyalty of the existing category to new
products, which may be difficult to judge on an in-shop trial basis. For example: Sony
extended its Walkman series of cassette players to its advanced technology enabled Cd
player, MP3 player, head phones, & then to mobile phones.

The key for a corporate brand is to create product brands which establish the brand value for
their parent brand & then leverage the joint brand equity to upgrade the given product brand
into a category brand through product & image related extensions.

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Some more examples from the real world
Companies which have successfully categorised their Brands:

Apple Inc.

The world’s largest technology company has been known as the category creator. Apple Inc.
launches a primary product and thereafter brings in variants. Major categories within which
Apple works can be classified are the enterprise products and the consumer products. The
product-category-corporate brand route is still followed. The products feed the category
which strengthens the corporate brand. A good example to follow, the proper branding route
is also a contributor to Apple’s rise amongst its competitors to one of prominence.

Nestle

Maggi started off as an “Instant Noodles” single product brand, but with time has created a
category of products which are easy to prepare as snack and snack add-ons including
ketchup and soups, Adherence to the Brand hierarchy model has in turn helped the Nestle
brand derive gain in equity over the course of its existence

Reckitt Benckiser

Reckitt Benckiser organises the its products into three main categories – health, hygiene and
home – with other brands belonging to three further categories: food, pharmaceuticals and
portfolio brands. The company's strategy is to have a highly focused portfolio concentrating
on its 19 most profitable brands, which are responsible for 70% of net revenues.

One of its iconic brands- Dettol, started off as an antiseptic liquid, & made a failed attempt
initially to extend into beauty soaps. Fundamentally being used to treat “cuts & gashes”, the
initial extension did not make an image fit & was met with a stiff resistance. On the other
hand, when Dettol extended itself as a “germ killer” soap, it was a success, & enabled the
brand to create a brand identity of a range of antiseptic products such as liquid hand-washes,
sanitizers, & more recently, dish-wash liquids. The mistake made by this company initially
was failing to realise that the personal care space comprises two distinct sub spaces viz. The
hygiene sub space on the one hand and the grooming sub space on the other. Dettol was a
leader in the hygiene sub space and extensions to this pioneer product brand should have
been hygiene products whose function is to “keep people clean’. The other sub space
grooming has at its objective “to make people look and smell good”. Reckitt Benckiser
missed the distinction between hygiene and grooming while launching their range of beauty
soaps, which was a basic error in Marketing. Once this was corrected, the company has
implemented the logic of building a “homogenous category around a pioneering product”
very effectively.

Tata Group

Tata, the global conglomerate, has seen its businesses grow from fledglings into sub
corporate brands (Titan, Tata Tea, Taj Hotels) which have progressively built their own brand

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equity &subsequently added to the strength of the mother brand Tata. These group companies
have built their own category(Titan Sonata) and product(The success can be seen in terms of
the market share of individual brands and how in the past 25 to 30 years the sub corporate
brands and their sub brands(product and category) have enhanced and added value to the Tata
brand. An example is the enormous (though unfortunately sub optimally used financial
resources that the Tata group was able to generate for the acquisition of Corus Steel. Here it
was the brand strength of Tata Tea which is now the largest tea company in the world with
the takeover of Tetley and the financial resources of Tata Consultancy Services that helped in
the smooth change of ownership of a steel major and put Tata Steel into the global
competitive space.

For every Nestle or Reckitt Benckiser you have a HUL underlining the fact that not every
established company has adequately understood let alone acted on the concept of Brand
hierarchy. Companies which have failed to leverage branding opportunities include:

Hindustan Unilever Ltd.

Hindustan Unilever has utilized the Corporate- to- product branding relationship to a
significant extent but has completely missed the category branding opportunity. This firm has
competing products within its own stable. Rexona and Lux compete for the same segment of
soap consumers. As a result, both the brands lose out due to cannibalization. The share price
of HUL is currently Rs 575 a share. Very recently they have stated that they will be shelving
certain products to concentrate on 100Cr + brands.

Maruti Suzuki

MarutiSuzuki, with 5 distinct brands of vehicles, serving the same set of economy centric
consumers, has experienced cannibalisation of its products. With cars such as Alto 1000,
Estilo, Wagon R, Ritz & A star, with identical engine capacities & wheelbase sizes
occupying similar and sometimes identical price points, there has been substantial and totally
avoidable confusion created in the minds of car customers. The company could have
successfully refreshed the existing model in the economy category, instead of launching a
new brand .

Conclusion: A company may choose to ignore the brand hierarchy model for managing its
portfolio and may do well in the short term. However, if it expects to perform well in the long
term and maximize profits, the brand hierarchy approach giving due importance to the
category branding, its creation and maintenance is the ideal framework to follow. History has
given us enough examples to validate this proposition, and it is a matter of analysing and
picking out the correct approach from a haystack of wrong ones. It is clear therefore that this
framework has stood the test of time and should be followed consistently to ensure marketing
success in an increasingly competitive business environment.

Mr. Pradeep Sri Lanka re Branding Workshops: the relevant industries were, banking & financial
services, insurance, food manufacturing, hospitality, healthcare and  information technology all
together 6.