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About the Tutorial

Brand Management is the process of creating, developing, and supervising the progress
of a brand. This tutorial introduces you to various categories of brands, their architectures,
extensions, and promotions. It also introduces brand equity, co-branding, brand
performance, and valuation.

This tutorial will teach you the basic terms in branding and provide ideas on how to manage
a brand right from creation to its valuation.

Audience
This tutorial is meant for all those readers who would like to understand the basics of
Brand Management. It will be immensely useful for management students who are keen
to make a career in Marketing.

Prerequisites
We assume the reader has a basic knowledge of business administration and marketing
concepts. Creativity, analytical thinking, strategic thinking, and good communication skills
are a plus.

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Table of Contents
About the Tutorial ........................................................................................................................................... 1
Audience .......................................................................................................................................................... 1
Prerequisites .................................................................................................................................................... 1
Table of Contents ............................................................................................................................................ 2

PART 1 – BASICS OF BRANDING .................................................................................................. 5

1. Overview of Branding ............................................................................................................................... 6

What is a Brand? ............................................................................................................................................. 6
Objectives of a Brand ...................................................................................................................................... 7
What is Brand Management? .......................................................................................................................... 7
History of Branding .......................................................................................................................................... 8
Brand Essence.................................................................................................................................................. 8
Elements of a Brand ........................................................................................................................................ 9
Brand Management versus Product Management ....................................................................................... 10
Brand Terminology ........................................................................................................................................ 10

2. Brand Diversity ....................................................................................................................................... 13

Basic Approaches of Branding ....................................................................................................................... 13
Fast Moving Consumer Goods (FMCG) Brands ............................................................................................. 13
Commodities ................................................................................................................................................. 14
Luxury Brands ................................................................................................................................................ 14
Business to Business (B2B) Brands ................................................................................................................ 15
Pharmaceutical Brands .................................................................................................................................. 15
Service Brands ............................................................................................................................................... 16
E-Brands ........................................................................................................................................................ 16
Country Brands .............................................................................................................................................. 16

PART 2 – INSIDE BRAND MANAGEMENT ................................................................................... 18

3. Brand Equity ........................................................................................................................................... 19

What is Brand Equity? ................................................................................................................................... 19
Why does Brand Equity Matter? ................................................................................................................... 19
Brand Decay................................................................................................................................................... 19

4. Brand Equity Models ............................................................................................................................... 21

Aaker’s Brand Equity Model .......................................................................................................................... 21
Keller’s Brand Equity Model .......................................................................................................................... 23
What is BrandZ? ............................................................................................................................................ 24
Brand Asset Valuation ................................................................................................................................... 25
Building a Strong Brand Equity ...................................................................................................................... 25
Building Brand Identity and Image ................................................................................................................ 25

5. Brand Architecture.................................................................................................................................. 27
What is Brand Architecture? ......................................................................................................................... 27
Types of Brand Architectures ........................................................................................................................ 27
Product Brand Architecture ........................................................................................................................... 28
Source Brand Architecture ............................................................................................................................ 28
Line Brand Architecture ................................................................................................................................. 28
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 Masterbrand or Monolithic or Umbrella Architecture .................................................................................. 29
Choosing Appropriate Branding Strategy ...................................................................................................... 30
Internationalizing the Architecture of the Brand .......................................................................................... 31
Classic Branding Dysfunctions ....................................................................................................................... 31
How to Name a New Product? ...................................................................................................................... 31
Group and Corporate Brands ........................................................................................................................ 32
Corporate Brands over Product Brands ......................................................................................................... 32

6. Brand Identity and Positioning ................................................................................................................ 33

Six Faces of Brand Identity ............................................................................................................................ 33
Brand Knowledge .......................................................................................................................................... 34
Brand Portfolios and Market Segmentation .................................................................................................. 35
General Steps of Brand Building .................................................................................................................... 36
Identifying and Establishing Brand Positioning ............................................................................................. 36
Defining and Establishing Brand Values ........................................................................................................ 38
Branding for Global Markets ......................................................................................................................... 39

7. Brand Promotion .................................................................................................................................... 41

Why is Brand Promotion Required? .............................................................................................................. 41
Brand Promotion Methods ............................................................................................................................ 41
Role of Brand Ambassadors and Celebrities.................................................................................................. 42
Online Brand Promotions .............................................................................................................................. 44

8. Brand Extension ...................................................................................................................................... 45

What is Brand Extension? .............................................................................................................................. 45
Line Extension ................................................................................................................................................ 46
Brand Extension ............................................................................................................................................. 46
Brand Adaption Process ................................................................................................................................ 47
Brand Adaption Practices .............................................................................................................................. 47
Factors that Influence Brand Extension ........................................................................................................ 47
Rebranding .................................................................................................................................................... 48
Relaunching ................................................................................................................................................... 49

9. Co-branding ............................................................................................................................................ 51
What is Co-branding? .................................................................................................................................... 51
Types of Co-branding..................................................................................................................................... 52
Situations for Co-branding ............................................................................................................................ 52
Points to Note before Co-branding ............................................................................................................... 52
Co-branding for Business Growth.................................................................................................................. 53
Celebrity Endorsement .................................................................................................................................. 54

PART 3 – MAINTAINING THE BRAND ......................................................................................... 56

10. Brand Performance ................................................................................................................................. 57

Launching a Brand ......................................................................................................................................... 57
Sustaining a Brand in the Long Run ............................................................................................................... 58
Adapting the Brand to Suit Various Markets ................................................................................................. 59
Handling Brand Name Changes ..................................................................................................................... 59
Handling Brand Transfer ................................................................................................................................ 61

11. Brand Leveraging .................................................................................................................................... 62

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 Importance of Brand Leveraging ................................................................................................................... 62
Role of Brand Managers in Brand Leveraging ............................................................................................... 62

12. Brand Valuation ...................................................................................................................................... 64

What is Brand Audit? ..................................................................................................................................... 64
Brand Equity Measurement .......................................................................................................................... 65
Employer and Employee Branding ................................................................................................................ 67
CEO as a Brand Leader ................................................................................................................................... 68

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Part 1 – Basics of Branding

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 1. OVERVIEW OF BRANDING

“A product is something made in the factory; a brand is something the customer

buys. A product can be copied or imitated by a competitor; a brand is unique. A
product can be outdated; a successful brand is timeless.”

– Stephen King (WPP Group, London)

Today, the commodity marketplace is flooded with various brands. The requirement of the
seller’s brand to stand out among other parallel brands is crucial. Hence, there is a fierce
competition among the sellers to make their products or services stand out in the market,
thereby winning new consumers and retaining the existing ones. At times, it even leads to
diverting the consumers following other brands to the seller’s brand. To remain
competitive in the marketplace, strong brand management is required.

Brand Management begins with understanding the term 'brand'.

What is a Brand?
Brand may be defined from the brand owner’s perspective or the consumer’s perspective.
There are various popular definitions of a brand:

 “A name, term, design, symbol, or any other feature that identifies one seller’s
good or service as distinct from those of other sellers. The legal term for brand is
trademark. A brand may identify one item, a family of items, or all items of that
seller. If used for the firm as a whole, the preferred term is trade name.” - American
Marketing Association

 “A type of product manufactured by a particular company under a particular name.”

- Oxford English dictionary

 “A name, term, sign, symbol, design, or a combination of these used to identify the
goods or services of one seller or group of sellers and to differentiate them from
those of competitors.”– A product-oriented definition

 “The promise of the bundles of attributes that someone buys and provide
satisfaction . . .” – A consumer-oriented definition

The fundamental purpose of branding is differentiation. A brand is a means of

differentiating the seller’s product from other competing products.

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A Brand has the following characteristics:

 Tangible characteristics: Price, physical product, packaging, etc.

 Intangible characteristics: Customer’s experience with the brand, brand
position, and brand image.

Objectives of a Brand
Here are some important objectives of a brand:

 To establish an identity for the product or a group of products.

 To protect the product or service legally for its unique features.
 To acquire place for the product in consumers’ minds for high and consistent
quality.

 To persuade the consumer to buy the product by promising to serve their needs in
a unique way.

 To create and send the message of strong reliable business among consumers.

What is Brand Management?

Brand management is an art of creating a brand and maintaining it. It is nothing but
developing a promise to the consumer, materializing that promise, and maintaining the
same for a product, a group of products, or services.

Brand management helps to manage the tangible and intangible characteristics of a brand.
A competent Brand Management includes building brand identity, launching the brand,
and maintaining the brand position in the market. Brand management builds and
maintains the corporate image of a business.

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History of Branding
The concept of branding exists since approximately hundred years.

Brand Essence
It is a single most compelling thing about a brand that differentiates it from the competing
brands. The brand essence serves as a metric to evaluate the seller's marketing strategies.
The most important brand essences arise from consumers' needs. Brand essence can be
described in just a few words.

For example, Volvo: Safe travel. Disney: Fun family entertainment.

There are seven contributing elements of brand essence:

 Authenticity: If the brand makes a promise and fails to keep, then it is rejected.
The consumers expect the sellers to be genuine and truthful.

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  Consistency: The essence of a brand is lost if it is not consistent in providing what
it promised to the consumer. Also, a brand should use its logo consistently over
time.

 Durability: The brand essence remains same over time. Even if packaging and
logos change, the essence does not change.

 Experience: It is the consumers experience with the brand.

 Uniqueness: It is how different a brand is from its competitors.

 Relevance: It is the relevance of a brand to the consumer.

 Single mindedness: It is sticking to only one thing about the brand which keeps
the brand focused.

Elements of a Brand
There are eight essential elements of a brand as given below:

 Brand Name: This is what the people get to see everywhere. It must be as simple
and memorable as possible, meaningful, easy to pronounce, and unique.

 Logo: This can be anything from a piece of text to the abstract designs. It may be
entirely unrelated to the corporate activities. It must be relevant to the product or
service, iconic, and attractive.

 Tone: This is how the seller communicates with the consumer. It can be
professional, friendly, or formal. It builds consumer’s perception about the brand.

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  Jingle: It must be pleasant to hear and hum, relevant to the product, easy to
remember, and easy to understand over a large age group to connect consumer
with the brand.

 Slogan: It summarizes overall value proposition. It should be short, easy to

remember, and catchy. For example, KFC’s slogan is “Finger Lickin’ Good” and
Britannia’s is “Eat Healthy, Think Better”.

 Packaging: It needs to be catchy and advertising, drawing people to see the

product inside. Also, it needs to be compact, yet attractive.

 Universal Resource Locator (URL): It forms the domain name on the internet.
A seller can register all prospective variations of brand name URLs or can buy the
existing URL of a business.

 Characters/Mascots: It is a special symbol, either still, animated, or real life

entity such as an animal or a human character. For example, Vodafone’s Zoozoo
characters are played in its various advertisements by humans wearing special
white body suits.

Brand Management versus Product Management

They are not the same. Let us see the difference between them:

Brand Management Product Management

Brand Management includes evaluation of Product Management includes

sales, pricing for a particular product, implementing the marketing
supervising ad campaigns. techniques to increase the product
sale and measure the same. For
example, repackaging the product.

Main objective: Maintaining product Main objective: Increasing product

quality. sale.
It includes interaction with manufacturers, It includes interaction with marketing
sales personnel, advertisers, and and sales personnel, customer
copywriters so that manufacturing, sales, support, etc.
and promotion are in synchronization.

Brand Terminology
Here are some commonly used terms in Brand Management:

Term Description

B2C It is the online selling of goods and services to the final consumers.
E-Commerce

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Brand It is the degree to which a specific product/service is recognized
Association within its product or service category. For example, a person asking
for Xerox wants to actually make true copies of a paper document.
Brand Awareness It is the extent to which the consumer knows and can recall the
brand.
Brand When two brands in the same product line, offered by a company
Cannibalism target the same market segment, and compete with each other by
eating away the market share.
Brand Equity It is the positive differential effect on the consumer about the
branded product or service after knowing the brand. It is the
potential of the brand to impact the business.
Brand Extension It means using a successfully established brand name for one
segment to enter another segment in the same brand market.

Brand Extension It is using a successful brand name to launch a new or modified

product under a new category.
Brand Image It is the perception a consumer develops for a brand as reflected by
the brand associations and holds in memory.
Brand Image or It is the association or belief the customer has towards a brand. It
Brand is not quantifiable.
Description
Brand Brand is seen as if how it was if it were a human being.
Personality

Brand When one company introduces new brands in the same product
Proliferation lines with the aim to cover every market segment for that product
line.

Brand Promise It is the functional and emotional benefits that customer receives
when he experiences products or services of a brand.

Brand When marketers recognize the declining status of a brand and

Rejuvenation or extend the life of brand by adding new product features, packaging,
Revitalizing or presentation, it is called Brand Rejuvenation.
Brand Strength It is the measure of a customer’s attachment towards the brand. It
or Brand Loyalty is quantifiable.
Brand Stretching It means using a successful brand name to explore a different
market.
Brand Recall It is the ability of the consumer to generate and retrieve
the brand in their memory.
Brand Value It is the total value of a brand as a separable asset when it is sold,
or included in a balance sheet. It is quantifiable and considered as
an accounting issue.

Chain Store Multiple outlets that are owned and controlled in common, have
same central buying and merchandising, and sell similar
merchandise.
Co-branding Alliance of multiple brands to launch a product or service in the
market.

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Commodity It is a raw material or a primary agricultural product that can be
bought or sold.
Consumer Brand Brand Strength + Brand Image.
Equity

Differentiation The ability of a brand to stand apart from its competitors.

E-Business The business running on the electronic platform such as Internet.
E-Commerce Buying and selling processes enabled by electronic means such as
Internet.
Exchange The act of obtaining something desired by offering something.
Export It is entering a foreign market by selling the goods (maybe with a
little modification) that are manufactured in the home country of a
business.

Family Brand It is when a parent brand is associated with multiple brands with
brand extension.
Fashion A contemporary style accepted in the given field.

Global Branding Exposing brand into foreign markets.

Lifestyle A person’s pattern of living as expressed in its activities, interests
and preferences.
Market It is a marketing strategy of dividing a broad target market into
Segmentation groups of consumers, businesses or countries having common
needs, interests, and priorities, and then designing and
implementing strategies to target them.
Market Share It is the percentage of market's total sales earned by a particular
company over a specified time period.
Marketing Mix It is the selection of different Ps (Product/Service, Price, Place, and
Promotion) an organization uses to bring the product or service to
the market.
Multi-Brand It is the coherent collection of brands, sub-brands, and co-brands
Portfolio included in the overall offering of the company, where each brand
has a defined place and role.
Parent Brand The one under which a company launches a new product.
Sub-Brand The one which is associated with the already established brand.

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 2. BRAND DIVERSITY

The humans have frequent needs as well as occasional needs in the life. They are varied
in number of ways such as day-to-day living needs, social needs, health and medication
needs, contemporary lifestyle needs, to name a few. According to this need-based market
segmentation, the brands are diversified in different sectors such as personal care, home
care, commodities, entertainment, healthcare, pharmaceutical, luxuries, and services.

Basic Approaches of Branding

There are two basic approaches of brands according to ownership:

Manufacturer’s Brands Private / Store Brands

They are created and owned by the They are created and developed by
producers. retailers, distributors, or wholesalers.

Manufacturer promotes its own brand The retailer does not promote one single
extensively. brand extensively. He can put the products
of different brands on the shelves.

Their budgets of research and
development, ads, sales promotion,
distribution channels depth etc. are huge.
Hence, there can be less profit margin.
They are more advanced and work
innovatively on manufacturing technology.
They do not communicate with the
consumers directly.
There is very less budget allocated for ads.
Similarly, research and development,
distribution channels depth are lower.
Hence, these brands can have higher profit
margins.
There is no manufacturing technology
involved, hence they can be less
innovative.
They work very closely with consumers,
hence they have a better idea on what
consumers demand.

The brands can be further categorized depending on the human needs or the context as
given:

Fast Moving Consumer Goods (FMCG) Brands

The FMCG items such as grocery, toiletries, easy-to-cook foods, are essential for our daily
lives. They are called fast moving because they are the quickest to get sold from the
supermarket shelves. They are also called Consumer Packaged Goods (CPG) brands. They
are inexpensive and tangible products which can be produced in advance and can be stored
to be consumed later.

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The brand managers need to handle these brands tactfully to generate more revenue as
there is fierce competition in the FMCG market. If a product does not meet the consumer’s
expectations, there is always other brand ready to take the advantage.

Examples of FMCG: Unilever’s Dove Bodycare, Colgate Palmolive’s oral care, Godrej,
Dabur, Burges Olive Oil, etc.

Commodities
They are the products or services which consumers buy depending upon their price. There
is no quantitative differentiation for commodities across the market. Milk, sugar, oil, grains
and cereals, metals, wool and rubber, and natural gas, are all commodities.

Since it is not easy to pursue the consumers to pay more price for the parallel product he
can get at a lesser price, the sellers need to put in a lot of effort on color, logo, brand
character, and packaging to differentiate the product so it makes a significant impact on
the consumers’ mind. Also, the seller needs to keep on adding value to the product.

Examples of commodities: TATA Salt, General Mill’s Pillsbury whole wheat flour, etc.

Luxury Brands
They are not essential but highly desired out of one’s own perception and self-worth. The
desirability is based on the consumer’s demand of high quality, fine craftsmanship,
exclusivity, precision, and beauty. Also, peer recognition, appreciation, and approval of
high status are the underlying needs which promote luxury brands. High-end automobiles,
jewelry, cosmetics, accessories, properties, and perfumes come under luxury brands.

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These brands are divided into three categories:

 Prestige Brands: Mercedes-Benz, Rolex, Swarovski, etc. represent high

craftsmanship and lavishness. They are regarded as the mark of high social status.

 Premium Brands: They are mass luxury brands. For example, Calvin Klein and
Tommy Hilfiger.

 Fashion Brands: They bring fashion products such as apparels and accessories
under “hot trends” and target mass consumers. They bring products according to
the seasons.

Most luxury companies are small to medium sized enterprises. Presence of luxury brands
must be maintained all over the world to reinforce the brand image in the consumer’s
mind. They are available in flagship stores.

Business to Business (B2B) Brands

Under these brands, a business makes a commercial transaction with another business.
Such transactions occur when one business provides resources to another business for
manufacturing some product, and when one business supplies or rents out the products
to another business.

B2B companies must pursue global branding as they have less number of customers
than B2C companies and more number of transactions with other businesses.

For example, restaurants buy cooking energy, raw materials, crockery, furniture, lights,
etc. from different businesses. Retailers buy a product from original manufacturer for
reselling it. McDonalds, Pizza Hut, IBM, GE, Microsoft, and Oracle are B2B brands to name
a few.

Pharmaceutical Brands
These brands cover the products which are commonly known as drugs or medicines used
to diagnose, treat, and prevent a disease. There are more than 70,000 registered brands
of drugs.

Pharmaceutical brands are different than consumer brands in various prominent ways.
Unlike consumer products, where requirement can be generated through creative
advertising and other promotional means, a pharmaceutical company cannot create a need
that is not there.

Any new pharmaceutical product cannot create demand without underlying medical need.
In addition, the product features of prescription drugs cannot be changed to meet
consumer needs or preferences without clinical development outcomes and receiving
approval from the regulatory authorities.

Examples of pharmaceutical brands: Simila Expert Care nutrition for infants from Abbott
Laboratories, USA and Dr Reddy’s Nise™.

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Service Brands
The service sector has spurred the economic growth of many countries. Services are
produced and consumed in real time. The output of a service brand is intangible, such as
experience of the consumer.

In service branding, the speed of processing the consumer’s request, punctuality in

delivery, quality, and degree of attending special needs, and responsiveness are the
factors the service provider caters for. Because of its intangible nature and dependency
on dynamic nature of humans who provide it, branding of service is difficult.

The domestic and industrial appliances, automobiles, etc. are sold with the promise of
quality servicing. The quality and cost claimed by the services belonging to the same
industry can vary to a great extent. Service brands are categorized into the following
types:

 Classic Service Brands: They include banks, beauty salons, consultation services,
car rentals, and airline services.

 Pure Service Brands: They include association memberships.

 Professional Service Brands: They include advisors, consultants, travel agents,

estate agents, etc.

 Retail Service Brands: They include restaurants, fashion stores, supermarkets,

etc.

Examples of service brands: Ford, Airtel, Axis Bank, Air India, Café Coffee Day by Coffee
Day Global Ltd., Lifestyle fashion retailing by Landmark, ICICI Prudential Life Insurance,
etc.

E-Brands
These brands portray their entire image, such as the company’s value, competency, vision,
motives, missions, products/services etc. through web to the online consumer. E-Brands
work to create a direct relationship between the brand owner and the customer via
Internet. Due to their wide reachability, it is easy for the e-brands to survive among
competitors and gain reputation among consumers.

The consumers are loyal to the sellers whose online commercial transaction schemes are
familiar, tested, and established. When the e-Brands provide features such as facility to
compare various products, listing products within a specified cost or feature segment, easy
and reliable payment modes, then the e-Brands can make place in their consumers’ minds.

Examples of e-Brand: Flipkart, Amazon, etc.

Country Brands
Countries, like companies, apply branding to help themselves market for investment,
tourism, and exports. The ‘Country of Origin’ is commonly referenced by the term ‘Made
in…’ which depicts an association with the product’s place of origin, which works as
effectively as product quality.

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Consumers are aware of the origin of the product and ethics used behind creating that
product. Some associations of countries and products are France=fashion, wine, and
cheese, Italy=design, India=spices, Denmark= chocolate, Germany=automotive,
Japan=electronics, etc.

Today, the brands apart from being associated with their countries also need to show their
strong connection with the country such as having a manufacturing setup in the country,
influx of designs emerging from the talent present in the country, or having a part of
production process set up in that country. For the simple reason, the consumers are more
likely to buy the product or service if they are authentic. The brand managers need to
emphasize on such points while branding.

The Country Brand Index (CBI) measures and ranks the countries on the strength and
power of their nation’s brand.

Examples of brand messaging by some countries: “Botswana Our pride, your destination.”,
“Canada – Keep exploring”.

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Part 2 – Inside Brand Management

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 3. BRAND EQUITY

Brand equity is the heart of brand management. The brand managers are engaged in
building strong brand equity as it directly affects the consumer’s buying decisions, defines
market share of the product, and determines the brand position in the market. Strong
brand equity can not only make the brand strong but also help the brand establish, survive,
and perform well in the long run.

Let us understand, what brand equity is and why it matters.

What is Brand Equity?

This term came up in the marketing literature in 1980. This multidimensional concept has
different meanings from the context of Accounts, Marketing, and Consumer.

 Accounting Context: It is a total value of a brand as a separable asset, when

evaluated for selling. It is also called Brand Value. It is quantifiable.

 Marketing Context: It is the description of consumer’s associations and beliefs

about the brand. It is non-quantifiable. Brand equity is tailored according to the
needs and demands of the consumer.

 Consumer-based Context: It is a measure of consumers’ attachment to a brand.

It is also called brand strength or loyalty. It is quantifiable.

As per Amber and Styles (1996), Brand Equity is a store of profits which can be realized
in future.

Why does Brand Equity Matter?

For brand management, the brand equity is vital as it establishes and fosters the customer
loyalty towards the brand, and directly influences the business growth may it be a well-
established or a new business.

There can be two motivations to study brand equity:

 Finance-based motivation: You can estimate the brand value more precisely for
accounting purposes, such as to evaluate the brand as an asset for the purpose of
reflecting in the balance sheet, or in case of merging or acquiring a business.

 Strategy-based motivation: You can study brand equity to improve productivity

of marketing.

Brand Decay
It is a progressive loss of brand integrity due to weakening of essential brand elements. It
also includes losing the respect of consumers and consistency of the brand. It is a gradual
process. For example, a number of US airlines are facing brand decay since years.

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Reasons of Brand Decay
Here are some most important reasons of brand decay:

 Company fails to manage strategies, create new value, and acquire new customers
or new marketplaces.

 Company treats the brand merely as a static asset than as a medium to create
customer value.

 Customer expectations are more than what a brand can deliver.

 Presence of issues in brand equity building.

 Company palms off brand-customer relationship on customer service department.

 Company halts innovations in products or services. The worst part is, customers
start suggesting innovations.

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 4. BRAND EQUITY MODELS

David Aaker and Kelvin Lane Keller developed the brand equity models. Let us learn about
both the models.

Aaker’s Brand Equity Model

David Aaker defines brand equity as a set of assets and liabilities linked to a brand that
add value to or subtract value from the product or service under that brand. He developed
a brand equity model (also called Five Assets Model) in which he identifies five brand
equity components:

Brand Loyalty
The following factors depict the extent to which customers are loyal to a brand:

 Reduced Costs: Maintaining loyal customers is cheaper than charming new ones.

 Trade Leverage: The loyal customers generate steady source of revenue.

 Bringing New Customers: Existing customers boost brand awareness and can
bring new customers.

 Competitive Threats Response Time: Loyal customers take time to switch to a

new product or service offered by other brand. Hence this buys time for the
company to respond to competitive threats.

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Brand Awareness
The following measures depict the extent to which a brand is widely known among
consumers:

 Association Anchors: Depending upon the brand strength, associations can be

attached to the brand which influence brand awareness.

 Familiarity: The consumers familiar with a brand will speak more about it and
thus, influence brand awareness.

 Substantiality: Consumers’ review on brand brings substantial and strong

commitment towards the brand.

 Consumer’s Consideration: At the time of purchasing, consumer looks for a

particular brand.

Perceived Quality
It is the extent to which a brand is believed to provide quality products. It can be measured
on the following criteria:

 Quality: The quality itself is the reason to buy.

 Brand Position: This is a level of differentiation as compared to competing brands.

Higher the position, higher is the perceived quality.

 Price: When quality of the product is too complex to assess and consumer’s status
comes into picture, the consumer takes price as a quality indicator.

 Wide Availability: Consumers take widely available product as a reliable one.

 Number of Brand Extensions: The consumers tend to take a brand with more
extensions as a measure of product guarantee.

Brand Associations
It is the degree to which a specific product/service is recognized within its product or
service category. For example, a person asking for Xerox wants to actually make true
copies of a paper document.

 Information Retrieval: It is the extent to which the brand name is able to retrieve
or process the associations from consumer’s memory.

 Drive Purchasing: This is the extent to which brand associations drive consumers
to purchase.

 Attitude: This is the extent to which brand associations create positive attitude in
the consumer’s mind.

 Number of Brand Extensions: More the extensions, more the opportunity to add
brand associations.

Proprietary Assets
They are patents, copyrights, trademarks, trade secrets, and other intellectual property
rights. More the number of proprietary assets a brand has, greater is the brand’s
competency in the market.

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Keller’s Brand Equity Model
This model is developed by Kelvin Lane Keller, a marketing professor at Dartmouth
College. It is based on the idea that the power of a brand lies in what the consumer has
heard, learnt, felt, and seen as a brand over time. Hence this model is also termed as
Customer Based Brand Equity (CBBE) model.

According to CBBE model, it takes answers to four basic questions for building brand equity
starting from the base of the pyramid shown above:

 Who are you? (Brand Identity)

 What are you? (Brand Meaning)
 What do I feel or think about you? (Brand Responses)
 What type and extent of association I would like to have with you? (Brand
Relationships)

Brand Identity
It is not only how often and easily the consumer can recall or recognize the brand but also
where and when he thinks of the brand. The key is to create brand salience to acquiring
correct brand identity.

Brand Meaning
According to Keller, to make the brand meaningful it is essential to create a brand image
and characteristics. Brand meaning arises out of brand associations, which can be
imagery-related or function-related.

The imagery-related associations depict how well the brand meets social and psychological
needs of the consumer. The function-related association such as product or service
performance is what the consumer looks for primarily.

Regardless of the type of product or service, developing and delivering the product that
completely satisfies the customer’s needs and demands is the prime objective of making
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the brand meaningful. A brand with the right identity and meaning creates a sense of
relevance in the consumer’s mind.

Brand Responses
The companies must cater for the consumer’s response. Keller segregates these responses
into consumer’s judgments and consumer’s feelings.

 Consumer Judgments: They are consumer’s personal opinions regarding the

brand and how he has put imagery-related and performance-related associations
together. There are four types of judgments crucial for creating a strong brand:

o Quality
o Credibility
o Consideration
o Superiority

 Consumer Feelings: They are consumer’s emotional reactions to the brand. They
can be mild, intense, positive, negative, driven from heart or head. There are six
important feelings crucial in brand building:

o Warmth
o Fun
o Excitement
o Security
o Social approval
o Self-respect

Brand Relationships
It is the level of personal identification the consumer has with the brand. It is also called
brand resonance, when a consumer has a deep psychological bonding with the brand.
Brand resonance is the most difficult and highly desirable level to achieve. Keller
categorizes this into four types:

 Behavioral Loyalty: Consumers may purchase a brand repeatedly or in high

volume.

 Attitudinal Attachment: Some consumers may buy a brand because it is their

favorite possession or out of some pleasure.

 Sense of Community: Being identified with a brand community develops kinship

in the consumer’s mind towards representatives, employees, or other people
associated with the brand.

 Active Engagement: Consumers invests time, money, energy, or other resources

and participates actively in brand chat rooms, blogs, etc., beyond mere
consumption of brand. Thus, the consumers strengthen the brand.

What is BrandZ?
BrandZ is the world’s largest brand equity database created and updated by Millward
Brown, a multinational company working in advertising, marketing communications,
media, and brand equity research.

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This database was created in 1998 and is being updated continuously since then. It lists
top 100 global brands since 2006. To compile this database, the raw data is collected from
about two million consumers and professionals across more than 30 countries. It lists
around 23000 brands.

BrandZ is the only brand valuation tool that helps brand owners to find out how much
brand alone can contribute to corporate value.

Brand Asset Valuation

Brand asset valuation evaluates a brand’s value, strength, and performance as compared
to other brands in the market. An agency named Young and Rubicam developed a metric
called Brand Asset Valuator (BAV), which measures brand vitality, which is the brand’s
potential in terms of its future growth and brand power.

The brand is analyzed in the following terms:

 Differentiation: How different and better is the brand from its competitors?

 Relevance: How closely the target audience can relate with the brand offer?

 Esteem: Has the brand built its esteem by keeping all promises it made to the
target audience?

 Knowledge: How many of the target audience know the brand?

Building a Strong Brand Equity

Brand equity, being the heart of brand management is very. Peter Farquhar, in a paper
he published on Managing Brand Equity, suggests three stages in building strong brand
identity:

 Introduce: Introduce an innovative and quality product in the market. Use brand
as a platform to launch future products. Customer’s positive recognition is very
important.

 Elaborate: Create brand awareness and associations so that the customers

remember the brand and the positive opinions about it for a long time.

 Fortify: Make the brand create a positive consistent image in the customer’s mind.
Develop brand extensions and create customer-brand emotional relationship to
fortify the brand.

Building Brand Identity and Image

In the contemporary market, three essential characteristics are required to manage the
brand: brand identity, brand image, and brand positioning.

Brand Identity
Brand identity is nothing but the belief fostered by the brand, its uniqueness and key
values. A brand has an identity when it is driven by a goal different from competing brands
and is resistant to changes.
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A strong brand identity can be built when you have answers to these questions:

 What is the brand’s unique aim?

 What is the brand’s distinguishing feature?
 What need is satisfied by the brand?
 What are brand’s values?
 What is the brand’s field of competence?
 What is making the brand recognizable?

Brand Image
Brand image is the set of beliefs, real and imaginary shortcomings about the brand
developed over a time and held in the consumer’s mind.

Brand image is built using communication media such as advertising, publicity by mouth,
packaging, online marketing programs, social media, and other ways of promotions.

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 5. BRAND ARCHITECTURE

When the company portfolio is growing, the brands tend to evolve. It is critically important to define
the structure of the brands within a portfolio to keep the brand health strong.

The brand managers need to take various decisions such as considering the right time to extend the
existing brand, selecting appropriate brand name, whether or not to have different websites for
multiple brands and so on. Since each of such decisions has direct implications on the future, a plan
for brands is developed to provide clarity to the consumers.

Brand architecture comes in play while presenting the brand efficiently. Let us learn more about
brand architecture.

What is Brand Architecture?

It is the structure of the brand in an organizational entity that defines how various brands and sub-
brands in a company’s portfolio are related to each other or are different from one another.

Brand architecture provides a hierarchy that depicts the roles and relationships within the products
and services that make a company’s portfolio and makes sure that the external stakeholders
understand the value of what the brands offer.

Types of Brand Architectures

They can be varied from pure to hybrid. However, generally brand architecture is distinguished into
two categories: House of brands and Branded house.

House of Brands Branded House

Product Brand Source brand

Range Brand
Line Brand
Endorsing Brand
Umbrella brand
Multiple brands or activities are brought
together under a single name. There is
complete freedom for the management
of divisions, activities and the brands.
For example,
Mitsubishi Motors division and
Mitsubishi Electricals division are
completely unrelated except the fact
that they come under Mitsubishi
business. Both divisions manage their
own advertising, and brand values,
and obtain separate profits.
Master brand
It is a family of brands with high degree of
unity. Here, the master brand structures the
child brands in such a manner that they are
capable of expressing the value of a parent
brand. Master brand is the single brand
acting as a driving force.
For example, Google.
Google books, Google maps, Google
Translate, Google Mail, etc., all come under
the master brand Google and only
differentiate in their descriptions.

Let us see the brand architecture strategies in detail.

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Product Brand Architecture
The brand is a kind of product brand, if the corporate brand name is hidden and every
product is assigned a different name and one single positioning. Each new product is a
new brand.

Source Brand Architecture

In this type, the company name is well known and guarantees the quality of the products.
For source brand, the products are on the forefront, while the company name remains in
the background.

Line Brand Architecture

When a variant is added to the existing brand, it is called line extension. The variant can
be anything from color, packaging, nutritional value addition, or a new shape. Line brand
targets a subset of the consumers.

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For example, Cadbury Bournville comes in three flavors: Raisin & Nut, Rich Cocoa, and
Cranberry. Likewise, Dairy Milk Silk comes in Orange Peel, Roast Almond, and Fruit & Nut
variants.

Masterbrand or Monolithic or Umbrella Architecture

This is the simplest type, where all units and divisions of a business share the same brand.
The brand name is used for different but related products. It involves creating a brand
equity for a single brand. It is also referred to as Corporate, Umbrella, or Parent brand.
In this type, the product or service benefits are less important than brand promise. It
drives purchase decisions and defines consumer experience.

Endorser Brand Architecture

Here, a parent brand consists of various operating units which are identified by their own
brands. The parent endorses the products or services under itself and has a clear market
presence. There is a synergy between the product name and the parent name. This
architecture provides credibility, approval, and guarantee to another brand.

For example, Marriot Residence Inn, Courtyard, and Fairfield Inn.

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Portfolio Brand Architecture
In this type, all or many brands are kept with separate identities, names, and life cycles
of their own. They often compete with each other. The parent does not provide any brand
equity to benefit the sub-brands. This structure is found in FMCG companies.

Ingredient Brand Architecture

In this architecture, a principle brand supports to qualify other brands. The idea is, if the
ingredient is good, it amplifies the brands better than they would have amplified
independently without the ingredient. Thus, the ingredient brands turn out as energizer.

For example, Intel Inc. Any computer brand’s ad says “Intel Inside”, depicting Intel
processor enabled motherboard that comes with high power and speed of execution.

Hybrid Brand Architecture

It is a combination of monolithic, endorsement, and portfolio architectures. These are the
most common solutions.

Brand architecture needs to be revised when the companies change their strategies or the
business has added important features which are beyond the existing brand structure.

Choosing Appropriate Branding Strategy

The following parameters should be considered while choosing an appropriate branding
strategy:

 Marketing strategy
 Business model
 Culture
 Speed of innovation
 Added-value lever on which the product is based
 Brand vision

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Internationalizing the Architecture of the Brand
Since most of the brand architectures are built over a substantial period of time in the
domestic market, there are some all-time questions while launching the brand on the
global canvas:

 Should the brand architecture be globalized?

 Can the present brand architecture be taken to the new potential countries?

 How to handle internationalizing of brand architecture in different countries when

there is difference in their respective infrastructure, civic rules and regulations,
media costs, to name a few?

For instance, it is definite that taking a brand architecture to Russia could be smoother
than taking it to the US as the media and distribution costs are higher in the US.

Classic Branding Dysfunctions

If a brand architecture is not proper, it can lead to unwelcome consequences. Few
instances are as follows:

Daughter Brand Swallows Parent Brand

When there are too many daughter brands, the parent brand loses the focus. In the
bargain of achieving recognition for the daughter brand, the parent brand takes a
backstep. While launching a daughter brand, it gets people’s attention and the daughter
brand attracts all the investment on the advertisement. It gets remarkably successful
thereby taking over the image of the parent brand. The solution to this is, turn daughter
brand into a simple product.

For example, Golf, the daughter brand of Volkswagen swallowed it up in image. Amul Lite,
a daughter brand is swallowing parent brand Amul butter due to increased health-
consciousness of consumers.

Weakening of Company - Product Connection

The company makes innovative products or makes improvements in the existing product.
When a superior product comes up, it is time to decide for the brand managers whether
to extend the new product as a part of the original brand or launch it as a new product
with a potential of becoming a brand in itself.

While branding the new product out of innovation, the connection between the product
and the company that develops it should not be weakened.

How to Name a New Product?

The company grows by bringing out the best in its product. Every time a research and
development team comes up with the innovative product, the brand managers have to
decide on what to name that ‘new’ product.

For example, a cement manufacturing company came up with an innovative cement that
provides extremely smooth surface. Before introducing it into the market, brand managers
need to be decide what to name the product. Is it fine to extend the name just as ‘new
31
ultra smooth cement from…’? Or should it be given a name that can stand as a brand in
itself later?

Brand name is the mightiest form of its identity. It tells the objective of the program and
reveals brand intentions. Some brand names and products apparently seem irrelevant.

As in case of ‘Apple’, the microcomputers brand, Steve Jobs and the co-founder Steve
Wozniak chose this name with the logo of a munched apple as they intended to give a new
look to the conventional human-machine relationship. The apple logo tells that a computer
machine is something to enjoy, rather than to fear about. Similarly, Amazon logo with a
directed arrow from a-to-z depicts range, continuity, strength, and uninterrupted flow.

Thus, to make a strong brand, almost any name can be chosen, with the fact that the
brand managers need to put consistent efforts in making the brand name meaningful.

Brand name is not a product. Hence while selecting brand name for a new product, the
names which differentiate the product among its competitors must be chosen instead of
those that describe what the product does.

Group and Corporate Brands

Instead of working behind a logo or a brand name, the companies have started coming up
as brands themselves called corporate brands. They are choosing to become as widely
visible as possible out of the consumer’s demand of responsibility and transparency.

By presenting itself under corporate brand profile, the companies can attract students and
executives in the employment market. In Asia, at the end of Procter and Gamble television
ad, company signature is displayed for a few seconds as it is already visible and established
as a corporate brand. In the US the P&G experience is different and it needs efforts to
make itself more visible.

Corporate Brands over Product Brands

Few companies have preferred to keep their own names separate from their brand names
for the reason of getting affected in case of brand failure. There are other reasons of
corporate visibility over product visibility. The multi-brand retailers, hyper chains are
interested in corporate visibility of a company rather than product brands they sell as their
basic B2B relation is with companies and not with brands.

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 6. BRAND IDENTITY AND POSITIONING

In today’s market, the customer has a very wide choice of products. When it comes to
brands, he chooses brands but he tends to compare the products of different brands.
Products increase customer’s choice whereas brands simplify decision making. To influence
the customer’s buying decision and to get hold of the competitor’s market share, brand
identity and positioning are essential.

Brand management works with these two fundamental tools, brand identity and brand
positioning. Let us understand these terms:

Brand Identity
It specifies that a brand has a goal that is different from the goals of other parallel brands
in the same market segment and it has resistance to change. It is defined clearly and does
not change over time.

Brand identity is fixed in nature being tied to the fixed parameters such as brand’s vision,
objective, field of competence, and overall brand charter.

Brand Positioning
Brand positioning is emphasizing on the distinguishing characteristics of the brand, those
that make the brand appealing to the consumers and stand out among its competitors. It
specifies how the products of a brand penetrate the market to grow their market share
while dealing with the competitor brands. Brand positioning is competition oriented and
hence dynamic over a period of time.

Six Faces of Brand Identity

Brand identity can be represented by six faces of a hexagon or a prism as shown below:

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  Brand Physique: It is the tangible and physical added value, as well as the
backbone of a brand. It considers physical aspect of brand: How does it look, what
does it do, the flagship product of the brand, which represents its qualities. For
example, the dark color of Coke and colorless Sprite.

 Brand Personality: If a brand were a person, what kind of person it would be?
Would it be sincere (TATA Salt), exciting (Perk), rugged (Woodland), sophisticated
(Mercedes), elite (Versace)? The brand has personality which speaks for its
products and services.

When a famous character, spokesperson, or a figurehead is used for branding, it

gives the brand an instant personality.

 Culture: It is the set of values that governs and inspires the brand. Countries of
origin, presence of brand over geographically diverse regions, changing society,
etc., play an important role in building a brand’s culture.

 Customer Self-Image: It is what the brand is able to create in the customer’s

mind and how the customers perceive about themselves after purchasing the
product of a brand.

 Customer Reflection: It is the perception of a customer about the brand after

using the brand. For example, “The Thunderbird I purchased is value for price. It
is giving me pleasure of leisure riding. Thanks to Royale Enfield.”

 Relationship: Brands communicate, interact, transact with the consumer. It is the

mode of conduct that defines the brand. This factor is vital for service brands. For
example, banking where the cordial relationship develops faith in the customers
when it comes to handling their money with respect.

Brand Knowledge
Keller defines brand image as awareness of brand name (whether and when customers
know the brand and can recall it) and belief about brand image (customer’s associations
with the brand). If either of both is created successfully while leaving the other one in poor
state, it brings down the brand drastically.

For example, Salman Khan is a brand in himself with very high awareness. But his image
went bad due to the hit-and-run case and that spoiled his reputation.

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Creation of Brand knowledge is a collective effort of consumer, marketer, researchers,
distributors, and ad agencies.

Creating brand knowledge is extremely important for the company’s stakeholders.

Brand Portfolios and Market Segmentation

There can be a single brand portfolio or multiple brand portfolios. The companies decide
courageously to create a new brand for its growth when the existing brand does not
perform satisfactorily.

There is a wide variety of consumers in terms of their behavior, economic status, tastes,
genders, age groups, and preferences. If the market segmentation is too diverse, it
becomes hard for a single brand to meet the demand of maximum consumers. Thus, the
main objective of creating a multi-brand portfolio is to meet the demands of the segmented
market in a better way.

To avoid the conflicts with the existing brand and the market segment, the companies are
inclined towards creating a new brand each time it ventures into a new market segment.
A multi-brand portfolio covers large market segment and can stop entry of any new
competitor in the market.

Key Rules of Managing Multi-Brand Portfolio

 Place and operate the brands within a portfolio with strong coordination.

 Set clear and precise charter and identity for each brand.

 Build strong brand architecture. Position the brands to increase their

appropriateness and target market.

 Focus on a particular competitor for each brand.

 Keep corporate organization and brand portfolio matched.

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General Steps of Brand Building
Brand stays in the minds of consumers and helps the company to grow their market share
and revenue. Here are few basic steps to build a strong brand:

 Study the market, need of the hour, competitors, and target audience. Study the
purpose of what you wish to accomplish through the brand.

 Decide brand personality, culture, and profile. Think of distinctive features to stand
out from the competitors.

 Identify how the stakeholders perceive the brand. Bridge the perception gaps.

 Decide where you want the brand to position in the market.

 Create a plan and work on strategies where you want to place the brand.

 Communicate the brand to consumers via TV ads, social media, online marketing, etc.

 Make sure the consumers remember the brand.

 Evaluate if the consumers are influenced in a right way and if you have
accomplished the purpose.

Identifying and Establishing Brand Positioning

To identify brand positioning, the brand manager needs to study the market segment of
venture. To establish a strong brand positioning, you need to get clear answers to the
following questions:

 Brand for what benefit?

For example, The Body Shop uses natural ingredients in its products and is
environment-friendly. Tropicana packs real fruit juices in tetra packs, etc.

 Brand for whom?

It is the target audience of the brand grouped as gender, age, economic bracket,
etc. For example, while Nike is top clothing brand for all income group, Gucci and
Fossil remain high income handbags brands.

 Brand for what reason?

These are the facts that support claimed benefits.

 Brand against whom?

This defines the way to attack competitors’ market share.

There is a standard formula to achieve brand positioning:

For … (target market of potential buyers or consumers)

Brand X is … (definition of frame of reference and category)

Which gives the most … (promise or consumer benefit)

Because of … (reason to believe)

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Where,

 The target market is the psychological and social profile of the consumers a brand
aims to influence.

 Frame of reference is the nature of competition.

 Promise or consumer benefit is the feature that creates preference and drives
decision after making choice. For example, Cadbury promises its Silk chocolate bars
to be the smoothest ones among other Cadbury chocolate bars.

 The reason to believe is reinforcement of promise or consumer benefit. For

example, Tropicana Products, the producer and marketer (a division of PepsiCo),
promises to be delivering 100% pure fruit juices in its Pure Premium juices range.

Let us take an example of brand positioning conducted by Shoppers Stop, the retail chain
in India that sells retail clothing, handbags, jewelry, perfumes, toys, home furnishing, and
accessories. It has business of 20 billion dollars. It was founded in 1991 with first store at
Mumbai and expanded rapidly across the country soon. The consumers perceived it as
mass market brand and it started losing its shine in the retail competition in 2008.

The brand managers and company management together carried out a store audit at all
outlets, studied customer experiences, updated brand identity, and came up with new
tagline, “Start something new”. It then repositioned the brand as premium, accessible-
luxury sector. This position of bridge-to-luxury appealed young, middle-class consumers
in India, who had their own money to spend at a young age. The new repositioning also
added the credibility of Shoppers Stop to preset itself as a potential partner for
international brands who were looking to enter the Indian market.

37
The impact was, its share price grew 450% from 52-week low, sales rose more than 10%,
and as newly acquired strength of positioning the brand, it started co-branding with
international brands such as Chanel, Dior, Armani, Esprit, Tommy Hilfiger, Mothercare,
Mustang, Austin Reed, and so on.

Defining and Establishing Brand Values

Consumers are interested in brand values. When the consumer understands the brand
value, he can interact with the business in a particular way.

For defining and establishing brand values, you need to take an honest look at the product
or service. You can proceed by using the following steps:

Step 1 – Find out the answers for the following questions:

 What unique and competing feature my product/service has?

 Why should the target audience take interest in my product/service?
 What is my passion being a product manufacturer/service provider?

Step 2 – Compile a list of values related to the product/service, such as:

 Simplicity
 Quality
 Affordability
 Timeliness

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  Politeness
 Integrity
 Creativity
 Innovation
 Commitment

Step 3 – Narrow down the list of values.

Bring down the list of values which are absolutely indisputable for execution of your
business. Recommended number of values is three to four.

For example, if your brand’s value is timeliness then make sure you keep the promise of
shipping and delivery of products always on time, handle and reply to your customer
inquiries in timely manner, attend the customer’s call in the shortest possible time etc.
Make sure that the value is always consistently honored, despite any internal or external
situation.

Step 4 – Use the list as a reference.

Use the list of brand values while creating new products or services, dealing with clients,
consumers, and partners.

Branding for Global Markets

Venturing into global markets is inevitable for brands. A brand is global when it is visible
and sold at every possible place in the world. The consumer around the world become
aware of various international brands if they travel worldwide or just watch a satellite
television at home.

Before you take the brand in the global market, you need to cater to various aspects of
the global consumer such as:

Culture of Consumers:

 The values the consumers follow

 The customs they observe
 Particular symbols and language they use
 The tone of their behavior
 Consumer’s level of income and buying power
Economic status of the country in terms of:
 Power supply
 Infrastructure
 Communication systems
 Distribution systems
Laws and Regulations enforced:
 Is it lawful there too?
 Political stability of the country

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When the brand transits from local to global, it competes with other global brands. For
example, Nokia battles Motorola and Samsung. The brand managers must manage the
transnational brand to remain superior on the essentials such as the brand’s price,
performance, features, and imagery.

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 7. BRAND PROMOTION

Brand promotion is the way to inform, remind, persuade convincingly, and influence the
consumers to drive their decision towards purchasing the product or service under a brand.
Marketing force of a company conducts brand promotion primarily, though the wholesalers
and retailers also can do it.

Why is Brand Promotion Required?

Brand promotion is required to:
 Promote information related to features, prices, and special schemes of the brand.

 Differentiate the product by convincing the customers about the unique features of
the brand.

 Create and increase the demand for the product.

 Build brand equity.

 Stabilize the sales affected by natural, social, or political changes. For example,
Nescafe promoted its new brand of 'iced coffee' to increase sales during summer.

 Outperform the competitor’s marketing efforts: In a highly competitive market,

even a well-established brand has to be promoted to retain market share. For
example, Coca Cola and Pepsi work to nullify each other's efforts.

 Build positive brand image.

Brand Promotion Methods

There are various brand promotion methods conducted to keep the brand noticeable:

 Organizing Contests: To attract the consumers, various contests are organized

for consumers without having them to purchase the product and giving away gifts
or prizes.

 Promotion on Social Media: When the brand is promoted on social media, it is

not perceived as “aggressively trying to sell”, rather as being able to communicate
at a more personal level.

 Product Giveaways: This strategy is used for promoting edibles, toiletries, foods,
etc., where a small sample is given away to the consumers for free trial.

 Point-of-Sale Promotion: These items are placed near the checkout counter in
the store and are often purchased by consumers on impulse as they wait to be
checked out.

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  Customer Referral Incentive Programs: This is a way to bring new customers
with the help of the existing customers by offering some incentives to the existing
customers.

 Causes and Charity: Some percent of the amount after selling the product is
donated for a cause or charity thereby promoting the product. Charity and cause
are the reasons which induce the feelings of helping in the customers.

 Promotional Gifts: It is giving away of gifts which the customers can practically
use, such as caps, key chains, pens, etc. This helps the brand to always remain
with the customers and creates an emotional attachment.

 Customer Appreciation: It is organized with the objective of not selling the

product or service. It is a way of creating a fond memory attached with the brand.
It includes organizing in-store refreshment events with the offer of food treats of
pizza, burger, beverages, etc. It is an effective way to bring new potential
customers.

Role of Brand Ambassadors and Celebrities

Another way of promoting brands is by employing a brand ambassador. A brand
ambassador is a person who embodies the brand, influences the customers, creates brand
awareness and a specific brand image, and generates sales opportunities.

Brand Ambassador
A brand ambassador usually represents only one brand at a time. The employing company
considers the brand ambassador as a face of the company that speaks of the brand in
their own words and boosts the positive image in the minds of consumers. The looks,
talents, status, achievements, and reputation of a brand ambassador is useful for
influencing large audience of consumers.

In 2003, India’s largest chocolate brand, Cadbury went into worm controversy. To regain
the consumer’s confidence, Cadbury contracted the Bollywood superstar Mr. Amitabh
Bachchan for brand promotion. During his campaign, Cadbury not only restored the trust
of consumers but also experienced boost in the sales of its flagship product Cadbury Dairy
Milk (CDM).

Celebrities
Celebrity branding is nothing but using celebrities to promote the brand. The celebrities
are featured in both electronic and print media ads. They appear at brand launches,
corporate events for social responsibility, and other such events.

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Celebrity brand endorsers are different from brand ambassadors as the former are not
employed by the company as the latter. The popularity, fame, and charisma of the
celebrities is useful in brand promotion. Celebrities can endorse multiple brands at the
same time unlike brand ambassadors. Similarly, a company can have multiple celebrities
to promote its brand.

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Online Brand Promotions
Online brand promotion comes with the challenge of integrating the marketing mix
(putting the right product, at the right price, at the right time) with the multi-channel,
multi-device digital marketing.

Online brand promotion leverages the power of Internet to present the brand to worldwide
audience. But it is a kind of double-edged sword as whatever good a brand has can reach
globally so does the brand’s weaknesses. There are various ways to promote a brand
online. Such as

 Publishing articles, news, spreading business links throughout the web, channeling
the promotional schemes and ads towards the target audience, creating and
updating the blogs and the forums.

 Creating and sharing videos, audios, and pictures of the brand on top ranking
websites such as YouTube.

 Creating the company’s business account on leading social networking websites

such as Facebook, LinkedIn and promoting the brand by gaining new followers.

 Engaging in social gaming such as Zynga, Kongregate, etc., under the name of the
brand.

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 8. BRAND EXTENSION

Brand extension is required for a company’s growth, profitability, and brand’s added
reputation. It is an inevitable strategic move at some point of time in brand management.

While extending a brand, all assumptions related to that brand held for a long time are
revised and the brand’s identity is redefined. The brand managers need to identify growth
opportunities and increase parent brand’s value.

What is Brand Extension?

It is nothing but launching a product in a different category under an already established
brand name. It is extending the existing brand promise with diverse products or services.

The following diagram shows the matrix of brand growth.

When a company introduces a new product, it has the following choices:

 New Brand, New Product (New Brand)

 New Brand, Existing Product (Multi-Brand)
 Existing Brand, New Product (Brand Extension)
 Existing Brand, Existing Product (Line Extension)

The last two in the above list are the types of brand extensions.

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Line Extension
A variation of existing product launched under the existing brand. It often adds different
flavor, package size or shape. Here, established brand is the parent brand.

For example, Coke is basic brand with Diet Coke as extension.

Brand Extension
A new product is launched under existing brand. It often adds a product of different
category. The new associated brand is a sub-brand.

For example, ITC brand with Sunfeast cookies, Vivel shampoo, Bingo chips as its sub-
brands. In 1994, Titan Industries Ltd. extended the brand Tanishq, India’s only national
jewelry brand.

Let us see yet another excellent example of systematic brand extension, Nivea.

Risks of Brand Extension

Just like product launching, brand extension demands time, resource allocation, energy,
and associated risks. When the brand is exposed into unknown market, it might face
dominance among established competitors. In addition, the brand image can come into
trouble too.

Pros of Brand Extension

 Bypass efforts, time, and cost for developing a new brand.
 Leverages the reputation attached to the parent/family brand.
 Saves costs on follow-ups and introductory marketing programs.
 Reduces perceived risk of customer about the product.
 Elevates the parent brand image.

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Cons of Brand Extension
 On failure, brand extension can hurt the parent brand image.
 It can cannibalize parent brand if the sub-brand is more successful than parent
brand.
 Creates confusion among customers if not communicated appropriately.
 Can dilute brand meaning.

Brand Adaption Process

Brand adaption is nothing but introducing and engaging the consumer with the brand. It
involves five steps:

 Awareness: Customer knows the brand but does not have complete information.

 Interest: Customer tries to find more information on the brand.

 Evaluation: Customer tries to know how beneficial the brand would be.
 Trial: Makes first purchase to determine its usefulness or worth.
 Adapt/Reject: Becomes a loyal customer or looks for some other parallel brand.

Brand Adaption Practices

The brand adaption practices involves the following steps:

 Develop internal (brand managers and representatives) and external launching

(consumer and prospects) of brand.

 Impart positive attitude towards the brand among sales managers and marketers.

 Create high customer demands and expectations about the brand.

 Provide training for the sales and customer care force to practically deliver the
brand promise.

Factors that Influence Brand Extension

There are various scenarios where a brand has successfully extended or failed to extend.
For example, Bic ballpoint pens. It extended successfully into disposable razors but the
extension into perfumes was a failure.

The factors that influence acceptability of a brand extension are mainly:

 Perceived risk: It is the evaluation of uncertainty about the type and degree of
expected loss after making the consumer makes a choice.

 Consumer’s Innovativeness: Personal trait or desire of consumers to try a new

brand/product and thereby experience something new.

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  Product Similarity: Greater the degree of similarity of the extended product with
the original product, more is the chance of transferring the positive effect.

 Parent Brand Reputation and Strength: Brand’s reputation is associated with

the consumer’s perception of the quality of the brand. Strong and reputed brands
leverage extension than weak brands.

Rebranding
A company requires to rebrand when it decides to change any of its brand elements such
as brand name, logo, slogan, or even a small change in the message for better
communication and more relevant brand promise. Rebranding is extremely important,
expensive to execute, and risky.

Why do Companies Rebrand?

There are multiple reasons behind why companies initiate rebranding. These reasons can
be categorized into two types: proactive or reactive. Let us take a deeper look.

Proactive Rebranding
It happens when a company anticipates and prepares for future changes in the market.

 To prevent or prepare for future potential threats by competitors.

 To plan for international growth, rebranding the products and services into a
consolidated brand thereby saving money over time and creating a greater sense
of brand unity.

 To enter into a category of business, product, or market which no longer remains

cohesive to the existing brand identity. In case of Apple Inc., as the company
evolved into new businesses beyond computers, the original brand name Apple
Computers became too restrictive. It was then changed to Apple Inc. At the same
time, Apple Inc. updated its logo depicting its progress.

 To attract new audience, or want to appeal to it. In case of McDonald’s ads, it refers
to itself as McDonald’s to target a different demographic from its traditional
audience.

 To increase the brand relevance in consumer’s mind, the company might decide to
rebrand. For example, when the use of printed Yellow Pages directories started
declining, Yellow Pages rebranded to YP.

Reactive Rebranding
This branding occurs when the companies need to react to a significant change. Reactive
rebranding might happen in the following situations:

 When companies need to work on negative brand image.

For example, during 1990-2000, the London based men’s clothes making company
Burberry’s public image was associated with hooliganism and violence. The brand
had lost its image so badly that the clubs and pubs in UK had started banning entry
for the people wearing Burberry. The company worked to disassociate itself from
such an image by changing styles of the product, changing their logo, and applying
excellence in everything.

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  When companies merge or acquire other companies, or when they separate. For
example, California based Intel rival and chipmaker, Advanced Micro Devices (AMD)
is considering to split shortly.

 When there are legal issues with branding. Trademarks are often the root cause for
rebranding. For example, an Australian business tries to expand into USA and finds
that its existing name is already trademarked and not available for use in USA.

 When a competitor manifests a company’s brand as useless or outdated, then

rebranding helps to get an opportunity to facelift the brand to effectively strike
back in the market.

 When changes take place in business regulations, laws, competitors, etc.

 When a company lands up into a significant controversy or negative publicity, it

considers rebranding to rebuild the trust of consumers and stakeholders. It cuts up
all the ties with the issues in picture and moves on with the new form of brand.

Relaunching
Relaunching a brand is reintroducing a brand into the market. Relaunching implies that a
company was marketing the brand but stopped doing so for some reasons. Relaunching is
an opportunity to set new objectives for the brand.

Relaunching a brand can demand the changes ranging from the aspects as minor as logo
prints on stationery and cutlery, staff uniforms, to as major as website of the company,
changes in premises, etc.

How to Relaunch a Brand?

When a company relaunches a brand, it hopes to avoid the mistakes from past experience
and wants to set a strong foot in the market. A brand manager needs to consider the
following do’s and don’ts while relaunching a brand:

 Analyzing the marketplace and target market segment.

 Knowing about the competitor brands.

 Conducting SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.

 Positioning the brand in an appropriate new form.

 Avoiding too many changes in too short time. This type of strategy can lead to the
risk of not retaining consumer’s attention and interest for a long time. In future, it
can make the company and its products unrecognizable to its existing customers.
Let the consumer know about the new form the brand has taken.

 Communicating clearly about the brand relaunch. Creating awareness among

people about new objectives and distinctive offers. Making the changes gradually
and noticeably.

Let us see an example of NIVEA FOR MEN relaunch. In 1980, NIVEA introduced an alcohol-
free, non-itching aftershave balm for men. It went popular with consumers, and then by
1993, NIVEA FOR MEN included a range of skincare products for men.

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By 2008, more and more men were investing in skincare and grooming products. NIVEA
FOR MEN brand understood this as an opportunity to claim more market share in the
growing category. To achieve this, NIVEA employed a strategic marketing to relaunch and
reorganize.

NIVEA assessed the marketplace, evaluated its own business, brands, and products. It
also assessed the brand’s position and the state of the market. It conducted SWOT analysis
and revealed some interesting facts such as women are an important target market for
the brand NIVEA FOR MEN as they are instrumental in buying male grooming products for
their partners as well as helping them to choose new ones.

Well-informed with SWOT analysis data, NIVEA FOR MEN brand management set
objectives for relaunch. Using research data to forecast trends, the marketing force set
SMART (Specific, Measurable, Achievable, Realistic) objectives. This helped in increasing
sales, growing market share, and improving its brand image.

NIVEA FOR MEN adopted a range of key performance indicators to assess the success of
the NIVEA FOR MEN relaunch in the UK. It revealed that:

 NIVEA FOR MEN is the market leader in many countries and is consistently gaining
additional market share.

 Internationally, NIVEA FOR MEN skincare products sale increased by almost 20

percent.

 The NIVEA FOR MEN brand image improved in the minds of consumers.

 NIVEA FOR MEN entertained its customers’ feedback and added products to its line
and reformed the existing products.

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 9. CO-BRANDING

Co-branding is now no more a new strategy used by companies for generating higher level
of interest and excitement about the products and services. As every single strategy of
branding comes with benefits and risks, co-branding is not an exception. Let us see all
about co-branding in detail.

What is Co-branding?
When a company uses multiple brands together to introduce a single product or service,
the practice is called Co-branding. It is also called Brand Partnership, piggyback
franchising, or combination franchising. There can be two or more than two brands
in alliance to achieve an appeal to the consumers that an individual brand could achieve.

Co-branding provides a way for companies to integrate the marketing forces from each of
the brands such that they work cooperatively to associate any of the logos, color schemes,
or other brand identifiers to a specific product. The objective of co-branding is to combine
strengths of multiple brands for business growth.

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Types of Co-branding
There are various types of co-branding as follows:

 Ingredient Co-branding: Multiple brands provide distinctive ingredient or

component to the carrier brand. For example, Intel chip inside all computers.

 Product-Service Co-branding: It is a co-branding between a product and a

service. For example, Best Western International, Inc. owns and operates a chain
of hotels with state-of-the-art amenities and services to its customers. It runs an
exclusive rewards program for Harley Davidson owners. The participating riders get
lavish privileged treatment at the hotel.

 Alliance Co-branding: Multiple brand serve the same target audience. For
example, Etihad Airways Partners, is a new brand which brings like-minded airlines
together to offer customers more choice in flight schedules and enhanced frequent
flyer benefits.

 Supplier-Retailer Co-branding: Starbucks Wi-Fi started from AT&T in the most

number of metropolitan cities in USA since 2008.

 Promotional Co-branding: It is an alliance of a brand with persons or events.

Situations for Co-branding

There are various situations when companies go for co-branding. They are:

 When introducing one company's product or services to the loyal consumers of

another company. For example, the “Intel Inside” campaign. Within a year of the
campaign, Intel started co-branding with around 300 computer manufacturer
companies.

 When a company wants to leverage the effect of one established and affectionate
brand for marketing another brand.

 When companies want to save costs on branding and other resources in this age of
economic competition. For example, the businesses such as fast-food restaurants
share the same place of working, counter, menu pamphlets, or sometimes the staff.

 When one brand is providing complementing products or services that other brand
requires.

Points to Note before Co-branding

Co-branding comes with inevitable risks. Before the brand managers of brand A go for co-
branding with brand B, they must consider the following points:

 If brand A is well established and generating excellent revenue, brand B would get
the benefit of A’s positive perception and experience. In such case, brand A’s
perception gets diluted.

 There is a risk of any of the brands A or B underperforming or failing. In such case,

the underperforming brand negatively impacts the over-performing brand and
destroys its reputation for none of its mistake.
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  If brand B is to some extent depending upon brand A’s equity, then brand B may
be taken as weak or secondary.

Brand A and B should be fit or compatible from the perspective of attributes and
benefits. For example, co-branding of ice cream parlor and dry-fruit shop is natural
so is co-branding of clothes brand with footwear brand.

 Brand A and B both should have common core values and corporate philosophies.
This is beneficial for both brands and reduces the risk of negative reputation if one
of them fails.

Rough Criteria for Co-branding

Here are basic rough guidelines for co-branding:

 Know your partner in co-branding. Go for co-branding only with the companies that
share complementary values.

 Co-brand only if the company has same ethics, core values, and common vision.

 Choose co-branding only with brands whose products are best-in-class status.

 Co-brand if the partner and company’s brand share the same target audience.

 Co-brand only if the company can retain full review and approval rights on all
elements of communications.

These guidelines bring down the opportunities of growth of the company but the good
news is, it reduces the risks associated with co-branding.

Co-branding for Business Growth

Apart from creating additional appeal to the consumers, the objective of co-branding is
increasing revenue. The ultimate goal of co-branding is one plus one = more than two. If
the co-branding is done using innovative ideas and effective strategies with the right
partner, it can prove to be very beneficial for business growth.

Benefits of Co-branding
Co-branding helps to:

 Make the product or service under the brands resistant to imitation by local or
private brands.

 Combine various perceptions about multiple brands.

 Increase the credibility of the product or service in the market.

 Increase revenue of both businesses, if done effectively.

 Save costs of the company for launching a new brand, advertising, and promoting
the brand through shared resources.

 Bring benefits from all brands and helps all brands participating in co-branding to
prosper.
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For example, Coca Cola, the soft drinks giant has paired itself with McDonalds and made
it sure it is associated with the brand that is consumed by millions of consumers around
the world. Just by being together, both giants in restaurants and beverage industry
respectively are earning billions of dollars’ revenue every year.

Celebrity Endorsement
The consumers follow their favorite celebrity and they wish to look, appear, and conduct
the way the celebrity does. The companies grip this nerve of consumer behavior to brand
their products with celebrity endorsement. The companies use the success and status of
the celebrity to brand its products.

The product alone cannot achieve consumers’ awareness and recognition as far and wide
as a celebrity can help it to achieve.

In India, Artist Booking India is a celebrity management and celebrity brand endorsement
agency powered by B-Town Entertainment Pvt. Ltd. It has a strong network of TV serials,
movies, writers, directors, and musicians in Bollywood. It provides solution right from
selecting a right celebrity for the brand, applying strategies for optimizing the celebrity’s
association with the brand to logistics.

Problems with Celebrity Endorsement

 The contemporary celebrity endorsers can be overused by endorsing too many
varied products.

 There must be a reasonable fit or match between the product and the celebrity
endorser to appeal the consumers.

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 Celebrity endorsers can get into controversies, which can affect the brand
adversely.

 Celebrity can distract the consumer’s focus from the brand by overshadowing the
brand.

 A number of consumers do not connect with the brand because they think that the
endorsing celebrity is doing it just for money and do not necessarily believe in the
brand they are endorsing.

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Part 3 – Maintaining the Brand

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 10. BRAND PERFORMANCE

Since the idea of branding came into existence and settled in practice, some brands such
as Nike, Coca Cola, Nivea, Amazon, etc., have been ruling the marketplace as successful
ones. They were novice and had started as ordinary names with some innovative products
or services at some point of time. With the efforts required for growing in the contemporary
market, these brands became leading, exemplary, and powerful.

In this chapter, we see what makes a brand successful over a long frame of time and how
to assess brand performance.

Launching a Brand
Brand launching is not the same as product or service launching. Products change but a
brand is to stay. Brand launch is a long-term project unlike product launch.

When a brand launches a product say P, and advertises for it, the competitors copy it after
some time. Since all products go obsolete after some time, the brand chooses to replace
the product P with some new product NewP, advocating its benefits and upgrading its
quality to the consumer. This NewP often gets the benefit of the previous known product
P. This is how a brand comes into life.

From this point onwards, the products under the brand are sold by brand itself and not by
mere advertising. Here, the product name (common noun) becomes a brand name (Proper
noun). Over a time, brand gets more unique, builds its way of communication, and
develops a rich meaning. Thus, a brand starts with a product and continues growing with
multiple products.

This was all about how a new product is converted to a brand. But launching a new brand
is different.

A successful brand launching needs treating a brand as a large entity than as a product.
Right from the start, a new brand is considered as a complete entity in itself endowed with
functional and non-functional values and presenting as if it is well-established.

Steps for Launching a New Brand

Take the following steps while launching a new brand in the market:

Step 1 – Draft the brand program. Try to get the answers for the following questions:

 Existence: Why is the brand necessary? What will the consumers miss if the brand
does not exist?

 Vision: What is brand’s vision in some X product category?

 Ambition: What does the brand want to change in its consumer’s life?

 Values: What will the brand never compromise on?

 Know-How: What are brand’s capabilities?

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  Territory: Where is the brand providing its lawful benefits? What are its product categories?

 Style, Tone, and Language: How a brand is going to communicate?

 Reflection: What image the brand wants its consumers to render about itself?

Step 2 – Define brand identity prism.

Step 3 – Create brand positioning.

 Identify potential added values for the brand based on its image, identity, and heritage.

 Explore four major scenarios: Why? Against whom? For whom? When?

 Test the above scenarios, redefine or eliminate them if required. Conduct consumer
studies, ideas and formulations.

 Conduct strategic evaluation of potential sales and profits in the marketspace.

Step 4 – Determine flagship product of the brand. Carefully choose which product or
service you think you should introduce as a first campaign. This star product is going to
form the brand’s identity subsequently.

Step 5 – Choose a strong brand name. Choose it by estimating the future changes the
brand can undergo. Look for meaningful, short, and easy to pronounce names. Do not
choose a deceptive or descriptive name.

Step 6 – Create brand slogan and jingle that is easy, meaningful, and memorable by consumers.

Step 7 – Reach out to opinion leaders (people who are influencers) and conduct brand
advertisements in various media to create awareness among the consumers.

Sustaining a Brand in the Long Run

Many brands have been with us for a long time and many are still struggling for survival.
Why do some brands sustain by escaping the effects of time and why do some brands
vanish?

There are many reasons why brands start performing low and eventually lead to vanishing:

 A brand not being able to withstand market changes and competitors.

 New cheaper entrants in the market, which destabilize added value of the
established brand.

 A brand not able to suffice consumer’s needs, or customized requirements.

 A brand not able to attract upcoming generation of consumers all over again when
current consumers grow old.

 A brand marketing and management team lacking foresightedness.

These are few most common facts why brands start to decline. To last for a long term, the
following vital points a brand must adhere to:

 Keep on innovating on the fronts of product quality, design, and consumer’s convenience.

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  Always keep its reputation good.

 Always remain contemporary with the changes in the consumer’s culture,

preferences, economic and technological changes, and new market openings in the
world.

 Always keep itself noticeable to the target market.

 Work on not to lose its market share for cheap copies of the products.

 Work on acquiring superior image and then keeping it.

 Price its products appropriately depending upon the target market’s income.

 Present itself in the quality environment which is as high as its product offers.

 Control the relationship with the opinion leaders and distribution of products.

 Defend its intellectual properties against theft or sneaking intrusion.

Adapting the Brand to Suit Various Markets

A brand cannot survive if it does not change according to the market changes. Brand
management needs to cater to different branding policies to introduce the product in
different countries around the world.

The market is not the same worldwide. First, the growth takes place in developing
countries, then in underdeveloped countries, and finally in developed countries.

In developing countries such as India, the economic growth rate is fast and there are
favorable business conditions. It is also revealed that the customer in developing countries
is more brand cautious than that of in the developed countries.

In developed countries of USA and Europe, the market is matured. There is not much
significant growth and innovation taking place. In such matured markets, brand needs to
stimulate the new desires and new experiences of the consumer.

Brand managers need to work by considering changes in the domains of politics,

economics, evolution of society, technology, consumer behavior and fads, all of which play
an important role while branding in different markets.

Handling Brand Name Changes

When it comes to brand name changes, some examples flash such as Anderson ->
Accenture, Datsun -> Nissan, Pal -> Pedigree, and Phillips -> Whirlpool, Backrub ->
Google, to name a few.

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Brand transfer is a lot more than brand’s name change. A brand’s established name has
links with emotional associations, empathy, and preference in its consumers’ mind. The
loyalty and trust of the customers cannot be transferred easily to just one entity: the brand
name. The brand image is required to be transferred.

When to Change a Brand Name

A brand’s name is changed in the following scenarios:

 When the existing name sounds weak or is not able to establish its position in the
market.

 When a brand wants to present its upgraded product or service.

 When a brand wants to introduce more clarity in its name.

 When a brand needs to distant itself from negating effects of the existing name.

 When a brand wants to get instant recognition in the market while expanding
globally.

What to do Before Changing a Brand Name

There are few estimations the brand managers need to work on:

 Estimate and quantify the costs

It includes the costs required for changing:

o Promotional properties such as banners, hoardings, website ads, business

properties such as letterheads and business cards.

o Company literatures such as white papers, data sheets, and presentations.

o Electronic properties such as website, newsletter, blogs, etc.

o Other in-house properties such as templates, folder names, network node

names, etc.

 Judge the benefits and losses

Try to find out answers for the following questions:
o How long the existing name is in use? How much goodwill has the existing
name built?

o How would it affect the consumers?

o How would it affect the market share of the brand?
 Analyze target audience and market
o Consider the target audience, culture, language, symbols, and preferences.

o Consider the average purchasing frequency of the customer.

o Identify the characteristics the customer associates with the brand.

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Handling Brand Transfer
To handle actual brand transfer, follow the given steps:
 Chalk out a plan of brand transfer.
 Let every department know, that it is going to be a combined effort of all
departments in the company.

 Warn the employees, retailers, opinion leaders and prescribers well in advance.
 Communicate clearly to the customers about the brand change.

 Invest time for all customers to know about the brand transfer.

 Keep the transitional period of the brand transfer minimal.

Brand Image Transfer

The following three factors facilitate brand image transfer:

Product Resemblance: When consumers consider source brand’s product and target
brand’s product or product category similar. For example, it is more likely for a pasteurized
milk brand to boost a low-calorie cheese brand than a soap brand.

Target Group Resemblance: If the target brand aims for the same target group as the
source brand, there are high chances of target brand succeeding as the initial purchases
of a target brand will mainly be made by consumers of the source brand. When the target
brand tailors to another target group then initial sales will not be significantly high.

Family Resemblance: Family resemblance means that the look and feel of the source
brand and the target brand have to be largely the same. The consumers are perceived by
symbols and colors while assessing the brand hence a similar style can transfer their
associations with the source brand to the target brand.

Image transfer may still become successful, provided the marketing communication is
clear and aggressive, and advertising campaign is intensive.
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 11. BRAND LEVERAGING

Brand leveraging is the strategy to use the power of an existing brand name to support a
company’s entry into a new but related product category by communicating valuable
product information to the consumer.

For example, the manufacturer of tea maker uses its brand name strength to launch tea
vending machine. Here, in spite of tea and tea-vending machine belonging to different
product categories, there is a strong correlation between the two items that the brand
name has a mighty impact on consumers of both categories.

Importance of Brand Leveraging

Brand leveraging is an important form of new product introduction because:

 Strong brand leveraging provides consumers with a sense of familiarity.

 It carries positive brand characteristics and attitudes into a new product category.

 Strong leveraging perceives instant recognition to the brand. Consumers are more
likely to try leveraged product.

 As the products belong to the different categories, they do not compete for market
share.

 More products mean greater shelf space for the brand and in turn more
opportunities for sale.

 The cost of introducing a brand-leveraged product is less than introducing an

independent new product.

 A full line permits coordination of product offerings, such as bagels and cream
cheese, potato chips and ranch dip, peanut butter and jelly, etc.

 A greater number of products increase efficiency of manufacturing facilities and

raw materials.

Role of Brand Managers in Brand Leveraging

The brand managers can create a strong brand leveraging, by maintaining the quality of
all products in different categories under the brand.

The brand managers need to decide which products can be leveraged under a brand. It is
very important for them to leverage a brand only into related or associated categories of
the original product.

In order to make the best decision for the brand, they need to find answers for the
following questions:

 Is the new product related to the established product family?

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  Does the established brand has characteristics that can be effectively carried on
into new categories?

 What will be the appropriate leveraging strategy?

 What will be the impact on original brand name? Will it be strengthened or diluted?

 Does the company have essential facilities to manufacture and distribute a new and
differentiated product?

 Will sales of the new product cover the cost of product development and marketing?

 If leveraging fails, what are the policies to revert or to keep original brand’s
reputation?

A brand leveraging strategy can be extremely successful and profitable if it is correctly

implemented and provides new products with the right image.

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 12. BRAND VALUATION

Brand valuation is an interesting topic in brand management. The brand valuation is not
just restricted to acquisitions and mergers but it is also important for the company
management to make policies for future, to train the marketing team, to use it for
information system, and provide as a reference for product or brand managers to plan
their strategies.

In the entire process of brand development and management, it is essential for the brand
managers to assess the progress of brand development. The companies are interested in
brand audit as the owner of the organization.

What is Brand Audit?

Brand audit is an assessment of where the brand stands in the market at its present status.
It is conducted by the company itself to judge the inclination of the brand. It reveals the
loopholes in brand development or management process.

When is Brand Audit Conducted?

Brand audit is conducted:

 When the companies are rebranding, acquiring business, or merging the

businesses.

 When the communication in management team and employees, or interpersonal

relations among employees are unhealthy.

 When brand, the strong foundation of the organization that inspires and empowers
the employees is found weak.

Who Conducts Brand Audit?

The CEO of a company along with his marketing and brand management heads generally
conducts brand audit. It can be an in-house team as said or an outside agency on hire.

There are two categories in which brand auditing is done:

Internal Audit
 Brand positioning
 Brand value
 Brand promise or brand essence
 Culture of the organization
 Product/service positioning
 HR policies

External Audit
 Corporate identity such as logos, and brand elements
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  Collaterals such as brochures, printed material, trade fair displays
 Advertisement
 Website
 Search Engine Optimization (SEO)
 Social media
 News
 Public Relations
 Company literature such as white papers, blogs, case studies, books
 Reviews and testimonials
 Videos
 Customer service system
 Sales procedures, touch points

Brand Equity Measurement

There is little standardization and more opinions in the market about brand equity
measurement. Brand equity is measured in both quantitative and qualitative brand
research.

The brand equity performance can be measured by collecting data of brand performance.
It includes:

 Taking face-to-face interviews with focus groups.

 Considering large sample audience to collect the data.

 By analyzing present customers as well as prospective customers.

 By conducting periodic surveys.

 Conducting experiments that examine consumers’ attitude and behavior.

There are three mainstay drivers or metrics of brand equity:

65
Financial Metrics
The company management is interested in financial aspect of brand equity to know how
profitable the brand is performing in the market.

Under the financial metrics, the brand managers with marketing team should track the
following:

 Cost for winning new customers

 Cost for retaining existing customers
 Growth rate
 Market share of the brand
 Marketing investments
 Price sensitivity
 Profitability
 Revenue

These are some of the many financial metrics given. By keeping the track of the trends, a
brand manager can ensure that the brand is building positive equity. Also, they can use
this data to explain how important the brand asset is for the company to bear brand
extensions or to determine marketing budgets.

Strength Metrics
The strength metrics include measurement of the following aspects:
 Brand awareness
 Brand knowledge
 Brand loyalty
 Aided and unaided brand recall
 Buzz in the market

Consumer Metrics
It is very important for the brand managers to understand what consumers know, think,
and feel about various brands. Under consumer metrics, the brand managers need to
measure the following:

 Consumer sentiments
 Consumer perception
 Emotional connection with brand
 Beliefs about the brand
 Relevance of brand for the market segment
 Consumer’s purchasing decision and other driving factors of the brand
 Consumer’s opinions and feelings about the brand
 Brand associations in the consumer’s mind

66
Employer and Employee Branding
It is very difficult to find the right talent in the market. Organizations are always interested
in attracting the talented employees thereby reducing the cost of grooming and training
the new employees.

Employer Branding
It is the practice of creating and establishing the reputation of an organization as a place
to work by associating recruitment and external HR practices with the organization as a
brand. It is a way of attracting and keeping employees by:

 Good pay package

 Ethical organization culture
 Comfortable and enjoyable workplace
 Rewards, perks, appraisals, and benefits
 Excellent management performance

It forms a perception in the employee’s mind about what it would be like to work in the
organization. It attracts not only potential employees, but also the specific ones who can
fit well within the organization.

For example, the software products giant Microsoft has provided its Microsoft Careers
website. Apart from featuring job opportunities, there is a blog that presents articles about
how it would be to work at the company by profiling the experience of the present
employees.

In addition, it provides a separate Facebook page as ‘Women at Microsoft,’ to give a unique

insight into the women working at the company. The YouTube video on Microsoft Career
features more than 100 videos where potential employees can get to know the aspects of
working with Microsoft.

Employee Branding
It is the practice of associating an employee’s behavior and opinions with the image,
characteristics, and attributes that the organization wants to project to its external
stakeholders. Here, the employee is a small version of a brand ambassador.
67
It tries to influence the interactions among employees within the organization as well as
among employees and external stakeholders. This way, an organization demonstrates its
characteristics it desires to show through its employees.

Employee branding includes:

 On-job training
 Customer service or customer interaction training
 Company orientation
 Education programs associated with corporate brands
 Evaluation and reward programs

For example, Cisco Networking Academy, program under Cisco Corporate Social
Responsibility, is an IT skills and career building program available to learning institutions
and individuals worldwide.

CEO as a Brand Leader

A poplar CEO of a company can bring in more deal flow and generate more revenue. Brand
CEO is the leader who creates a vision for the brand and leads his teams by speaking with
actions more than words.

With high rank in management hierarchy and authority, a CEO can play an instrumental
role in branding.

CEO’s Social Media Presence

CEOs are expected to have profiles on LinkedIn, but if they have presence across every
prominent social media platform, their focus on reaching consumers directly dilutes. A
smart CEO finds out on which social media the target audience spends time and focuses
the efforts there.

Speaking Engagements with Audience

It establishes credibility of the brand and helps to bring up CEO’s reputation as an industry
expert. It is an opportunity to connect to the audience in person when a CEO is physically
in front of the target audience.

Author, Recognition as an Expert

Being an author of the book grants the command on the subject. Writing a book and
introducing it among large audience, signing events are excellent opportunities for CEO
for brand campaigns.

Awards
When a CEO gets an award as an industry expert, the credibility and reliability elevates.

68
 BRAND MANAGEMENT

www.eiilmuniversity.ac.in
Subject: BRAND MANAGEMENT Credits: 4

SYLLABUS

Branding Concepts
Introduction to Brand; Brand and Branding Basics; Relationship of Brands with Customers; Building
Successful Brands.

Terms associated with Brands

Understanding Various Terms; Brand Names and Brand Extensions; Co-Banding and Corporate Branding;
Brand Associations and Brand Image.

Management of Brand
Brand Loyalty; Brand Relationship; Brand Equity; Brand Management

Brand Processing
Brand Evolution; Value of Brand; Brand Planning and Brand Potential.

Brand Selection
Brand and Consumer Buying Process; Consumer Search for Brand Information; Issues associated with
Effective Brand Name; Added Values Beyond Functionalism; Brand Personality; Branding to make Tangible
the Intangible.

Suggested Reading:

1. Branding Concepts and Process by Pati D, Publisher: Macmillan

2. Creating Powerful Brands by McDonald Malcolm and De Chernatony L,
Publisher: Amazon.Co.UK
3. Brand Positioning by Subroto Sen Gupta, Publisher: Tata McGraw-Hill
4. Product Management in India by R. C. Majumdar, Publisher: Prentice-hall of
India Pvt Ltd.
5. Managing Indian Brands by S R Kumar, Publisher: Wharton School Publishing
 BRAND MANAGMENT
COURSE OVERVIEW

A good brand is priceless to any business, and with this course • identify the responsibilities of a brand manager.
in Brand Management you will learn exactly how to market, • evaluate brands to identify the components of brand equity.
• use Porter’s Method of Competitive Strategy to implement a
manage, develop and integrate a brand in both the marketplace
marketing strategy for a brand in a given scenario.
and over the Internet.
• identify appropriate steps for evaluating brands in a given
There are three ingredients every company needs for branding scenario.
success: a brand manager, a brand, and the consumer. But how • recognize the benefits of having an effective brand.
do these ingredients relate and what are they comprised of that • identify examples of business properties that can be
branded.
makes them so important? This course will demonstrate how
• determine the appropriate strategy for a product within the
each ingredient reacts to the other in order to create a valuable, brand hierarchy in a given scenario.
long-lasting brand. First, you will learn about the responsibili- • evaluate the effectiveness of the creative elements in brands.
ties of a brand manager, from conception of a brand to • identify a strategy to negotiate trends in the marketplace.
building, evaluating, and maintaining brand equity. Then, you • recognize the benefits of knowing your consumers.
will be introduced to a brief history of branding and its • analyze a question used in consumer research to determine
intended purpose. This also includes the elements of a great which method was used.
• identify examples of sales promotional tools.
brand, and current trends in branding. Finally, you will recognize
• analyze a brand to determine where the consumer adoption
the components and intricacies that make up your consumer,
process failed.
how to appeal to the consumer, and one of the most impor-
tant facts of all: how the consumer dictates your brand equity.
By the end of this course, you will apply all of these ingredients
and assemble a recipe of your own as a foundation for effective
management of your brand.
This course is an overview for future managers, brand managers
and marketing personnel who wish to conceive, build, improve
and maintain a successful brand identity for their products and
company. This will help them to interpret the potential affects
of various brand strategies and tactics and assess the value of
any type of brand.
• recognize the benefits of utilizing a brand manager.

i
BRAND MANAGMENT

BRAND MANAGMENT

CONTENTS
. Lesson No. Topic Page No.

Lesson 1 Introduction to Brand 1

Lesson 2 Brands and Branding Basics 6

Lesson 3 The nature of relationship of brand with customers 13
Lesson 4 Building Successful Brands 21

Lesson 5 Understanding various Terms 29

Lesson 6 Brand Names and Brand Extensions 35
Lesson 7 Co-Branding and Corporate Branding 43
Lesson 8 Brand Associations and Brand Image 48

Lesson 9 Brand Loyalty 55

Lesson 10 Brand Relationship 63

Lesson 11 Brand Equity 68

Lesson 12 Brand Management Process 75

Lesson 13 Brand Evolution 83

Lesson 14 Value of brands 90

Lesson 15 Brand Planning and Brand Potential 94

Lesson 16 Brands and consumer buying process 101

Lesson 17 Consumer search for Brand Information 108

Lesson 18 Issues associated with effective brand names and 114

Lesson 19 Added values beyond functionalism 122

Lesson 20 Brand Personality 131

Lesson 21 Branding to make tangible the intangible 137

vi
 BRAND MANAGMENT
BRAND MANAGMENT

CONTENTS

. Chapter No. Topic Page No.

Lesson 22 Response of Weak and strong manufacturers 144

Lesson 23 Brand Positioning Strategies 152
Lesson 24 Consumer Segmentation 157

Lesson 25 Brand Architecture and Brand Portfolio 162

Lesson 26 Perceptual Mapping 168
Lesson 27 Brand Benefits and Attributes 175
Lesson 28 Advertising and Branding 181
Lesson 29 Successful Repositioning 187
Lesson 30 Differential Advantage and Positioning 194

Lesson 31 Brand as strategic devices 202

Lesson 32 Brand Evaluation and Planning 210

Lesson 33 Protecting Brands through Trademarks 221

Lesson 34 Legal Perspectives in Branding 232

Lesson 35 Online Branding 236

Lesson 36 Business to Business Branding 247

Lesson 37 Live Industry Projects 251

vii

FOUNDATION OF BRAND MANAGEMENT
LESSON 1:
INTRODUCTION TO BRAND
Objectives
The learning objective: after this lecture you should be able to
understand:
a. Why studying Brand management is important for
marketing managers.
b. Various terms related to Brand in terms of Glossary are
given in this lesson, which will help you in understanding
the course better.
It has never been clearer that in this shrinking world, countries
and regions and cities have to compete with each other – for
tourism, for inward investment, for aid, for membership of the
supranational groups, for buyers of their products and services,
for talent. So there’s hardly a place left that isn’t thinking hard
about its brand image, and most are in need of clear, realistic
strategies for communicating and promoting themselves, their
culture, their exports, their acts of policy and their contribution
to the global community.
Which consultants or agencies will ultimately lead the field in
managing and promoting these hugely complex and often
contradictory megabrands? Is promoting a country more about
policy, management consultancy, public relations, marketing,
CRM, advertising or brand strategy? Or is it a combination of
everything that working with companies has taught us in the
last fifty years?
Guest-Editor Simon Anholt - one of the leading international
marketing thinkers, and according to The Economist “one of
the world’s leading consultants to corporations and govern-
ments who wish to build global brands” - has united the
leading academics and practitioners in this critical but still largely
unexplored field to bring together the best and latest thinking
on place marketing.
A strong brand is the most valuable asset of many successful
companies. Brands are assets because, when properly managed,
they provide a secure stream of income for the business. But
what about your own brand, is it delivering its full value?
This course provides resources to help you successfully
manage your brand
As you work to unlock the potential of your own brand you are
facing a wide range of brand management issues. You are
probably asking questions such as:
What are We Trying to Achieve?
• Who should be involved?
• How do we manage this?
• What are the tools and techniques to use?
• How do we know we’re making progress?
There are three steps to the answers
UNIT I
UNIT 1
CHAPTER 1
BRANDING CONCEPTS
Step One
BRAND MANAGMENT
Read about successful brand management. This course
provides you with illustrations and anecdotes from the world
of brand management. You’ll see what worked for other
companies and find ideas that you can apply to your own
brand.
Step Two
Learn the principles and practices. Subscribe to our ‘Shared
Learning’ newsletter and learn the principles and practices of
successful brand management - you’ll be another step closer to
unlocking the potential of your brand.
Step Three
Apply proven tools and techniques. This brand Manual
provides proven tools and techniques - and a complete brand
management process - to help you unlock the value of your
most important asset, your brand.
Glossary of Terms
A. Awareness The percentage of population or target market
who are aware of the existence of a given brand or
company. There are two types of awareness: spontaneous,
which measures the percentage of people who
spontaneously mention a particular brand when asked to
name brands in a certain category; and prompted, which
measures the percentage of people who recognise a brand
from a particular category when shown a list.
B. Brand A brand is a mixture of attributes, tangible and
intangible, symbolised in a trademark, which, if managed
properly, creates value and influence.
“Value” has different interpretations: from a marketing or
consumer perspective it is “the promise and delivery of an
experience”; from a business perspective it is “the security
of future earnings”; from a legal perspective it is “a
separable piece of intellectual property.” Brands offer
customers a means to choose and enable recognition within
cluttered markets.
Brand Architecture How an organization structures and
names the brands within its portfolio. There are three main
types of brand architecture system: monolithic, where the
corporate name is used on all products and services offered
by the company; endorsed, where all sub-brands are linked
to the corporate brand by means of either a verbal or visual
endorsement; and freestanding, where the corporate brand
operates merely as a holding company, and each product or
service is individually branded for its target market.
Brand Associations The feelings, beliefs and knowledge
that consumers (customers) have about brands. These
associations are derived as a result of experiences and must
be consistent with the brand positioning and the basis of
differentiation.
1
 Brand Commitment The degree to which a customer is
BRAND MANAGMENT
committed to a given brand in that they are likely to re-
purchase/re-use in the future. The level of commitment
indicates the degree to which a brand’s customer franchise is
protected form competitors.
Brand Earnings The share of a brand-owning business’s
cashflow that can be attributed to the brand alone.
Brand Equity The sum of all distinguishing qualities of a
brand, drawn from all relevant stakeholders, that results in
personal commitment to and demand for the brand; these
differentiating thoughts and feelings make the brand valued
and valuable.
Brand Essence The brand’s promise expressed in the
simplest, most single-minded terms. For example, Volvo =
safety; AA = Fourth Emergency Service. The most powerful
brand essences are rooted in a fundamental customer need.
Also, in Interbrand’s model, a vivid distillation of the
Brand Platform.
Brand Experience The means by which a brand is created
in the mind of a stakeholder. Some experiences are
controlled such as retail environments, advertising,
products/services, websites, etc. Some are uncontrolled like
journalistic comment and word of mouth. Strong brands
arise from consistent experiences which combine to form a
clear, differentiated overall brand experience.
Brand Extension Leveraging the values of the brand to
take the brand into new markets/sectors.
Brand Harmonisation Ensuring that all products in a
particular brand range have a consistent name, visual
identity and, ideally, positioning across a number of
geographic or product/service markets.
Brand Identity The outward expression of the brand,
including its name and visual appearance. The brand’s
identity is its fundamental means of consumer recognition
and symbolizes the brand’s differentiation from
competitors.
Brand Image The customer’s net “out-take” from the
brand. For users this is based on practical experience of the
product or service concerned (informed impressions) and
how well this meets expectations; for non-users it is based
almost entirely upon uninformed impressions, attitudes
and beliefs.
Brand Licensing The leasing by a brand owner of the use
of a brand to another company. Usually a licensing fee or
royalty rate will be agreed for the use of the brand.
Brand Management Practically this involves managing the
tangible and intangible aspects of the brand. For product
brands the tangibles are the product itself, the packaging,
the price, etc. For service brands (see Service Brands), the
tangibles are to do with the customer experience - the retail
environment, interface with salespeople, overall satisfaction,
etc. For product, service and corporate brands, the
intangibles are the same and refer to the emotional
connections derived as a result of experience, identity,
communication and people. Intangibles are therefore
2
managed via the manipulation of identity, communication
and people skills.
Brand Mission See Brand Platform.
Brand Parity A measure of how similar, or different, different
brands in the same category are perceived to be. Brand parity
varies widely from one category to another. It is high for petrol,
for example: about 80% of respondents (BBDO survey) see no
real difference between brands. By contrast, brand parity for cars
is low: only about 25% of respondents say that one make is
much the same as another.
Personality The attribution of human personality traits
(seriousness, warmth, imagination, etc.) to a brand as a way
to achieve differentiation. Usually done through long-term
above-the-line advertising and appropriate packaging and
graphics. These traits inform brand behavior through both
prepared communication/packaging, etc., and through the
people who represent the brand - its employees.
Brand Platform Interbrand’s proprietary model for
defining brands. The Brand Platform consists of the
following elements:
• Brand Vision The brand’s guiding insight into its world.
• Brand Mission How the brand will act on its insight.
• Brand Values The code by which the brand lives. The brand
values act as a benchmark to measure behaviors and
performance.
• Brand Personality The brand’s personality traits (See also
definition for Brand Personality).
• Brand Tone of Voice How the brand speaks to its
audiences.
Brand Positioning The distinctive position that a brand
adopts in its competitive environment to ensure that
individuals in its target market can tell the brand apart from
others. Positioning involves the careful manipulation of
every element of the marketing mix.
Brand Strategy A plan for the systematic development of a
brand to enable it to meet its agreed objectives. The strategy
should be rooted in the brand’s vision and driven by the
principles of differentiation and sustained consumer appeal.
The brand strategy should influence the total operation of a
business to ensure consistent brand behaviors and brand
experiences.
Brand Tone of Voice See Brand Platform.
Brand Valuation The process of identifying and measuring the
economic benefit - brand value - that derives from brand
ownership.
Brand Values The code by which the brand lives. The brand
values act as a benchmark to measure behaviors and perfor-
mance. (See also Brand Platform.)
Brand Vision See Brand Platform.
Branding Selecting and blending tangible and intangible
attributes to differentiate the product, service or corporation in
an attractive, meaningful and compelling way.
C. Co-branding The use of two or more brand names in
support of a new product, service or venture.
 Consumer Product Goods (consumer goods) or services
(consumer services) purchased for private use or for other
members of the household.
Core Competencies Relates to a company’s particular areas
of skill and competence that best contribute to its ability to
compete.
Corporate Identity At a minimum, is used to refer to the
visual identity of a corporation (its logo, signage, etc.), but
usually taken to mean an organization’s presentation to its
stakeholders and the means by which it differentiates itself
from other organizations.
Country of Origin The country from which a given
product comes. Customers’ attitudes to a product and their
willingness to buy it tend to be heavily influenced by what
they associate with the place where it was designed and
manufactured.
Customer Characteristics All distinguishing, distinctive,
typical or peculiar characteristics and circumstances or
customers that can be used in market segmentation to tell
one group of customers from another.
Customer Relationship Management (CRM) Tracking
customer behavior for the purpose of developing
marketing and relationship-building processes that bond
the consumer to the brand. Developing software or systems
to provide one-to-one customer service and personal
contact between the company and the customer.
Customer Service The way in which the brand meets its
customers’ needs via its various different channels (for
example, over the telephone or Internet in the case of
remote banking, or in person in the case of retail or
entertainment).
D Demographics The description of outward traits that
characterize a group of people, such as age, sex, nationality,
marital status, education, occupation or income. Decisions
on market segmentation are often based on demographic
data.
Differential Product Advantage A feature of a product
that is valuable to customers and is not found in other
products of the same category.
Differentiation Creation or demonstration of unique
characteristics in a company’s products or brands compared
to those of its competitors.
Differentiator Any tangible or intangible characteristic that
can be used to distinguish a product or a company from
other products and companies.
E Endorsed brand (See Brand Architecture.) Generally a
product or service brand name that is supported by a
masterbrand - either dominantly e.g. Tesco Metro or lightly
e.g. Nestle Kit-Kat.
F FMCG Fast moving consumer goods. An expression used
to describe frequently purchased consumer items, such as
foods, cleaning products and toiletries.
Focus Group A qualitative research technique in which a
group of about eight people is invited to a neutral venue to
discuss a given subject, for example hand-held power tools.
The principle is the same as an in-depth interview, except
BRAND MANAGMENT
that group dynamics help to make the discussion livelier
and more wide-ranging. Qualitative groups enable the
researcher to probe deeper into specific areas of interest (for
example, the nature of commitment to a brand). The result
adds richer texture to the understanding of broader data
(for example, quantitative), which may paint general trends
or observations. Also known as a group discussion.
Freestanding Brand (See Brand Architecture.) A brand
name and identity used for a single product or service in a
portfolio, which is unrelated to the names and identities of
other products in the company’s portfolio.
Functionality What a product does for the buyer and user;
the utility it offers the user; what he or she can do with it.
G Goods A product consisting predominantly of tangible
values. Almost all goods, however, have intangible values
to a greater or lesser extent.
Group Discussion See Focus Group
H High Technology (high tech) A term with vague and far-
reaching meaning. This covers electronics, data technology,
telecommunications, medical technology and bio-chemistry.
In order to be classed as a high tech company, one
definition is that at least 35 percent of staff should have a
technical qualification, and at least 15 percent of sales should
be used for R&D. Another definition states that the
company must employ twice as many scientists and
engineers and invest twice as much in R&D as the average
of all manufacturing companies in the country.
I Intangibles “Intangible” - incapable of being touched. (1)
Intangible assets - trademarks, copyrights, patents, design
rights, proprietary expertise, databases, etc. (2) Intangible
brand attributes - brand names, logos, graphics, colors,
shapes and smells. (See Service Brand.)
L Launch The initial marketing of a new product in a
particular market. The way in which the launch is carried out
greatly affects the product’s profitability throughout its
lifecycle.
M Market Leader A company that has achieved a dominant
position - either in scale (e.g., British Airways) or influence
(e.g., Virgin) - within its field. This leading position often
comes about because the company was the first to market a
certain type of product and, with the protection of a patent,
has managed to consolidate its position before direct
competition was possible. Alternatively, a company may
overtake a previous market leader through greater efficiency
and skilful positioning.
Market Position A measure of the position of a company
or product on a market. Defined as market share multiplied
by share of mind.
Market Segment A group of customers who (a) share the
same needs and values, (b) can be expected to respond in
much the same way to a company’s offering, and (c)
command enough purchasing power to be of strategic
importance to the company.
3
 Market Share A company’s share of total sales of a given
BRAND MANAGMENT
category of product on a given market. Can be expressed
either in terms of volume (how many units sold) or value
(the worth of units sold).
Mass Marketing Simultaneous standardized marketing to
a very large target market through mass media. Other names
for this are market aggregation and undifferentiated
marketing.
Masterbrand A brand name that dominates all products or
services in a range or across a business. Sometimes used
with sub-brands, sometimes used with alpha or numeric
signifiers. (See also Monolithic Brand.) Audi, Durex,
Nescafe and Lego, for example, are all used as masterbrands.
Monolithic Brand A single brand name that is used to
“masterbrand” all products or services in a range. Individual
products are nearly always identified by alpha or numeric
signifiers. Companies like Mercedes and BMW favor such
systems.
Multibrand Strategy /Multiple Branding Marketing of
two or more mutually competing products under different
brand names by the same company. The motive may be that
the company wishes to create internal competition to
promote efficiency, or to differentiate its offering to different
market segments, or to get maximum mileage out of
established brands that it has acquired. When a company
has achieved a dominant market share, multibrand strategy
may be its only option for increasing sales still further
without sacrificing profitability. For example, Lever Brothers
sells washing powders under the Persil, Omo and Surf
names; Cadbury sells chocolates under the Dairy Milk,
Bournville and Fruit & Nut names; Heinz sells canned
convenience foods under the Baked Beans, Spaghetti Hoops
and Alphabetti Spaghetti names.
N Names There are three basic categories of brand (or
corporate) name:
• Descriptive name A name which describes the product or
service for which it is intended, e.g., TALKING PAGES.
• Associative name A name which alludes to an aspect or
benefit of the product or service, often by means of an
original or striking image or idea, e.g., VISA.
• Freestanding name A name which has no link to the
product or service but which might have meaning of its
own, e.g., PENGUIN.
The following are also helpful:
• Abstract name A name which is entirely invented and has
no meaning of its own, e.g., ZENECA. Abstract names are
a sub-set of freestanding names because they also have no
link to the product of service.
• Coined name Any name which is in some way invented.
Coined names can be descriptive (CO-CREATE),
associative (IMATION) and freestanding/abstract
(ZENECA).
• Niche Marketing Marketing adapted to the needs, wishes
and expectations of small, precisely defined groups of
individuals. A form of market segmentation, but aimed at
4
very small segments. Niche marketing characteristically uses
selective media.
O OEM market OEM stands for Original Equipment
Manufacturers. The OEM market consists of companies
that use another company’s product as a component in their
own production. A manufacturer of ball bearings, for
example, sells both to OEM customers who build the
bearings into machines, and to end users who need the
bearings as spare parts for machines that they have bought
from the OEMs. Most manufacturing companies thus have
an OEM market and a replacement market. The latter is
usually called the MRO market or aftermarket.
Offering What a company offers for sale to customers. An
offering includes the product and its design, features,
quality, packaging, distribution, etc., together with associated
services such as financing, warranties and installation. The
name and brand of the product are also part of the
offering.
P Packaging Design The design of the pack format and
graphics for a product brand.
Parent Brand A brand that acts as an endorsement to one
or more sub-brands within a range.
Passing Off The name given to a legal action brought to
protect the “reputation” of a particular trademark/brand/
get up. In essence, the action is designed to prevent others
from trading on the reputation/goodwill of an existing
trademark/brand/get up. The action is only available in
those countries that recognize unregistered trademark rights
(for example the UK and US). In some countries, it is called
“unfair competition action.”
Perceptual Mapping Graphic Analysis and presentation
of where actual and potential customers place a product or
supplier in relation to other products and suppliers. Most
perceptual maps show only two dimensions at a time, for
example price on one axis and quality on the other. There
also are methods of graphically analyzing and presenting
measurement data in three or more dimensions.
Positioning Statement A written description of the
position that a company wishes itself, its product or its
brand to occupy in the minds of a defined target audience.
Power Branding A strategy in which every product in a
company’s range has its own brand name which functions
independently, unsupported by either the company’s
corporate brand or its other product brands. Power
branding is a resource-intensive strategy, since each brand
must be commercially promoted and legally protected. This
strategy is used mainly by manufacturers of consumer
goods. Lever’s and Procter & Gamble’s detergents are good
examples of power brands.
Product Brand A brand which is synonymous with a
particular product offering, for example, Cheerios.
R Rebrand When a brand owner revisits the brand with the
purpose of updating or revising based on internal or
external circumstances. Rebranding is often necessary after
an M&A or if the brand has outgrown its identity/
marketplace.
 Relative Market Share Your own company’s market share
compared to those of your competitors. A large share
confers advantages of scale in product development,
manufacturing and marketing. It also puts you in a stronger
position in the minds of customers, which has a positive
influence on pricing.
Relaunch Reintroducing a product into a specific market.
The term implies that the company has previously marketed
the product but stopped marketing it. A relaunched product
has usually undergone one or more changes. It may, for
example, be technically modified, rebranded, distributed
through different channels or repositioned.
Repositioning Communications activities to give an
existing product a new position in customers’ minds and so
expanding or otherwise altering its potential market. Many
potentially valuable products lead an obscure existence
because they were launched or positioned in an inadequate
manner. It is almost always possible to enhance the value
of such products by repositioning them.
Rollout The process by which a company introduces a new
product or service to different geographical markets or
consumer segments.
S iMac.
Selective Media Media that, unlike mass media, reach only
small and identifiable groups of people, for example,
members of a particular profession or industry or other
groups defined by geographic, demographic or
psychographic data (otherwise known as targeted media).
Service Brand A product consisting predominantly of
intangible values. “A service is something that you can buy
and sell, but not drop on your foot” (The Economist). In
this sense, a service is something that you do for
somebody, or a promise that you make to them.
Share of Mind There are many definitions of share of
mind. At its most precise, share of mind measures how
often consumers think about a particular brand as a
percentage of all the times they think about all the brands in
its category. More loosely, share of mind can be defined
simply as positive perceptions of the brand obtained by
market research. Whereas market share measures the width
of a company’s market position, share of mind can be said
to measure its depth.
Share of Voice The media spending of a particular brand
when compared to others in its category.
Sub-brand A product or service brand that had its own
name and visual identity to differentiate it from the parent
brand.
T Tangibles “Tangible” - capable of being touched. (1)
Tangible assets - manufacturing plant, bricks and mortar,
cash, investments, etc. (2) Tangible brand attributes - the
product and its packaging. (3) Tangible brand values - useful
qualities of the brand known to exist through experience
and knowledge.
Target Market The market segment or group of
BRAND MANAGMENT
customers that a company has decided to serve, and at
which it consequently aims its marketing activities.
Top-of-Mind What is present in the uppermost level of
consciousness; the manufacturer or brand that people in
market surveys name first when asked to list products in a
specific category. Top-of-mind is the highest degree of share
of mind. To attain that position, a company normally needs
to have a large share of voice in its category.
Trademark “Any sign capable of being represented
graphically which is capable of distinguishing goods or
services of one undertaking from those of another
undertaking” (UK Trade Marks Act 1994).
Trademark Infringement A trademark registration is
infringed by the unauthorized use of the registered
trademark, or of one that is confusingly similar to it, on the
registered goods or services, or in certain circumstances on
similar or dissimilar goods and services.
Trendsetter Someone or thing that breaks a traditional
mold or routine and gains a following because of it. iMac is
an example of trendsetting in design as now office supplies
come in the familiar colors and translucent packaging of an
U User Segmentation Division of potential customers into
market segments according to how and for what purpose
they use a product. Do they use it for cleaning their teeth or
for making cakes (baking powder)? For oiling their hair or
for frying food? (True story concerning use of Brylcreem in
Nigeria). As a decongestant chest rub or as an aphrodisiac?
(True story concerning Ribby Rub in Caribbean).
V Visual Identity What a brand looks like - including, among
other things, its logo, typography, packaging and literature
systems.
Notes
5
BRAND MANAGMENT
LESSON 2:
BRANDS AND BRANDING BASICS
Topics Covered
Introduction to product and brands, Importance and
characteristics of Brands, Nature of relationship of brand with
customers and Building successful brands through industry
cases.
Objectives
The learning objective: after this lecture you should be able to
understand:
Basics of Branding
a. Concepts of brand management
b. Importance of brands and
c. Characteristics of brand
After going through the Introduction to the subject in first
lesson let us now discuss the Brands and Branding basics in
detail. This is very important as if the basics are not clear you
may not be able to understand the subject well.
Have you ever given a thought that why branding gained so
much importance in the past few years? Why companies are
spending lavishly on branding their product? To understand
this we need to discuss brands in detail and importance of
branding.
Background and Introduction
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.
Do you know 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 and they usually put
these marks in a low visibility place on the product.
Today’s modern concept of branding grew out of the con-
sumer 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.
So we can say that 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.
Why do we, as consumers, feel loyal to such brands that the
mere sight of their logo has us reaching into our pockets to buy
their products?
6
Keller’s Definition
A product, but one that adds other dimensions that
differentiate it in some way from other products designed to
satisfy the same need.
• Rational and tangible
• Symbolic, emotional and intangible
The psychological response to a brand can be as important as
the physiological response.
Product = Commodity
A product is a produced item
always possessing these
characteristics:
• Tangibility
•Attributes and Features
Brand = “Mind Set”
The sum of all communications and experiences received
by the consumer and customer resulting in a distinctive
image in their “mind set” based on perceived emotional
and functional benefits.
So we can say in short:
Brand: is a name, term, sign, symbol, design, or some combi-
nation that identifies the products of a firm
The Meaning of Brands
Brands are a means of differentiating a company’s products and
services from those of its competitors.
There is plenty of evidence to prove that customers will pay a
substantial price premium for a good brand and remain loyal to
that brand. It is important, therefore, to understand what
brands are and why they are important.
Example
Macdonald sums this up nicely in the following quote
emphasising the importance of brands:
“…it is not factories that make profits, but relationships with
customers, and it is company and brand names which secure
those relationships”
Businesses that invest in and sustain leading brands prosper
whereas those that fail are left to fight for the lower profits
available in commodity markets.

Can you Define Brand Now?
One complete definition of a brand is as follows:
“A name, term, sign, symbol or design, or a combination of
these, that is intended to identify the goods and services of one
business or group of businesses and to differentiate them from
those of competitors”.
Three other important terms relating to brands should be
defined at this stage:
As we discussed earlier it is very important to be clear about the
difference between Brands and products
Brands are rarely developed in isolation. They normally fall
within a business’ product line or product group.
A product line is a group of brands that are closely related in
terms of their functions and the benefits they provide. A good
example would be the range of desktop and laptop computers
manufactured by Dell.
A product mix relates to the total set of brands marketed by a
business. A product mix could, therefore, contain several or
many product lines. The width of the product mix can be
measured by the number of product lines that a business
offers.
For a good example, visit the web site of Hewlett-Packard
(“HP”). http://www.hp.com HP has a broad product mix that
covers many segments of the personal and business computing
market.
BRAND MANAGMENT
Activity 1
Lets see how many separate product lines can you spot from
their web site? http://www.hp.com
Managing brands is a key part of the product strategy of any
business, particularly those operating in highly competitive
consumer markets.
In its simplest form, a brand is nothing more and nothing less
than the promises of value you or your product make. These
promises can be implied or explicitly stated, but none-the-less,
value of some type is promised.
Additional Definitions
Brand image is defined as consumers’ perceptions as reflected by
the associations they hold in their minds when they think of
your brand.
Brand awareness is when people recognize your brand as yours.
This does not necessarily mean they prefer your brand (brand
preference), attach a high value to, or associate any superior
attributes to your brand, it just means they recognize your
brand and can identify it under different conditions.
Brand awareness consists of both brand recognition, which is
the ability of consumers to confirm that they have previously
been exposed to your brand, and brand recall, which reflects the
ability of consumers to name your brand when given the
product category, category need, or some other similar cue.
Aided awareness occurs when you show or read a list of brands
and the person expresses familiarity with your brand only after
they hear or see it.
Top-of-mind awareness occurs when you ask a person to name
brands within a product category and your brand pops up first
on the list.
When you think about fast foods and Luxury cars, Mc Donald’s
and Mercedes Benz come to mind? These brands enjoy strong
top-of-mind awareness in their respective categories.
What is Branding?
Branding is the business process of managing your trademark
portfolio so as to maximize the value of the experiences
associated with it, to the benefit of your key stakeholders,
especially current and prospective:
• employees
7
 • customers
BRAND MANAGMENT

• stock/share holders
• suppliers A Brand is a …..
n Name,
• intermediaries n Term,
• opinion leaders n Sign,
• local communities n Symbol, or
• purchasers and licensees n Design

Experts argue as to which stakeholders should be the main intended to

focus of the branding process, but this is probably the wrong distinguish the goods
question as their experiences are all inter-related: and services from
one another
• Employees - the more your employees value your brands Dalrymple & Parsons/Marketing Management 7th edition: Chapter 7 3

and understand what to do to build them, the more your

customers, suppliers, local communities and opinion
leaders will value them. The more attractive your brands are
to potential employees, the more they are likely to want to
work for you
• Customers - the more your customers value your brand, Adding An Item: Four Brand
the more they will buy your products and services, and Types
recommend them to other people. They will also pay a
premium for them and make the lives of your employees Product Category
easier. This, in turn, will enhance the value of your brands Existing New
to prospective purchasers and licensees. Research has shown
that strong brands are more resistant to crises of reputation Existing Line Brand
Brand Extension Extension
• Stock/share holders - strong brands multiply the asset Name
value of your company (90% of the asset value of some New Flanker New
major corporations lies in their intellectual property), and Brand Product
assure them that your company has a profitable future. Dalrymple & Parsons/Marketing Management 7th edition: Chapter 7 31

They also allow you to afford to give competitive dividends

to your current stock/share holders
• Suppliers - suppliers like to be associated with strong
brands as this benefits their own reputation in the eyes of
other current or potential customers. You are therefore likely
to get better service at a lower total acquisition cost
• Intermediaries - retailers, distributors and wholesalers
value strong brands as they improve their own profit
margins. They are likely to give you more “air time” and
shelf space, thus enhancing further the value of your
brands in the eyes of your current and prospective
customers
• Opinion leaders - the media, politicians and non-
government organisations are more respectful of strong
brands
• Local communities - supportive local authorities can make
your life easier in many ways, and offer you better deals, if
you have prestigious brands. Your local communities
provide you with your work force and can be highly
disruptive if they perceive you as damaging their
environment
• Purchasers and licensees - the question prospective
purchasers and licensees ask is “how much more profit can I
get for my products and services sold under this brand than
under any brand I might build?” Strong brands can be
spectacularly valuable.
Characteristics of Brands
Our definition of a brand adheres to a model which shows the
extent to which a product or service can be augmented to
provide added value to increasing levels of sophistication. This
model, views a brand as consisting of four levels
• generic
• expected
• augmented
• potential
The generic level is the commodity form that meets the buyer,
or user’s basic needs, for example the car satisfying a transporta-
tion need. This is the easiest aspect for competitors to copy and
consequently successful brands have added values over and
above this at the expected level.
Within the expected level, the commodity is value engineered to
satisfy a specific target’s minimum purchase conditions, such as
functional capabilities, availability, pricing, etc. As more buyers
enter the market and as repeat buying occurs, the brand would
evolve through a better matching of resources to meet custom-
ers’ needs (e.g; enhanced’ customer service).
With increased experience, buyers and users become more
sophisitated, so the brand would need to be augmented in
more refined ways, with added values satisfying non-functional
(e.g. emotional) as well as functional needs. For example,

8
promotions might be directed to the user’s peer group to
reinforce his or her social standing through ownership of the
brand.
With even more experience of the brand, and therefore with a
greater tendency to be more critical, it is only creativity that limits
the extent to which the brand can mature to the potential level.
For example, grocery retail buyers once regarded the Nestle
confectionery brands as having reached the zenith of the
augmented stage. To counter the threat of their brands slipping
back to the expected brand , level, and therefore’ having to fight
on price, Nestle shifted their brands to the potential level by
developing software for retailers to manage confectionery shelf
space to maximize profitability.
Experienced consumers recognize that competing items are
often similar in terms of product formulation and that brand
owners are no longer focusing only on rational functional
issues, but are addressing the potential level of brands.
Key Action Points
We can define Brands according to the following dimensions:
1. Its central organizing thought - defining it for internal &
stakeholder use in one sentence
2. Its slogan - defining it for use with customers in one
sentence
3. Its personality - what would it be like if it were a human
being?
4. Its values - what does it stand for/against?
5. Its tastes/appearance - what does it look like? What does it
sound like? What does it like and dislike?
6. Its heritage - what are the stories you tell about how it all
came about/what sort of brand it is?
7. Its emotional benefits – how it avoids/reduces pain or
increases pleasure
8. Its hard benefits - the “pencil sell”
Brands need to provide customers with a consistent, compel-
ling experience in order not to confuse them, as confusion leads
to doubt. Everyone associated with the brand must understand
its key dimensions in order to deliver this consistent experience,
and it helps if customers can be given a short slogan, which
encapsulates the essence of the brand.
Central Organizing Thought
How are you going to describe the essence of the brand to your
colleagues and business partners in one short, memorable, and
motivating sentence? What makes it special?
This is the last and hardest stage of the brand definition
process. Try to create images of what the brand does, and
preferably link it to an eternal value such as friendship, status,
belonging, realizing your true self (Maslow’s Hierarchy of
Needs could be useful here).
The central organizing thought is not the same as the slogan.
The central organizing thought addresses a core customer value
whose articulation may make customers uncomfortable or even
resentful. The slogan refers to this core customer value but in
terms the customer is happy to acknowledge and discuss.
Slogan
BRAND MANAGMENT
How are you going to describe the essence of the brand to your
customers in one short, memorable, and motivating sentence?
This should hint at the central organizing thought, without
necessarily stating it.
As an example, the central organizing thought of the BMW
brand is “competitive achievement”, but the slogan is “the
ultimate driving machine”.
The Personality of the Brand
If the brand were indeed human, what sort of person would it
is - jovial, serious, sporty, aristocratic, and cunning? (Liril Girl)
The Values of the Brand
What does the brand stand for? What does it believe in? What
would it make a stand on?
Tastes/Appearance
What does the brand like? What does it look like? What does it
wear? How does it speak?
This will include the iconography of the brand - the icons, the
symbols, the trade dress, the typeface, and the look and feel.
Heritage
All great brands have stories about them. Some are favorable,
some are less favorable, but all of them work to explain what
the brand is all about. Telling stories about the brand is one of
the strongest ways of communicating the essence of your
brand.
Emotional Benefits
What does the brand do for its customers?
These can usually be classified into:
• Avoids pain
• Reduces pain
• Gives pleasure
Hard Benefits
What does the brand offer its customers in tangible,
quantifiable terms?
These are the benefits as in “Features, Advantages and Ben-
efits”.
Brand Awareness is not Everything
Brand awareness is vitally important for all brands but high
brand awareness without an understanding of what sets you
apart from the competition does you virtually no good. Many
marketers experience confusion on this point.
Strategic awareness occurs when not only does the person
recognize your brand, but they also understand the distinctive
qualities that make it better than the competition. Strategic
awareness occurs when you have differentiated your brand in
the mind of your market. This distinction as to why your brand
is unique in your category is also referred to as your Unique
Selling Proposition or USP. Your USP tells your target market
what you do and stand for that is different from all of your
competitors.
Brand preference occurs when consumers prefer your brand to
competing brands. Brand preference might be considered “the
holy grail” of branding because it is the result of consumers
knowing your brand, understanding what is unique about your
9
 brand, connecting emotionally with your brand, making a
BRAND MANAGMENT
decision that your brand is superior to others for some reason
or combination of reasons, and choosing it over competing
brands.
You cannot build a strong brand solely through advertising.
Branding is also more than a logo, a color scheme, and a catchy
tag line. While these all are important components in branding,
they are simply tactical tools that help establish and build the
brand.
Establishing a Brand
Public relations are the way a strong brand is truly established
and advertising is how the brand is maintained. If a brand is
successful in making a connection with people and
communicating its distinct advantage, people will want to tell
others about it and word-of-mouth advertising will develop
naturally-not to mention writers in the press will want to write
about the brand. Once that type of differentiation is established
in the market’s mind, advertising can help maintain and shape
the brand.
What you need to do in branding is to communicate what the
brand distinctively stands for using as few words or images as
possible.
So remember, branding is all about creating singular distinction,
strategic awareness, and differentiation in the mind of the target
market-not just awareness. When you have been successful, you
will start building equity for your brand.
Points of Parity
Discussion of strategic awareness, points of singular
distinction, and brand equity would not be complete without
discussion of brand points of parity.
Points of parity are those associations that are often shared by
competing brands. Consumers view these associations as being
necessary to be considered a legitimate product offering within a
given category.
In other words, if you create what you consider to be a
wonderful point of differentiation and position, they might
not be enough if consumers do not view your product or
service as measuring up on “minimum product expectations”.
Points of parity are necessary for your brand but are not
sufficient conditions for brand choice.
For example, Maruti might produce a wonderful new automo-
bile that uses advanced global positioning and sensor
technologies that render a driver obsolete by automatically
routing the car, adjusting speed for traffic conditions, recogniz-
ing and complying with all traffic laws, and delivering
passengers and cargo to the proper destination without the
need for operator intervention. They have invented the first car
with functional autopilot. What a strong position and unique
selling proposition!
However, unless they have fully consider their brand’s points of
parity with other products in the category, they probably will not
meet with success.
Consumers might expect that at minimum Maruti’s automobile
have four wheels with rubber, inflatable tires, be street legal, run
on a widely-available fuel source, be able to operate during both
10
night and day in most weather conditions, seat at least two
people comfortably with luggage, be able to operate on existing
roads and highways, and provide a fair level of personal safely
to occupants. If their automobile does not possess these
points of parity with competing brands, then it might be too
different and might not be seen as a viable choice or a strong
brand.
The lesson here is that differentiation and singular distinction
are necessary for strong brands, but they do not solely make for
a strong brand. Your brand must also measure up well against
the competition on expected criteria so as to neutralize those
attributes.
Once you have met the points of parity requirement and then
you provide a unique selling proposition and hold a strong,
defensible position, then you have the makings of a very strong
brand.
Brand Equity
Brand Equity is the sum total of all the different values people
attach to the brand, or the holistic value of the brand to its
owner as a corporate asset.
Brand equity can include: the monetary value or the amount of
additional income expected from a branded product over and
above what might be expected from an identical, but un-
branded product; the intangible value associated with the
product that can not be accounted for by price or features; and
the perceived quality attributed to the product independent of
its physical features.
A brand is nearly worthless unless it enjoys some equity in the
marketplace. Without brand equity, you simply have a com-
modity product.
More Things to Know About Brands
As mentioned earlier, a brand is more than just a word or
symbol used to identify products and companies.
A brand also stands for the immediate image, emotions, or
perceptions people experience when they think of a company or
product. A brand represents all the tangible and intangible
qualities and aspects of a product or service. A brand represents
a collection of feelings and perceptions about quality, image,
lifestyle, and status. It is precisely because brands represent
intangible qualities that the term is often hard to define.
Intangible qualities, perceptions, and feelings are often hard to
grasp and clearly describe.
Brands create a perception in the mind of the customer that
there is no other product or service on the market that is quite
like yours. A brand promises to deliver value upon which
consumers and prospective purchasers can rely to be consistent
over long periods of time.
You Already have At Least One Brand
First of all, you must understand that you already have a brand.
Everyone has at least one brand. Your name and who you are
is, in fact, your personal brand. The brand called “you”. The
issue then is not whether you have a brand; the issue is how
well your brand is managed.
Brand Management
If a brand is not effectively managed then a perception can be
created in the mind of your market that you do not necessarily
desire. Branding is all about perception.
Wouldn’t it be nice to have people perceive you the way you
would like them to perceive you? That is what branding and
brand management are all about.
Brand management recognizes that your market’s perceptions
may be different from what you desire while it attempts to
shape those perceptions and adjust the branding strategy to
ensure the market’s perceptions are exactly what you intend.
So you may now have a better understanding of what a brand
is and why awareness about your brand does not necessarily
mean your brand enjoys high brand equity in the marketplace.
You might even understand that brand management is all
about shaping and managing perceptions. You may still be
asking yourself, however, why you should care about branding
in the first place.
The Benefits of a Strong Brand
Here are just a few benefits you will enjoy when you create a
strong brand:
• A strong brand influences the buying decision and shapes
the ownership experience.
• Branding creates trust and an emotional attachment to your
product or company. This attachment then causes your
market to make decisions based, at least in part, upon
emotion- not necessarily just for logical or intellectual
reasons.
• A strong brand can command a premium price and
maximize the number of units that can be sold at that
premium.
• Branding helps make purchasing decisions easier. In this
way, branding delivers a very important benefit. In a
commodity market where features and benefits are virtually
indistinguishable, a strong brand will help your customers
trust you and create a set of expectations about your
products without even knowing the specifics of product
features.
• Branding will help you “fence off ” your customers from the
competition and protect your market share while building
mind share. Once you have mind share, your customers will
automatically think of you first when they think of your
product category.
• A brand is something that nobody can take away from you.
Competitors may be able to copy your products, your
patents will someday expire, trade secrets will leak to the
competition, your proprietary manufacturing plant will
eventually become obsolete, but your brand will live on and
continue to be uniquely yours. In fact, a strong brand name
may be your most valuable asset. Brands help people
connect with one another.
• Have you ever witnessed the obvious bond between people
using the same brand of product? If a person wearing a
Benetton T-shirt finds another person wearing a Benetton
product, she will have instant rapport with her and
immediately begin talking about their experiences with the
BRAND MANAGMENT
brand. How is it that we can feel such a connection with
complete strangers? The answer lies in the psychological
connection people have with a particular brand.
• A strong brand can make actual product features virtually
insignificant. A solid branding strategy communicates a
strong, consistent message about the value of your
company. A strong brand helps you sell value and the
intangibles that surround your products.
• A strong brand signals that you want to build customer
loyalty, not just sell product. A strong branding campaign
will also signal that you are serious about marketing and
that you intend to be around for a while. A brand
impresses your firm’s identity upon potential customers,
not necessarily to capture an immediate sale but rather to
build a lasting impression of you and your products.
• Branding builds name recognition for your company or
product.
• A brand will help you articulate your company’s values and
explain why you are competing in your market.
People do not purchase based upon features and benefits
People do not make rational decisions. They attach to a brand
the same way they attach to each other: first emotionally and
then logically. Similarly, purchase decisions are made the same
way-first instinctively and impulsively and then those decisions
are rationalized.
The Three Cs of Branding
by William Arruda
May 20, 2003
The benefits of having a strong brand are tremendous. Strong
brands charge premium pricing; they thrive during economic
downturns; they attract great employees, partners and custom-
ers; and they can extend into new business areas with ease.
In addition to being able to boast these enviable benefits,
strong brands have something else in common. They all exhibit
the “three Cs” of branding.
The three Cs are: clarity, consistency, and constancy. Does your
brand pass the Three C Test?
Clarity
Strong brands are clear about what they are and what they are
not. They understand their unique promise of value. And this
promise of value sets them apart from their competitors.
It differentiates them and allows them to attract and build
loyalty among a desirable set of consumers. Volvo, for example,
is clear about their commitment to safety and security. They are
not about speedy sports cars, or about small economy cars, or
about luxury cars.
They build cars for families. Cars that are safe. And they clearly
focus their communication activities on this differentiation.
Nordstrom’s clarity is around unmatched customer service. And
it is clear from the moment you step into the store. Nordstrom
has been able to separate itself from other retailers through this
unwavering commitment to customer service and satisfaction.
There are several retailers who will sell you a black Armani suit;
11
 but only Nordstrom will turn it into an experience you will talk
BRAND MANAGMENT

about with friends and colleagues.

This clarity guides Nordstrom as they build on their current
business. When they developed their on-line store, they did so
in a way to ensure that customers would experience the same
level of service they have come to expect from the Nordstrom
brand.
Consistency
In addition to being clear about who they are, strong brands are
also consistent. They are always what they say they are.
For Volvo, they are always about safety. They don’t change their
focus from model to model. When new editions come out each
year, they are safe too. And Volvo consistently communicates
that.
Or look at Madonna. Madonna is the chameleon brand of
entertainment. She reinvents herself with each CD that she
produces. She didn’t change for her first five CDs and then stay
the same for the next two. She consistently changes.
And the one thing we can be sure of with regard to her
upcoming CD is that it will be nothing like any of the others
she has done before. Madonna’s ability to change consistently
throughout her career separates her from other entertainers,
thereby strengthening her brand.
Constancy
It is not enough to be clear and consistent if you are not always
visible to your target audience. Strong brands are constant; they
are always there for their customers and prospects. They don’t
go into hiding.
For Coke, the world is the target market. That is why you can’t
make it through a day without being exposed to their bright red
color or familiar script logo. Vending machines, people carrying a
coke as they walk down the street, restaurant menus, product
placement in TV shows and movies, billboards and print and
TV advertisements all scream COKE.
Coke is a constant in our lives. And Coke is the world’s
strongest brand.
Chances are, your brand’s target market is a lot smaller than
Coke’s. And that is good news, making it easier (and a lot less
expensive) for you to remain constantly connected to your target
audience.
In building and nurturing a strong brand, you have a lot more
to think about than these three C’s. But no brand is truly a
strong brand if it doesn’t pass the Three C Test.
How does your brand do?
William Arruda Dubbed the ‘Personal Branding Guru’ by
the media and clients alike, William Arruda works with
individuals and organizations to build strong, memorable
brands. Combining his 20 years of international branding
expertise with his passion for people, he founded Reach ,
the human branding company.
Notes

12

LESSON 3:
THE NATURE OF RELATIONSHIP OF BRAND WITH CUSTOMERS
Objectives
The learning objective: after this lecture you should be able to
understand:
a. Concepts of brand management
b. Importance of brands and
c. Characteristics of brand
If I ask you to name a brand of each of the following catego-
ries: Soft Drink, Wrist watch, Detergent powder and Motor
Bike. Answer this before you read ahead. Now check whether
anyone of it matches given hereunder.
Thums up, HMT, Nirma, Honda – These are not preferences of
Consumers. They just indicate the probability level of brand
consciousness in the respective product category. With global
brands around in most product categories, there is an interest-
ing ‘battle of brands’ in the marketing area. Battle of not just
brands but a battle based on how effectively they have ‘pen-
etrated’ into the psyche of consumers.
The Indian scenario provides challenges of all kinds to brand
managers who have to conceptually figure out how they ‘can
place and sustain’ their brands in the minds of consumers. It is
simply not warfare between mega-brands. For established
brands, it is a question of enhancing their equity. For others it is
a matter of building up the brand image and these will have to
be done in a country which is replete with regional, social,
cultural and linguistic variations where the governing marketing
parameters for a given product/market situation cannot always
be predicted.
As you must have studied in the Consumer buying behaviour
(with regard to any product or service, especially in consumer
products) the consumer is influenced by the ‘brand-pull’. This
may be because of several reasons and could vary across product
categories (from footwear to pagers) but certain generalisation
could be drawn for the kind of behaviour. They may be:
• Historical presence of the product category
• Type of product category
• ‘Social signalling’ value associated with the product
• Efforts put in by specific brands to build an equity
• Past experience with a brand.
Time Frame
Each of the above factors is not mutually exclusive from this
viewpoint of the ‘brand-pull’. There are traditional product
categories like toothpastes, footwear, audio products, balms,
cigarettes and scooters, which have been in the Indian market
(as compared to products like pagers, personal computers,
shampoo in a sachet, electric shavers and credit cards).
Now just think of 5 very old brands in any of the segment like
FMCG or Electronics?
BRAND MANAGMENT
There have been brands which have carefully built up their
brand equity for a number of years – Colgate, Bata, Vicks,
Philips, Bajaj and these brands are likely to enjoy a higher
consciousness in the consumer’s mind in the respective product
categories. This has a ‘rub-off ’ effect on their relatively recent
brand extensions.
There may be a number of brands, which have not built up
their equity despite of their long presence in the market. These
brands have gone out of the ‘mind-set’ of consumers.
Again think of 5 such old brands that exist since last 20-30 years
but have not been able to create impression in consumers
mind????
……………………………………………….
Following can be the various aspects of nature of relationship
of brand with customers
a. Product Category
In a new product or service categories, which could be associated
with liberalisation, global brands may create a higher level of
brand consciousness among consumers. This may be because
of ‘perceived premium’ associated traditionally with foreign
brand names.
Examples could be Motorola in cellular phones, McDonald’s in
food chains and Citibank in credit cards or you can name many
more in the list.
b. Social Value
In product categories which are relatively old like ready-made
garments (this category has been in existence for a long time but
has exploded in the recent years), an audio products and
household appliances, global brand names may make a greater
impact on the customers. In this context, the social signalling
value of products (the visibility a product ahs in the eye of the
other customers- consumer durables are placed generally in the
room where visitors are received at homes and cars which are
bought for personal use have more of signalling value than the
geyser, water purifier or contact lens) provides the symbolic
association which consumers look for in attempting to give a
13
 spur to their ego. Even in the case of non-durables (like
BRAND MANAGMENT
cigarettes and pens), consumers look for brands which reflect
their lifestyles to the society in general (examples could be 555
cigarettes, Parker pens, Arrow shirts and Pepsi. Brand building
is extremely important in product categories where the
signalling value is high. These are products, which are in the
premiums/ super –premium category and hence the personality
of these brands makes a significant impact on the brand
consciousness of the respective segment of customers.
A good example of he application of mega-marketing (advo-
cated by Philip Kotler) in the Indian context is the case of
Japanese brands. Mega-marketing helps a brand to overcome
marketing barriers when they attempt to enter international
markets. Sony. Sharp, Akai and National brands started
advertising in India and built their brands even before the
liberalisation process was formulated .As a result they enjoy a
better level of consciousness than brands like Goldstar,
Samsung and Electrolux which are also international brands.
Apart from the quality, brand building ensures the emotional
linkage and this plays an important part in consumer decision-
making.
Activity
Just close your eyes and try to recollect all the brands of
electronics goods you have at home. (like Refrigetor, Television,
Iron, Microwave, Washing Machine and others….)
India, with its markets fragmented in most product categories,
has offered enough scope for brand building in the respective
segments if marketers have had the inclination to build brands.
Vicks very carefully built up it brand from the fifties and carved
a niche for itself as a cold remedy in a balm market where
segmentation was totally absent. This enabled the brand
extension over a period of time (to adults and headaches). Bajaj
strongly built a ‘value for money’ image and this could be very
stressful for the brand if it starts scanning the lower –end of its
passenger car market which has been left untapped. (Maruti was
successful and now it is building up-market brands).
Philips has an interesting brand development history in India-
it has been around for sixty-five years and in a closed economy
(not much of specific brand personality was required). During
recent times, its brand development has been in tune with its
product development introduction of a spate of TV models
for the upmarket and entering into household appliances and
pagers, to reinforce the technological prowess that the brand has
in global markets in the minds of consumers. This is a brand
which is already on the ‘top of the mind’ consciousness level
and its trying to create a position even at this level as there are a
number of competitive brands which have an equally good
equity.
In the non-durables category, brand consciousness has to be
viewed differently. Colgate, Horlicks, Lifebuoy, Sunlight, Ponds,
Lux, Farex are all global brands but they have been very much a
part of the consumer psyche because of their time frame
association.
Any brand cannot be successful without consumers support.
Success of any brand depends on brand loyalty showed by
14
consumers. Just think how many brands of Bath soap or
toothpaste you have changed during last 5 years.
Concept of Involvement and Branding
In this era of brand personality, brand extensions and brand
equity, marketers are attempting to raise the emotional level of
consumers not only with regard to brands but also with regard
to product categories which were till recently perceived as
commodities. Imagery, positioning styles and a host of
behavioural concepts are being attempted. The conflux of
branded products in the market overwhelms the consumers
and makes the buying choice difficult. Each brand is trying to
outdo the other by attempting to create different images for
itself.
• Yesterday’s consumer went to the shop and asked for a new
tyre for replacement purposes. Today, the same consumer is
faced with a ‘long playing radicals, anti – skids and wider
ones as choices, thanks to the elevated levels of association
with the product category of tyres.
• The routine change of oil as Lubricants for two and four-
wheelers has become an area of consumer’s decision –
making with consumers asking for specific brands.
• Bathrooms have become glamour rooms; pepper and salts
are ‘Catching up with customers; ‘Thirty plus’ citizens are
becoming fitness conscious.
To understand the above points better relate the above
statements to your own example.
Consumers Involvement
As you yourself is the consumer of almost all the brands of
products mentioned here. Again try to co-relate with your own
example for each brand when you read ahead. This will give you
better understanding of the topic.
It is involvement everywhere with anything from morning tea
to air-conditioners. The concept of involvement assumes
significance against the marketing backdrop described. With the
battle of brands and minds in any product category, the
consumer spends more time and effort in the purchase of
product category, products, which have been uninspiring to him
all these years.
The concept of involvement characterises the difference in the
intensity of interest with which consumers make buying
decisions. This has an important impact on:
• The attention given to marketing communication (especially
advertisements).
• The evaluation of information processed by the consumers
• The behaviour of consumers in low-involvement buying
situations to levels of higher involvement. While cars,
cigarettes, watches, designer wear and consumer durables
(like TV, refrigerator, etc) have been traditionally associated
with high involvement categories, certain commodity items
have got themselves into high – involvement category.
Some Examples
1. Catch introduced branded salt and pepper and followed it
by communication to create involvement.
2. In a country where traditional herbs and pastes have been
consumed for ages, Kotmatsu has targeted its herbal
products to the ‘back –to-nature’ urban segments.
3. Apollo packaged its tyres and tubes in reusable tamper
proof packs apart from creating Black Cat, Anti Skid brands
– an effort to raise the involvement level of consumers.
MRF’s Tyredromes and Dunlop’s spectra wide have also
raised the involvement required for the brand
differentiation plane.
4. McDowell has deepened the spirit of involvement by its
Minis range of whisky, rum, gin and vodka brand (in 60 ml
sizes).
5. Involvement was created in the glass category by the
introduction of Modi float glass (Sheet glass was the only
variety available to the consumers till recently). The company
went on a concept –selling advertising campaign by using a
celebrity.
6. Ruchi created involvement in the traditional homemade,
low-involvement category of pickles.
Now as we have discussed about the Consumers involvement,
just think of its Market Implications
High- Involvement Situations
One important influence, which the concept of involvement
has had on the consumers, is the manner in which consumers
process information to determine the meaning. When a
consumer is in the process of buying a TV or a two-wheeler, he
could be in the high involvement situation. He may be
interested in knowing the difference in the brands; he may like
to objectively assess the claims made by a brand in its
advertisements. Critical evaluation by the consumer gets
combined with the predisposition of the consumer’s mind
(attitude). A consumer who has received a ‘word-of’ mouth’
reference about a brand from his friends will tend to use it at
this stage. The ‘store’ image as perceived by the consumer may
also matter once he has finalised the brand. Information, which
is consistent with the beliefs of the consumer, will make him
positively oriented towards a brand. Finally, after the formation
of attitude, behaviour takes place in the form of buying the
brand.
With all brands offering an acceptable level of quality, marketers
can ensure that consumers perceive the differentiation on the
service count. It is not only important to have good service but
also important to communicate the service arrangements
through a variety of ways. Apart from using the popular media,
BRAND MANAGMENT
the point-of-purchase material at he dealers’ showrooms will
raise the level of involvement of consumer. Service can also
assume other dimensions like the dealer’s sales personnel
ascertaining the proper needs of the consumer and proposing a
match which will suit the consumer.
Videocon TV has a number of models and the consumer has
to be involved in the ‘awareness’ phase before he moves on to
the next stage in the decision making process. With several
companies following the brand-extension path, it can be
ascertained if a prospective consumer (in a show-room) has
been a user of a brand earlier in some other product category.
A consumer wanting to buy a gift for his son (a TV) may also
be user of the brand in which he is showing interest. The
involvement here may shape the attitude of the consumer
towards the brand. He feels happy the brand /store is interested
in finding out how he feels about his association with the
respective brand. Even if the consumer has been having a
negative belief about a brand, he may try to give a ‘second
chance’ for the brand because of the involvement created. If he
has been having any wrong perceptions about the brand, they
can be corrected.
Low –Involvement Situations
In these situations, (typically surrounding consumables) the
consumer may have little interest in going through the
information regarding brands. It is in this context, marketers are
attempting to create interest in their respective brands. Low
involvement situations could also be present in some product
categories (durables) where competition is not very tense. An
example is the sewing machines category. For a long time there
have been only a few major players (Usha, Singer) though there
are a number of regional companies. Singer raised the level of
involvement by introducing the Fashion maker, an upmarket
version and following it up with a campaign. Homelite
matchstick is another example which created involvement with
value addition.
In the low-involvement category, marketing communication has
been used to bring in a a renewed perception about the
products with brands image being the focus of the communica-
tion exercise. Taking advantage of the excise structure, ITC
launched Hero cigarettes to target beedi smokers and get them
involved in cigarettes. It used the ‘tinsel’ imagery.
The consumer after the awareness stage tries the product. Unlike
the previous category, attitude about he brand is formed after
the product trial (consumables). If the consumer is satisfied, he
buys it again and this pattern could trigger off brand loyalty.
(Whenever a need is felt – whenever tea is required, a particular
brand of packaged tea may be bought). Even in case of
durables, marketers may attempt to raise the low-involvement
product to the high-involvement plane.
Marketers are also making use of the ‘self-concept’ principle to
generate involvement .A consumer’s aspirational values and the
manner in which he perceives himself influence the degree of
personal influence, which he ascribes to product. In the ball pen
category, Reynolds generated considerable amount of involve-
15
 ment by waving a ‘romantic spell’ as a positioning strategy for a
BRAND MANAGMENT
product which has been well accepted for its functional utility.
The black box of the consumer’s mind has several dimensions,
which can be explored by marketers by a judicious mix of
concepts and down to earth marketing practices.
Too Many Walls
You as a consumer must have seen so many new products
being launched in quick succession. How consumers adopt new
products is a challenging question marketers face today. The
time taken for consumers to adopt a new product is vital as
there is a number of brands, which may enter a product
category once the viability for a new product, are established in
the market. There have been products which never caught on
(or took decades to catch on) despite of the consumers being
exposed to new product concepts for a sustained period of
time.
• Frozen Vegetables: In the sixties, a leading multinational
launched a brand of packaged green peas, which failed.
Today Safal, a brand from the makers of Amul butter, is
attempting to create awareness about frozen vegetables.
• Liquid detergents: Ezee has been in the market for a
decade but hasn’t taken off as have other detergent forms.
• Electric cars which never really caught on in advance
markets (during the last 25 years) are about to be launched
in India.
• Cornflakes, which have been in the market for the last
three decades, could never really penetrate Indian Homes.
But with the entry of Kellogg’s some awareness seems to
have been created.
• Pharmaceutical major Boots introduced Paltab, a soft-drink
tablet in orange and pineapple flavours it the mid-sixties.
Till date, no other manufacturer has attempted to make the
product.
For the new products to make an impact on the consumer’s
mind , you have to keep in mind the following factors:
Does the innovation (or the new product) bring in discontinu-
ity in the habits of the consumer?
Is the timing right of a specific type of marketing communica-
tion?
Do cultural factors play a major role in the marketing of the
concept?
What kind of enhanced value does the product offer to upgrade
the consumer if functional utility is the unique selling propos-
ing?
The extend to which consumers will be able to try out the
product (triability).
16
Discontinuity (habits)
Triability
Timing of
Culture CONSUMER
communication communication
MINDSET
Functional Value
Acceptance of New Products
Discontinuity In Habits
Take your own example when you go through this. As habits
are strongly associated with behaviour, there are two
dimensions to them physical and psychological. The growth of
the two-wheeler category is an interesting example. Till the mid
eighties, the category grew at a slow pace. One reason was that
consumers were comfortable with cycles or whatever mode of
transport they were used to. Hence the people were neither
motivated nor readily amenable to the idea of using an engine-
based two-wheeler for personal transport. Getting used to the
two-wheeler would have meant getting used to the acceleration,
the controls and of course periodical maintenance and running
expenses. However, consumers exhibit a mindset to accept
discontinuity of their learned habits (physical dimensions)?
When life-styles change, there is increased pressure on time and
consumers become mentally prepared to accept new product
concepts though it may involve a change in habits. The
assumption is that the new product is not prohibitively
expensive.
The psychological dimension of habits is associated with certain
non-functional, non-phjysical aspects like taste and preparation,
which may be involvement before the consumption of the
product. The penetration of coffee makers even in the urban
markets (South) is an example. Coffee being a ‘hedonistic’
drink, consumers used to the ‘filter-taste’ may be wary of
changing the method of preparation by using a machine. The
success of rice –grinder Elgi – Ultra Grind in southern markets
is a good example of how a company overcame this barrier.
This product is a sleek version of the traditional stone grinder.
The working of the machine is such that it convinces the
consumer of a standardised taste (applies to traditional food
items of a South).
While changes in the environment and life style could bring
changes in the physical dimension, changes in psychological
dimensions are relatively more difficulty to achieve. Instant
coffee (pure and chicory mixed) has been in the market for a
long time but hasn’t penetrated phenomenally inspite of being
convenient to use. Marketing communication can build in life-
style aspects (apart from highlighting product attribute - taste it
the case of instant coffee) to create an impact in the minds of
consumers. Bru, after hammering down the stereotype of
south Indian coffee, is currently associating itself with contem-
porary life style.
Acceptance of Marketing Communication
Acceptance of a product category could be associated with the
timing of marketing communication. Consumers have
different frames of reference for different situations.
Westernisation has opened up several creative dimensions in
marketing communication. Once a communication is accepted,
it is a matter of time before the product is accepted by
consumers who might have been reluctant to try out the
product initially. Herbal brands like Raaga (though the newness
in the category is limited to the branding and packaging) made
use of the ‘back to nature’ syndrome, which is sweeping across
the west.
The concept of get toothpaste is another example. The
communication based on the ‘smile for me…. Close-Up smile’
ad film did not seem to have any impact on the teenage young
adults segment it the mid-seventies when the brand was
launched. However the variation of the same theme is widely
accepted today and gel as a category makes up for more than 20
percent of the toothpaste category.
Soya based foods and milk drinks is a new category. Brands
have vigorously attempted to ‘push’ these products in recent
times but without much success. The reason is the lack of
awareness about the ‘soya protein - good health’ association
(though awareness about health in general has improved.
Cultural Factors
These factors can also be associated with the psychological
aspects of discontinuity. Food habits are strongly entrenched in
the culture and hence are extremely difficult to change. Except
for Maggi (noodles have a Chinese origin), there does not seem
to be any other food brand, which has succeeded in a similar
manner. Microwave ovens, which have been around for almost
ten years, have a dismal penetration level. Even you may be
apprehensive about using the product for Indian foods.
Stigma ‘barriers can prevent consumer acceptability of new
product like cigarettes for women (Ms, a cigarette brand which
was launched a few years back was targeted at women profes-
sionals). The personal care products and cosmetics category for
women have taken several years before emerging as a solid
market. For such products, marketers need to aim at a specific
‘niche’ rather than at huge markets. It is easier for companies
with a strong financial muscle to launch such products, as these
will have to be sustained over a period of time before they start
appealing to profitable segments.
Functional Value
New product categories will have a better chance of getting
accepted if they offer a better functional value, which can
upgrade existing consumers rather than create consumers.
When the target segment (upper strata) employs a number of
staff for domestic help at home, what could be the functional
value addition from a dishwasher? Additionally, there is also
need to train people hired for domestic help. Pressure cookers,
gas stove, fully automatic washing machines and mixies have
provided functional utility with disrupting the domestic routine
much.
Trialability
BRAND MANAGMENT
Cielo opened up a new dimension with its promotional
strategy of offering the car for a test ride for 18 months (for 200
customers). These prospective customers had the option of
returning the car after the test drive period. This promotional
method is suitable from product categories like durables .The
modalities of offering this kind of trialability depends on the
product, type of prospective customers and the launch budget
of the company. In certain product categories where a niche is
targeted, this may be more effective than advertising. This
method not only builds credibility of the new product but also
helps in word-of –mouth publicity.
As more and more products appear in the Indian market,
breaking the barriers in the consumer mindset will be as
important as the product offering.
The Concept of Perception
Sony – the brand name could usher in images of quality and
innovation in the mind of a person who has never used any
product of the brand. Raymond is the fabric for ‘the complete
man’ and Allen Solly is the designer wear for corporate
executives who prefer an aura of casualness in their corporate
setting. Pepsi could be associated with the ‘fun and frolic
moments’ of the younger generation. If one wonders about
the logic and reality associated with the various kinds of
marketing communication in today’s context, the principles of
perception could be used to reason out the development of
brand images attempted by marketers.
Principles of perception
In simple terms perception is an important psychological
process in which you can add meaning to what has been sensed
by your sensory organ. This is precisely the reason why two
individuals have different kinds of perception about products,
brands ideas, places and people. In the marketing context the
conditioning of the consumer’s psyche over a period of time
because of the individual ‘s exposure to products, brands
trends, etc gets associated with the incoming marketing stimuli,
which could be a brand, advertising message, product or a
company’s name, to complete the process of perception. The
conditioning aspect is the relevant information which is already
stored in the memory of the individual.
Consumer notices
the brand at the
retail store
Incoming
Marketing stimuli
Brand of Soap
‘freshness’ Perception about the
conditioning achieved brand ‘Freshness’ being
associated wit the brand
over time through
Stored Information Stored
advertising
Information
Mechanism of Perceptions
17
 You have to keep in mind that the mechanism of perception,
BRAND MANAGMENT
adding meaning to whatever has been sensed, is not just
restricted to the marketing context alone. Individuals perceive
information in a perceptual manner. Perception is not just
limited to visual aspects such as seeing the product or the brand
in a retail outlet. It could get extended to any of the inputs to
sensory organs.
For example, just the audio part without the visual of Titan’s
TV commercial (the background music used in the brand’s
commercial) could trigger of visual images of the brand’s
commercial in an consumer who has viewed the commercials
many times over a period of several years. This act of comple-
tion, which takes place in a consumer’s mind, is called
‘completion’ and this is one of the very useful principles of
perception. A brand of soap, which has been advertising widely
in television and cinema halls for years, attempted this principle
a few years back. In certain market it used only the radio
medium, and advertised the brand with the popular jingle
(background music tune with the brand name). The brand
registered a high recall rate, and consumers were able to recall the
visual images associated with the popular commercial.
Activity
For each of the factors given above, write atleast two brands
each.
Principles of Proximity
The principle of proximity could be used as a part of a brand
image development. This involves associating visuals which are
appropriate to t he positioning of the brand with the brand
name. ITC’s Classic brand of cigarette, a brand positioned to
the upper strata of smoker, is associated with the game polo,
which has an upmarket image. The logic is to associate a visual,
which could elicit perception that will be favourable to the
development of the brand image. Peter England, the value for
money brand, has used the proximity principle in its retailing
decisions. It has not followed the exclusive showroom
arrangement. In tune with its value proposition, it has entered
into small retail showrooms where the brand is displayed along
with a number of other brands. This enables a consumer to
compare the value aspect of the brand with other brands. It is
interesting to note that this usage of the proximity principle has
taken into consideration the other aspects of the value
proposition ‘the honest shirt’ and a wide range of colours
offered.
In the last decade, there has been a proliferation of shampoo
brands in sachets. Shampoo was a category exclusively associated
with upper middle/ upper class consumers. It was sold in
200ml bottles at selective shops and advertised in selective
media vehicles. The product form (sachets) and the display of
these sachets in millions of small outlets (including rural areas)
have radically altered the perception of consumers of the
product category. It is well within the reach of millions of
middle –class consumers, and about sixty five per cent of the
shampoo volume is realised through sachets. The proximity in
this context is simply the association of the product/brands
with small retail outlets. Currently even premium brands are
launched in sachets, probably to upgrade consumers from value
brands. The compact detergent sub-category (Ariel, Surf Excel)
18
presents another example where the visuals have used the
principle of proximity. Ever since the launch of this category,
both brands have projected the ‘common man’ visuals, using
the candid camera technique in which middle-class housewives
are interviewed at common place retail outlets.
Figure and Ground
The ‘figure and ground’ principle is yet another principle of
perception which could be used for formulating advertisement
copy. The distinguishing feature of this principle is that it
emphasises the point that creativity in marketing
communication should not eclipse the message associated with
the brand. The ultimate objective of using creativity in
marketing is to develop memorability and a high degree of
brand recall, apart from conveying the proposition of the
brand. The message, which involves the proposition and brand
name, should always be the ‘figure’ in any advertisement.
Creativity through jingles, humour, or graphics takes the role of
‘ground’ in the advertisement.
Brand - Customer Relationship
You as a Customer must have experienced how the promise of
the brand is delivered through the call center, distribution
channels, billing and service departments - in short, the Brand-
Customer Relationship.” Therefore, advertising may get the
initial sale, but only marketing can keep and retain customers by
making sure the promise is delivered, and from every contact
point possible. It is critical to be consistent across the entire
company and convey the same brand message and experience.
This is crucial to the development of the Brand-Customer
Relationship.
The Brand-Customer Relationship becomes - if properly done -
part of the goodwill and core competency that a brand can
leverage in gaining and maintaining customer trust and
business. This relationship can lead to stronger brand equity,
thereby creating a differentiating factor between your brand and
the competition. Strong brand equity allows us to retain
customers better, service their needs more effectively, and
increase profits. Brand equity can be increased by successfully
implementing and managing an ongoing relationship market-
ing effort by offering value to the customer, and listening to
their needs. Disregarding the edge that the Brand-Customer
Relationship offers in the market place and not utilizing the
benefits and goodwill that the relationship creates will surely
lead to failure in the long run.
Customer service, and the relationship a company has with a
customer, is indeed part of the brand, and it is imperative that
it is recognized as such. The relationship is in many ways the
strongest part of the brand. Competitors can copy packaging,
product, ads, etc., but they have a much harder time copying
your customer relationships, and more importantly your
customers’ loyalty. People aren’t just buying a product or service
from a strong brand; they are buying an idea, a perception, even
a wish. In fact, many customers will pay more time and time
again if they are getting what they perceive as fulfilment of the
promise, and a great experience.
The central brand idea may be static among the entire customer
and prospect bases, but the total sum of the brand idea or
perception is rooted in the customer’s experiences with the
brand itself, and all its messages, interactions, and so on. In
light of this, customer service and the entire marketing effort
has a great deal to do with the strength of a brand. The
fundamental strength and success of a brand lies in its ability -
via marketing - to create and cultivate a strong and lasting
relationship with its customers.
Activity
Name atleast 10 Brands in a minute, which you can praise for
good customer care service, and 10 Brands for bad service.
Brand-Customer Relationship: The Face of Your Business
Strategy
Article by Michael Dunn & Kevin O’Donnell
April 4, 2001
Are brands dead? Well, some are. Brand building, on the other
hand, is very much alive and more critical to a company’s success
than ever. Unfortunately, many companies fail to understand
how to create and shepherd strong brands. The days of brand
building defined simply by awareness and driven by marketing
alone are over. Visionary companies recognize that responsibil-
ity for brand management belongs with the organization as a
whole.
There’s No Escaping Your Brand
A brand is the collective experience of your key constituencies-
customers, suppliers, investors, and employees-and is defined
more by deeds than by words. It’s what your company stands
for and how it behaves with each of these groups. Which is
why developing a brand-customer relationship is so important-
either you make the customer experience or it gets made
without you.
To create a successful brand-customer relationship, you must
develop a compelling brand identity and customer value
proposition, rely on customer perspective, and have the ability
to listen and respond appropriately to evolve your company’s
offerings to meet customers’ needs and desires.
A strategy is not enough either. The organization must be
aligned in ways that anticipate and fulfill customers’ emotional
expectations at every touch point to create meaningful relation-
ships and lasting competitive advantage.
Brand Identity-the Touchstone
A brand identity is the centering idea of an organization. It
captures that which you’d like to become, giving the
organization something to aspire to. A common pitfall for
many companies is not taking the time to think about who they
are or what kinds of companies they want to become. While it
BRAND MANAGMENT
may be easy to articulate revenue goals, developing a brand
identity requires a different thinking process.
A brand identity should be focused on customer benefits,
differentiated from competitors, and of course, given the
organization’s capabilities, possible. Once defined, the brand
identity becomes the organization’s centering set of associations
that it continually strives to create or maintain.
Customer Value Proposition-the Marching Orders
A successful customer value proposition clearly communicates
the brand’s functional, emotional, and self-expressive benefits.
It is delivered in a way that is superior or unique when
compared to competitors. While a brand identity is a big-picture
vision, the value proposition provides the strategy for reaching
that vision, linking the brand to the customer experience.
Here is another place where companies go astray. Organizational
structures often prevent creation of a relevant, holistic customer
experience. For example, departmental goals can too often take
precedence and end up disconnected from the brand. A value
proposition must be integrated across the organization so that
every functional area contributes to the overall customer
experience.
Customer Perspective-the Continuous Thread
Customer experience is shaped by a series of interactions with
an organization. What products or services are offered? Does
the package arrive on time? Does the help desk answer the
phone promptly? If you don’t take a customer perspective
when creating the customer experience, you’ll make it much
easier for a competitor to copy your product or service and steal
market share. You should always base the brand-customer
relationship on an outside-in perspective, creating a customer-
centric experience.
Listen, Understand, Respond-the Way To Grow
The final ingredient that binds a customer to your brand in a
lasting relationship is dialogue. Your company’s brand isn’t a
monolithic, hermetic face that the organization presents to the
world. Rather, it’s an ongoing exchange where you listen
carefully to your customers, understand what they say, and
respond by modifying your value proposition and extending
your businesses appropriately to fulfill customers’ desires.
A Brand That Works
Hard work? Yes. The payoff however can be counted in high
customer satisfaction, sales, and revenue. For example, before
launching an online store, Williams-Sonoma wanted to ensure
that the customer’s online experience was consistent with the
catalog and retail brand experience it had carefully crafted. The
company defined new business processes so that every
functional area supported the new channel. This meant working
with merchandising, inventory management, call center,
distribution center, database marketing, and financial reporting
areas to make sure that the mail order systems, retail systems,
and web site worked together. Distribution center and retail
employees were trained to ensure that customers had virtually
the same experience with the Williams-Sonoma site as they did
in a physical store. The firm exceeded its revenue goals and has
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 been able to significantly grow its business in this specific
BRAND MANAGMENT

channel.
A brand-customer relationship is the bedrock on which great
companies rise, or mismanaged, it’s the chalk on which
mediocre companies fail. Great brands that aspire to perfect
touch points create the coherent experience to which customers
respond. If you fail, you’d better watch your back.
Michael Dunn is the President & CEO of Prophet, and Kevin
O’Donnell is the Managing Partner of Prophet’s San Francisco
office. Prophet (www.prophet.com) provides brand leadership
and brand-driven growth services to companies competing in
today’s dynamic business environment through a unique ability
to fuse business, brand and technology perspectives into world-
class strategies and implementation programs.
Notes

20

LESSON 4:
BUILDING SUCCESSFUL BRANDS
Objectives
The learning objective: after this lecture you should be able to
understand:0
a) Concepts and strategies of Building strong Brands.
As we have discussed the foundation and basics of Branding.
Let us discuss through cases how to marketers build strong
brands. This cannot be taken up as classroom text. So you need
to be very observant now. Wherever you go, whatever you wear
or eat have a close watch on the brand. Always keep a track of
the strategies by companies whenever you go to market to
purchase anything.
To be a good brand person you need to have open eyes and
open mind always.
Steps in Building A Strong Brand
1. Start with a Quality Product.
To build a strong brand you must start with a quality product
that delivers superior performance. All strong brands absolutely
demand a superior product or service. High quality is a
prerequisite to entry so don’t think just high quality is enough
to set your brand apart from the competition.
2. Identify your Brand’s Singular Distinction, Define
your Message, and Position Your Brand Properly
in the Marketplace.
Once you have a high quality product, then you must decide
upon the singular distinction for your product that is most
important to your target market. Are you first, best, fastest, or
most luxurious in your category? If so, then you may have
found your point of singular distinction. You should put a lot
of thought into choosing your brand’s singular distinction
because everything you do will reinforce your singular
distinction in your market’s mind in some way.
An interesting thing to know is that many times the first brand
in a category emerges as the category leader and can enjoy that
leadership position for years and years. If your brand is not first
in your category then create a new category so you can position
your brand to be first in that category. Being first in your
category is often a positioning strategy that allows your brand to
be the leader in your category for many years. Federal Express
was not the first package delivery company so they invented a
new category-overnight package delivery. Not only were they the
first brand in overnight shipping but they continue to be the
leader in that category.
Your brand must make people feel better, be faster, do
something much better, or deliver a perceived quality of lifestyle
much higher than competitive brands. Take the time to
understand your category and then position your brand in
some manner that makes it very distinctive within the category.
BRAND MANAGMENT
Own a Word or Phrase
When defining your message, try to own a single word or short
phrase in the mind of the market. Coca-Cola owns “the real
thing”. Volvo owns “safe”. Nike owns “Just do it”. Federal
Express owns the word “overnight”.
If somebody else in your category already owns the word,
choose a different word. The chances are that word is firmly
etched in the mind of the target market and they associate it
with your competitor’s brand. You are not very likely to change
that impression regardless of how much money, time, and
effort you put into trying to take over ownership of that word.
The strongest brands that exist today are strong because they
stay focused on that one aspect of singular distinction. Once
you try to position your brand to be many different things to
many different people, then your brand begins to not really
mean much of anything to anyone. Positioned properly, your
brand will enjoy a leadership position in your market.
3. Tap into Emotion.
Develop accessible attributes for your brand. Your brand
should readily tap into your target market’s psyche and evoke an
emotional response.
A strong brand helps mold and shape that emotional reaction
in people-which is a very strong influencer in the purchasing
decisions they make. Once they have an emotional attachment
to your product or your company, then they will justify their
purchase decision based upon product features and benefits.
4. Build the image.
Visually, verbally, and through your actions you need to build
the message you are trying to create about your company’s value.
Choose or create a memorable name for your brand. Create a
visually effective logo. Write a tag line or slogan for the brand
that concisely captures the essence of your unique selling
proposition. Your brand should communicate through all
marketing channels with one voice, in the same tone, in the
same style. In other words, your brand image must remain
constant across all channels of communication.
5. Market the image
Projecting the image of your brand should be carried out
among all contact points with your market. This means your
name, logo, advertising, and all marketing communications
materials should communicate your USP and consistently
communicate your brand’s message. Don’t forget about your
website, mailings, sponsorships, and events.
Your branding effort must permeate your entire organization.
The CEO, the customer service staff, the sales force, the people
who ship your product, and the people who sweep the floors at
night must all know and demonstrate your brand’s singular
distinction at every touch point with your market.
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 6. Live the message.
BRAND MANAGMENT

You need to deliver on the promise you make to your market.

Whatever your brand image, positioning statement, or unique
selling proposition, you have made promises to your market The Dimensions in Brand
that you must deliver on. Remember, your brand is nothing
more and nothing less than a promise of value and you must
Building
deliver on such promises in the mind of your market. • Brand identity
Everyone in your organization must be trained to think from a • Brand awareness
brand perspective. All employees who have contact with • Familiarity and knowledge of the brand
prospects and customers should speak and act in a way that is • Consideration to evaluate the brand
consistent with your brand’s values. Many people call this • Purchase
process internal branding.
• Brand loyalty (or brand equity)
You’ll know your organization is working together to build a
strong brand when there is an underlying sense that your
employees act based upon what is in the best interest of the
brand rather than in their own self-interest or in the interest of
their departments. Tell everyone in your organization that the If you look at the Successful brands the list will be endless to
one yardstick for evaluating every decision will be answering the count upon. You as a future brand manager will have to
question, “What is best for the brand?” observe closely what these brands have been doing to reach that
The customer’s experience must meet or exceed your brand’s stage. To name a few successful brands are LG Electronics,
claims and promises of value. When your entire organization is Phillips, Videocon in Consumer durable segment.
clear about your brand’s values and promises and everyone in In FMCG Real Juice (Dabur), Kissan (HLL), Maggi (Nestle),
your organization works together to build a strong brand, your Lehar Kurkure, Haldiram and many more.
market will notice and their image of your company will be In fashion and style Nike, Woodland, Benetton, Levis, Lee,
consistent with your intended brand image. Your brand can Liberty Shoes etc.
also deliver an enormous sense of satisfaction and enjoyment
Hereunder are given 2 cases of Brands how they have been able
to your employees-but only if they treat it right.
to do to so. You are required to keep a close watch on the
7. Measure Your Brand Equity Against the market trends like this to keep yourself updated.
Competition and Continue to Build and Refine Dabur Foods unleashes focused promotional strategy for
Your Brand.
‘Real’
The only way to know how well you are doing in your branding
effort is to measure your brand equity against your competition
at frequent intervals. This can be accomplished through a variety
of market research methods such as conducting market surveys,
analyzing the price premium your brand can enjoy, studying the
sustainability of your brand, and conducting focus group
research. Regular brand audits also will help you assess the
health of your brand while uncovering its sources of equity.
Brand equity is constantly changing just as society’s values and
December 20, 03 Jasmeen Dugal
perceptions are changing. You must understand the equity your
brand has in the market and also understand how your brand’s Dabur Foods has unleashed consumer promotions and
image measures up against the identity you are putting forth workshops to breathe new life into its brand, ‘Real;’ 2003
and the image you are trying to create. witnessed the company spending approximately Rs. 4 crore on
workshops and consumer promotions. This season, the
When the image you have in the marketplace is not consistent
spotlight is on increasing out-of-home consumption of fruit
with the image you are trying to create for your brand, then you
juice, and to this end, Dabur Foods has initiated ‘Mixology’
must refine your branding strategy and project the newly refined
workshops aimed at promoting juice-based cocktails.
identity.
Tom Cruise in ‘Cocktail’ inspired budding bartenders to concoct
Branding is a continuous process of communicating with your
novel cocktails. Cutting to India, with new pubs mushrooming
market and making and keeping value promises. When you
every month, bartenders have to be creative to ensure that
build and manage your brand properly, your brand will be pay
customers return. Dabur Foods has taken advantage of this
you large dividends and your brand will be the most valuable
trend by organising the ‘1st Real Fruit Juice Mixology’ work-
asset you own.
shop that witnessed some of the best bartenders tossing up
exotic cocktails out of a mix of the company’s juices. At the end
of the day, guests went home convinced that there is ‘real’ good
stuff in juices.

22
The underlying objective lies in increasing out-of-home
consumption of fruit juice. “The idea behind flair bartending
events is to bring in the fun element into juices and to increase
awareness among bartenders on how to use fruit juices in an
exciting and innovative way. You can do a number of things
with juices and this kind of workshop helps bartenders to
experiment and increase their repertoire of recipes,” asserts
Amit Burman, CEO, Dabur Foods Ltd., whose ‘Real’ brand
enjoys 55% market share for packaged fruit juices.
And what is the nature of their consumer promotions? “The
recent ‘Real Taste Challenge’ organised at shopping centers
involved asking customers to identify the fruit by tasting the
juice. If they guessed right, they were offered Rs 10 discount on
the purchase of 1 litre Real juice pack. This is an interesting way
to communicate the core benefits of Real and also reinforce the
positioning – ‘Real Tastes Like Eating a Fruit.’ Events like these
help in expanding consumer base by inducing product trials and
also reinforce our existing consumer’s buying decision,”
comments Sanjay Sharma, Head (Marketing), Dabur Foods Ltd.
“There are a lot of juicewalaas in city markets, so juice is
not something Indian consumers had not seen before. And,
we felt if we give them juices in a packaged form, which is
more hygienic, it should do well”
Amit Burman, CEO, Dabur Food Ltd.
In Brand Speak this time, Amit Burman, Chief Executive
Officer, Dabur Foods Ltd., speaks to exchange4media’s Nikhil
Gupta, on its brand strategy, psyche of Indian housewife and
buying patterns in the processed food category.
BS.How is your brand ‘Real’ fruit juice doing in the
market?
We launched it in the year 1999, and over the years it has
shown us very good growth. From last year to this year, it
grew at about 30%. I believe it’s good growth but then we
are starting from a very small base, for a category, which is at
a very nascent stage as compared to its potential today.
BS.What kind of background research you had done
before launching your products- ‘Real’ fruit juice and
‘Homemade’ cooking pastes?
When we launched ‘Real’, we didn’t do much of market
research, as we clearly saw there was a gap in the market.
And looking at the Indian consumers, and there are so
many juicewalahas in the market, so juice was not
something Indian consumers had not seen before. So, we
felt if we give them juices in a packaged form, which is more
hygienic, it should do well. In other categories, ‘yes,’ before
launching ‘Homemade,’ we did a lot of research. What we
found was that in a typical Indian household, cooking as an
activity could be split to two parts. One is the negative
activity, which involves preparation of right mix of spices
and pastes for the food. The other one being the positive
activity, which consists of what an Indian housewife ads on
top which makes the final food different in your house than
my house. That is where she gets the pride from serving
guests, husband, her family, that’s something she doesn’t
wants to loose. So, we decided rather than if we focus on
the positive labour, we would be taking away this feeling of
pride from her, so we focused on the negative labour, where
BRAND MANAGMENT
ginger paste from my house and your house is crushed the
same way, garlic paste in my house and your house is
crushed the same way. So, we are focusing on what is
around the main meal and we are not focusing on the main
meal.
BS.How did the market reacted to ‘Homemade’ pastes?
Most of the products that we have launched actually try to
create a category. Even today there is no national level player
except us present in the market.
BS.How fast is the ‘Homemade’ range growing sales wise?
Sales are not growing that fast. In India, there is an
inherent problem in the processed food category, they
compare the commodity with the market prices. If they
were to go out and buy 200g of ginger, it should be equal
to so many grams of paste. They don’t look at the
processing part, that processing is free in their minds.
Similarly, what happens is when the commodity prices are
going high our product starts selling more. Also, what we
have seen is that a housewife usually keeps a bottle of
Ginger paste of a garlic paste in the refrigerator and its only
used as an emergency. But in regular use, that is something
we are trying to create, it should be a regular use item.
BS.What is the USP of Homemade?
The USP as I explained, one insight that we got from the
consumer, that the taste of spices grinded on Silbatta
(grinding stone) is different from the taste we get from the
mixer. We incorporated that in our manufacturing process,
we actually use stone grinding to give the same taste to the
consumers. We also ran an ad campaign, which has a tagline,
saying, “Homemade Ka Paste, Swad Silbatte Wala.”
BS.Going further, how do you maintain a check at the
retailers level that the products are being displayed
properly at the point-of-purchase (pop) since the
bottles are usually not clean, which creates a perception
that it might be very old?
See, the manufacturing date is printed over there, but in
terms of cleaning the bottles and all, when our sales officers
visit the stores, his first job is to check that the products are
displayed properly and the bottles are kept clean.
BS.Just exploring one thought, wont it be better if the
“Homemade” pastes are delivered to the housewife at
home, since a lot many times she would feel awkward
picking it up from the shop shelves?
That’s a good suggestion, but rather shying away from
sending it to their house, we have to build a brand to tell
that consumer that it as good as fresh. Its an inherent
problem, people in India will never agree that something
that is packaged is fresh. Thus, the onus is on every player in
the processed food industry to change the perception to-
whatever is on the shelf is fresh.
BS.Going back to ‘Real’ fruit juice. Who is the typical
target consumer? And are you trying to compete with
Softy Drinks as category?
In ‘Real’, we have two range of juices one is Real fruit juice
other is Real Active juice. The Real fruit juice is targeted
23
 towards the housewife and kids, and the Real Active juice is
BRAND MANAGMENT
targeted towards the young adults between the age of 24 to
35. We are very clearly focused on the in-home segment and
soft drink is more out- of- home impulse purchase.
“Advertising does help in building brand recall, but
advertising alone does not sustain a brand”
Vikram Bakshi, MD,, McDonald’s
In this part of Brand Speak, we speak with Vikram Bakshi and
learn about the various advertising and marketing initiatives at
McDonald’s, which have made it one of the favourite fast food
resturants, especially amongst kids.
BS.Despite the fact that McDonald’s is a fast food chain of
restaurants, in India it has been positioned as the family
restaurant. How did you bring about it? Was it a
conscious decision or did it just happen. Was there any
strategy behind it?
McDonald’s is known as a family restaurant. We believe that
we are here to make our customers feel at home and enjoy
their time out with their family when they are at
McDonald’s. Extra care has been taken to make our
restaurants child friendly, by providing play areas wherever
possible so that the parents can relax and have a good time
when they are visiting McDonald’s. Our tables are rounded
so that a child does not hurt himself while in the
restaurant, our counters are low and the menu pictorially
depicted so that a child can order a meal for himself very
easily and his parents don’t have to bother. At McDonald’s,
the customer always comes first. Every employee strives to
provide 100 percent customer satisfaction - for every
customer - every visit. This includes friendly and attentive
service, accuracy in order taking, and anticipation of
customer’s needs. We have hostesses who keep circulating in
the lobby helping children and adults alike with straws,
napkins, soufflé cups, sauce sachets etc. and any other
assistance that they may require.
BS.Recently your ad line shifted to
When we started operation in India, five years back we were
still trying to position ourselves as a place to visit, with the
baseline “McDonald’s mein hain kuch baat” in our
advertisements. This had an aura of mysticism whereby
people were encouraged to try the McDonald’s experience.
However over the years, McDonald’s has been hugely
accepted by our customers, so there was a need to evolve
our communication strategy and move on from trying to
encourage people to visit us for the first time to making
McDonald’s a regular experience. Now that we have already
established ourselves, people have already visited us, they
know what McDonald’s is all about, we have changed our
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baseline to ‘Toh aaj McDonald’s ho jaye”. Here we are
talking about an everyday experience, not the first time visit.
We are encouraging our customers to visit us more often
with their family and enjoy their time out.
BS.Would more ad-campaigns be coming up this fiscal?
What would be the theme? And if there is a shift in the
same, then why so?
The present campaign will be on air for eight weeks. While
other food commercials will follow this year, the theme will
remain same. The objective will be to continue positioning
McDonald’s as a comfort zone for families.
BS.What is the brand’s media strategy?
At present our focus is more on the electronic media as is
evident. Our new brand film is all about emotions, family
ties, fun and this has a higher visual appeal. The new ad that
we have come up creates more impact if it is seen and heard
at the same time and that fun filled atmosphere which our
customers can identify with when in McDonald’s, can be
created only on electronic media. We do not usually support
other advertisements be they marketing or commercials
through other mediums such as print.
BS.On an average what has been the growth of your
customer base. Please give us the break-up of first time
consumers and repeat consumers. Has advertising
played a role in attracting first timers?
Advertising does have its impact on consumers, but if the
product that is being advertised is not good enough, then it
is very difficult to maintain consistency in the sales figures.
Most customers, who visit any McDonald’s restaurant once,
do come back. Our customer base has increased
substantially since we started operations. The past four years
has seen very high trials from first-time customers-
averaging 77-80%. Now we are trying moving away from
inviting trials and focussing on building customer loyalty.
BS.With so many coffee bars coming up and other fast food
chains has it affected McDonalds? What has been the
marketing strategy to meet competition?
We have always offered tea and coffee on our menu at our
restaurants but we have recently tied up with Coca - Cola to
serve their Georgia Gold brand hot beverages in our
restaurants. We believe in providing variety and in keeping
with this we try to add value to our customers eating out
experience. Our core product and focus continues to remain
burgers. Our marketing strategy is simple, we believe in
satisfying our customers. QSC&V (Quality, Service,
Cleanliness and Value) have been our core values from the
very beginning and we firmly believe that these values will
bring our customers back to us time and again.
BS.If these new trends have not affected your business
what is it so unique about McDonald’s positioning and
marketing strategy that it has not been hit by these new
outlets?
We believe in the McDonald’s promise of “With a sense of
fun and youthful spirit, we will proudly serve an exceptional
McDonald’s eating experience that makes all people feel
special and makes them smile, every customer, every time.”
 Every employee strives towards providing 100 percent
customer satisfaction. We do not compromise on the
quality of our products and have stringent checks at every
step to ensure this. All these have resulted in developing a
loyal customer base that keeps visiting us again and again.
We do believe that it is this drive towards providing the
best that keeps us head and shoulders above the rest.
BS.McDonald’s is looking at a tie-up with Nestle India.
You have already started test marketing nestle products
in some outlets. Is it an attempt to counter competition
from the new coffee bars, which serve varieties of
coffee and tea?
Testing new products is an ongoing process based on our
own menu vision and customer response. Of course, our
focus does remain on core products - burgers, but we
would like to offer some variety on our menu too.
BS.What according to you has been the strength of
McDonald’s as a brand in India?
McDonald’s is the most recognisable brand world over
amongst all age groups. When we launched in India we
realised that we would have to Indianise some of our
products to appeal to the local taste and yet retain our equity
on core products. Being a culturally sensitive company, India
is the only country where McDonald’s does not serve beef
and pork. This coupled with our consistently maintaining
high standards of QSC&V and understanding of the
Indian consumers, their needs and wants have helped in
strengthening the McDonald’s brand in India.
BS.Recently McDonald introduced co-branded ice-cream
McSwirl with Cadbury India. Why did you go for a co-
branded product when you had your own ice cream,
which was doing well?
Yes, we do have our own soft-serves. But as I have already
mentioned above, we keep introducing new items to our
menu. Before introducing any product on the menu, we
conduct extensive consumer research. We had received
overwhelming response to this new product and our soft
serve sales have gone up by 25%. Cadbury enjoys a 70%
share in the chocolate market. We introduced this product as
it offers a fantastic product to our consumers at a great price,
which is basically a value addition.
BS.What has been the role of advertising in the success of
McDonald’s in India?
Advertising does help in building brand recall, but
advertising alone does not sustain a brand. The products
that we serve are of international standards and we believe
that our brand has grown because we deliver our promise,
we sustain the quality and experience promised to the
consumers in our advertisements in the restaurants.
BS.When is McDonald expected to break even and how
many more outlets do you plan to have in place by the
end of this fiscal. What would be your marketing
strategy for the smaller towns and cities?
McDonald’s is planning to break even on operations by
December 2003 and expand to 80 outlets the same year. We
are planning to open 16 new restaurants by the end of this
year. At present we are concentrating on cities from where
BRAND MANAGMENT
our cold chain facilities can be availed, but yes, opening up
in new places are on the anvil. We are also focussing on
opening up restaurants in Highways. McDonald’s has
already opened 3 highway restaurants in India on the Delhi
- Agra highway, Delhi-Ludhiana highway and Mumbai-
Pune highway. We are also looking at several small cities too.
BS.McDonald’s has been a favourite with kids. Will you be
undertaking any promotional activities aimed at this
segment?
McDonald’s does run promotions and that involves
children from time to time. At present we are running a
Happy Meal Carnival in all our restaurants where a child can
pick a toy of his choice from among 45 toys and win
amazing prizes every time. The focus of this promotion is
to enhance the family experience. McDonald’s is all about
having a great experience and this is another effort by which
we hope to ensure that.
BS.You have used kids as an entry strategy to the family.
Why this emphasis on kids? Is it part of your
international strategy or a special plan for India?
World over McDonalds is a family restaurant and children
are an integral part of a family. McDonalds ensures that
every member feels special at our restaurants. Our
restaurants are child friendly where children feel comfortable.
The entire family can come and have a good time. We have
always tried to make McDonalds the best family outlet
where both the parents and the children would have a good
time.
BS.Kids are becoming a very important target audience
for most categories including consumer durables. Why
have kids become the center to communicate?
In the 90’s India saw a major shift to nuclear families. When
there were more joint families, it used to be the head of the
family who used to take most decisions. In smaller families
everybody’s opinion started mattering, whether it was for
buying a fridge or a TV or whether it was for going out.
The child became an integral part in decision making for
buying things. Today the child does influence the decisions
of parents as have been proved by research. We all realise
that no longer can this group be ignored.
BS.McDonalds’ is perhaps the icon of indeginising a
foreign brand. How have you done it? What are the
steps that you will be taking in future to bring it close
to the Indian community
McDonald’s worldwide is well known for a high degree of
respect for the local culture. McDonald’s has developed a
menu especially for India with vegetarian selections to suit
Indian tastes and preferences. Keeping in line with this,
McDonald’s does not offer any beef or pork items in India.
In the last two years, it has introduced some vegetarian and
non-vegetarian products with local flavours that have
appealed to the Indian palate. Efforts are on to add and
enhance variety in the menu by developing more such
products
25
 Activity
BRAND MANAGMENT
Study 5 successful brands and make down notes as above how
they have been able to achieve that success.
Is it Creativity that Drives Marketing?
November 19, 03
Anushree Madan Mohan
Is it creativity that drives marketing? Or is it the rationality
factor? The fourth session of the National FMCG Conclave
attempted to shed some light on the same subject and featured
Sanjay Johri (Managing Director, Readers Digest), Ashok
Dhingra (Director, Sales and Marketing, Perfetti India), Shripad
Nadkarni (Vice President, Marketing, Coca Cola India Ltd) and
Neeraj Swaroop (Country Head-Retail Banking, HDFC Bank
Ltd) as the key panelists. The moderator of the session was
Vivek Sharma, Brand Director, Ogilvy &Mather Pvt Ltd.
Sanjay Johri, Managing Director, Reader’s Digest asserts, “ How
important is creativity in advertising in comparison with the
other elements of the marketing mix? For every issue, Reader’s
Digest distributes around 500,000 copies. Around 435,000
copies goes to subscribers and 65,000 copies are sent to
bookstores and newspaper outlets. For Reader’s Digest, it’s the
rational approach, which has led to much success in our
marketing activities. We rely primarily on direct marketing
wherein subscriptions are sold via direct mail and serviced
through the postal system. We have a detailed database of all
our customers; each list is coded separately for all the tests that
we undertake with regard to our marketing mix. High cost per
contact is unavoidable but in the process, we get a high
response rate as well.”
He adds, “Statistical sampling is our mode of operation,
through which we examine the value proposition. As far as our
target group tests are concerned, our telephone lists garner a
response of around 2.5% whereas referrals offer a response of
around 15%. As per our price and offer tests, we found that the
subscription price of Rs.299 did 6% better than a price tag of
Rs.300. Enclosing a gift raised responses upto 22% and a
money back guarantee added around 10% to the overall
responses. A credit offer also manages to pull three times more
responses than a cash offer.” Johri highlights that accurate
targeting makes a huge difference to any kind of business.
Johri also addresses the role of copy and visuals, within the
overall marketing mix. He believes, “ From the tests that we
have taken on, it is quite visible that creative changes have
limited effects on sales, as compared to target groups, prices and
offers. For instance, we were relying on creative approach A,
when we were garnering an order rate of 10.2%. We changed
our approach to B, and the order rate went up to 11.5%. The
difference was marginal.”
A rational approach may have worked for Reader’s Digest. But
AK Dhingra, Director Sales & Marketing, Perfetti India has
another story to tell!
Says Dhingra, “ Packaging, promotion and pricing may be
important but its creativity which is paramount in generating
business. Marketing for Perfetti, has always been led by
creativity. The common perception is that all marketing must be
logic led and low on gut feel and innovation. But at Perfetti, we
26
are used to breaking all the rules. For instance, candy has always
been associated with kids, but when we launched Alpenliebe,
the creatives were primarily revolving around grown ups.
Inspite of that, Alpenliebe has been outperforming its
expectations, year on year. Again with Alpenliebe lolliepop, the
ads certainly don’t pass any test of rationale.”
He adds, “ After the problems that CenterFresh faced during
the World Cup 1996, we weren’t in a position to advertise for it
at all. It was after that particular lean period that we launched
CenterShock, which again flaunted all conventional rules for
advertising. With Center Shock, there was no concept of a
chocolate hero, an iconic heroine or an appetizing approach to
the product. The colloquial style worked in our favor. And
Center Shock is the number one player in the category today.”
Meanwhile, Neeraj Swaroop (Country Head-Retail Banking,
HDFC Bank Ltd) takes on a different tangent. He asserts,“
Ideas are definitely born out of creativity. But every creative idea
gets replicated with time and sooner or later, it’s going to give
rise to more competition. With the multiplicity of choices in the
current day, there is a need for greater segmentation within the
market and hence, a greater thrust towards rationality when it
comes to the marketing mix. Research and data management,
the right kind of pricing for value added services and feedback
on consumer insight go a long way in building the brand.”
Swaroop adds, “ As far as the rational approach of HDFC is
concerned, we try and understand behavioral patterns of
consumers through our database, bring in relationship pricing
or preferential rates on the basis of the customer value and
management services for high net worth customers (fee waivers
and the kind). Our marketing efforts are geared towards greater
segmentation.”
Shripad Nadkarni, Coca Cola argues in favor of creativity being
the driving force behind marketing. He asserts, “ Creativity
confers a distinct point, as far as the competition is concerned.
The right creative can give you the competitive edge. For
instance, Pepsi had launched its Chotta Pepsi way earlier than
us. But the Paanch ad did the trick for us and now its known as
the Chotta Coke!”
He adds, “ With McKinley bottled water, we departed from
what would seem as logical and rational within the category, and
included the Boond Boond Mein Vishwaas TVC which made
an emotional connect with the people. We highlighted safety
and trust, and perhaps it was the lilting music that added to the
impact. Till the Boond Boond TVC, Bisleri’s approach was
completely towards highlighting the rational benefits of the
product. Thereafter they went for a complete reversal and took
on an ad which was more or less out of character for them, a
step which worked in our interest.” Nadkarni discussed at some
length as to how the term Thanda lifted Coke’s perception and
place in the market, in addition to making it a household name.
Creativity? Or the rational approach? Or the right blend between
the two? Well its upto the marketing gurus to figure that one
out! But from all that occurred in the fourth session of the
National FMCG Conclave, the overall consensus in the audience
was that it is indeed creativity, which is the driving force behind
any kind of a marketing mix. Thums up to the creative guys!
Case Study
How to Manage Your Brand Portfolio
by Debbie MacInnis
1/22/2002
Managing brand images and building brand portfolios are
difficult challenges even for the most seasoned executives. This
is particularly true in hard economic times when consumers are
prone to forego known names to buy less expensive store
brand substitutes. The recent example of Pampers diapers
illustrates many of the challenges and some of the
opportunities available to marketers to increase the value of
their brand franchise.
The Case of Pampers
When you think Pampers you think of what-diapers of course-
expensive diapers at that. These rather narrow associations were
not helping the Pampers brand.
Although the brand commands a 24% share in the diaper
category, it was and is now under siege from lower priced
counterparts, particularly in the wake of new and improved
store brands that have greatly upped quality. The economic
recession doesn’t help-particularly since Pampers’ price is 50%
higher than that of store brands. Nor did Pampers’ advertising
which, since 1961 had changed relatively little and tended to talk
down to mothers. Pampers (and other diapers) are also in some
sense responsible for their own slowed growth as improve-
ments in diapers means fewer diaper changes (see Emily
Nelson, Wall Street Journal, December 27, 2001, B1).
How can companies build and enhance their brand franchise-
both deepening the meaning of the core brand and insulating
the brand from price-based competition? Attention to a few
simple concepts provides a start.
Brand Longevity Through Line Extensions
Keeping customers around as long as possible is a problem for
products like diapers since parents’ desires for potty training
force even loyal users to give up the product after a few years.
Natural aging make the product obsolete among core
customers-fueling expensive attempt to garner new customers.
Pampers’ line extensions however, are aimed at keeping
customers initially happy with the Pampers brand loyal for as
long as possible. Different lines are offered for boys and girls
and diapers are offered for different stages of kids’ develop-
ment. Diapers for newborns offer extra absorbency, toddler
diapers have stretchy sides for crawlers and pull on pants type
diapers are offered for toddlers and preschoolers who can’t yet
make it through the night.
Market Development Through Brand Extensions
While retaining customers through line extensions is a no
brainer, a much more difficult decision is how the brand
franchise can be built through brand extensions. A brand
extension is a management strategy in which a well known
brand name (e.g., Pampers) is used to promote a new brand in
a different category (e.g., Pamper’s bibs).
Marketing academics have identified two basic strategies for
engaging in brand extensions-(1) extend the brand to product
categories that share similar features to the parent brand or (2)
extend the brand to product categories that serve similar goals
to the parent brand. The two strategies offer very different
BRAND MANAGMENT
insights into potential extension options.
Extensions Based on Similar Features
The first-called extensions based on taxonomic category
structure-suggests that one think about diapers as a subcategory
of a larger taxonomic category (e.g., absorbent paper products).
Conceptualized this way, Pampers could extend to other
product categories that are part of this broader taxonomic
category structure- categories like diaper wipes, disposable paper
bibs, napkins, tissues, as well as other products potentially
outside the baby category (e.g., toilet paper, sanitary products,
paper towels).
With this strategy, the brand franchise is built on what the
product is-an absorbent paper product.
Extensions Based on Similar Goals
An alternative is to look beyond what the product is-to what it
does.
Broadly speaking, Pampers could be conceptualized as a brand
that “protects kids from the elements”. This type of reasoning-
called extensions based on goal derived category
structure-suggests that one look for core benefits or goals that
the brand fulfills and extend to other products that serve
similar goals.
Conceptualized as a brand that “protects kids from the
elements” Pampers could extend to a broader array of catego-
ries, including bibs, diaper wipes and tissues, but also products
like warm and protective clothing, antibacterial lotion, sun-
screen, protective gear (like bicycle helmets, knee pads), safety
latches for toilets and electrical outlets, and so on.
Of course other goals could be identified, suggesting different
brand extensions and different meaning to the core brand.
Comfort as a goal might lead to extensions such as baby
blankets, pacifiers, wipe warmers and the like. A different goal-
such as “fun” might lead to altogether different extensions like
toys, mobiles, books, playmates and the like.
Being Strategic
Strategic thinking is key here. While there are a number of
possible directions to pursue in developing brand extensions,
one strategy must be selected. If too many directions are
pursued, the brand loses focus and consumers become
confused about what the brand stands for and why they should
buy it. The extensions should fit together as a package to deliver
a unified message about the meaning of the brand. Extensions
to toilet paper, protective gear, and mobiles, for example, would
leave consumers scratching their heads about just what Pampers
is and why they should buy it.
Sequential Brand Extensions
A final issue in managing the brand franchise has to do with
when a brand extension should be introduced relative to other
extensions. Consider, for example, the fact that Pampers does
want to extend its name to sunscreen. Going immediately from
diapers to sunscreen could pose some problems. Not only is
Pampers linked with expensive diapers, its association with
diapers links the product with another set of not so pleasant
associations-think malodorous bowel byproducts.
27
 Extending the brand name from diapers to say-sunscreen-
BRAND MANAGMENT

represents a potential challenge since consumers may

immediately think that the product is- well, not so sweet
smelling.
However, extending first from diapers to pleasant smelling
diaper wipes and then to sunscreen applied through a wipe
based product eliminates that immediate association. The sweet
smelling wipe is not only linked logically with diapers and
protection, one of its critical ingredients (its scent) counters and
otherwise inappropriate association that might be transferred to
the sunscreen extension.
Again, strategic thinking is required here. A company brain-
storming session might identify a bunch of potential
extensions (and licensing opportunities) that fit the goal derived
category “things that protect kids from the elements”. Among
those that seem feasible, tactical considerations of when each
should be introduced relative to others is helpful in building a
core brand image that doesn’t run into interference from other
associations linked to the brand.
Discussion Questions
1. Analyze the Pampers communication strategy at the time of
the launch. How did it fit in with past advertising efforts?
How did it contribute to brand equity?
2. How would you characterize the Pampers brand image?
What makes up its brand Extensions?
3. Describe some of the Brand Extension strategies? Are they
good enough strategically and tactically to maintain their
strong leadership status in the coming years?
Notes

28
 CHAPTER 2
LESSON 5: TERMS ASSOCIATED WITH BRAND
UNIT 2
UNDERSTANDING VARIOUS TERMS

Topics Covered Table 6.1 Differentiation Mechanism in Brand Building

BRAND MANAGMENT
Brand symbols, Brand Character, Brand logo, colours, Brand
name; types of brand name, Name change, Brand Extension, Means Initial step Ongoing actions
Core product or • Highlight distinct benefits Use the tangibles or positioning to
words used as a sub-brand, Co-Branding, Corporate name as service like contents create an identity.
brand name, Brand association, Brand image, Brand Auxillary Services • Exceptional Handling • Loyalty development
relationship, Brand loyalty and Brand Equity. programmes
• Efficient Packaging • Retain customer interest
Objectives by
communication
repeated

The learning objective: after this lecture you should be able to • Innovative promotion, • Develop customer pull by
communication different marketing mix -
understand:
• Use channel and ensure
a. Understanding of various terms associated with brand: push

b. brand symbols
c. brand character
d. brand logo and counter fakes
After building up the Foundation of brand management, we
will discuss various term in Branding, which will help you in
understanding the process of Brand Management in later
chapters.
Now after studying brand we can define Branding as
Branding is a process, a tool, a strategy and an orientation.
• Branding is the process by which a marketer tries to build
long term relationship with the customers by learning their
needs and wants so that the offering (brand) could satisfy
their mutual aspirations.
• Branding can be viewed as a tool to position a product or a
service with a consistent image of quality and value for
money to ensure the development of a recurring preference
by the consumer. It is a common knowledge that the
consumer’s choice is influenced by many surrogates of
which the simplest one is a brand name. Although there
may be equally satisfying products, the consumer when
satisfied with some brand does not want to spend
additional effort to evaluate the other alternative choices.
Once he or she has liked a particular brand, he or she tends
to stay with it, unless there is a step rise in the price or a
discernible better quality product comes to his/her
knowledge which prompts the consumer to switch the
brand.
• Branding can be used as a differentiation strategy when the
product cannot be easily distinguished in terms of tangible
features (which invariably happens in case of many CNDs,
service and even durables) or in products, which are
perceived as a commodity (e.g. cement, fertilizer, salt, potato
chips etc.) In all such situations marketers use branding as a
differentiation strategy and try to develop and deliver
customized products and auxiliary services with tailor –
made communications to match with the customer’s self –
image. Such differentiation is an on-going process and the
initial and on-going actions are depicted in Exhibit 6.1:
Brand building is a conscious customer-satisfaction orientation
process. The brand owner tries to retain you as a customer to
its fold over their competitions by a mix of hardware and
software because when you feel satisfied you may develop a
kind of loyalty for the same. Therefore, a strong brand, apart
from name, symbol or design, ensures quality, stability of
assured future market and effective utilization of assets.
Further, a strong brand, which a retailer wants to stock because
of high customer pull, also provides the owner of the brand
with a platform for the sale of additional products.
Brand Symbol
We can describe Brand symbol as a visual entity and includes
Brand Character and Brand Logo. Both are elements of brand
identity. Brand Symbols lead to:
• Awareness of brand, e.g the Doughboy for Pillsbury, the
Captain for Captain Cook, the devil for ONIDA, Gattu for
Asian Paints, the rabbit for Energizer, and the penguin for
Kelvinator.
• Brand associations, e.g. lightning for Rin, jetfighter for Jet
Mosquito repellents, rose for breeze, lime for Cinthol Fresh,
and mangoes for Frooti.
• Likeability and positive feelings, e.g Mc Donalds (Ronalds)
smile and Amul Girl.
• Stronger memories for the brand, e.g Jolly green Giant,
which is present on all packs of Green Giant products, and
Amul girl.
Brand symbols can be created across ten
concepts in order to add value to brands.
1. Non-living characters, e.g. Jolly Green Giant, Doughboy for
Pillsbury, Captain Cook, strongman for MRF tyres, lady
Milkmaid, two men for Citibank, cricketer batsman for
MILO.

29
 2. Animal, e.g. tiger for Tiger Biscuits, tortoise for Tortoise
BRAND MANAGMENT
Coils, camel for Camel cigarettes, robbin bird for Robin
Blue, crocodile for Lacoste, black cat for Eveready and
penguin for Kelvinator.
3. Nature, e.g. coconut tree(s) in Parachute, apple in Apple
Computers, lightning in Rin, rising sun for Aditya Birla
group, rose in Breeze, butterfly for HPCL, sunrays in
Sunlight detergents, lime in Cinthol Fresh soap and
mangoes in frooti.
4. Pack, e.g. bottle of Coke.
5. Things, e.g wheel for Wheel detergents and cup for Nescafe,
dagger for Dettol and tooth for Pepsodent.
6. People, e.g. mother with sleeping child for Good Knight, a
range of faces for Fair Glow, a girl in a frock for Nirma and
babies for Farex.
7. Geometric shapes, e.g. Maruti, Power, HP, BPCL,
Whirlpool, Castrol, Ceat, and Britannia.
8. Scenes, e.g. Marlboro country, and Liril waterfall.
9. Monuments, e.g. Taj Mahal for Tata tea, Red forte for Lal
Quila rice, and Charminar for Charminar
10. Logo, e.g. Pepsi (more on logos in next section). When
none of the above exist for a brand, its logo is the only
symbol.
Brand Character
Marketers develop living or non-living characters and add
personality and meaning to it in the context of brand
development. These characters are called Brand Symbols.
Marketers present their brand character in a static manner.
Captain Cook does not walk and Mc Donald’s sits. However to
create likeability among consumers, their interactivity (i.e not
static) could be exploited. Doughboy plays a role in the ads of
Pillsbury. Internationally, the movements and action of
Doughboy have been defined. Its ‘belly poke and giggle’ was
used in the launch ad of Pillsbury atta in India. Apart from
making the character loveable, this action is supposed to
connote softness of the chapatti made from the product. When
the Doughboy interacts with the housewife playfully with
humour, it is projecting the interaction with the brand of the
housewife. The brand’s pack or logo cannot do this.
30
It has been observed that 80% of consumers’ learning happens
through their eyes. It is easier to link inmemory visual elements
(e.g. Brand Character) rather than words (e.g. Brand Names).
Hence it is for the marketer to decide/plan to exploit the
opportunity provided by the Brand Character in the process of
creating learning about the brand. Obviously, a character is of
no use if it is linked in memory to a brand name, and advertis-
ing has to do this job.
The overall research process to decide on a brand character
involves both qualitative and quantitative research.
Qualitative Research
You would require understanding the following:
• Personality (projective techniques to determine whether the
brand and the customer are ‘made for each other’ or not.
• Fitness with name of each option, along with rationale.
• Fitness with slogan of each option, along with rationale.
• Fitness with brand associations (current for existing brand
and proposed for a new brand) of each option, along with
rationale
• Fitness on Pack
• Fitness with proposed role in advertising (appropriate
stimuli to be used) of each option, along with rationale.
• Comparison among character options, along with rationale.
• Fitness with specific brand extension options, and reasons
for the same.
Quantitative Research
This would focus on ascertaining the following:
• Thoughts evoked on seeing each option, and grouping of
thoughts as positive and negative.
• Likeability of each option
• Specific likes and dislikes of each option, reasons for the
same.
• Uniqueness of each option.
• Comparison of each option with symbols of competition.
• Rating of each option’s fitness with pack.
• Rating of each option’s fitness across a battery of general
and specific traits, e.g. cute, stylish, friendly, matured and
loveable. Specific brand associations and brand slogan
(desired or current) should also be included.(A ten point
numeric scale could be used).
• Preference among symbol options (though a preference
scale).
• Preference among name options (through a preference
scale).
Brand Logo
In order to make a word in a page standout, we highlight it,
underline it or circle it. This increases the noticeability. It gives an
identity to the word. Similarly, for a brand name to stand our
marketers use shapes and colours. This we see on packs and
across communication media. This combination of shape and
colour is called Brand Logo. Note that the brand name may or
may not form a part of it, e.g Coca-Cola is in the logo, but
Pepsi is not.
The Brand Logo stay in the mind with colour distinctiveness. It
is the visual signature of the brand. It is a long-term property
of a brand and need to be handled cautiously. Each brand has a
logo, though the elements of the logo vary across brands.
Elements of a Brand
A brand logo consists of five distinct elements:
• Brand Name: ( Castrol in Castrol Logo)
• Geometric Shape: This includes non – copy visuals like
Maruti, whirlpool, Star TV, Maggi and Nestle have.
• Colour: This is anecessary condition as the brand name also
is in the colour and the latter is a necessary condition for a
brand logo.
• Slogan: Brand slogan in the brand logo is a rare
observation. One such example is Britannia: Eat Healthy,
think Better.
• Font: All copy matter including the brand name has a
specific font, e.g: Coca –Cola is always written in a particular
manner.
Dos and Don’ts in a Brand Logo
1. Use Creative elements than can be printed on all types of
material and can be reproduced with consistency. Coke has
different logos on the bottle and cans. There is a printing
constraint on the glass bottles and these do not have the
‘bottle’ in the logo. But surprisingly, the geometric shape
varies .It is rectangular on bottles and mostly circular
elsewhere.
2. In some cases the logo and the name are separate, i.e. the
name is not in the logo, e.g. Pepsi. In these cases the
consumer has to learn two different entities. Learning is
simpler otherwise. Eyes have to stop at two places to learn
instead of one. Besides, if the brand has a symbol not in
the logo, it leads to the same issue. A good integration of
all these elements is MRF, where the man is in the logo and
the body of the man ends on the name and in the case of
Frooti, the mangoes rest on the name.
3. A brand name is an identity, a signature and these are
consistent in definition. Brands should similarly stay in the
minds. If we try recalling Cinthol, do we get any specific
colour or geometric shape in mind?
4. If a brand does not have a form, the same should be
developed. If a brand does not have specific colour, the
same should be developed. It would pay in the long term.
It would pay during extensions, which would lead to
different packs having different dominant colours. The only
consistency is the logo.
5. The geometric shape should not have edges. It defines
boundaries and lack of dynamism perceptually. Wavy shapes
connote dynamism and flexibility. There is no consistency
on this across strong brands. E.g. Pepsi, Coke, Thums up,
etc.
6. The Pack of colour(s) should contrast the logo colour(s).
Brooke Bond’s Red Label tea is a leading brand. When we
recall its logo, red and white colour comes to mind. The red
on the pack clearly overpowers the dark green logo of
Brooke Bond.
7. Colour connotes class and puts a premium on the product.
BRAND MANAGMENT
The golden colour of Cadbury, wherever used fits the
criterion. For premium brands, premium colours should be
used. Park Avenue uses golden logo on personal care
products.
8. A logo should overpower the crowd on the shelf and attract
attention from a distance, irrespective of lighting condition.
Apart from colour combination, even size plays a role to
create this effect. In terms of the pack size, the green Frooti
packs are not big. But its logo just overpowers. Size has a
role to play in this.
Logo Change
Logo changes of increased of late, mostly to have a common
identity across a range of businesses or product categories.
Some example follow:
• The Korean group Lucky – Goldstar changed its name to
two letters, i.e LG, primarily to bring synergy through the
name across all its businesses. Earlier, ‘Lucky’ stood for
bulk sale items and ‘Goldstar’ was used for electronics.
Apart from becoming omnipresent across all group
companies, the brand LG became smaller and smarter.
• Aditya Brila’s group also, like LG, developed a similar logo
for its group companies, namely Indian Rayon, Hindalco,
Indo Gulf and Grasim. This new identity is to be.
• Tata Modifies its logo in 1999 to suit its changing business
structure, rejuvenates the old Tata logo, and increase
visibility through use across.
• Lakme changed its logo in the 1990’s. The new
development included intensive qualitative, quantitative and
competition-based research with employees, customers, and
consumers. The new logo was a deep green with a pink
brush stroke, touches of gold, and a wavy border line. The
logo was supported with a line: ‘The Beauty’.
The Overall Research Process
For a new logo, evaluation is advised so as to effectively
improve, select and finalize the same. The research should be
undertaken between two independent sets of people- one to
evaluate the logo in isolation, and the other to evaluate the logo
on the pack. In real life, the logo has to stand out in both these
contexts.
Evaluation of Logo in Isolation
This would involve ascertaining the following:
• Likeability (across a five-point scale, Disliked it very much’…
‘Liked it very much’) of each logo option.
• Specific likes and dislikes and reason for the same, for each
logo option.
• Distinctiveness (across a four-point scale, ‘Not at all
distinctive’…Distinctive).
• Comprehension of message conveyed, by logo options.
• Preference among logo options (through Constant Sum
Preference scale).
• Preference of each logo among key competition (through
constant sum preference scale).
Evaluation of Logo on Pack
31
 This would include ascertaining on the same parameters as
BRAND MANAGMENT
before. It would also include a stand-out research. In this you
would be exposed to simulated shelves. In each situation there
would be an arrangement of packs, similar to that at typical
outlets. However, the position of the packs would be different
in each. You would be given thirty seconds to locate test pack
with a logo option. The speed at which each logo-option pack
gets identified would get measured. This would help rank the
logo-option packs in terms of how well they would stand out
on the shelf. If the research is for logo change, this process
should also be done for the existing logo, so as to use the
findings as a benchmark. Its preference against each of the logo
options should also be ascertained.
Colour Associations
People have grown up with a range of colours. Let us
understand the associations of colours.
Table 6.2 show a list of colours and their conjectured associa-
tions.
Colour Association(s)
White Purity
Black Luxury
Purple Royalty
Green Environment and Health
Red Energy, Excitement, and Will to win
Blue Peace and Tranquillity
Yellow Lightness, cheerfulness and Relaxation
Choosing Colours
You should consider following key factors while choosing
colours as:
• Climatic conditions:
Colours fade over time. Direct exposure to sunlight and
intensity of sunlight lead to fading of colours. Among all
colours red, clue and green do not fade fast.
• Visibility from a distance
This is critical as people usually get exposed to a brand logo
and pack from a distance. What could look good at close-up
might not stand out from a distance. Red wins on this
parameter. Further specific combinations also do well, eg:
red and white and red and yellow.
• Product category
It is believed by some that because red and orange are more
connected to emotions, they fit better as a food product
colour. Blue is perceived to better suit as a corporate colour.
One needs to know mood/benefit associations linked to a
brand or category and decide on such aspects.
• Material used for packaging
If logo is to be printed on PET bottles or glass bottles, the
number of colours that can be used becomes restricted.
32
However, if on the PET bottle a label is shrik wrapped the
same does not hold good.
• Quality of printing technology
This is also linked to material used for packaging . One
needs to first understand what are the options and most
likely printing output. Only then should the colours be
selected. Printed packaging material can also be imported
but it has its own cost.
Benchmarking Key Competitor
A first entrant does not have to bother about this, but
followers into the category have to. It is important to create a
separate brand identity than to use the right symbolic colour. If
Coke was red, Pepsi should have avoided red in its logo. They
used red to symbolize Cola, and also blue to differentiate. Half-
hearted logic does not necessarily provide desired effectiveness,
which Pepsi has realized. Hence, its attempt to go blue in the
late 1990s.
Objective
It is better to set an objective, arrive at options, and then select a
colour considering the above points. To set the objective, you
should first understand product benefits, brand personality,
and ultimate desired brand relationship, in a competitive
framework. Literacy level of the target segment should also be
understood. Some brands are known by their colours in the
rural market:
• Parachute: To connote purity and cooling effect, blue was
used.
• Close – Up: To communicate freshness, vibrancy and
youthfulness, red and blue were used.
• Dena Bank: To project four aspects, four colours were used
– red prosperity, blue for expansiveness, grey for sobriety,
and white for honesty and truth.
• Gulf Oil: It represents a vibrant and energetic organization.
Orange in it is associated with the rising sun- source of
energy. Blue denotes class and quality.
• Rin: To denote power, red was used. The white lightning is
on similar lines. It gives a feeling of dynamism.
• Fed Ex: To stand out on the recipient’s desk, two bold
colours - orange and purple were used.
Counter Fakes
The issue of counter fakes has reached such a level in India that
some corporates , who otherwise are enemies at the
marketplace, had no choice but to get together. They wish to
fight out with counterfeits and look alike goods. The activities
are to be undertaken under the banner of Brand protection
Committee (BPC) of FICCI. A comprehensive action plan is to
be developed to counter the threat of counterfeit goods,
currently costing the industry an estimated Rs 2500 crore in
annual sales. And government does not get the taxes on it. The
plan would:
• Emphasise the enforcement of laws and also strive to make
legal provisions more stringent for lawbreakers.
• Make consumers aware of the risks they take in using such
goods.
• Create interaction with state and Central Governments in

BRAND MANAGMENT
making government agencies more responsive to the threat
of such goods.
• Create interaction with state and Central Governments in
making government agencies more responsive to the threat
of such goods.
Strategic Brand Management
Brand Protection Committee has members like HLL, P&G, The World's 10 Most Valuable Brands - 2002
Coke, Pepsi, Colgate, Tata Tea, Dabur, Smithkline Beecham and VALUE ($billions)

Marico. BPC has also launched a web site, which gives details of 1
2
COCA-COLA
MICROSOFT
69.6
64.1
Interbrand’s Assessment
the problems of using spurious goods and the people arrested 3 IBM 51.2 is of Brand Power – the
4 GE 41.3 fullest possible view of
during the raids for spurious goods. 5 INTEL 30.9 each brand’s strengths
Can you think of key reasons for purchase of fake goods? 6
7
NOKIA
DISNEY
30.0
29.3
and potential as a
marketing and financial
• Lack of awareness between the real thing and not the new 8
9
McDONALD'S
MARLBORO
26.4
24.2 asset.
thing (due to packaging deception). 10 MERCEDES 21.0
Data: Interbrand Corp., J.P. Morgan Chase & Co /

• Fake goods are about 50 per cent cheaper (and India has Business Week AUGUST 5, 2002

enough poor people who cannot dream of better things

and products in life).
The phenomenon is stronger in small towns and in the rural
areas.
At times the law of the land has shown look alike products
their place. A brief example follows:
Wipro Ltd. is a 55-year-old company, engaged in a wide range
of businesses including the development and export of
software, manufacture of electric bulbs and tube lights. It has
registered its trademark Wipro. In 1999, it adopted a distinctive
packaging for electric bulbs with the picture of distinctive
packaging for electric bulbs with the picture of a rainbow flower,
the slogan ‘Applying thought’, claim ‘lasts 30 percent longer’,
trademarks ‘longlite’, Watts such as 60 written in yellow colour
and a red colour background. The company introduced electric Brand Vision
bulbs in 1994.They learnt that company introduced electric
bulbs in a deceptively similar Shivam Lamps was selling electric MUST BE:
bulbs in a deceptively similar packing as that of Wipro’s
Longlite electric bulbs packing. They went to court. Wipro So big, so bold and so audicious that
claimed that Shivam had copied the rainbow flower’s picture, expressing it – never mind executing it –
the slogan ‘Applying thought’ trademark Longlite, claim ‘lasts has a transformational effect. You start to
30 per cent longer’, the colour combination, layout and get -up become what you want to be. The dream
of their packing. The only noticeable difference was in the and the reality fuse. Kevin Clancy, Copernicus, Counter Intuitive

trademark, Gokul.
The Delhi High Court granted an ex pate ad interim injunction i.e. YOU NEED A BIG HAIRY VISION
against Shivam lamp Industries ‘as the object of granting
injunction may be defeated by delay.’ Shivam was restrained
from manufacturing, selling and offering for sale, advertising,
directly or indirectly dealing in electric bulbs, tube lights and
electrical fittings and apparatus which were substantial reproduc-
tion of the plaintiffs (Wipro Ltd.) copyright in the artistic work
Wipro Longlite electric bulb packing… were further restrained
from using the trade mark Rainbow flower device.’ The court
also appointed the local commissioner to visit the premises of
Shivam Lamp Industries, where the infringing goods were
alleged to be stored and take the same into custody.

33
 Brand builders have faced forms of some of these
BRAND MANAGMENT

challenges in the past, including increased competition and

media fragmentation. Though the new challenges certainly
make it more difficult to build a strong brand, by no means
What is a Brand? to they make it impossible. Other issues include brand
Kotler’s Five Levels backlash, which illustrates a different type of accountability.
Potential Product
of A Product As the repeated targeting during anti-globalization protests
of retail locations of multinational companies such as
Augmented Product
BRAND DISTINCTION by Timothy D. Ennis
McDonald’s, Gap, and Starbucks illustrates, a recognizable
Products
(Commodities)
Brand
Name Brand
Strong Brand brand can also become a lightning rod for criticism and
Expected Product No Difference Well Known Distinctive
Perceived by the
Consumer as protest.
Except Price But Similar Unique

OWN Something Notes

Generic Product

CORE BENEFIT

Discussion Questions
1. What do brands mean to you? What are your favorite
brands and why? Check to see how your perceptions of
brands might differ from those of others.
Answers will vary widely, and discussion could center
around reasons for such differences.
2. Who do you think has the strongest brands? Why? What
do you think of the Business Week list of the strongest
brands in Figure 1-10? Do you agree with the rankings?
Why or why not?
These two questions can be used to illustrate the similarities
and differences between “favorite” brands and “strong”
brands. The discussion could include evaluation of the
criteria for inclusion on the Business Week list.
3. Can you think of anything that cannot be branded? Pick an
example of a branded product that was not discussed in
each of the categories provided (physical good, services,
retailers and distributors, person, and organization, place,
and idea) and describe how it is a brand.
Discussion might involve why anything can become a
brand. (Because of the way perception functions, the
differential effect of when a brand is present vs. the
commodity product can always be achieved.) Students will
come up with many different examples of branded
products, and the discussion can be used to examine what
makes a brand.
4. Can you think of yourself as a brand? What do you do to
“brand” yourself?
People resemble brands themselves in many ways – with
their name, their mode of dress, their pattern of speech,
their interests and activities, etc. – because each aspect of a
person contributes to the differentiation of that person
from other people.
5. What do you think of the new branding challenges and
opportunities that were listed? Can you think of any other
issues?

34

LESSON 6:
BRAND NAMES AND BRAND EXTENSIONS
Objectives
The learning objective: after this lecture you should be able to
understand:
a. Brand Name and its importance
b. Types of Brand Name
c. Name Change
d. Brand Extension
e. Sub Brands
Have you ever thought of why did your parents give you a
name. Or if you and your brother never had a name. How
difficult it would have been for the teacher to call you or your
friend when you don’t have any name.
Same is the case with the products. If you go to the market to
purchase soap how would you let the shopkeeper know that
you need Pears or Lux had their parent companies not named
them, as both are soaps?
Why to Create a New Brand Name
The brand name puts a face on every company. Names like
McDonald’s, Amazon.com, GM, Apple, Intel, and a host of
others have long become significant members of pop culture
vocabulary. They’ve also given consumers a point of reference
when thinking about a company.
Many of us don’t realize that companies often spend millions
of rupees coming up with their names. They hire experts,
conduct research, and test the market before making a decision.
In this lecture we will show you a straightforward way to create
new brand names. In this way, by understanding the basic ideas
behind name generation, you might be able to avoid these
excessive costs - and bring your company greater prosperity.
What are The Characteristics of Good Brand Names?
Firms usually don’t have a lot of time to inform customers
about their name, so skillful firms create names that are easy to
learn and remember.
So, what makes a brand name easy to learn and remember?
a. It is sufficiently different to attract attention. Would
your firm’s name attract your attention if you saw it the first
time?
b. The name evokes interest. Rhymes and humor are some
ways to gain interest, but there are others as well. Think
about your target audience and what would interest them.
c. The name elicits a picture or image. Names that do this
are “dual coded,” in the sense that people remember them
most because the name is stored in pictures and words.
d. The name is meaningful. This is hard to do when you use
a nonsense word for a name. It can be overcome with lots
of advertising, but names that are inherently more
meaningful to customers are more readily stored in
BRAND MANAGMENT
memory. More important, the name should have
associations that are meaningful to customers in that they
convey the benefits that customers want.
e. The name has some emotion. Emotional associations are
easier to learn and remember.
f. The name is simple. Simple names are easier to learn and
remember than complicated names.
Activity 1
Write down in your notebook 2 brands each of the categories
(a to f) mentioned above……
Think???
• Does that brand name suggest the product class?
• Does the brand symbol, logo, or slogan support the brand
name?
• Does the brand name suggest the desired associations?
• Does the brand name suggest no undesirable associations?
Is the brand name distinctive and legally defensible?
• As per the Branding Model, which in a way is a branding
process:
BRAND
Brand Relationship = Brand Image + Attitude
• As per the Branding Model, which in a way is a branding process:
Brand Image = Brand Associations + Brand Personality
Brand Associations = Link up in memory with brand’s attributes, benefits and looks
Brand Looks = Brand Symbol + Brand Name
Brand Symbol = Brand Character + Brand Logo
PRODUCT
So we can define a brand name as –
A Brand Name summarizes various relevant and irrelevant
aspects as well as copy, audio and visual aspects of a product,
which a human being can sense. It provides an identity beyond
doubt. And identity differentiates. Since branding is a concept
that exists to create identifiable differentiation, the brand name
becomes a key marketing tool.
For example
Any brand name is a source of value to the company. It carries
symbolic meaning at times, for the customer and anyone it
interacts with. A Bennetton T-Shirt without the brand name/
brand slogan printed on it would be a mere commodity.
Or we can say a brand name is :
• the basic core indicator of the brand
• the basis for awareness
35
 • the basis for communication effects
BRAND MANAGMENT

Brand Names
• the basis for sales measurement and
Brand name can
• Help create association(s) in the mind that act as descriptors,
as to what it is and what it does. Xerox is a fitting example.
• It provides entry barrier in its category once it gets
established. Some appropriate examples are Burnol, Surf
and Dettol. Descriptive Suggestive Free Standing
• Through time and use it becomes a valuable asset. Tata and Close –up Flora Kodak
Godrej are good examples. Glucovita Whisper Xerox
Glucon C Surf
It has been observed, what a brand name is all about could vary
Band Aid Pepsi
over a time continuum. It is the effect of what the brand does,
Ganga Digene
what its competitor does, how customers change, how Babool Limca
technology changes, how customer interactivity changes, etc. Doordarshan Tropicana
Time has a great role to play in giving form to a name in the Frooti Jumpin
minds of the consumers. . The same could be by design or by Real Thums-up
default. Some elements are avoidable and unavoidable. Fair & Lovely Sunsilk
Think about Surf before Ariel was launched. Now think about Ujala Pampers
Surf and Ariel after Tide was introduced. Also think about
Robbin Blue after Ujala was launched. Does your mind notice If you were paying attention I’m sure by now you must be
these changes? having a fair idea of Importance of brand Names and their
Types of Brand Name types and Characteristics. If not means you were sleeping.
Activity 2 Now try to understand the Brand Name Associations
Again if I ask you to pen down 20 brand names of personal What clicks to your mind first when I say this: Brand Name
health care lets see how many are repeated in the class so that we Associations
can summarize the general traits of a good brand name: If you are smart enough I’m sure you can guess what it should
• Acceptable be about. Let’s discuss it in detail…….
• Easy to recognize Word Association
• Easy to pronounce These are words freely associated with names. Some words
• Easy to memorize/ recall associated with Sunsilk are sun, silk, nature, clothes, shine,
See if Lux, Lifebuoy, Surf, Dettol, Close up, Pepsodent, bright, smooth, outdoor and soft. Hommade gets associated
Colgate, Hamam, Kellogs… is in your list and try to relate the with home , natural, care, affection, mother, pure, safe, hygiene
traits of these brand names to the above. and nutritious.
Now let us discuss the generating associations that brand Image Associations
names can be grouped into. These include images stimulated/provoked by the name. It
could consist of situation(s), scenes and types of people in the
It can be three types of names:
scene. These could be clear or vague, positive or negative in first
a. Descriptive brand name: A descriptive brand name such person or in third person, of current times or past about living
as Handy Plast is simple and direct. things or non-living things, etc. For example Fair &Lovely
b. Suggestive brand name: Suggestive brand names like could provoke images about a beautiful woman. It could bring
Denim often communicated some appropriate message Aishwarya Rai to your mind. It could recall compliments
about he product in a subtle manner. received from friends
c. Freestanding brand name: A freestanding brand name like Product Associations
Kodak conveys less or no information immediately to the It includes any specific products or product categories associated
consumer. with names. Asprin, Coldarin and Anacin could provoke
Activity 3 associations with tablet, medicine or pain reliever. Usually, it is
Now write as many brands as you can recall in each of the believed by psychologists that human relationship (customers
categories given above. Lets see who does it maximum number are human) thrives on positive aspects. It is a qualitative aspect
of brands. and no answer is arguably correct. Interestingly, most successful
No cheating don’t turn the page before you complete the list. brands do not have negative associations.
You have a maximum time of 3 minutes. Read this table No 7.3 you will get even a clearer idea.
Okay time is over now check up your list with the list given in Brand Name Associations: Positive, Negative or Neutral?
table No 7.2Brand Names

36
 • Lehar Pepsi became Pepsi.

BRAND MANAGMENT
Brand Name Name –evoked association(s) When I talk of Brand Extension what comes to your mind
Good Knight Positive first?
Raid Negative Can you think of few companies who have done this?
Hit Negative
Brand Extension
Mortein Neither
Brand extensions are a familiar phenomenon for most
All Out Positive
marketers. Organizations see them as the easiest way of
Baygon Neither entering new markets or segments. Establishing a new
consumer brand internationally costs at least a 100 million
Activity 4 rupees. Thus brand extensions are seen as an easy and possibly
Now try to do a similar exercise for toothpastes or soaps inexpensive way of entering new business lines or
category. strengthening old ones if done with caution.
Further there can be another way of looking at brand names i.e. Broadly speaking, there are three types of brand extensions:
Naming Products With The Help of ‘Consumer Insights Product related extensions, Image-related extensions and
Spectrum’ Unrelated Extensions
Good associations can be generated through names by Product-related extension is more popularly called ‘line
understanding available positions on the ‘Consumer Insight extensions’. A line extension is typically a product or flavour or
Spectrum’. Let us discuss the edible oil case with brands like fragrance variant. Examples of this are Nirma detergent powder
Sundrop, Sweekar, Dhara Health, Cooklite, Shakti, Goldwinner extending into cake and Frooti soft-drink extending into other
and Gemini. variants besides the mango flavour.
Image-related extensions are those where the brand extension
Consumer Response Key Consumer Insight Brand Name bears some logical or emotional relationship with the parent
Generation
I use Sunflower Oil Sunflower Sundrop brand. Examples of this are Cinthol moving into talcs from
Why?
Good Oil Good -
toilet soaps and Zodiac moving into belts from shirts. In both,
Why? the same consumer is targeted demographically and psycho-
Good for health/healthy oil Health Dhara Health graphically.
Why? Unrelated extensions are those where the parent and the
brand extensions have little in common but for the brand
• Less oil required to cook Economy
• Light oil Lighter Cooklite name. A classic case of this is the brand name Godrej appearing
How does this help?
on soaps, safety locks, almirahs, typesetters, hair-dyes, refrigera-
• Active Active Dalda Active tors and other products.
• Energetic Energetic Shakti
• Normal Life Think when is a brand extension a success and when is it a
failure? What situations aid the success or failure of brand
extensions?
Five out of nine brands of sunflower oil fall somewhere across Let us discuss the Brand name extensions in detail with a few
the Consumer Insights Spectrum. Fortunately each of the five more examples. Try to remember further more examples while
has distinct positions. There exists scope for new brand location you read ahead.
as well as for sub-branding of current brands, not having a
Product-Related Extensions
location on the spectrum.
There are several reasons for having line extensions. These are:
Name Change a. giving the consumer more options (e.g. Five variants of
When the main part of the name in a multi word brand name Cinthol),
remains the same, the disturbance of the change is less and can
b. cornering more shelf space (e.g. variants of Yardley talcum
be well managed. But if the main word or the complete name
powder)
changes, all can be lost overnight by the marketing organization.
c. creating some excitement around an old brand (e.g. Rin
Without resorting to a complete change of name, the brand can
Supreme)
benefit from a slight modification thereof. Some examples of
name change are listed below: d. expanding core promise to new users (e.g. Ariel Super
Soaker)
• Tata Nihar became Nihar after HLL purchased it
e. managing a changed market situation (e.g. Colgate’s Gel
• Binaca became Cibaca through an international acquisition
extension fight Close Up).
by Ciba Geigy.
But by and large the important underlying reasons for line
• Teenopol became Ranipol
extension are
• Jyoti appliances became Jaipan Appliances.
• an unfulfilled need
• Annapoorna became Kissan Annapoorna
• upgradation of existing customers

37
 • novelty.
BRAND MANAGMENT
Nirma detergent cake was a big a success as Nirma detergent
powder because it satisfied the average Indian housewife’s need
to scrub clothes. Magic, a brand extension of Ponds
Dreamflower Talc, similarly fulfilled the up market buyer’s need
for a stronger and a more lingering perfume. Classic Mild’s
brilliantly upgraded the image of the parent besides being in
line with the trend of growing preference for milder brands
among urban consumers. In fact it is easy to see that whenever a
brand was extended to meet an unfulfilled need it was success-
ful.
Hindustan Lever was fairly successful in upgrading customers
through its brand extensions. Examples of this are Lux
International, Lifebuoy Plus and Clinic Active. Lux Interna-
tional brought in new customers from other premium soaps
besides upgrading some of Lifebuoy’s customers by offering a
new benefit of combating body odour. Clinic Active took off
where the parent left. Clinic Plus itself started as an anti-
dandruff shampoo. But as the brand grew in prominence it had
to broaden its positioning to connote ‘health’. The anti-
dandruff platform was hence read into the extension Clinic
Active that became a success.
Some brand extensions have failed possibly in their up-
gradation attempts For instance, Mysore Sandal Classic as a
glycerin soap had tough competition from Pears which is more
clearly focused on the skin care benefit. Raaga herbal pow del
tried to upgrade to Raaga Plus as a herbal paste. It was very
attractively packaged in green but lost customers because the
paste dried up, causing problems in usage.
Image-Related Extensions
Image-related extensions and unrelated extensions need to
ensure two things if they have fit, namely image fit and
business fit. A brand extension is said to have, an image fit if
the parent brand and the extension are closely linked in th,
consumer’s mind. For instance, Colgate toothpaste extending
into ‘brushes is a classic example of proper image fit. Similarly,
the extension of Prestige pressure cookers into non-stick ware.
Lakme nail polish becoming a cream, Maggie noodle stretching
into success and Dettol antiseptic liquid becoming a soap are all
good examples of suitable image fit. Some of the above
extensions like Lakme, Maggie and Colgate are complementary
in their use. They have all been successful.
Probably the single most factor important for image fit is
consistency between the brand personality of the parent and the
extension. The most commonly accepted definition of brand
personality is that it is the set of human associations with
which the brand is linked. The reason for the initial failure and
subsequent succes of Dettol soap is rooted in the issue of
consistency of brand personality. In fact poor image fit almost
ensures failure. Dettol’s initial attempt at becoming a beauty
soap is an example of this mistake. Dettol has fundamentally
been used as a brand for ‘cuts and gashes’. Thus attempts to
make Dettol a beauty met with stiff resistance in the market
place. On the other hand, when Dettol extended to become a
germ-kill soap (100 per cent bath) it was a success. In fact Dettol
later used the same anti-germ equity to become a shaving cream.
38
A similar consistency can be seen in the stretch of Lux shampoo
from its parent soap.
There is a need for such consistency in sub-branding as well. For
instance, the ‘Budgetline’ television series has more in common
with Videocon’s personality than ‘Bazooka’. Does the ‘youthful
and glamorous’ image of India-Today Plus fit in wit: the
‘mature and politically inclined’ image of the parent? This in
effect is a question relating to image fit.
Besides having image fit, if there is no business fit the exten-
sions are likely to fail. For instance, extensions of Park Avenue
premium suiting into men’s toiletries had image fit. But men’s
toiletries itself is a very small market (in India only 2 per of the
entire toiletry market comprises men’s product while in the
West it is 40 per cent). Thus if the Park Avenue men’s toiletries
range fails it should not come as surprise. Hawkins pressure
cooker extended to become masala. There is again image fit here
but no business fit. No single brand in India has been able to
corner ‘masala’ market for the whole country probably because
‘masala’ need regional receipes, which are different in different
parts of the country. Besides there is stiff competition from the
unorganised sector. In a similar manner, the extension of Liril
soap into talc and Ambassador shoe into shirting ran into
business-fit problems. In the first case, the talcum powder
market was found to be stagnant_ In the second case there was
too much competition.
Sometimes there is image fit as well as business fit but the
extension fails, because the marketing mix (product, price, place
and promotion) of the extension is not managed well. BPL,
Video con and Onida have all started diversifying into con-
sumer electronics at the same time. However, BPL has been
successful in more categories than Videocon and Videocon in
more categories than Onida because of the manner in which the
marketing mix was managed. Internationally Walker brand sells
at different prices as Black Label, Red Label and other sub-
brands successfully because it configures the marketing mix for
each of its variants distinctly besides managing them well.
In fact in several cases of brand extension success and failure,
the marketing played as important a role as other issues
mentioned.
Unrelated Extensions
Image fit and business fit are important in unrelated extensions
as well. But here the image of the organization itself is as
important. In some way successful unrelated extensions are
closely linked to the history of the development of industry in
India. This is demonstrated by the growth ofTata and Godrej
brand in the past. Both Tata and Godrej have been among the
first few Indian brands to be known to the consumer. Besides,
the commitment of Tatas to quality and employee welfare
(TISCO) and Godrej to product innovation (use of vega table
oil instead of animal fat for making soap) is well known. When
Tata branded salt or when Godrej branded safe they were
among the first to do so. Thus unrelated diversification is more
likely to be successful if the brand possesses
a. early entry advantage
b. quality image
c. respected family or organizational name.
The unrelated diversification of Wipro is of more recent origin.
Wipro started with vegetable oil and successfully moved into
computers. (WIPRO means Western India Vegetable Products.)
They were equally successful in their forays into lighting and
soaps largely due to organizational commitment. Both lighting
and soaps businesses need extensive marketing investments
(brand building, distribution,etc.) and without organizational
commitment Wipro would not have fared well in either
category. It may be worthwhile to note that Wipro is currently
running a corporate campaign on the theme “Applying
Thought” in an attempt to probably ensure that all its products
are perceived as offerings which are offered with great care and
commitment.
So we can say that
Brand extension, to be successful, needs: (a) organizational
commitment (b) image fit or consistency of brand personality
between the parent and the extension (c) business fit (d) deft
management of the marketing mix of the extension and (e)
relevance to the consumers.
Now after discussing the brand names and brand extensions let
us discuss the sub brands
Nurturing Sub-brands
As Competition intensifies in the Indian context, marketers are
trying to stretch, successssful brands into extensions in related
and unrelated product categories. The widely held belief is that
the image, trust and goodwill of a brand could be extended
new category in the hope that it would trigger off positive
associations among the target segment.
Ries and Trout, the gurus of the positioning concept, warned
marketers about brand extensions decades back. Studies in
developed markets - revealed that brand extensions have been
just a myth with regard to financial bottom lines. David Aaker
who is well known for his work on building brands, advocates
that managers should avoid vertical extensions whenever
possible, within the same product category consisting of
different offerings, in one of his recent articles. Closer home,
Hindustan Lever, Colgate and Proctor and Gamble are some of
the top companies which. have consistently used extensions
within the same category, and some of these have been quite
successful.
Though there is some literature on the Indian context which
seems to suggest that an extension would need as
much of advertising support as a new brand, some companies
pursue extensions. The framework advocated by Aaker could be
useful to Indian marketers (product and brand managers) who
may perpetually be in a “to be” or “not to be” dilemma
regarding these extensions. The distinguishing aspect of the
framework is that it leverages on the cumulative equity of
brands built up over a period of time, without going over-
board on extensions. It prescribes optimal ways in which
marketers could plan extensions.
Why are sub-brands necessary?
A sub-brand is a mother brand plus an additional brand name.
Lifebuoy Gold, Junior Horlicks, and Cadbury’s Perk are
examples. Sub-brands are essential because:
i. A company may introduce a new offering for a new
BRAND MANAGMENT
segment, and hence differentiation is required with the
reassurance of the mother brand (Junior Horlicks).
ii. A brand may become staid and may require a contemporary
orientation with the tried and trusted mother brand name
(Pond’s Dreamflower Magic).
iii. A brand may enter a downscale market and the mother
brand may be perceived as expensive, or the brand may
want to introduce a sub-brand to compete with a number
of regional brands (Reno from Sintex water tanks). Though
Reno is advertised as a separate brand, it is advertised as
“from the manufacturers of Sintex”. I
iv. When a company has a string of offerings within a product
category, there is a need to develop an identity for each
offering (Cadbury’s Gold, Perk Picnic, 5-Star to name a few).
v. A brand may want to move to upscale markets but may
find that its equity is not upmarket, though some amount
of reassurance in terms of product acceptance has been
achieved by the brand (Video con’s Challenge Bazooka).
vi. A brand may want to address different consumers within
the same psychographic segment. Close- Up is a toothpaste
positioned towards fun loving, vibrant youngsters. As there
is brand proliferation within the category and within the
sub-category of gel, there is a need to address different
kinds of needs, real or perceived, in the same psychographic
segment. While gel as a product variant has been accepted by
youth, Close-Up Renew and Colgate Stripes address the
different needs of the same segment.
vii. When a brand attempts to develop different kinds of
imagery for a new segment, it could use a sub-brand (India-
Today Plus). This may look a bit contradictory in terms of
brand personality in certain situations. The mother brand in
the example (India Today) has a different kind of
personality as compared to the extended sub-brand (India-
Today Plus). The target segment is also different. Though
there is an apparent image gap, this combination could also
be attempted in certain product categories. In the bike
segment, Bajaj’s has a distinctively different personality from
its Caliber, which was positioned at younger consumers
based on life style associations.The discrepancy in the
personalities should be considered based on the specific
product category. A magazine is different from a bike in
terms of consumer behaviour. Image may play a significant
role in magazines, but in a bike the imagery association is
one of the many factors considered by the buyer, it is
important for the respective target segment, but not
sufficient.
viii. Sub-brands are useful when the brand, especially a leading
brand introduces an innovative offering (innovative in this
context is pioneering the product in a specific market).
Philips created a new sub-category audio system with its
Powerhouse sub-brand. Johnson and Johnson’s Kids is
another example. J & J has had a strong association with
baby products and a sub-brand will create a new niche in the
minds of consumers (though Kids is not a pioneering
brand in the category).
39
 ix. When a well-known brand wants to upgrade a loyal base of
BRAND MANAGMENT
consumer to a better offering, sub-brands could be useful.
Surf, after establishing it in the detergent market, introduced
Surf Excel and Surf Excel Power to upgrade at least a cross-
section of Surf users to the updated offering. It is
interesting to note that Hindustan Lever chooses a new
brand and not a sub-brand for a downscale offering for the
lower end to counter Nirma (Wheel).
x. Sub-brands are useful to ensure that consumers are not
confused especially when a company makes an entry into a
new product category. BPL entered the alkaline battery
market with its ExceU, and later entered the traditional
battery category with its Power.
Aaker suggests that there are three kinds of relationships which
a parent Brand or mother brand could have with sub-brands,
and each of these relationships are useful in specific situation or
branding applications. A marketer has to note that research-
information on brand perception is vital before decisions on
sub-brands are taken.
The Mother Brand can be an Endorser of the Sub-
Brand
In this case the sub-brand is the more dominant of the two,
and has a major impact on consumer decision-making. The new
sub-brand is endorsed by the mother brand. The endorser
approach reduces the threat of cannibalisation to the mother
brand as the sub-brand does not make a dent into the share of
the mother brand. The endorsor strategy is also useful for a
brand to enter into lower-end markets(downward stretch).
Junior Horlicks is a good example for the endorser strategy.
Horlicks the mother brand has an equity among consumers and
this has been developed over a period of time. Horlicks is
perceived as a nutritious health drink for children and adults.
Decades back it was probably perceived as the drink for
convalescence. Junior is a sub-brand and this is targeted towards
children in the group of 1 to 3 years. Horlicks the mother brand
provides the reassurance (endorsement) to the mother
population, which is the buyer segment. The endorser route of
creating subbrands also minimises the damage to the image of
the mother brand.
Titan is considering a watch for a lower end to compete against
the Indian-made foreign (IMFQ) watches in the unorganised
sector. A sub-brand with Titan’s assurance a useful approach to
make an impact on consumers. The lower end offering context
could be an offering at around Rs. 150 to Rs. 250. Researching
the perception is vital because Titan has developed the Sonata
brand without the Titan association, as research revealed that
Titan is associated with premium ness. However, the TV
commercial for Sonata ends with the message that the brand is
from Titan-a variant of the endorser route!
An interesting aspect, which is to be considered, is the product
category that is under consideration. In the case of Horlicks,
endorsement is required as there is a considerable amount of
perceived risk associated with any product consumed by
children. In the other examples of computers and watches, the
perceived risk of a different nature it is concerned with initial
investment and the performance of the product. Hence, the
sub-brand could have the endorsement of the trusted mother
40
brand. This is important because this is the fundamental
difference between the endorser relationship and the co-driver
relationship between the mother brand and the sub-brand.
The Co-driver Relationship Between the Mother
Brand and the Sub-Brand
While this approach or the earlier approach can be used by a
brand to position an offering at the lower end of the market,
the basic difference lies in the fact that the mother brand does
not endorse the sub- brand (it is not considered so by
consumers, though they may be influenced by the mother
brand). It should be noted that the three sub-brand approaches
have linkages with one another, but in terms of consumer
perception the endorser route has a stronger impact. The
importance given to the mother brand in terms of support and
reassurance which could be through marketing research
techniques determines whether the mother is an endorser or a
co-driver or a driver.
In the second category of co-driver relationships, the mother
brand creates the familiar association, and the sub brand
develops an imagery which appeals to the target segment. The
imagery could be created through marketing communication (a
vital factor) and packaging to a certain extent. Lifebuoy Gold is a
good example where the sub-brand creates a persona which is in
tune with the target segment of young, college girls. The
irreverent modern young and fun-loving personality of this sub
brand is well supported by the familiar. Lifebuoy mother brand,
and the gentle white-cum-pink packaging differentiate the sub-
brand from the mother brand. The India- Today Plus example
probably attempts this route. Lifebuoy Gold maintains its core
proposition “hard on germs” while making use of the mother
brand as a co-driver. Mysore Sandal gold has been launched
recently, extending the mother brand Mysore Sandal.
The sub brand could create a distinctive persona for itself,
making use of the familiar mother brand. Colgate Total fits in
as an example in this kind of an approach. The Colgate mother
brand still has a major hold over the toothpaste market, and
this is a good enough reason for consumers to consider the
brand. Colgate Total has developed a persona using a well
known celebrity and hence the Total sub-brand is a co-driver .
Iodex has attempted this in its Power cream aimed at young
urban women. While the endorser approach may be more
appropriate for durables, the codriver appears to be appropriate
for consumables which depends more on the brand personality
for differentiation. Packaged tea as reflected from market studies
is an image driven category, and brands are using the co-driver
approach to create images around brands
The driver descriptor Relationship
In this approach, the mother brand is the driver providing the
basic motivation for consumers to buy the brand, and the sub-
brand provides the description of the product as a descriptor.
The description should not only be developed by marketing
communication; it has also to be emphasised in the physical
appearance of the product. Dettol Liquid Soap and Parachutte
Lite (the lighter coconut oil for grooming hair) could be
examples. In the durables category, the Maruti brand fits into
this approach with its Esteem and Zen variants. It is also,
interesting to note that Maruti 1000 which was very similar to
Esteem is not advertised vigorously by the company. Mercedes
introduced a brand C class to compete with Acura and Lexus in
US using this approach. The C class variant had a physical
appearance different its mother brand.
Too Many Sub Brands could be Counter Productive
While sub-brands offer an alternative to marketers for
harnessing the strength of the mother brand, Al Ries, one of
the gurus of positioning, warns market, that too many sub-
brands may weaken the mother brand, leading to an erosion of
market share.
Examples
• In 1988, American Express had 27 per cent of the market
share of credit cards. It started introducing a number of
sub brands-Senior, Student Optima, Optima Rewards plus
gold. True Grace, Optima Golf, Purchasing, Corporate
Executive, Miles. Its market share in 1997 was 18 per cent.
• Levi’s Strauss had about 27 different cuts of jeans with a
number of Sub brands. The last 7 to 8 years, the market
share has gone down from 31 to 19 per cent.
• Chevrolet introduced a number of sub-brands-Caprice,
Camaro, Cava1ier Corisca-Beretta, Lumina, Malibu, Metro,
Monte Carlo and Prizm. Currently the brand does not have
the same hold as it used to have over the market.
• Sunsilk, which promoted sub-brands like Fruitamins,
Nutracare and Black, a year back, is currently promoting only
the mother brand with its variants
• Brand managers of Titan, Surf, Close-Up, Colgate, Vicks
and Maruti may already be working on such challenges
posed by sub-brands.
Activity 5
Now that we have had a thorough understanding of sub-
brands, you have to list down at least 5 brands each which are
cannibalising their mother brands market share and also 5
examples of those which have gained more brand awareness
than their respective mother brand?
Exercises and Assignments
1. Make a list of brand slogans, analyze what each
communicates, and explain why the parent firm would
select it.
2. Develop a brand name, logo and symbol, slogan, package
and, if appropriate, character for a new product. Discuss
how the elements would change if the target market
changed. Candidates might include a men’s fragrance, a
laundry detergent, a battery-free wind-up flashlight, and a
sparkling fruit drink.
3. Pick two brands from the same product category and
compare their brand elements in terms of their
memorability, protectability, adaptability, meaningfulness,
and transferability. Mc Donalds vs Wimpys’ burger,
Aquafina vs. Bisleri water, Apollo vs. Goodyear tires,
Holiday Inn vs. Comfort Inn motels, Kingfischer vs.
Aristocrat beer, and Budweiser vs. Miller beer could be used.
4. Bring in competing brands so that their packages can be
compared. Discuss the reasons for the similarities and
differences between them, as well as the pros and cons of
BRAND MANAGMENT
each.
Playing The Name Game Again
by Bryan Culp
April 9, 2000
Let’s play a game. You’ve probably done this before. I’ll say
a company name, you tell me what that company stands for.
IBM. Microsoft. BMW. Coca-Cola. Verizon?
Got you on that last one, didn’t I?
If you haven’t already heard about this - the press release came
out Monday April 3 - you may be surprised to hear ‘Verizon’
was selected from among 8,500 candidates in a lengthy and
expensive process. In addition, more than $300 million will be
spent on marketing to support the new name.
Verizon, pronounced ‘vurr-EYE-zon’, is derived from the
clever combination of ‘veritas’, which means truth in Latin, and
‘horizon’. SONY has a similar heritage, being derived from the
latin word ‘sonus’ back in the days when everything that
company did dealt with sound.
Does this imply that Verizon deals with truth? Of course not.
It’s the phone company, or at least a phone company. More
specifically, Verizon is what you have after Bell Atlantic buys
GTE. I know what Bell Atlantic and GTE are. I understand the
logic behind Arch Communications, Lucent, Nextel, Nortel,
Teligent, Omnipoint, Qualcomm and Sprint. Even Wildfire
makes sense in its own way.
But what’s a Verizon? Other than to evade geography and
escape the Ma Bell connection, what is the added value? If
those, admittedly good reasons, were all, why didn’t the
decision-makers simply stick with GTE, the more inclusive
name of the company being acquired? Allied Signal morphing
into the new Honeywell, Norwest into Wells Fargo, and
Nations Bank into Bank of America all went that route, taking
advantage of the brand equity we must assume was part of the
purchase price.
These questions are especially important because Verizon must
reach out and connect with the masses, not simply a select
group which essentially guides the masses, as is the case with
the merger-happy drug companies. This means that when
Vodafone Airtouch merges its wireless operations with that of
the combined Bell Atlantic / GTE, the newly named Verizon
Wireless will go head-to-head with AT&T Wireless, Sprint PCS,
Nextel Communications and Voicestream, as well as the
wireless combination of SBC and BellSouth announced April 5.
Let’s start with the fundamentals and imagine why names
matter. Why does your name matter? Well, your name repre-
sents who you are for people that know you, or at least know
of you. As people get to know you, or hear about you, they
associate certain emotions and images with the collection of
phonetic sounds that make up your name. That’s why your
name could mean different things to different people - and
probably does. Your name is also one of the first things you
tell strangers if you have any interest in interacting with them.
Moreover, because how we think is so influenced by the norms
of the society we live in, how our names sound, even how they
41
 look written, carry with them a certain feeling before we, the
BRAND MANAGMENT

people our names are supposed to represent, even enter the

picture. Yes, this means we are often pre-judged by the associa-
tions our names conjure up even before someone has met us.
Companies are also pre-judged. Think back to the first moment
you heard the name ‘Verizon’. Did you think about it at all? If
so, what was your immediate thought? You don’t know what
the company looks like. You don’t know whom the company
hangs out with. All you have to go on is the company name,
those three syllables chosen for greatness out of 8,500 group-
ings of sounds.
Companies are inherently different from people in three crucial
ways that impact the naming process.
1. Companies, or at least the good ones, tend to be based on
certain core competencies which essentially carve out their
market positions. Their names either capture their positions
from early on, think IBM, or come to represent their
positions, think Toyota.
2. Companies, unlike the vast majority of people, usually have
marketing budgets in order to cultivate their brand names
and thus reinforce these positions. Think Coke and Ford.
People know these companies and their products, yet the
marketing continues.
3. It is generally assumed that being able to hold on to this
position, or deftly move to a new, more profitable one, will
improve the company’s long-term financial prospects. Think
AT&T. It owned the phone company position; now it
wants to be the infrastructure, if not the content provider,
for all your communication and entertainment needs.
Back to Verizon and why should we care. Ultimately, when you
have a company that large, willing to spend that much money, a
name with almost any backstory probably won’t doom the
company.
On the other hand, I feel in my gut that the people in charge are
missing a strategic opportunity. Companies such as Ford,
Toyota, and Wells Fargo could grow into their names because
they were named in the early moments of their industries.
Leaders at the companies that became IBM and WorldCom
took another approach. They chose aspirational names. They
looked into the future and asked, ‘Who do we want to be?’ and
then they went for it.
Bell Atlantic should have used this naming process as a chance
to stake out the area they aspire to dominate, as well as how
they plan to do it, meaning their positioning. Verizon, ‘truth in
the horizon’, doesn’t do it for me, doesn’t establish who they
are and what they do.
http://www.marketingprofs.com/2/verizon.asp
Notes

42

LESSON 7:
CO-BRANDING AND CORPORATE BRANDING
Objectives
The learning objective: after this lecture you should be able to
understand:
a. Co- Branding : Its meaning and purpose
b. Corporate branding: Why is it important
Co-Branding: Is It Right for You?
Pick up any newspaper these days, and more than likely, you’ll
read yet another story-if not dozens-about two brands
jumping into relationship mode. Not simply of the
promotional “Happy Meals” variety, but of the “mating for
life” sort.
“Co-branding,” as it’s called, is running rampant with no
apparent signs of slowing, even given the cautious economic
forecast. In fact, the need for overnight and innovative growth
strategies seems, if anything, to have fueled its popularity. What
faster way to gain critical mass, catapult into unstaked territory,
or refresh a tired image, than through an instant association?
Given this profligate coupling, the questions that should be
asked are, “Is faster better?” and most important, “Is a new co-
branded relationship ultimately good-or bad-for the brands
in play, in terms of brand equity?” Is the association a
strategically sound one, strong enough to sustain time and
scrutiny, or is it simply a short-sighted and potentially harmful
answer to increased competitive challenges?
Perhaps a good way to sort through this co-branding mania is
to think about judging the merit of a co-branding venture the
way you might judge those traits that make a marriage success-
ful. My wife once quipped that the best marriages are based on
“interlocking neuroses.” The steadiest relationships are those in
which both parties are allowed to maintain their individual
identities, but in a way that complements and helps bring out
the best in the other-all in a mutually beneficial and compatible
way.
Finding the Right Partner
It’s certainly a good place to start when it comes to assessing the
potential co-mingling of two recognized brands. First,
obviously, is self-awareness-a keen understanding of your
brand’s identity. You’ve got to know who you are and what you
are known and trusted for before you can determine a natural
partner. Smart brand managers also realize self-awareness allows
you to know who and what you could be.
Then, for a brand marriage to succeed, each must bring those
appropriate “interlockable” strengths and assets to the table,
and likewise, each must be flexible enough to commit or
abdicate authority in certain areas.
Most critical, each must bring complementary and interlocking
end benefits to the consumer-benefits that intuitively “feel
right” and work together in concert on both the rational and
emotional levels. These benefits, when combined, provide
BRAND MANAGMENT
increased value to the consumer and a greater degree of
relevance.
After all, at the heart of all well-managed brands is a simple
promise to the consumer to deliver on the expectations of what
the brand stands for. Enhance this promise-and its delivery-and
it’s win-win. The merged brands will discover that, as a couple,
they’ve expanded their sphere of influence and gained competi-
tive advantage. Consumers will find, quite happily, that one
plus one can actually equal three when two brands they’ve relied
on as solo players meet their needs and desires better than ever
before.
A Fruitful Relationship
By way of example, consider the successful marriage of
Starbucks and Barnes & Noble. Starbucks has definitely created a
well articulated brand for itself and it realizes it’s about more
than just coffee. It’s about sociability, an experience reminiscent
of the dolce vita coffee house culture-an inviting and appealing
“place to be.” Barnes & Noble venues, more than merely
bookstores, are welcoming and social places in which to browse,
to relax, to partake of a cultural experience-and now, to do so
over a comforting latte. The end game: compatible user groups,
complementary brand personalities, and enhanced end benefits
for the consumer. They’ve been able to capture a market and
differentiate themselves more than any of their respective
competitors.
The same can be said for the pending alliance between Starbucks
and Microsoft with the offering of wireless Internet access in
Starbucks locations. The benefit, again, for the socially oriented,
is a familiar community environment in which to access your
extended community. First mover advantage-totally connected
customer. (If you’re thinking bigamy here, don’t. The world of
co-branding has a totally different and publicly accepted code of
fidelity.)
Also appropriate to me are Wal-Mart and AOL: a strong
marriage that exhibits an understanding of America’s shopping
mall culture-online and off. Another shopper’s dream team:
Amazon and Toys R Us. The new and the old economy
together for the fast relief of harried parents everywhere. For
“fuel yourself ” road warriors of every age, McDonald’s and
Coke, Haldiram Chips and Coke, Citibank credit cards and
Indian Oil Company make a nice match. And looking at
Hindustan Times and Radio City, any companies that merge to
ease the effects of the common cold have got to have the
consumer’s best interest at heart.
An example of brands that took the time to look at themselves
carefully before tying the knot are Filmfare magazine and
Parachute Oil from Marico. After analysis, they recognized this
was not a match bound to work. Trying to combine incompat-
ible brand personalities can only send confusing messages to
the consumer.
43
 And perhaps the most telling example of the need to know
BRAND MANAGMENT
yourself and what assets you bring to the party before you
jump into a relationship is the dot-com partnership explosion
that preceded the dot-com implosion. Internet speed may have
its place in the new economy, but not at the expense of some
solid brand architecture work. Before all of that venture capital
money was spent, these brands should have spent some time
defining themselves, their audience and the benefits they
provided.
As the marketplace continues to challenge even the most robust
players in the areas of growth, differentiation, and wallet share,
it will become increasingly difficult to resist the lure of marrying
for money. Remember another fundamental rule of branding:
it’s easier to destroy a good brand than to create one. The prizes
for the winningest co-branded relationships will go to those
who follow these tried and very true rules: Know who you are;
know and respect who you’re partnering with; and do it as
much for the consumer as for yourself.
Tips for a Lasting Relationship
Whether the marriage is made in heaven or the marketplace,
don’t take your vows unless you know:
1. Have you looked around enough?
• What are the criteria/guidelines to evaluate and support
the decision to partner or not?
2. Will you get as much as you give?/Will it bring out the best
in you?
• What is each brand’s relative contribution to the
partnership?
• Will the partnership enhance your brand?
3. Who’s going to wear the pants in the family?
• Is the relationship dominant, shared or endorsed?
4. How much can you still get on the side?
• Exclusivity is not required-pursue additional options
that would not be inconsistent.
• Make sure your name and presence will be felt across all
touch points.
5. Will you grow old together?
• Define the scope and duration of the partnership.
• Maintain an active leadership role in the marketing
execution to ensure a better outcome.
Now that we have studied what is Co-Branding let us discuss a
few examples to get a better insight.
Domino’s Pizza Co-Branding
44
Domino’s Pizza Co-Branding is a program designed to link
Domino’s Pizza stores with new or existing convenience store
locations. This program utilizes a complete Domino’s Pizza
delivery and carry-out store - no express concepts here. If you
have an existing c-store location and would like to explore what
Domino’s can deliver for you, please read the information
below and contact our Store Development Department today.
How the Program Works
Domino’s operates its co-branding program through existing,
local Domino’s franchisees (some franchise opportunities exist
in specific geographic areas). These franchisees negotiate a lease
with the convenience store operator to run a full-scale Domino’s
Pizza operation within or adjacent to the convenience store. The
convenience store operator pays no franchise fees and the
Domino’s franchisee is responsible for staffing and running the
operation.
If you meet the minimum requirements below and are
interested in pursuing a co-branding relationship with
Domino’s Pizza, please let us know.
Minimum Requirements
• Four or more MPDs
• 100,000 gallons per month
• $40,000/mth inside sales (less lottery)
• 750 sq. ft. of lease space
• Price sign and building signs
• Drive-through window preferred
Co-branding occurs when two or more brand names function
together in creating a new product. Examples of co-branding
range from credit cards to cereal to automobiles:
AT & T Universal Master Card
• Citibank/American Airlines/Visa Card
• Healthy Choice Cereal by Kellogg’s
• Coach edition of the Lexus ES series
• Eddie Bauer edition of the Ford Explorer
• Water by Culligan GE Profile Refrigerator
• Pillsbury Brownies with Nestlé Chocolate
• Braun/Oral-B Plaque Remover
To see Co-Branding on websites
Visit: http://msdn.microsoft.com
A genuine co-branding campaign has each company that is
involved consistently focused on achieving the following goals:
• Respond to the marketplace’s expressed and latent needs.
• Leverage one’s own core competencies.
• Create a new product to increase corporate revenues.
• Increase product salience to the consumer.
After studying Co-Branding let us discuss Corporate
branding. Its importance and implication on other brands.
Creating a Powerful Corporate Brand
Nothing touches the customer more than how he or she
perceives your corporate image. This fundamental perception
not only determines whether the customer will conduct
business with you, it also provides competitive advantages,
increase employee morale and loyalty, and a future direction for
the organisation.
Developing a powerful corporate brand is a circular, continuous,
five-phase process that can be applied at any stage of an
organisation’s development. The five phases are:
• Preliminary Audit, Research and Evaluation
• Analysis, Strategy, Planning and Development
• Creative Exploration
• Refinement and Implementation
• Monitoring, Managing and Marketing of the Corporate
Image
A Qualitative Process
Part of the initial process comprises qualitative interviews with
internal and external audiences. The internal interviews are
conducted at all levels of the organisation, from frontline staff
and backroom support personnel to senior management and
the Board of Directors. The interviews with external audiences
will include key customers, end users, joint venture or other
business partners, shareholders or other stakeholders, suppliers,
distributors, retailers, prospective customers and partners,
government officials, senior media people and other outside
influencers, competitors, and members of the general public.
The objective is to gain an understanding of the market’s
perception of the organisation by its customers, partners and
competition, and to contrast these perceptions with those held
by its own employee and management staff. Another aim is to
identify the organisation’s internal willingness and current
acceptance levels for change.
The interview process answers these key questions:
• How is the corporate image being portrayed and projected
today?
• How is the organisation perceived by its key internal and
external audiences?
• How does the image of the organisation compare with
those of its competitors?
• How does the image of the organisation compare to the
image desired by management?
• Will the current corporate image enable the organisation to
reach the goals and objectives set for it over the next three to
five years?
By starting the corporate brand development process with a
review of the existing corporate brand perceptions, the
organisation has a clear view and understanding of where it is
today, an important criterion when trying to decide how one
wants to be perceived in the foreseeable future.
From here, you can conclude it is a matter of relatively simple
steps to create a well-defined corporate brand positioning
platform that is supported by the core attributes of the
organisation and a series of strategic image marketing objectives
that will help to guide future business directions and brand
development.
Your corporate brand image needs to be thoroughly thought
out, planned, nurtured, executed, monitored and, when
necessary, modified. It’s the organisation’s most valuable
BRAND MANAGMENT
commodity and deserves to always be treated as such.
Let us have a look at this article about Enron as a Corporate in
India which could not be successful.
Corporate Ethics, Corporate Culture and Corporate
Image
Enron. HIH Insurance. OneTel. WorldCom. Aggressive
accounting procedures. Corporate governance. Business
honesty. Corporate reputations being destroyed. Share prices
dropping at the first hint of any financial shenanigans.
These are the headlines and the key business stories of today.
And they all relate to one critical management subject -the
Corporate Image.
Every organization has a corporate image, whether it wants one
or not.
When properly designed and managed, the corporate image will
accurately reflect the organization’s commitment to quality,
excellence and its relationships with its various constituents:
such as current and potential customers, employees and future
staff, competitors, partners, governing bodies, and the general
public.
As a result, the corporate image is a critical concern for every
organization, one deserving the same attention and commit-
ment by senior management as any other vital issue.
Managing the Corporate Image
The fallout from the Enron collapse continues to impact the
global business community.
The sad fact is that it appears that it wasn’t the business concept
that Enron got wrong; it was the corporate culture that was
wrong. The impact now affects Andersen, the accounting firm
that audited and appears to have approved the methodologies
used by senior Enron executives to “cook” the books and to
pad the financial reports given to shareholders, the investment
community, and employees. It also affects numerous other
companies as the investment community is acutely attuned to
not getting caught out by the “next Enron.” Even stalwarts
such as General Electric have seen their stock
prices dragged down by worries, concerns, and questions about
how “aggressive” the company has been in interpreting financial
reporting regulations.
Not surprisingly, the issues of ethics, business ethics, and
corporate ethics, have suddenly become key topics of conversa-
tions and the subject of numerous articles in the business
press. Unfortunately, the suggested solutions often mentioned
- more rules and regulations, more oversight entities (both
internal and external), and clearer reporting of financial transac-
tions - will merely treat the symptoms of this current
managerial crises but will do little to remedy the underlying
condition.
The true way to fix this problem is to understand how to create
the right corporate culture through the corporate image
management process.
As I wrote in four years ago “Corporate Image Management: A
Marketing
Discipline for the 21st Century,” corporate image management
45
 will help senior executives to deal with another of the critical
BRAND MANAGMENT
issue facing management today: corporate ethics.
As The Economist asked in 1995, “how can a company ensure
that its code of ethics is both followed and enforced?”
The sure-fire way is to develop a corporate culture that not only
emphasizes ethical behavior, but a so punishes and ostracizes
those who do not live up to the desired standards. Very rarely
can a single employee engage in unethical behavior without
other employees being “in the know,” or at least suspicious.
A corporate culture, communicated and spread throughout the
organization, that exhibits zero tolerance for unethical behavior
and that is intricately tied to the corporate image is
management’s best form of assurance against this deadly
disease.
This works a whole lot better than having internal policy police
and a bundle of quarterly forms submitted, analyzed, and then
stacked in some compliance officer’s cupboard.
Companies that win the marketing battle are those who have
the internal strength from knowing who and what they are, and
where they are headed - three of the most critical elements for
managing the corporate image.
The underlining principle of my marketing philosophy is “if it
touches the customer, it’s a marketing issue.™”
Nothing touches the customer more than how he or she
perceives your corporate image. This fundamental perception
will be the major factor that determines whether the customer
will decide to conduct business with you and, more impor-
tantly, enter into a long-term and mutually rewarding
relationship with your organization.
There may be no greater marketing issue than corporate image
management in today’s increasingly competitive markets.
Likewise, there may be no greater methodology for heading off
potential business ethics and corporate ethics problems in your
own organization than through re-evaluating your corporate
image management process.
And it’s not just in the area of financial manipulation that
business ethics in recent years has gone astray.
How many people justify such so-called guerilla marketing
tactics as releasing highly skewed market share data? Or the
buying of market share and then claiming that market share
actually grew, as if such growth had been organic. Or how about
the stealing of someone else’s idea? Or making a product
announcement of a future product when the product is little
more than a concept on the drawing board? The latter even
resulted in new terminology in the IT industry - vaporware.
Unfortunately, as marketers we are often no less dirty in our
shenanigans and tricks than our colleagues in the financial
department have been. Are the dirty tricks of politics now
firmly embedded in the business world? Is the business
community about to sink to the same level of distrust as
politicians? It is indeed a slippery slope that we collectively
appear to be on.
What can you do to ensure that your company, department, or
work group abides by the highest business ethics?
46
If you’re the CEO, Managing Director, or other senior leader,
you need to create and manage the right corporate culture.
If you are a department head or work group leader, you need to
“walk the talk,” - in your personal life as well as your corporate
life.
Why?
If you brag about all the copyrighted music you downloaded
for free from Napster, what message does this send to your
subordinates and colleagues?
If you take your spouse or significant other out to dinner and
put it on your corporate expenses, what message does this
convey?
If you lift materials out of some one else’s presentation, or
download data off the Internet without crediting the source,
what other actions does this suggest as allowable?
Ethics is not a gray issue.
If you have a single seed of doubt about what you are doing,
or planning to
do, is wrong, it probably is!
As Dr. Martin Luther King wrote:
“Cowardice asks the question - is it safe?
Expediency asks the question - is it politic?
Vanity asks the question - is it popular?
But conscience asks the question - is it right?
And there comes a time when one must take a position that is
neither safe, nor politic,
nor popular; but one must take it because it is RIGHT.”
What does this have to do with marketing?
Everything
Because, “if it touches the customer, it’s a marketing issue.”
Your business ethics will eventually be directly reflected in the
way you interact and do business with customers, suppliers,
channel partners, and others.
Conducting business the RIGHT way is the ONLY way. This
principle should be
a nucleus of your marketing strategy and corporate culture.
As Nelson Mandela said, “the time is always right to do right.”
If you don’t, then your organization could well be on its way to
a future induction in the Hall of Shame & Failures.
Today’s Most Important Managerial Issue
We live in a world of change. As a matter of fact, the rate of
change today is faster, and affects a larger portion of the earth’s
population, than at any other time in history.
Yet, despite all this change, there is still one constant. And this
is that marketing excellence and a strong corporate image are
firmly linked. You cannot have one without the other. At least
not for very long.
Because, at the end of the day, your competitors can mimic and
better your product offer. They can create stronger distribution
systems than yours. They can outspend you in advertising and
promotions. And, of course, they can always beat you up on
price.
But the one thing a competitor cannot mimic or copy is a well-

BRAND MANAGMENT
defined corporate personality.
As I always advise my clients, “if it touches the customer, it’s a
marketing issue.” And nothing, nothing touches your custom-
ers more than how he or she perceives your corporate image.
This makes the management of your corporate image one of
the most potent marketing and management tools available for
senior executives to use in ensuring the viable execution of your
corporate vision
Source - From the book “Corporate Image Management: A
Marketing Discipline for the 21st Century” by Steven Howard.
Contributor - Steven Howard
Notes

47
BRAND MANAGMENT
LESSON 8:
BRAND ASSOCIATIONS AND BRAND IMAGE
Objectives
The learning objective: after this lecture you should be able to
understand:
a) Brand Associations: Why is it important for parent Brands
b) Brand Image: How it works and helps in maintaining brand
Identity
After studying the various terms related with Branding it is very
important to discuss Brand associations and brand image. As
every effort put in by the company is to build up the brand
image. All the money put into branding if it is not realized by
the consumer it is all a waste. So it is very important for you to
understand the importance of brand image and how to build
up.
Types of Brand Associations
Brand Associations can be;
• Qualitative, e.g. it feels good after having a Pepsi.
• Quantitative, e.g. a little Axion is enough to clean a large
number of utensils.
• Absolute, e.g. Wheel removes stains on clothes.
• Relative, e.g. Nirma does not provide whiteness like Rin
does
• Negative, e.g. Nirma powder fades colored clothes.
• Positive, e.g. Frooti has a good taste.
• Generic, e.g. any drink in a TetraPak is a Frooti, any bottled
water is Bisleri, and any chocolate is a Cadbury.
Brand associations get created or expressed as per the consum-
ers. It is difficult to ask them to express in any particular
manner. However, the contents can be controlled to an extent
by marketers. And in this context advertising has a major role to
play. BA, quite often, is the brand’s advertising managers try. So,
a marketer who fails to keep the memories fresh takes an
enormous risk.
Five Ways of Help
You have to be very careful about building Brand Associations
as it helps in five important ways.
Basis For Extensions
This has been discussed earlier in the chapter covering brand
name. Let us have a look at some examples.
• Savlon was first introduced as a brand of antiseptic liquid
which does not burn. It was then extended to the soap
category.
• J & J launched toilet soaps for kids under the brand Kids
fruit flavours. Then they introduced talc.
• Fair Glow was introduced as the first fairness soap. Then
cream was launched.
• Clinic was introduced as a shampoo first. Then a hair was
rolled out under the name.
48
• Kellogg’s corn flakes was followed by biscuits.
All these are examples of exploiting BAs in another category.
Please note that as a reason to choose a brand is created, reason
for not choosing another brand is simultaneously born.
Differentiate
You must have studied in advertising course that it plays an
important role in demonstrating the difference. It involves
comparison and the same has to be done. One would have to
contest with AMI (Advertising agencies Association of India)
or MRTP (Monopolies and restrictive Trade Practices) if a case is
lodged. Some examples are given below:
• Savlon showed in the ad that it did not burn (like Dettol)
although in the ad the character expected it to.
• Captain Cook salt exhibited in the ad that its salt flowed
freely unlike the other salt (Tata salt).
• Whisper demonstrates that it absorbs more/effectively
(compared to other brands). It is supported through the
gel formation concept.
• Dove is not a soap.
Wide Reason To Choose
Bumol is for burns. No other brand comes to the mind for the
same problem. Krack cream is for cracks on the feet. No other
brand comes to the mind for it. Further, all examples for
‘Differentiate’ have a reason to loose.
Ilicit Feelings
Close-Up provides confidence as it ensures freshness because of
which one can interact with others at a close distance.
• Good Knight Expert helps me ensure that my child has
sleep without disturbance.
• Santoor helps me look younger.
Evoke Favourable Attitude
• Cadbury’s Dairy Milk is for all age groups. I can have it too.
It would not be embarrassing if I am seen having it
• Femina is for modern and forward looking women like me
• Elle 18 is for the young, fast, and trendy
Forms of Brand Associations
Associations can exist across a range of specific parameters.
Based on the type of parameter, BAs can be classified. You can
see few good examples hereunder and think of few besides
these.
Product Category
Some examples in this context are:
• Microsystem detergent powder versus normal detergent
powder.
• Onjus is a juice.
• Surfmatic is for washing machines.
The classic example in this context is of 7 Up-the Uncola. This
approach has rarely been used with intensity in India.
Competitors
Some brands have used specific competitor in a subtle manner
to create a reference point for generating association. These are
mostly on tangible aspects. Examples are Mortein twelve hour
red mat (versus normal eight-hour blue mat-Good night),
Wheel detergent powder (versus Nirma-does not n. my hands),
and Captain Cook salt (free flow versus your favourite salt- Tata
salt). Just talking of the attribute/benefit would not have as
much intensity as it has when used against a strong brand. Care
should be taken that the real-life performance is no different
from the claim, else such a route could be the brand’s
Waterloo.A classic example for all times in this context is ‘We are
No.2. we try harder,’ by Avis car rentals.
Celebrity Personality
Brands are increasingly using it-Sachin Tendulkar for Visa, Pepsi,
Gillette, and Boost, Kapil Dev for Samsung, Rapidex,
palmolive and S Kumar’s, a host of cricketers for Pepsi, and
Saurav Ganguly and Rahul Dravid for Britannia.
Overuse has led to a feeling of ‘me too’ in the cola market.
Aamir Khan is used for Coke, Salman Khan and Sunil Shetty
Thums Up, and Sharukh Khan for Pepsi. BAs should help a
brand to stand out and thus revitalize it. If all competitors
follow the same formula, differentiation reduces. It then boils
down to which star is more appealing at that point of time.
Lux was one of the first to capture this parameter and Cinthol
has tried it often in the past. But consistency has paid off for
Lux in the crowded soap market, which has a lack significant
benefit differentiation. Well, consistency can become monoto-
nous leading to fast wear-out. So, Lux has been consciously
changing its models. As time progresses and new stars are born
they find their place in the Lux ad, from Hema Malini to Tabu.
Intangibles need to have a tangible evidence. Celebrity endorse-
ment is one of the ways to provide such evidence.
So we can say celebrity advertising are most likely to be effective
for:
• Lifestyle products such as premium watches, and brand
garments as in such cases the need is intangible imagery.
And the concept of celebrity is ‘intangible imagery’.
• A brand if its main competition is also not using
comparable celebrity.
• A brand if the celebrity used has the credentials for
BRAND MANAGMENT
endorsing the product (e.g. Sachin Tendulkar for
BOOST’the secret of my energy’).
• A brand in whose ad the brand is a bigger hero and not the
celebrity. The ad is for a brand and not for a celebrity. The
halo effect of celebrity has to be prevented in the story line.
• The brand message gets communicated and found to be
relevant.
While on celebrity advertising one need to touch on a celebrity
product-Kaun Banega Crorepati. ,Few questions come to mind
when thinking about KBC. What would have happened with
KBC if Amitabh Bachhan would not have been the anchor in
it? Why did ‘Chappar Phad Ke’ on Sony” Govinda as anchor
loose out? Was the cause the celebrity? Or was it the program
content? Or was it to do with who was first? Or was the cause
the channel-Star versus Sony ?
Price
Price is used to segment appeal value based on affordability and
heterogeneity in the marketplace. Mostly it is the lower economy
pricing that can be exploited. Some good examples in this
context are provided below. This association is a great busiiness
opportunity. Further, this can be effectively used if cost
structure can be re-engineered (decentralized product sourcing
could be a way out; another could be franchising).
Edible oils: Gemini, Goldwinner
Detergents: Nirma, Wheel
Toothpaste: Babool
You can note this opportunity exists for the entire category and
not just for a specific brand. The first mover has the advantage
but it can be effectively copied.
The reverse of economy pricing is also possible. Premium
pricing has to be supported by a valid/credible reason. Scotch
whisky is not normal whisky and justifies higher price point.
Much better quality can also be used to support this, like Ford
Ikon and Hyundai Accent passenger cars.
Value for money perception can also be created through
characters like Surf ’s Lalitaji (Surf ki khariddari mein samajhdari
hai).
Good Knight twelve-hours mat last much longer than the
normal eight-hour mats, and hence provide significant addi-
tional benefit leading to justification of a higher MRP. Such
pricing appeals also go further in terms of defining user profile,
which is also a BA parameter.
Place of Origin
Certain places have some speciality and these can be converted
into focused BA. Darjeelingi/Assam are known for great quality
tea. Some such international examples are as below:
France - Fashion, Perfume, Champagne Russia - Vodka
Italy - Shoes, Leather goods Germany - Beer,
Quality automobiles
The only fear with this is that these could change over long-time
period or other places could catch up. There has been no
noticeable use of this parameter in India.
49
 Use Of Product/Service
BRAND MANAGMENT
Some examples are:
Any-Time Money (for banking services)
Beer even in monsoon (ad for kingfisher in 2000)
Monsoon time is soup time (ad for maggie soup in 2000)
For making ice quickly (Whirlpool refrigerator in 2000)
These usage occasions provide association opportunities and
though promoted by specific brands are actually opportunities
for almost all brands in the concerned category. Whoever does
it first loudly steals the association.
Measuring Brand Association
The efficiency of BA research depends on seven key aspects
listed below:
• Stimulus material available (concept statement or ad which
could be a storyboard, animatics or finished).
• Language used and its appropriateness among target
respondents.
• Research technique(s) used.
• Newness of product concept under study. Understanding
existing state of affairs in the minds before exposing to
stimulus material.
• Communication skills of respondents.
• Unbiased facilitation by researcher/interviewer.
• For existing brands or existing competition of new brands,
minds would already have BAs. Hence, in such cases
evaluation should include the following;
• Ascertain current state of affairs, without exposing
respondents to the new concept(s).
• Expose new concept( s).
• Ascertain response to new concept(s).
• Compare responses generated pre- and post-exposure of
the 1ew concepts(s) to understand effects.
You should remember that without having knowledge of BAs
pre-exposure, one is likely to link all effects observed post-
exposure to the concept. And that would not be true. History
(or past) has its effect in the consumers’ mind and we cannot
neglect it. If the measurement process is faulty, measures would
be inaccurate, and decision based on such measures may not be
the right one. So, beware and ensure research agencies design
research appropriately.
The Overall Research Process
The process is outlined as follows:
Round 1: Qualitative research to test new concepts/options, or
evaluate existing state of affairs in the mind. The scope should
include absolute evaluation as well as relative to pre-defined
competition. Options, if any, should be prioritized.
Appropriate techniques should be used. Irrespective of the
techniques, probing should be done in detail at appropriate
points of response generation. ‘Multiple why’s’ would help a
lot here.
50
Stimulus material should be in the appropriate language(s)
Consumers may be used to rewrite it so as to improve compre-
hension.
Round 2: Modify concept(s) evaluated in Round 1. If need be,
generate new one(s).
Round 3: Conduct Quantitative research and prioritize the
options. Identify the winner. Use research findings to modify it,
if required.
Qualitative Research Techniques
For Qualitative research you should involve focus-group
discussions, depth interviews, and observations. As the context
of BA exploratory, it is used extensively and frequently. BA
research involves ascertaining responses that:
• Exist in the form of thoughts, feelings, experience, and
attitudes
• Are present at the conscious or subconscious levels and
• Though at the conscious level, might not be forthcoming
as respondents might not be willing to express.
Respondents Might or Might not Express Everything
Openly.
It is a common observation in day-to-day life that people/
individuals (who are the respondents in the research based on a
particular selection criteria) are unable to express in
circumstances like:
• Giving reasons as to why they purchased a particular brand.
At times, they do not know the true reasons. I have used
Ariel, Tide and Surf. I have no issues with any of these, nor
does my maid. I would not mind using any of these
brands in the future. But still, I ask for Surf most often at
the outlet spontaneously by default. I don’t spend a second
thinking for the brand to buy. But why? I have no
convincing answer. Many consumers have the same state of
mind for certain brands, may not be Surf.
• What is good about the brand Lux? One might not have an
answer. One might never have thought about it, and it is
the first time that one has to, because of the question in the
research.
Such responses, if they exist, do so at the subconscious
level and not at the conscious level. What exists in the latter gets
expressed spontaneously unless the respondent is unwilling to
express it. People usually are unwilling to express certain things,
which are embarrassing.
This could involve a question like why do you want to look
beautiful, or you are dark why you do not use creams like
Fairever, or why you use Nirma most often although you
almost have Surf Excel or Ariel at home. On putting pressure,
the respondent might end up giving invalid justification or beat
around the bush or still keep quiet. This should be consciously
avoided by the researcher. Pressurizing technique as a consumer
research technique is not advised under any circum’tances.
At times, the research process (interview/discussion) might
have gone for so long that the respondent might not express,
resulting in faster end of the interaction. The researcher needs to
accordingly design research and pilot it before going live.
But to manage BA these hurdles need to be overcome. :, over
the years, researchers and psychologists have developed
techniques to enable this process of ascertaining responses
which respondents are unwilling or unable to express.
These do help greatly as per real-life experience. Whether they
completely solve the issues or not is difficult to answer. These
techniques are called projective techniques. These allow a
respondent to project himself or herself into a context which
bypasses the inhibitions or limitations of more direct question-
ing. Hence, the name of the techniques. It is human nature to
be willing to give uncomfortable comments about others, but
not about one’s own self or others who are one’s near and dear
ones.
These techniques hide the goal through the process ascertaining
responses. Caution has been taken so that there are not
confusing or make the respondents feel cheated at the end.
Some of the often used projective techniques are brie discussed
below:
Free Association
These include:
• Word association, and
• Sentence completion.
Word association:
This involves the following steps:
Respondents are exposed to a battery of brand names.
Respondents are then asked to express the first set of we that
come to mind.
(Before the brands under study are presented, a short warm
up/trial run is advised. Verbal expressions obtained help
capture spontaneous thoughts.)
After generating the associated words, the reasons for the same
are obtained.
Quantitative ratings are obtained for the test brand and its
competitor as to how well the words fit the brand through a
scale.(Fits very well,fits quite well, fit to some extend and does
not fit at all.
Sentence Completion
This involves the following steps:
• Respondents are exposed to one or more incomplete
sentences. (Warm up is advised,)
• They are then asked to complete the sentence.
For example,
People like Hero Puch because. . .’
A friend of your brother has just bought a washing machine.
He asks you what he should do to wash clothes effectively in it.
You would say, “You should. . . ‘
Picture interpretation
The steps are as below:
• Respondents are exposed to a picture with one or more
scenes. The latter are linked up in some manner if it is more
than one. Each of these has thought or speech bubbles like
in comics. These bubbles are empty.
• Respondent is briefed about the scene(s).
BRAND MANAGMENT
• They are then asked to fill the empty thought or speech
bubbles.
• Based on what is filled, respondents might be asked to say
why the character( s) would say or think or feel the way they
had stated.
This allows respondents to express how they actually feel by
making use of the characters in the picture. It is believed what
the characters are saying as per the respondents is what the
respondent would say if he/she would be that character in real
life.
Experience of Using Product
There are two ways of understanding this. One is spontaneous
and the other prompted. Prompted method involves
respondents describing the last time they used the product;
how they used it, the place, time and occasion of use, what they
did before use and after use, what went wrong and why, what
went right and why, benefits derived and miscellaneous queries
based on content of response given during the interview. This
should be done for both the brand under study and its
competitor. While researching for Tide, one can also get
responses for Ariel and Surf Excel. This will help to map the
differences in the use process and diagnostics. It will help
identify ‘better’ factors, ‘similar’ factors, and ‘weaker’ factors for
a brand and its competition. These factors also need to be
prioritized among the consumers in the same research. This can
help have a re look at the communication content as well as
product development guidelines.
To ascertain some of these experiences, different ‘use contexts’
or ‘benefit contexts’ can be exposed to respondents through a
brief story or the use of picture completion may be done.
Spontaneous process would capture small things which
respondent may be unable to recall or note during use. For
example, a dissatisfaction point with Rin may be that becomes
soggy and soft during use and hence gets over fast. Observa-
tion (recorded on a video or without) might indicate that while
Rin is being used it is left on the floor of the washing area and
is continuously submerged (partly or completely) in water, or
the soap case used does not have perforation/slits the base to
let water run out during or after use. Such factors could be
facilitating the softening process. One can then observe the
process with fresh/dry soap while controlling these factors. If
improvement is seen, the causal analysis gets direction. If it
does not, further exploration needs to
conducted like the formulation itself. Benchmarking would
need to be done by observing a similar process with similar
factors for the competitors. This can ultimately lead to things
like product development or customer education process about
best practices for washing, using the particular soap or similar
soaps or soaps per se.
Depending on the product category and its usage practices, the
observation research would have to be planned in detail. The
process cannot be similar for toilet soaps, deodorant spray and
sanitary napkins. All observations cannot be:
• Made at the spot (side effects of Anacin)
51
 • Made as the product use cannot be seen (sanitary napkins
BRAND MANAGMENT
effect of Band-Aid)
• Made within a short time-span as the use process and
efficacy would involve quite a long-time period (effect of
Cinthol three-day test, effect of lasting deodorant effect of
Rexona deodorant spray or effect of Krack cream).
Creativity, which should be practical, needs to be used based on
used context and expected efficacy time period. Things like
sniffing of mouth after hours for freshness due to a tooth-
paste, or sniffing of armpits/used clothes at the end of the day
for a deo product would be ideal to observe and note. These
things do not get verbalized by respondents; so the technique
has to play the role.
Decision-Making Process
At times, a detailed understanding of the process helps. One is
to dissect it and for each part, understand aspects like influencer,
time taken, information required, etc. For all we know the
process hardly exists in a case like-’My mother always consumes
Gelusil. We buy before it is almost over or is over. We do not
evaluate or consult. Gelusil has to be there and it has to be
bought if it is getting over.’
With the help of the consumers the process mapping should
be done. This is most advised for high involvement products
or close personal products. ‘Multiple-why’s’ may be used
Whenever appropriate.
Difference Between Brands
It is not always enough to ask, ‘What is the difference between
Brand X and Brand Y?’ to understand differences that exist in
the minds of the consumers. This concept of brand differences
can be better understood if one can ascertain, ‘how brand users
differ?’ This gets into the concept of brand personality. A range
of questions can be used together to understand this. It is
possible that a customer may be buying a brand because of its
packaging, i.e. brand looks and might not be consciously aware
of it. Hence, it might not be expressed by him/her overtly. The
suggested range of questions are as below:
• Questions related to personality.
• Give respondents a pair of brands (they are aware of) and
ask how they differ. Understand what makes the
respondent say so.
• Give respondents three brands (they are aware of) and ask
them to identify two that are similar. Then ask, why the
two are similar and the third is different.
• Give brands and ask for first and second preference. Ask
why the brand preferred first is so preferred. Also ask why
the first is preferred more than the second?
Multiple Why’s*
This can be used to move responses from the ‘attribute level’ to
the ‘benefit level’. Well, attributes lead to benefits and benefits
are the means to achieve desired ends. An example follows for
your better understanding:
Q: Why do you prefer Jet Airways?
A: Leg space.
Q: Why do you want leg space?
52
A: Physical comfort.
Q: Why do you want physical comfort?
A: Feel better about self.
Well, based on this, what would you prefer to be the BA for Jet
Airways?
Jet Airways is the preferred airline.
Or
Jet Airways is where you can get more leg space.
Or
Jet Airways is the place for ultimate physical comfort.
Or
Feel better about yourself in Jet Airways.
Which of these sound intangible? Which of these can be
copied? Which of these has greater creative opportunities for
developing communication? Which of these can better
differentiate even in the future or if customer-need
prioritization changes?
Quantitative Research Techniques
These involve personal interviews with the help of structured
questionnaires. Responses are obtained at two levels-
spontaneous and prompted. It is advised to get the
spontaneous responses first and then the prompted responses.
Quality probing needs to be done for the spontaneous
questions.
Spontaneous questions help us obtain thoughts, feelings, and
facts that exist at the conscious level in the mind. Prompted
questions aid getting responses for the aspects that exist at e
subconscious level. Further, spontaneous questions help
getting better diagnostics.
The spontaneous response questions typically are:
What thoughts come to your mind on hearing the
word………. (Brand Name)?
What is . . . (Brand Name)?
What do you particularly like about. . . (Brand Name)? What do
you particularly dislike about. . . (Brand me)? .
What is unique about. . . (Brand Name)?
Why do you use. . . (Brand Name) most often?
Why don’t you use. . . (Brand Name)?
Why do you prefer. . . (Brand X) over. . . (Brand Y)?
Why would you never use. . . (Brand Name)?
The prompted response questions typically are:
What are the key attributes/features/benefits of ... (Product)?
Here is a list of attributes/features/benefits of ... (Product)
which some other people like you have indicated. Which of
these are key according to you? Now, please rank each of these
in order of importance with rank one for the most import
attribute according to you, and so on.
Brand Image
The perception of your product or your brand by the
consumer.
Variety may be the spice of life, but not when it comes to
marketing your business-especially when you’re creating a brand
image to set you apart from the competition.
Branding is a way to help companies of all sizes achieve the
highest level of professional awareness. It’s also one of those
50-cent marketing words used by super-successful companies
like Nike, whose “swoosh” logo has become synonymous with
its brand.
This isn’t to suggest that you need big bucks to brand your
homebased business. Rather, you need your own “swoosh,” a
singular look that you use on all marketing materials, including
your letterhead, business cards, Web site and any signage.
It sounds simple enough, but it’s not, at least according to
Aaron Pratt, owner of Prattboy Dot Com, a Hayward, Wiscon-
sin, graphic design firm. “One of the biggest problems I see is
people start going nuts with desktop programs like Microsoft
Publisher,” says Pratt, who often counsels others on creating a
unified marketing look. “They think they have to use all the clip
art available, [so they] end up with a fancy hodgepodge of ideas
that on their own are OK, but together, don’t say anything
about their business. This is especially confusing for potential
customers.”
That said, just do the following:
1. Remember that one is not the loneliest number when it
comes to creating a consistent marketing message. Find one
look or message that describes your business and stick with
it.
2. Use the same color scheme, fonts and design throughout
your marketing materials, business cards, letterhead and
Web site.
3. Get a second, third and even a fourth opinion about your
idea-and get them from people who might be more
objective than your spouse or your mom.
4. Finally, put the rest of those fancy ideas in a folder.
Microsoft Publisher may be cool, but if you use every trick
the software offers, you’ll end up looking messy, not
professional.
Consumers perceive and accept many brands within a certain
trade group in different ways. By personifying a brand (How
would you describe brand X if it were a person?) we can find
out, that for instance consumers perceive brand A as a young,
impulsive, lively, attractive, energetic woman full of ideas. In the
same way could brand B be an elderly, conservative and relaxed
man. The brand can also have a completely inexpressive and bad
image. That is how brand C may not have any real personal
characteristics, slim, tall, unnoticeable and calm.
The image basically expresses a way of a consumer thinks about
the brand and the feelings the brand arouses when the con-
sumer thinks about it. On the basis of these characteristics,
which the consumer associates with the brand, the company can
build a competitive advantage for its brand.
What sort of image should our brand have?
Before answering this question it is important to take into
account several factors and market circumstances: company
goals, consumer wishes and expectations, trade groups and
several other groups. A company builds its brand image
BRAND MANAGMENT
through trade communication with its consumers. That is how
a company informs the consumer of what the brand represents,
what its values are, what the company is offering or guarantee-
ing the consumer, what its advantages are, its qualities etc. The
consumers interpret all obtained information and form a
subjective perception of the brand or its image
Why research the brand image?
Understanding a brand image is of key importance to long-
term management of a brand. It is also important how the
consumers formed the brand and what kind of relationship
was formed with the brand - what the brand means to them
and how they have accepted it. Understanding the relationship
between consumers and brands can help a company control its
successful brand positioning and the efficiency of advertising.
How do we research the image?
The brand image is formed in the long-term and represents a
non-conscious and “untouchable” area, which needs to be
researched using projective researching methods that help the
consumer to overcome certain obstacles and limitations as well
helping him to be inspired in the world of brand names. The
consumer does therefore not only focus on the brand, but
mainly on his experience with it and on its usual users. He
focuses on the opportunities, which are most suitable for the
specific brand and what sort of image the brand presents etc.
We are able to research and describe the brand from various
perspectives. We obtain many different associations, ideas,
benefits and people whom the consumer in some way connects
to brands, which need to be suitably and correctly interpreted. It
is important to define the key characteristics and values, which
are connected to a specific brand by the consumer. Relevant
findings show results of long-term management of a brand
and represent key dimensions on which the competitive
advantage of a brand is based
Weak Brand Image Hitting Indian Exports
Copyright © 2003 rediff.com India Limited. All Rights
Reserved.
Weak brand image and poor marketing continues to affect the
prospects of Indian exports to the European Union, a top
official of the European Commission said in Chennai.
“Indian companies exporting to EU need to further improve
their brand image and put more thrust on marketing to increase
export volumes,” Stefano Gatto, counsellor and head, trade and
economic affairs, European Commission, told a Round Table
on business with EU, organised by the Federation of Indian
Export Organisations on Thursday.
He stressed on the fact that European importers were highly
conscious of the quality of exports mainly in respect of fruits,
vegetables and other food products.
Besides health and safety standards, EU countries also measure
their imports against social standards like codes of conduct and
ethics, labour conditions and child labour practices, he pointed
out.
Gatto offered to help the Indian exporters by providing
information about EU importers, customs tariff structure for
53
 specific products and methods to get products certified under
BRAND MANAGMENT
EU regulations.
Titan to Tackle Flagging Brand Image
Times of India - May 29, 2002
New Delhi: Titan has embarked upon a multi-pronged strategy
to regain lost ground and revive brand image. This include a
launch of 300 new designs (against 100-150 normally) later this
year, revamping of136 exclusive retail outlets across India, a 10
per cent rise in ad spend from a stagnant Rs 26 crore in the past
couple of years and fine-tuning of distribution strategy.
The big boy of the Indian watch industry in the past, is
working hard to ensure top-of-the-mind customer recall.
For a couple of years now, foreign brands like Espirit and
Swatch have been taking away the fashion-conscious customer
away from Titan (in the over Rs 2,000 category).
At the bottom-end (sub-Rs 500), its Sonata range is seeing
cheap Chinese imports, the grey market and local assembled
pieces gobble up the pie. Somewhere in the middle, Timex is
swaying the young, sporty types away from its Fastrak.
Where has that left Titan? Admits Bijou Kurien, COO
(watches): “We earlier had an image of being a premium brand.
That has got dulled now and the Titan image has got diffused.”
He feels the best way to retain a hold in the various segments is
by strengthening the sub-brands and having clear brand images
for them.
The Rs 700 crore company (2001-02 net profit Rs 23 crore) has
decided to stick to Sonata (value for money, low-priced, aimed
at first-time user and semi-urban/rural customer), Titan (with
upmarket Raga, Regalia and Nebula being a part of it), Fastrak
(trends, sporty watches for the young adult) and Dash (for
children) as its four key brands. A management consultancy has
been hired to give inputs.
A clear segmentation is needed as the watch industry has been
growing in single digits for some time now. Kurien says while
the watch industry is stagnant in parts, the two ends of the
market are growing rapidly.
The top end, thanks to the international players, is growing fast
in value and is put at Rs 250 crore. The bottom end, led by
locally assembled watches and cheap smuggled pieces, is
leapfrogging in volumes. To be a part of both, Titan will need
clearly defined products here.
‘My Principle Focus is Give The Brand Image A
Facelift’
It may not be the numero uno domestic carrier but is definitely
making progress at consolidating its market share. Raman
Mohan, general manager - sales and marketing, India, Air
Sahara, in conversation with Raadia Mukadam, elucidates some
new marketing strategies up his sleeves. Excerpts
How do you find the transition from a CRS to an airline?
I am fortunate that they are both part of the travel industry,
which entails me to deal with the same people. However, this
portfolio comes with its own set of challenges, because
challenges in an airline are much more. There is more scope in
terms of what can be accomplished in the field of sales and
54
marketing, with a much larger playing field including travel
agents and the corporate segment.
Has your airline also suffered a setback in lieu of the post-
Afghan strikes?
Surprisingly, we did not receive a major setback, even during the
worst time we were doing at least 50 per cent load factor. We did
better than we expected. Overall, there has been a slowdown in
the aviation industry so I won’t be surprised, if we do not
register scaling sales figures. The emphasis right now is on
sustenance with nominal growth. Judging by those standards
things are looking up in our favour.
What is your principle focus for Air Sahara?
My principle focus prevailing currently is to improve the image
of the airline. Operationally, we have no gray areas with flights
meeting the scheduled departure time. We want to establish this
as a brand which is professional, yet has a human face to it. We
also want to bear the image of being extremely approachable
and have no room for attitude among our staff. We want to
inculcate a professional work culture which will naturally reflect
in better service. By incorporating an incomparable frequent flier
programme with increased flights between metros, we have
already taken a step ahead to alter our image with the corporate
segment.
With three primary players in the market, how do you plan
to beat competition?
The fact that we are not the numero uno makes the job all the
more interesting. We agree that we do not cover as many
destinations as other domestic carriers but given our fleet and
infrastructure, playing the game and emerging the winner is
what eventually counts. We are increasing flights to metros like
Delhi, Kolkata and Bangalore and expect to capture a sizable
traffic by this decision. The only area of value down South
which we do not cover is Kerala, to which we intend to initiate
flights in the near future.
What according to you is your biggest handicap?
Firstly, our biggest handicap is the fact that we have a small fleet.
Secondly, our services do not encompass any satellite towns,
unlike Jet Airways, who does so because of the ATR’s that they
posses. Our immediate plans include inducting more aircraft
into our existing fleet. Given our existing fleet, we intend to
maximise output by increasing our frequency between metro
cities. Since, the main business for any small airline in terms of
turnover and break-even lies in the metros.
Which way is your marketing strategy pointed at the
moment?
We want to deviate our focus from the leisure traveller to the
business traveller. Our only reason in the past for not having a
substantial corporate traffic was the lack of morning - evening
city pairs, which we are rectifying by increasing the number of
flights between metros. This can enable a corporate to fly in the
morning, transact his business and return late evening without
necessarily having to stay overnight.

LESSON 9:
BRAND LOYALTY
Objectives
The learning objective: this lecture will help you to understand:
a. Brand Loyalty its types and importance for branded
products.
In the previous lesson we discussed about Brand Relationship
in detail. This gives us an insight to understand Brand Loyalty
better.
Brand loyalty is a very interesting topic as it relates very closely to
our daily lives. I’m very sure you can name atleast 10 great
brands of Jeans, Shoes, Shirts, Sun glasses, Jackets you are crazy
for.
Just think for a while.??
Now think that how many of these brands you have used more
than once.
Introduction
Retaining an existing consumer is often more profitable than
finding a new consumer. This is known to marketers for the
last two decades though one has not seen too many retention
strategies in India, until recently. While retaining brand loyal
customers, it is important to consider its impact on the bottom
line of the company. Research across product categories has
shown that 100 per cent retention of customers will not be
always profitable to the brand and retaining customers
indiscriminately would not lead to profitability. A basic
understanding of retention strategies is required for a marketer
even before CRM (customer relationship management)
strategies are planned. There cannot be a better time to
understand and implement customer retention strategies (in
both consumer and business-to-business marketing) given the
economic downturn in several markets and the need to retain
profitable customers.
Customer equity deals with the manner in which customers can
add value to the profitability of the company (customer equity
also looks at how the company can create value for the customer
but this article deals with the other aspect). Loyalty and reten-
tion strategies would have to be understood before customer
equity strategies are formulated. The following aspects of
customer equity may be useful for marketers:
• What is brand loyalty?
• Is brand loyalty built on functional or symbolic aspects?
• Do psychological factors matter to brand loyalty in
business-to-business marketing?
While in-depth aspects of customer equity are firm-specific,
certain concepts are likely to provide insights to marketers and
these answers cover the questions mentioned above.
There is a need not only for customer equity oriented strategies
but also for investing in behavioural research of customers to
know the underpinnings on which loyalty or retention is built.
BRAND MANAGMENT
UNIT 3
Brand Loyalty
Brand loyalty is the repeat purchase made by the consumer out
of commitment to the brand. In many cases of loyalty,
marketers may do well to check if the repeat purchases are made
out of commitment or if they are inertia purchases. You may
keep buying a brand of soap or toothpaste because of its
availability with regard to a specific stock-keeping unit which he
can afford (50 grams or 75 grams package is the specific stock
keeping unit referred in this context). Brand loyalty is indicated
when the consumer deliberately chooses a brand from a set of
alternative brands.
You may not go through a decision process to select a brand
when you are brand loyal. Though there is a great deal of
similarity/overlap between habit and loyalty, the repeat purchase
made out of convenience can be classified under habit whereas
purchases made out of commitment is loyalty.
When you develop loyalty towards a brand you develop a
favourable attitude towards the brand resulting in commit-
ment. Brand loyalty offers a number of advantages to the
marketer. “Brand loyal consumers start building a relationship
with the brand”. You may become advocates of the brand by
the positive word of mouth.
“Brand loyal consumers may become passionate about the
brand and form clubs which results in further strengthening the
brand”.
Bajaj, the motorcycle brand in India, is an example of how
passion among consumers has been instrumental in reflecting
the loyalty to the brand.
The members get together and go out on adventure trips on
the bikes wearing special garments created by the brand. The
linkages involved in brand visibility and the display of loyalty
results in a positive rub-off on the equity of the brand.
There is even research evidence to show that brand loyal
consumers may even actually avoid advertisements of competi-
tive brands. Loyal consumers may also be prepared to try out
the variants of the brand and in certain categories may even be
prepared to pay a premium (high priced cigarettes and perfumes
may be examples).
Brand loyal consumers may try out other offerings (other
categories) brought out by the brand. Fabmart, the Internet
store, which is into books, jewellery, music and groceries, has
consumers who are loyal to the brand and are likely to order
several categories from the store - this indicates store loyalty.
Under certain conditions, consumers may also transfer their
brand loyalty across product categories.
Virgin is a brand in the US, which is into financial services, cola
drink, music and airline and the brand is doing well in all the
categories.
55
 Recently there has been research which reflects that brand loyalty
BRAND MANAGMENT
could be enhanced if the product tried results in a high degree
of satisfaction. This is because the consumer feels that the time
invested in learning about the brand has resulted in a positive
outcome.
If you spend significant time in choosing a readymade apparel
brand and find that it gave you high level of satisfaction, there
is a high degree of probability that you would become a loyal
consumer of the brand.
This is because the time invested in learning about the category
and the brand has resulted in a positive outcome which is likely
to discourage you from experimenting with other brands
during your subsequent cycles of the category purchase.
There is a need to investigate you as a consumer learn about a
product category and brands as this would be useful to provide
the learning experience (besides providing a good product or
service) which may also have an impact on loyalty.
For instance, the experience of logging on to Amazon.com may
be important because of the benefits offered by the Web site.
Is Brand Loyalty Built on Functional or Symbolic
Aspects?
Drawing upon several theories and models associated with
consumer loyalty and learning processes, consumers may
initially become loyal to a particular brand because of its
functional benefits. Loyalty across toothpastes, cars, banking
services and books clearly show that a brand has to score on
functional aspects whenever consumers use ‘search-oriented’
products (search-oriented products are those which could be
evaluated by consumers even before they buy/try the product).
For instance, a consumer may go through the ingredients of
Colgate Total and derive inferences about the benefits (evaluate
it to a certain extent) and try the brand. Loyalty on such search-
oriented products gets initiated when the consumer experiences
the benefits of functional attributes.
Symbolic associations may also play an important role in
strengthening loyalty to a brand (gel toothpastes are advertised
on the symbolic aspects and this trigger a certain kind of loyalty
because of peer group associations - this could happen after the
brand is established). But even when symbolism triggers
loyalty, a certain degree of benefit should be an outcome of the
brand usage. Symbolism can have an impact on loyalty related
to products which are consumed for sensory gratification - such
as beer, perfumes and cigarettes. A brand’s communication
revolving around symbolism (status or snob appeal or group
affiliation or a personality trait) adds to the gratification inherent
in the product and results in loyalty. Raymond which has
positioned itself for the ‘complete man’ may attract a certain
degree of loyalty from its target segment (but in this kind of
product category, improvements in functional qualities of
offerings would strengthen and sustain the loyalty of the
brand). In categories which are highly ‘experience related’ like
hotel services or airline services, symbolism could enable
consumers try the service. Experience related services are those
which could be evaluated only after the consumer goes through
the consumption experience. A hotel or an airline could bring in
appealing symbolism in its advertisements but the ‘experience’
56
would prove to be the final dimension which would trigger
loyalty.
An ideal approach for a brand would be to use the functional
route to loyalty and then use appropriate symbolic communica-
tion to strengthen the loyalty over a period of time. The basic
assumption in this kind of an approach is that the brand
would constantly update its offerings (or product line) with
improvements which would result in a competitive advantage
over competing brands. A brand has to adapt itself to the
changing environment over a period of time (while using
symbolic imagery consistent with its brand proposition). Bajaj
has a strong value for money family-oriented and a very Indian
(ethinocentric) image. It may be a good strategy for Bajaj to
strengthen these associations rather than get into an other-
directed trendy mode (the TV commercial lady for Chetak being
driven by a modern lady). Such symbolic brands (like Bravo or
Classic from the same company) should be promoted without
the association of Bajaj ‘Chetak’ given its presence in the Indian
scooter market is the “vehicle for the masses” and such exclusive
symbolism may not be in tune with the mindset of a loyal
brand of consumers. The equity of this brand could be realised
from the fact that it is perhaps the only brand to command a
respectable second hand value in a scooter market which is
registering negative growth. Symbolic or psychological appeals
should strengthen loyalty rather than create a feeling of
alienation from the existing loyal base of consumers. Volvo, a
brand name known for safety and reliability for several decades
(around the world) may launch campaigns which centre around
psychological appeals which reinforce the safety image - the
advertisements may show beautiful scenic spots which provide
a break for the pressurised urbanites and the advertisement
could present how such consumers could reach these spots
safely with their Volvo (See chart). The psychological factors like
reliability, trust and reassurance also matters in business-to-
business marketing as they provide the basic platform for CRM.
Retention
As stated earlier 100 per cent retention may not be a very
practical retention strategy. An airline like Jet Airways or Indian
Airlines would certainly like to retain 100 per cent of its
customers in the top segment (perhaps Business class). But
there is a vast segment which is highly price sensitive and several
dimensions are to be analysed before a decision is taken to
retain these price-sensitive customers with rewards and freebies.
Price-sensitive customers may shift to another brand which
offers them more freebies; besides it may be worthwhile to
analyse the purchase pattern of these price- sensitive customers -
what is the potential profitability of retaining these customers?
The Brand Loyalty Challenge: An Indian Perspective
By
Chandranath Chakraborty & Nandini Jayaram M, NITIE
Indian consumers have always exhibited Multiple Brand Loyalty
(MBL). The increasing brand variety in the Indian Market is
eroding brand loyalty per se and the multiple-brand loyalty
brand bouquet is witnessing greater variety-seeking behavior.
The most important factors contributing to this phenomenon
are the growth of organized retailing, changing consumer
preferences and increasing media clutter. As India speeds on the
road to modernization, these are necessary evils marketers have
to contend with. The relevance of brands in future will be
decided not on their emotional imagery, but perceived value. In
this context, combating brand variety entails creating need-based
customer value propositions, prioritizing target markets and
creating short-term brands.
Introduction
“Consumer loyalty is fast becoming a disappearing
phenomenon with an increasing demand for brand variety”
- Rajeev Bakshi, MD, Cadbury India, August 31, 20001
In an increasingly borderless world, consumers are getting
exposed to both information and choice overloads, making
them increasingly confused about brands, products and
advertising. Today, India sees the launch of new products, new
brand extensions and new price points, all aimed at that elusive
thing called the consumer’s mind-space, almost every day. In
this context, it becomes imperative for the marketer to evaluate
brand loyalty and whither he stands in the brand continuum.
Brand Variety and Multiple-Brand Loyalty in The
Indian Market
Brand loyalty is the degree to which a customer holds a positive
attitude towards a brand, has a commitment to it, and intends
to continue purchasing it in the future. This presupposes that
there is something in the brand that satisfies both the social and
psychological needs of the consumer.
Indian consumers have always exhibited multiple-brand loyalty
(MBL) as privileged members in the family are given preferential
treatment in terms of better quality goods than the rest. The
elderly and children are two such groups with formidable
influencing power. The young urban professional might wear
Allen Solly or Peter England shirts as daily wear, but is likely to
use Louis Philippe for special occasions.
A housewife is likely to use Tide or Surf Excel for extra
whiteness, whereas for coloured
clothes, she might use RIN Power. In rural India, MBL exists
albeit in a restricted manner
due to limited choice. The plethora of brands now available in
the Indian market, in virtually every product category, has only
increased the breadth and depth of MBL. Increasing brand
variety has resulted in more product usage, with every new
brand trying to create its own space within the category spec-
trum. For example, the shampoo category now includes
shampoos for dry, oily, normal and damaged hair. We also have
shampoo-plus conditioners, anti-dandruff shampoos and
shampoos guaranteeing increased volume and better hair
growth. With premium brands like Lux penetrating the lowest
SECs3 in the rural sector, no market can remain immune to the
phenomenon of brand variety. Over the past five years, the
smaller brands have started to threaten the bigger players in
every product category. The fastest growing brand in calendar
year ’01 was the little-known Gold Winner, a refined oil
produced by Kalisuri Oil Mills, according to an ORG report4.
This phenomenon is not restricted to products alone.
In fact, the services sector witnesses greater challenges in
BRAND MANAGMENT
sustaining brand loyalty, as the offerings are intangible. The
banking and financial services sector is a prime example of the
customer churn caused by increasing brand variety. People now
have a wide variety of options to choose from, right from
insurance policies to bank accounts. Every brand in the mul-
tiple-brand loyalty bouquet is witnessing greater brand
switching due to greater brand variety. This brings us to the
need for a paradigm shift in the way marketers approach the
empowered Indian consumer.
The Need for a Paradigm Shift
Indian marketers are under assault from a number of factors.
Organized retailing has thrown up powerful retailers who
cannot be dictated to. Increasingly sophisticated consumers are
demanding more for less. The plethora of media options has
resulted in fragmentation of mass-communication reach and
effectiveness. To understand and evaluate the impact of brand
variety on the Indian consumer, all these externalities need to be
taken into account.
The Rise of Organized Retailing
With organised retailing gaining rapid acceptance and popularity,
the fight for shelf-space
has begun in earnest. Proliferation of SKUs has added to the
mayhem. Brand switching is
induced by both manufacturer and in-store promotions,
merchandizing and retailer. The undiscovered country,
Businessworld, Apr 7, 1999 4 Economic Times, Apr 24, 2002
In urban India, the preoccupation with convenience-shopping
and hygienically packed goods has led to an increase in national,
regional, local and store-level brands. Earlier, small brands
remained so as they could not match the distribution might of
the MNCs. The growing reach of organised retail chains has
lowered this key entry barrier. The resultant increase in brand
variety has in turn led the consumer to opt for multiple brands
for multiple occasions rather than an all-encompassing brand.
In the rural sector, there are a total of 3,697,527 shops (retail
outlets) in the rural sector, leading to an average of 5.85 shops
per village. Haats operate once a week or more often in a total of
41,888 villages. 45% of the villages with haats are in the east,
27% in north, 20% in west and 8% in south. The data indicates
that with establishment of (permanent) shops, haats are
moving out 5.
Changing Consumer Preferences
With rise in the disposable income level, the Indian consumer is
willing to spend more on personal needs and indulgences. In a
scenario where ‘cool’ means the latest, variety-seeking behaviour
is becoming the norm than the exception. Increasingly, people
sticking to the ‘old faithfuls’ are seen as predictable and boring.
Customer’s willingness to try a new brand nowadays matches or
even surpasses their loyalty towards a familiar brand. Jagdeep
Kapoor, MD, Samsika Marketing Consultancy says that
consumers are more loyal to “perceived value” than to
“brands”6. Consumers are not stressing on low cost but higher
value.
57
 The reasons for variety seeking are many. Dan Herman says that
BRAND MANAGMENT
buying a new brand
can be psychologically instrumental because it –
• Strengthens the self image of someone who is current
• Nurtures a feeling of liveliness and connectedness to what
is happening in the
• World around us
• Provides a refreshing, renewed, stimulated and invigorated
feeling
• Facilitates mood management
• Increases confidence in purchase choice because new often
means improved quality
The rapid advancements witnessed by the country in areas like
education, communication, information technology and
transportation have created a sense of freedom in the minds of
the populace. The influence of community in shaping purchas-
ing decisions has diminished to a great extent. The fast pace of
development has removed the surprise element in any new
brand introduction.
Increasing Media Clutter
Clutter or non-programme material is primarily constituted by
content that leads to interruption in programme viewing like
brand commercials, programme promos (tagged/untagged),
station identification and public service announcements.
The TNS Mode survey for the year 2000 revealed that consum-
ers spend maximum time watching television. Greater brand
variety has thus resulted in an overwhelming demand for
television advertisement spots but the effectiveness of indi-
vidual advertisements has been limited by the Snag effect10 -
the viewer starts
perceiving that commercial breaks are eating into programming
and hence loses interest in both the program and the commer-
cial. Advertisement durations are decreasing, as advertisement
spots get prohibitively expensive. In 2002, TV commercials
below 20 seconds in duration accounted for about 70 per cent
of all commercials. TAM Adex reported in 200211 that
magazine ad sizes had eroded by 30 per cent and print by 21 per
cent over the previous eight years. The decreasing duration and
size of individual advertisements has led to consumer fatigue
reducing brand recall, affecting brand loyalty in the long run.
Reference data from:
http://www.agencyfaqs.com/www1/media/opinion/
carat.html http://www.moderesearch.com/cmed.html
http://www.agencyfaqs.com/www1/media/opinion/
carat.html
http://www.responservice.com/archives/jan2003_issue1/
media/televisn.htm
Dealing with Brand Variety
Create a Need-based Customer Value Proposition
Van Gelder12 propounds that ‘brands introduced merely to
provide variety or as an alternative have little raison d’être’. To
remain relevant to consumers in the midst of shifting market
trends and changing consumer lifestyles, brands should present
58
a consistent value proposition, not only in terms of core
benefits, but also on consumeroriented ordering and delivery
systems and brand-based employee training and guidance.
Now that we have discussed brand relationship and brand
loyalty in detail, let us have a look at few examples from the
industry. This will help us gain a better insight of Brand.
Following is the discussion statements by Brand Speak ( http:/
/brandspeak.com) with Kartik Raina, Managing Director, Dr.
Morepen, and try to analyze the consumer buying patterns, Dr.
Morepen’s branding stratagem and the way it is trying to change
the OTC market into FMCG market.
BS.What drives pharmaceutical marketing in India? What
about over- the-counter (OTC) medicines?
I will not be talking about the prescription market as that is
influenced by the doctor, but if we talk about the market
where the consumer makes his or her own choice by getting
influenced by advertising and word of mouth, we have two
distinct types of markets. There is an informed market,
which is predominantly in the urban areas, this is the
market where the consumer is exposed to advertising or
could be exposed to a friend’s experience, and he
consciously takes a decision to buy a product. But in the
rural belt there is a lot of uninformed decisions, where
people like the Registered Medical Practitioner (RMP) or a
chemist can sway the decision of the consumer on a
particular product.
BS.What is the branding strategy of Dr. Morepen in the
years to come? What is the unique selling proposition
of Dr. Morepen?
Well, Dr. Morepen right from the start has adopted a
principle of umbrella branding, where we have basically one
mother brand, or one umbrella brand called Dr. Morepen
which stands for two core values: first is health and second
empowerment, signified by the line ‘health in your hands’.
We felt that if we get into the business of advertising each
product as a separate entity then commercially it will be very
difficult to break even, it will take a long time. So, we will
continue to invest some amount of money every year in
promoting, Dr. Morepen as an overall brand. And make
sure that each of our individual brands gets an initial
introduction to the consumer, and thereafter it carries on
with the umbrella of Dr. Morepen.
BS.How has been the response from the consumers? Can
you give us a few facts indicating the success of Dr.
Morepen’s strategy?
Dr. Morepen as a brand has got an extremely powerful
response both from both consumers as well as a lot of
stakeholders. We are being seen as a lifestyle health product
and not as a conventional OTC product. Like powdered
soft drinks are traditionally been promoted as a natural
product with good taste. We have a product C Sip in this
category. When we did brand-tracks we found that the
consumers feel C Sip is healthier than any other powdered
soft drinks available, because it is from Dr. Morepen. If we
look at the average monthly sales that we were doing in
November last year, at the moment we are roughly 25 times
 that level. Of course, part of it has happened because we
have added new products, part of it has also happened
because we have gone to newer cities as a part of our
strengthening our distribution. A very important part of
why our strategy has worked very well for us is that we have
acquired two new brands, ‘Burnol’ and ‘Lemolate’.
BS.How is ‘Burnol’ doing in the market?
Well, last year the total sale of ‘Burnol’ was about 4.8 crores.
This year we started selling ‘Burnol’ on our own only from
July, and we have already touched a level of sales close to 4
crore. If we see over the last few years, the average sale of
‘Burnol’ has been about 6-6.2 crores. The way we are going
for the period July (2002) to March (2003) we expect to do
close to 7 crores.
BS.What are the major challenges in repositioning brands,
which have been there for years, say ‘Burnol’, which
came into the market about 60 years ago?
If we look at the history of ‘Burnol’, it was always
positioned for burns, in between an attempt was made to
make it an antiseptic, the consumer never really accepted
that. So, what we have done is that we have really brought it
back to being a burns product, very clearly. However, we
have gone for a subtle change, we have brought in a factor
of protection. And therefore the storyline is basically it
‘protects skin’. With this, we feel we will be able to take the
consumer through a transition which first says, ‘Burnol is
great for burns, it protects your skin against burns’, in the
second stage we will say ‘Burnol protects your skin from
burns because it understand burns’. And the third stage, ‘It
understands burns because it has a great knowledge of
skin.’ And then when we launch newer products for other
skin ailments like cuts and wounds, they will carry the
heritage of ‘Burnol’. The difference will be while ‘Burnol’
the brand will be about burns, the other products will be
from the makers of Burnol. That’s how we will carry the
equity.
BS.How important role does distribution plays in the
Indian pharmaceutical market? And why?
Extremely important, you may have created a demand for
the product but the consumer is not going to run around
to 10 or 12 shops because your product are not life saving
products. So, distribution is very important and along with
it, visibility is very important. For example ‘Burnol’, you
may not have a burn but you may feel that I must keep the
product with me. So, when you enter the shop, visibility of
Burnol at the point-of-purchase (POP) acts as a reminder. I
think the blend of both distribution and merchandising is
very critical. Second thing, that we have draw link between
our media efforts and distribution, it is very critical that
wherever your media goes it should be backed by
distribution.
BS.How does Dr. Morepen plan to change the landscape of
the OTC market in the next five years? What are the
initiatives?
I think the first thing I would like to say is that we tend to
define the category we are operating in as Fast Moving
Health Goods (FMHG) and not OTC. The motive of
BRAND MANAGMENT
taking a medicine has changed from sheer relief to swinging
you back to normal lifestyle. So, we have defined the
category of ailments we call lifestyle inhibitors, these are
ailments that prevent you from leading your present
lifestyle. The second area, is an area called lifestyle enhancer,
where the consumer wants to enhance his lifestyle, within
the area of health. In the future we are planning to come up
with nutraceuticals, vitamin supplements and a lot of
health drinks.
BS.What stages does a pharmaceutical brand go through to
become the best brand in the minds of the people?
How is it different from evolution of brands in other
categories?
In the pharmaceutical business there are two ways in which
branding actually happens. One way is to convert an ethical
brand into an OTC brand. In this category come products
which are prescription based, but over a period of time
newer drugs take their place with advanced molecules. So,
the incremental growth in their sale declines. That’s where
the role of converting an ethical into an OTC starts. Almost
70-80% of the pharmaceutical business today is based on
this branding strategy. But increasingly more and more
companies are getting directly into building a new OTC
brand. In the recent times, Paras Pharmaceuticals has done
well in this area, they have picked up niche segments and
brought in products. ‘Moov’ and ‘Crack’ are such examples.
So, I have a feeling more and more companies will be
moving in the direct OTC market.
BS.What are the customer buying patterns in case of
medicines (both prescribed/OTC)? And how are they
different in the metros as compared to semi urban/
rural areas?
If the person is bringing in the prescription, then either it’s
a written prescription or he remembers the name orally. In
case of prescription, if the brand written on the prescription
can be easily substituted with some other brand by the
chemist, with same composition, and the consumer accepts
it, branding as an exercise doesn’t really works. In the
FMHG segment, the consumers get influenced by the
advertising, promotions we have done and he starts relating
the particular brand in context of his lifestyle. If it’s a quasi-
serious ailment like acidity, constipation, the consumer
tends to move towards the chemist or a general store that
has a drug license and generally dispenses the drugs. But if
you take a product in the lifestyle enhancer category like C
Sip, there a consumer would go to the Kirana or grocery
store. If we talk about our candies like Gol Goli, the
consumer will buy it from the pan shop.
BS.What do you feel about the use of media for building
pharmaceutical brands? Any new trend or observation?
In terms of role, I feel the most potent medium is going to
be television, primarily for the companies with an urban
skew. Television will be important but the challenge will be
how to get your numbers through addressing a highly
fragmented market. Second is the increasing role of what we
call media inversion, where you use a lot of below the line
59
 activities to constantly appeal to the consumer and win their
BRAND MANAGMENT
loyalty. Things like loyalty clubs, and home to home
promotions give greater time to talk to the consumer, its
more interactive, and I believe it will build brand shares
faster than just above the line activities. So, I feel media
inversion will take over. In print I feel, magazines are
certainly better as they are repeatedly visited media, so
through a magazine you can get a repeat OTS of your
advertising. Interaction with Kartik Raina on Brand
SpeakFollowing are the comments from various Heads of
A class companies regarding their brand and consumers.
These are for your reference and help you to understand
brands better.
• Archives
“B-class cities do not mean lower purchasing
power. The difference lies in the size of the
target segment; B-cities have a population of
10-20 lacs, but the percentage of the target
segment is 20-25%. Compared to metros, the
haul is almost double, with the target segment constituting
35% of the population, resulting in more walk-ins and
volumes.” - Rakesh Malhotra, COO, Ebony Retail Holdings
Ltd. - 11/29/2003.
“For the hospitality industry to grow, the
industry has to work together towards marketing
and promoting India in a better way; we have to
make travel to India painless.” - Priya Paul,
Chairperson, Apeejay Surrendra Park Hotels - 11/
14/2003.
“The consumer really is not price
sensitive today. If you are giving quality
products and the latest technology, they
want it. Then they won’t compromise.
As for our prices, in every product
category be it colour televisions, refrigerators, or washing
machines, we have feature packed products at every price point.
With the trend of 29”CTV, projection TV and plasma TV
catching on, Videocon offers an entire premium range at
competitive pricing.” - Sunil Tandon, VP- Marketing, Videocon
India Limited - 11/1/2003.
”We want to position Rasna as ‘an affordable drink for the
masses,’ contrary to its existing image of
being a family drink.” - Piruz Khambatta,
Chairman and Managing Director, Rasna
Pvt. Ltd - 10/22/2003
Below the line initiatives are extremely important in the
cosmetic segment since the buying experience is as important as
brand image and advertising. Significant
focus is on sales counters, beauty
advisors and dealer aids. We constantly
integrate a lot of the above the line
campaigns like ‘Whose watching your lips’ with below the line
initiatives - Anil Chopra, Business Head, Lakme Lever - 10/14/
2003
60
“We use BTL activities only to complement the overall market-
ing programme or above-the-line mass communication. To
support product launches or new innovations,
to address niche audiences, or to reach out to
the customer who otherwise is non-reachable
by mass media are some of the roles for BTL activities.” - Dilip
G Piramal, Chairman,, VIP Luggage - 9/27/2003
The confectionery market in India is witnessing tremendous
activity. Regular product launches, high
decibel media activity, consumer
promotions and trade promotions
make it one of the most hyperactive
categories in the Indian market. The
total market is estimated to be growing
at approximately 12% in the year 2003 over the year 2002. - A K
Dhingra, Director (Sales & Marketing), Perfetti India Ltd - 9/
20/2003.
50% of the confectionery market lies in rural areas, and the
market is growing at a rate many times
more than the urban market - Nilanjan
Sarkar, Brand Manager, Confectionery
Business, ITC - 9/10/2003
”The Barista store is our brand. Our brand is also the customer
Basav has more than eleven years of
experience in marketing sales and
operations, and has been with Barista
since its formative months. Prior to
joining Barista, he was Manager,
Marketing at the corporate office of Oberoi.” - Basav
Mukherjee, Head Marketing, Barista - 8/28/2003
”If we look at the market then female segment is very impor-
tant to us. An Indian woman will always
prefer modern scooters and scooterettes
for their use. Motorcycles, because of their
shape, are a problem for them and they
also do not like geared, old-fashioned
scooters. I think we would have a 40% share of these buyers” -
Sulajja Firodia Motwani, Jt Managing Director, Kinetic Engi-
neering - 8/18/2003
”It is the technology advantage and not the lower rates
that is attracting more and more customers to Reliance
India Mobile” - Kaushik Roy, Head of Marketing,
Reliance India Mobile #448686 - 8/2/2003
”By continually introducing new products, expanding our
target base and with Amitabh Bachchan
endorsing our product, we are confident that
Parker will be a Rs 100 crore brand by next year.” - D.K. Jain,
Chairman and President, Luxor Writing Instruments Pvt. Ltd. -
7/18/2003
”Jewellery is one of the last great
commodity frontiers in India; it has
remained so because this market is very
fragmented, very unorganized. Tanishq
has successfully taken on the challenge of transforming this
frontier into a reliable consumer space by bringing to it all the
virtues and benefits that branding offers.” - Harish Bhatt, VP -
Retailing, Tanishq - 7/11/2003
”The basic philosophy of ‘Vardaan’ is that it can deliver the
same level of satisfaction and pleasure
that a person gets from a normal bidi but
without the ill effects of tobacco.” -
Kartik Raina, Chief Operating Officer,
Dalmia Consumer Care. - 7/10/2003
“The people who have already experienced the lifelike sound of
Bose are the biggest advertisers for us
through the â”The people who have
already experienced the lifelike sound of
Bose are the biggest advertisers for us
through the âdvertising we believe in letting people experience
the products.” - Ratish Pandey, General Manager, Bose Corpo-
ration India Pvt. Ltd - 6/16/2003
“I have been in this job for 30 years and I can confidently say
that the kind of challenges that Eveready has
faced, its difficult to find a company that has
gone through so much and yet managed to
remain on top.” - Roshan L.Joseph, Director,
Eveready Industries India Ltd. - 5/27/2003
“About 50 per cent of the better-known liquor brands in India
belong to Shaw Wallace. In that respect, there is
no change in the positioning of the company;
we are consistently focused on offering
powerful brands that set new yardsticks for the
industry to match. Shaw Wallace is becoming
much more of a marketing driven company and is increasingly
taking the route of imaginative promotions, events and
associations for building brands. “ - A K M A Shamsuddin,
President, Shaw Wallace - 5/17/2003
”Our branding techniques have ensured that Zip is not seen as
an ordinary phone instrument, we have
been able to allot it certain personality
traits. Consumers perceive the Zip
Fone to be friendly, trustworthy, smart
and young” - Shishir Lall, President,
Zip Telecom. - 5/8/2003
“Saffola provides us with an ideal platform to capitalize on the
trend of increasing health consciousness
by offering a number of new food
products that are able to cater to needs in
this area” - Arvind Mediratta, Head-
Marketing, Marico Industries Ltd - 4/17/
2003
“There are a lot of juicewalaas in city markets, so juice is not
something Indian consumers had not seen before.
And, we felt if we give them juices in a packaged
form, which is more hygienic, it should do well” -
Amit Burman, CEO, Dabur Food Ltd. - 4/8/2003
“Timex has captured market share amongst the young and
young-at-heart, upwardly mobile, sporty, fashion
conscious and those who follow the latest trends
in technology” - Kapil Kapoor, Managing
Director, Timex - 3/22/2003
“In this segment there is a skew in the Indian market. Here
BRAND MANAGMENT
investment is done predominantly by
males. Also, a person seriously starts
looking into investment at an approxi-
mate age of thirty, when he has
investable surplus” - Ambareesh Murty,
VP,Marketing, ICICI - 3/7/2003 .
“The demand of tyres in a particular market is determined by
the vehicular population in that market.
However, the ownership patterns are
now slowly changing, specially in the
metros, affecting the marketing
strategies of tyre majors” - Neeraj Bhatia, GM, Marketing - 2/
21/2003.
“We are trying to position Liberty as a more vibrant and
contemporary brand without leaving the
current comfort, durability and value planks.”
- Adarsh Gupta, Executive Director,, Liberty
- - 11/8/2002 .
“We are both clear and consistent in our positioning. The
tagline is “Hungry Kya” and the business model
is delivering hot n fresh pizza in 30 minutes,
guaranteed. We have no plans to change this
successful positioning in the Indian market.” -
Arvind Nair, CEO, Domino’s Pizza - 8/19/2002
“Below-the-line activity like product demonstrations and
cooking classes etc are certainly important
for product categories like microwave ovens
where there is still a fair degree of concept
selling happening” - M B Lee, VP-Marketing, Samsung India -
8/7/2002 .
“Surrogate advertising ban would not hamper our plans to a
large extent because there are a number of
alternative media through which you can
always address your consumer.” - Abhishek
Khaitan, Executive Director, Radico Khaitan -
7/8/2002
“Advertising does help in building brand recall,
but advertising alone does not sustain a brand” -
Vikram Bakshi, MD,, McDonald’s - 7/2/2002.
If you look at sheer numbers. TV will always outscore press.
That is why we and lot more companies
tend to pool a lot of money on television
and back it up with certain amount of press
advertising which allows us to give the
names of the dealers. If the consumer picks up the newspaper
and is going to buy a refrigerator then it becomes far easier to
see the ad and go to the particular dealer. In white goods unlike
in FMCG, dealers are also very important receivers of communi-
cation as they play a very important role in customer’s brand
choice. - Anand Bharadwaj, EVP (Marketing and Marketing
Services),, Electrolux Kelvinator - 6/24/2002
61
BRAND MANAGMENT

Activity
Collect atleast 10 statements from industry people about their
brands.(To understand brands better always keep a track of
such statements in press releases or magazines.)
Notes

62

LESSON 10:
BRAND RELATIONSHIP
Objectives
The learning objective: after this lecture you should be able to
understand:
a. Brand relationship and its types.
b. How is it important to get Brand Loyalty by consumers.
In this chapter we have already discussed about various Terms
associated with brands and lot about Brand association, image
and Corporate branding. Now this background will surely help
us in understanding Brand relationship and Brand loyalty
better.
A Taxonomy of Brand Linkages: The Brand-relationship-
Interaction (BRI) Matrix
Brands and the relationships between them are of increasing
importance to practitioners and of continued significance to
researchers. The environment of increased communication that
continues to develop as a result of new and improved
technology, together with the increasing use of brand extension,
co-branding and other associative techniques and effects, is
resulting in an increasingly complicated set of relationships
between brands. In this paper we consider various types of
brand constellations and propose a four-cell matrix based
taxonomy of brand linkages as a contribution to the further
understanding of this complex area.
The Complex Nature of Brand Linkages
The way that you perceive brands is a key determinant of long-
term business consumer relationships (Fournier, 1998). The
term “brand” has been shown to comprise meanings drawn
from two distinct sources; firstly the brand identity as codified
and communicated by the brand originator, and secondly the
brand meanings drawn from the users or consumer
environment (Jevons, Gabbott, and de Chernatony, 2001). This
division of meaning between originator and consumer has a
number of implications, not least the potential for ‘drift’
between organisationally determined meaning and user
perceived meanings, (see de Chernatony and Dall’Olmo Riley
[1997]).
The drift between owner and user brand meanings is accentu-
ated by communicative or rich environments such as the
Internet, and this increases the importance of understanding
the forms of linkages between brand meanings. Understanding
how consumers perceive the brand is of course vital to manag-
ers. Brand associations can be represented in a number of ways;
verbal, visual, other physiological senses (such as taste, smell,
sound) and emotional (Supphellen, 2000).
A large proportion of consumer brand perception is obtained
under low-involvement conditions and is therefore not
consciously processed by the consumer’s brain (Supphellen,
2000); associations tend to be stored in terms of metaphors
and, importantly, they tend to aggregate in clusters. Low and
Lamb (2000, p. 360) found that “brand image, perceived quality,
BRAND MANAGMENT
and brand attitude are separate and distinct dimensions of
brand associations for a variety of brands and product catego-
ries, on an overall level”, although brand associations for less
well-known brands tended to be more unidimensional. From
the point of view of the distribution channel, Collins-
Dodd and Louviere (1998) found that brand names influenced
the probability of independent retailers’ listing brand exten-
sions, but that brand names did not influence those retailers’
sensitivity to mix elements such as consumer advertising,
promotional allowances and wholesale price.
We have discussed so far the meaning of a single brand.
However, managers attempt to create and modify brand
meaning in the eyes of consumers in a number of ways, for
example through brand extensions, which are apparently
increasingly popular. Murphy (1997) estimates that 95% of the
16,000 new products launched in the country every year are
brand extensions, which compares with Aaker’s (1990) finding
that over the period 1977-84, 120-175 totally new brands were
introduced to American supermarkets annually, of which
approximately 40% each year were actually brand extensions,
either stocked or own brand. At its most basic, a brand
extension is an attempt to link one product with another by use
of a brand. The predictive value of brand names is one of the
primary reasons that brand extension strategy is so pervasive;
the brand name becomes more than a simple associative
prompt and becomes a predictive cue (Janiszewski and van
Osselaer, 2000). One of the managerial intentions of brand
extension is presumably to link meaning by transferring some
positive attitudes of consumers from the preexisting brand to
the newly-introduced one. Although this is intended to be a
one-way process, it has recently been shown (Sheinin, 2000) that
after experience with a brand extension consumers changed their
beliefs and attitudes about parent brands (although more so if
the parent brand was unfamiliar than if it were familiar). In the
context of the Internet, where brands and the linkages between
them are more dynamic, managerial control becomes less
predictable in the extension process, since it allows for a two-
way process where the original brand can become the recipient
of positive attitudes from the extended brand. This adds
weight to the recommendation of accepting and building on
the inevitability (de Chernatony, 2001) of decreasing managerial
control of the brand in a high-communication environment
such as the Internet, and shows that the link between brands is
clearly a two-way process.
The Solution: Brand Relationship Management
We will extend the definitions of relationship marketing by
Gro–nroos (1990) and Shani and Chalasani (1992) to define
Brand Relationship Management (BRM) as follows:
An integrated effort to establish, maintain, and enhance
relationships between a brand and its consumers, and to
continuously strengthen these relationships through interactive,
63
 individualized and value-added contacts, and a mutual exchange
BRAND MANAGMENT
and fulfillment of promises over a long period of time.
This definition implies that BRM refers to all activities associ-
ated with both “relational exchanges,” and “transactional
exchanges”. The effectiveness of Brand Relationship Manage-
ment is consequently dependent upon customer data and the
way in which it is gathered, managed and turned into actionable
information.
BRM changes the Brand Management practice by turning the
old transaction paradigm into a relational paradigm (see Figure
1.0). The execution of refined Brand Relationship Management
requires:
• A deep understanding of customer expectations, attitude
and behavior through a well organized and managed
customer database.
• Innovative customer strategies, which are based on the
results of thorough customer analysis and which,
consequently, address the major issues pointed out by the
analysis.
Learning Relationships
To strengthen their brands, marketers have no other choice but
to continuously improve their value propositions. The brands
that are first to move into Relationship Management will be
furthest along in their “learning relationships” with these best
customers, and will thus be in the best position to take and
keep the best customers.
Not only will these brands enjoy the “halo effect” benefit of
always being considered to have pioneered this level of service,
they will also always have a longer learning relationship with
their customers than their competitors. “First mover” advan-
tages are the benefits that can accrue to a company for being the
first to make a competitive move.
The success of Brand Relationship Management is closely
related to the integration of a comprehensive Customer
Relationship Strategy, and the effective collection and utilization
of customer information to derive an understanding of
customer needs and expectations. In other words, it is critical to:
• Unlock the marketing potential of the customer data.
• Turn this data into actionable information.
• Encapsulate this information to support strategic marketing
decisions.
64
• Turn the gained knowledge into a competitive advantage.
Customer Insight-Driven Relationship
Customer Insight-driven relationships help strengthen brands
to anticipate and deliver against customer needs and
expectations. Consider the extremely high interest generated by
a pilot brand relationship program implemented across six
different dairy brands in France. Of the 4,000 consumers
selected for the pilot program:
• 65 percent declared the brand relationship program to be a
tangible benefit because it showed the brand’s willingness
to provide recognition for them as highly valued customers.
• 78 percent looked at the brand relationship program as
proof that the brand wanted to better meet their needs.
Technology now allows both the collection and processing of
data on individual customers in many industries as well as the
detailed evaluation of supply performance. Leading brands use
“customer friendly” technology to become easier to do business
with and to achieve closer and more interactive communications
with customers. These brands also use technology to improve
the efficiency and effectiveness of marketing processes that add
the most value for the customer.
New technologies such as the Internet have opened a whole
new way to reach customers, and the growth in the use of these
channels over the past 18 months has been truly explosive.
The idea of relationship marketing has been around for some
time, but a new area of Marketing Automation Systems (MAS)
is emerging that has the potential to radically change the brand
marketing processes and advance the concept of one-to-one
marketing from theory to reality. These new MAS are designed
to automate the marketing function, enhance its efficiency, and
tie together many of the promising, but often limited, technol-
ogy solutions that have been emerging in marketing over the
last several years.
Brand Management and the Relationship Equation
The ability of the brand to generate incremental and sustainable
value is related to its ability to:
• Differentiate by providing the basis for non-price
competition (Davies 1992), thus commanding a premium
price.
• Secure a customer franchise by establishing a strong
preference for its relative added value, thus maintaining and
growing its average share of customer.
• Expand relationships with its customers by developing an
affinity with them in order to sell other products/services
(i.e., cross-selling, add-on selling).
Extending the case of umbrella branding (Tauber,1988), the
actual relationship between a brand and a customer can be
considered to be an “umbrella” relationship. This relationship
makes it possible for the brand to develop new relationships by
“monitizing the equity” of this existing umbrella relationship.
Brand Relationship Management Is The Next Evolution
of Brand Management
Earlier decades of brand management focused on generating
trial and high share of requirements (i.e., the product’s market
share for a specific consumer). This concept was known as
brand loyalty. If a brand had a high share of requirements, then
its brand equity was high. The typical brand equity picture is
shown in Figure 2.0.
It is important to recognize that high share of requirements
(often mistaken for loyalty) is transient. If the sole focus of a
brand is on high share of requirements, the brand is highly
vulnerable. Consider the new paradigm shown in Figure 3.0.
The relationship a brand develops with its customers clearly
represents great value. Figure 4.0 illustrates the effect of the
Brand Relationship Program on the perception, attitude and
declared behavior of 4,000 consumers towards their regular
dairy brands. The survey has revealed that even consumers
showing a high share of requirements could enhance their
already very positive perception of that brand through an
effective brand relationship program. Consider that 74 percent
of consumers felt such a program represented a good means of
gathering objective and reliable information about the brand.
It is important for you to recognize that “real” loyalty is a more
complex concept than share of requirements. Both preference
and attitudes must be factored in.
Not all customers of a brand are likely to develop a relationship
with that brand. Research conducted by Accenture across
different product categories has shown that a certain level of
affinity with a brand is required before a customer may be
willing to enter an intimate relationship with that specific brand.
And the level of affinity a consumer is likely to develop is highly
correlated to category involvement and brand sensitivity.
Amazon.com is an example of a company that has increased its
affinity with each customer by providing greater, value-added
services. Amazon introduced sophisticated information
technology (i.e., collaborative filtering) to expand its service
offerings to include CDs, DVDs and other lower ticket
consumer durables. The company is now adding auction
services and broadening its scope. Amazon understands that its
BRAND MANAGMENT
relationship to the customer is critical in developing its brand.
Brand Relationship Management: Linking the Brand
and the Customer Together
The relationship between a customer and a brand is an exchange
relationship. Consumers enter into a relationship on the basis
of expected equity and the desire to increase the predictability of
exchange outcomes (Peterson, 1995).
The length and strength of the customer relationship is a result
of the relative value the customer perceives in the brand; in
other words, the implied utility associated with the product
features, the tangible value of these features, and the intangible
value the consumer assigns to the brand name. The utility is a
function of the capacity of the brand to consistently deliver an
experience in alignment with the customer’s expected equity.
Consequently, it reflects the convergences of the customer’s
perceptions and expectations.
Following the conceptual model of consumer choice developed
by Tybout and Hauser (1981), the customer’s preference for a
brand is based upon how valuable its utility is perceived to be.
The customer’s brand value perceptions and his motivations are
translated into preferences (Kamakura and Russell, 1993). The
relative level of preference for a brand thus affects his brand
choice and his repeat purchases (share of customer).
In summary, the stronger the individual relative utility, the
stronger the preference, the higher the share of customer, the
longer the lifetime and the greater the lifetime value (LTV).
Customer Equity Is Driven by Brand Equity
The more extensive, comprehensive, and intensive the prefer-
ence is, the higher the customer and target customer base-wide
average utility will be. This also results in a higher average LTV.
The current and future revenues or profitability derived from a
customer by a brand also reflect the willingness to pay a
premium in terms of price and/or time. The stronger the
relative utility of a brand, the stronger the consumer’s willing-
ness to pay a premium. Figure 6.0 stresses the intriguing result
of a three-month Brand Relationship Program on consumers’
perception of a food brand. Not only did more consumers
acknowledge the brand as the best brand, but they also agreed
that it is worth paying a premium price for.
65
BRAND MANAGMENT
The LTV of a customer reflects the influences of the customer’s
preferences and situational constraints (e.g., promotion,
availability, location). The stronger the brand equity, the higher
the LTV. For instance, as a consequence of the increased
perceived value, the consumers selected for the Brand Relation-
ship Program increased their average spending for their regular
brand by 29 percent over a three-month period of time, some
of them showing a 77 percent increase.
Customer-Centric Revenue Management: Customer Equity
Reinforces Brand Equity
The heart of Brand Relationship Management is customer-
centric revenue management, which optimizes profits for each
customer relationship based on the price a customer is willing
to pay for his or her perceived value.
This is an important concept for brands that are too focused on
Product Revenue Management instead of Customer-Centric
Revenue Management. In transactional relationships with tens
of millions of consumers, analysis often reveals that just a
small percentage of the customer base is truly profitable. By
refocusing some of its marketing expenditures on that part of
its customer base, a brand may significantly increase both its
revenues and turnover.
The following example is a good illustration of this paradigm
(see Figure).
66
The average consumer spends an approximately $104 per year
on Brand X. In turn, the brand spends approximately $5 per
consumer per year. Consider that
• Half of the consumers are light users, generating an average
turnover of $21/year for an average marketing investment
of $5/year. Given the low margin (20 percent) in this
market, these consumers are definitely not profitable.
• 20 percent of the heavy consumers generate more than 60
percent of the brand’s revenues. Each consumer spends an
average of $294/year (14 times more than the light users)
for the same average marketing investment of $5/year.
Though the brand is a mass-market brand, the customer base
structure revealed the unexplored potential of Customer-
Centric Revenue Management. The challenge for this brand is to
identify its profitable consumers and to develop a direct
relationship with them to increase both their share of require-
ments and their loyalty.
Individual revenue management decisions must consider the
value of the individual customer to the brand in terms of
future revenue potential and cost to serve. This new customer-
centric revenue management philosophy has a profound effect
on all aspects of traditional Brand Management, including
product offering, pricing, market communications, and so on.
Thus the focus shifts from the product or service to the
relationship developed with the customer.
Brand Relationship Management’s Journey
BRM is a journey, not a destination. It requires a long-term
focus to create and manage a relationship with the customer in
which the joint exchange is profitable to both the customer and
the firm. The steps to manage this journey are outlined below:
Step 1: Actionable Insight
Provide in-depth actionable insight of customer preferences,
behaviors and value drivers, and continuously capture,
maintain, and apply this insight across the entire customer
relationship cycle.
• Identify the key value drivers that contribute to brand
preference.
• Measure the utility that consumers attach to the brand. on-line-controlled appliances ‚ a washing machine’s wash cycles

BRAND MANAGMENT
• Analyze the customer’s buying patterns and identify the can now be downloaded from the Internet and a digital cooker
factors that influence brand switching can receive instructions by mobile phone.
• Analyze the way actual choices reflect consumer preferences What does it mean for a food brand when the freezer has
and situational constraints. online links with supermarkets and automatically places orders
when food supplies run out?
• Develop predictive scoring engines.
In the next few years, BRM will become a discipline driving
• Develop for each customer a market response profile,
fundamental change at leading organizations. Developing a
measuring the propensity to respond to various marketing
long-term relationship with customers is not only a question of
stimuli (e.g., TV, direct mail).
marketing, but it is also a question of vision, strategy, major
Step 2: Actionable Segments process change and technology. It is a question of business
Group target customers into actionable segments based on transformation that will be the key to stability in an increasingly
profitability, usage characteristics, and/or common needs. dynamic market.
Step 3: Value Propositions Relationship brands are working hard to understand smaller
Define offers and corresponding value propositions that meet and smaller groups of customers in greater detail and, with the
the identified needs. Reconcile the value of the customer to the help of technology, will soon make the “market of one”
value of the brand, and understand tradeoffs in revenue concept a reality.
management versus customer relationship management. Notes
Step 4: Develop a Relationship
Develop a relationship with the customer. Create mechanisms
that can generate positive interactions between the customer and
the firm. These mechanisms should strive for customer
satisfaction, loyalty growth, consumer demand increase and
lifetime customer ownership.
Step 5: Measure the ROI
Measure the ROI of the implementation of a BRM strategy:
• Define the economic framework.
• Develop a spending allocation model based upon the Life
Time Value of a customer.
• Elaborate upon different investment scenarios (based on
internal and external resources).
Conclusions
Brand Relationship Management (BRM) is not just a single idea
or process. Rather, it is a completely new approach to brand
management that extends the idea of revenue management
into the realm of customer centric revenue management and
across both product and customer life cycles. The world is
moving rapidly towards a more sophisticated approach to
customer relationship management, which must ultimately
change brand management.
The successful brands of the Third Millennium are working
hard to rethink their strategies and processes to enhance the
value of their relationships with their customers and, therefore,
become the brand of preference. These brands are striving to
develop brand loyalty by targeting customers who:
• Perceive the differentiating and discriminating added value
of the brand.
• Make their choices by preference.
• Are ready to reward the brand for providing unique value to
them by paying a premium and/or by investing time in the
relationship.
Some industries display incredible ingenuity to give their brands
the definitive ownership of the relationship with their custom-
ers. Consider domestic appliance brands that are developing

67
BRAND MANAGMENT
LESSON 11:
BRAND EQUITY
Objectives
This lesson will enable students to understand
a. What is Brand Equity and how to acquire it over
competitors
b. Its Importance in Branding
Understanding Brand Equity
Do You Know How Many New Brands are
Introduced in The Market Every Year?
Over 21,000 new products were introduced in 1995 alone, yet
history tells us that better than 90% of them won’t be on the
shelf a year later. Why such a high failure rate and why has this
been a historical trend? The development of a successful
product - which includes the product, the package, the product’s
name and identity - is a challenging, but not insurmountable
task. The likelihood for success can be greatly enhanced if one
focuses on certain critical issues. Clear product definition and
proper execution and implementation of that definition can
lead to success and longevity in the market. Throughout the
1980’s and 90’s, there has been a growing corporate emphasis
on increasing shareholder value (i.e. making the stock price rise).
Typical headline-grabbing stories of these decades have included
waves of layoffs, corporate restructuring and an emphasis on
operating efficiencies. In today’s shortsighted cower from or
cater to Wall Street environment, how can you expect the CEO
to keep the company growing, retain the loyal following of the
investment community, and keep shareholders happy?
One solution is to grow your brand. This serves to build
consumer and investor confidence in and loyalty to the com-
pany. A strong brand acts as a promise, leading faithful
customers to pay a premium over competitive products.
Likewise, the stocks of highly reputable companies trade at
premiums to others in their respective industries.
Have you ever thought of what are the most important assets
of any business which are intangible: its company name, brand,
symbols, and slogans, and their underlying associations,
perceived quality, name awareness, customer base, and propri-
etary resources such as patents, trademarks, and channel
relationships.
These assets, which comprise brand equity, are a primary source
of competitive advantage and future earnings. Yet, research
shows that managers cannot identify with confidence their
brand associations, levels of consumer awareness, or degree of
customer
loyalty. Moreover, in the last decade, managers desperate for
short-term financial results have often unwittingly damaged
their brands through price promotions and unwise brand
extensions, causing irreversible deterioration of the value of the
brand
name. Although several companies, such as Canada Dry and
Colgate-Palmolive, have recently created an equity management
68
position to be guardian of the value of brand names, far too
few managers, really understand the concept of brand equity
and how it must be implemented.
In a fascinating and insightful examination of the phenom-
enon of brand equity, it is extremely important to know how to
avoid the temptation to place short-term performance before
the health of the brand and, instead, to manage brands
strategically by creating, developing, and exploiting each of the
assets in turn. Likewise you as a brand manager of a company
can increase new product’s chances, and maximize the potential
rewards, by understanding what your target market desires. For
instance, your temptation to short-cut market research and rush
a product idea to market.
Large sums of money become invested in the process. Even if
poor consumer test results occur, companies may continue on
when they should postpone or cancel the launch. You as a
manager must first listen to the voice of the consumers early in
the process and know how to translate the market’s messages.
The voice of the consumer is a critical one to hear but one that
many firms have difficulty in translating into products. Many
companies hear the words spoken by the consumers and work
hard to deliver on them but, as is often the case, what is said
and what is actually meant (by the consumer) may be very, very
different.
Branding and Brand Equity
In today’s environment, building strong brands and
establishing brand equity is becoming more and more
challenging. Increased pressures to compete on price, increased
competition through product introductions and store brands,
and the fragmentation of advertising and market segments are
just a sample of the pressures being faced by companies in
today’s highly competitive environment.
Now let us try to understand Brand Equity.
What is Brand Equity?
There are many different definitions of Brand Equity, but they
do have several factors in common:
Monetary Value. The amount of additional income expected
from a branded product over and above what might be
expected from an identical, but unbranded product. For
example, grocery stores frequently sell unbranded versions of
name brand products. The same companies produce the
branded and unbranded products, but they carry a generic brand
or store brand label like Hawkins. Store brands sell for
significantly less than their name brand counterparts, even when
the contents are identical. This price differential is the monetary
value of the brand name.
Intangible. The intangible value associated with a product that
cannot be accounted for by price or features. Pepsi and Coke
have created many intangible benefits for its products by
associating them with film stars. Children and adults want to

BRAND MANAGMENT
consume their
products to feel some association with these stars. It is not the Brand Equity
ingredients or the features that drive demand for their products,
but the marketing image that has been created. Buyers are
willing to pay extremely high price premiums over lesser-known Brand Name Industry Brand Value
($US m)
Brand Value as
a % of Market
brands, which may offer the same, or better, product quality and Capitalisation
Coca-Cola Beverages 83,845 59%
features. Microsoft Software 56,654 21%
IBM Computers 43,781 28%
Perceived Quality. The overall perceptions of quality and General Electric Diversified 33,502 10%
Ford Autos 33,197 58%
image attributed to a product, independent of its physical Disney Entertainment 32,275 61%
Intel Chips 30,021 21%
features. Mercedes and BMW have established their brand McDonald's Fast Food 26,231 64%
AT&T Telecom 24,181 24%
names as synonymous with high-quality, luxurious automo- Marlboro Tobacco 21,048 19%

biles. Years of marketing, image building, brand nurturing and Source: Interbrand 1999, The World Biggest Brands

quality manufacturing has lead consumers to assume a high 10

level of quality in everything they produce. Consumers are likely

to perceive Mercedes and BMW as providing superior quality to
other brand name automobiles, even when such a perception is
unwarranted.
In short, Brand Equity is a set of assets and liabilities
linked to a brand, its name and symbol that add to or
subtract from the value provided by the product or service
to a firm and/or to that of firm’s customers.
So overall we can say Brand Equity incorporates the ability to
provide added value to your company’s products and services.
This added value can be used to your company’s advantage to
charge price premiums, lower marketing costs and offer greater
opportunities for customer purchase. A badly mismanaged
brand can actually have negative Brand Equity, meaning that
potential customers have such low perceptions of the brand
that they prescribe less value to the product than they would if
they objectively assessed all its attributes/features.
One of the best examples of Brand Equity is in the soft drink
industry. Without a brand name and all of the marketing
money that has gone into, Coca-Cola would be nothing more
than flavored water. Due to the company’s long-term marketing
efforts and protection, enhancement and nurturing of their
brand name, Coke is one of the most recognizable brands in
the world and Pepsi in India.
However, even this marketing giant has trouble capitalizing on
its own Brand Equity when handled improperly (e.g. New
Coke). If someone suddenly took their brand name and Brand
Equity away from them, Coke would lose hundreds of
millions, if not billions, of dollars. This includes lost sales,
lost marketing budget and lost promotions, additional
marketing costs to promote a new brand, and significantly
lower awareness and trial rates for their new brand.
How Do I Use Brand Equity to My
Advantage?
Brand Equity can provide strategic advantages to your company
in many ways:
• Allow you to charge a price premium compared to
competitors with less brand equity.
• Strong brand names simplify the decision process for low-
cost and non-essential products.
• Brand name can give comfort to buyers unsure of their
decision by reducing their perceived risk.
• Maintain higher awareness of your products.
• Use as leverage when introducing new products. Often
interpreted as an indicator of quality.
• High Brand Equity makes sure your products are included
in most consumers’ consideration set.
• Your brand can be linked to a quality image that buyers
want to be associated with. Can lead to greater loyalty from
customers. Offer a strong defense against new products and
new competitors.
• Can lead to higher rates of product trial and repeat
purchasing due to buyers’ awareness of your brand,
approval of its image/reputation and trust in its quality.
Brand names are company assets that must be invested in,
protected and nurtured to maximize their long-term value to
your company. Brands have many of the same implications as
capital assets (like equipment and plant purchases) on a
company’s bottom line, including the ability to be bought and
sold and the ability to provide strategic advantages.
How Do You Measure Brand Equity?
Most evaluations of Brand Equity involve utility estimation.
Specifically, we attempt to measure the value (utility) of a
product’s features and price level and also measure the overall
utility of a product when including brand name. The difference
between total utility and the utility of the product features is the
value of the brand. In other situations, the utility of the brand
is measured directly and added to the feature utilities to produce
an overall utility for the product. Besides utilities, contributing
factors such as current awareness levels of each Brand, overall
perceptions of each Brand, and Brands currently used should be

69
 measured. It is also useful to obtain estimates of marketing,
BRAND MANAGMENT
advertising and promotional expenses for the major Brands in
the market. Together with utility estimates, this information
provides a more complete picture of the relative value of each
Brand and allows you to understand the major forces driving
Brand Equity: product features, price, market awareness, market
perceptions and expenditures to build and support those
Brands.
Branding Promotions
I hope you will agree Brand Equity cannot be built without
pumping in promotion.
Developing a promotion as a brand can provide a powerful tool
for building additional brand awareness and positive
associations. An excellent method to achieve this is through
linking the promotion to the actual brand.
For example, consider a promotion to win a trip to Disney
World for a product with no link to Disney World or travel. The
contest participants will most likely forget except the actual
product associated with the prize.
Compare this with a company’s Brand promotion that builds
directly on the associations of the product thus enhancing the
power of the brand. A promotion such as this affects non-
participants as well as those involved, creating a platform to be
built on each year.
Furthermore, developing a tight link between the promotion
and the brand (or its primary associations) avoids the possibility
of promoting other brands. In effect, it is recommended to
brand a promotion so that it cannot be linked to another
brand.
Conclusion
We can conclude that building a brand takes time and money,
and maintaining it takes patience and discipline. Market
unfortunately, causes many executives to lose focus and
abandon forward-thinking stewardship in favor of short-term
profits. The evidence clearly shows,however, that brand
building is an investment rather than a cost, a necessity rather
than a luxury, and a priority shared by the most successful
corporations. So next time, when considering where to trim the
fat in order to meet short-term shareholder expectations,
remember that the bottom line is only as strong as the brand.
Source: Sandeep Hardikar
MMS – I JBIMS http://www.indiainfoline.com/bisc/
brae.html
Building Brand Equity:
Brand = Product+/- Service+/- Adv.
Brand equity, also called an intangible asset, customer goodwill
or unbridled loyalty and beliefs of customers, is gaining
increasing importance all over the world and in the Indian
boardrooms in particular.
From the business and the marketing point of view Equity is
the assured inflow of cash in the future based on the past
investments made into the brands. Some time brands take
decades to build up the image or the familiarity in the minds of
the consumers. The formula Product + Services + communica-
70
tion (advertising and all other promotional tools)= Brand has
proved successful over the years.
Dominic Cadbury’s Views on Brand Life
According to the head of the world’s most brand rich company,
in his own words “ I think that the brands don’t have life cycle
unless you choose to give them a life cycle. We look at our
brands that are going to have a long term life, long-term
growth. However, we recognize that when brands are not
successful, and start to decline, if, after full support in the
market place we don’t believe there is long term future for
them, of course we are prepared to kill them off.”
Brands Built over a Period
Brand building process takes place over time & is a continuous
process. If the product idea has an intrinsic USP, establishing a
brand is much easier.
Brand extensions help to reinforce or augment values of brand.
Extensions could help to bring new value to a brand that can
sustain it longer and give it a new lease of life. Extensions,
properly managed, can play the role of an heir and get be-
queathed the parent’s values, so that the brands continue to
group. Lux, Surf, Rin and a host of other brands confirm this.
Research Study On Factors Affecting Brand Equity
Introduction
Today the share of promotions in the marketing budget of a
typical consumer products company is continually on the rise.
They may be preferred because good promotional exercises
provide the facility to carry out controlled activity on a focused
target group and unlike mass media advertising it directly
addresses and involves the consumer. There are other reasons
that abet their popularity. They are:
Consumer promotions produce results
The results occur quickly
The results are measurable
Consumer promotions are relatively easy and inexpensive to
implement
Different marketing activities affect various aspects of consumer
buying process. Consumer promotions generally hit directly at
the decision and purchasing stages of the buying process. Thus
they affect behavior directly producing immediate results.
Consumer promotions can thus be defined as
Marketing and Communications activities that change the
price / value relationship of a product or service thereby:
Generating immediate sales.
Altering long term brand value
Types of Promotions
Various types of Consumer promotions are coupons, cross
promos, contests, sampling, bonus pack, freebies etc. Brand
managers have thus a plethora of choices when opting for a
consumer promotion. How they actually go about choosing it
is critical in determining the extent of success the promo would
achieve. David Aaker points this out in his book ,Managing
Brand Equity “Sales promotion are selected without
determining their associations and considering their impact
upon the brand”. But to analyse what effect promotions have
on brand equity let us first understand what brand equity is.
What is Brand Equity?
Brand equity is a set of assets linked to a brand’s name and
symbol that adds to the value provided by a product or service
to a firm. Brand equity is a set of assets and the brand manger’s
job is to create and enhance these assets. The major asset
categories are:
Brand awareness is the strength of a brand’s presence in the
consumer’s mind.
Brand Loyalty refers to the commitment of consumers towards
the brand.
Perceived quality reflects the quantum of goodness felt by the
consumer on buying it.
Associations that consumers make with the brand support
brand equity. These associations may be product attributes, a
particular symbol, or even a celebrity spokesperson.
Consumer Promotions Vs Brand Equity (A research
study)
To design an effective promo, the brand manager must
understand what is it that puts that gleam in the consumer’s eye
without distorting the image of the brand that is without
eroding its brand equity. Promotions must be synergistically
linked to the brand attitude.
There are ways to design promos to enhance rather than tarnish
brand equity. The normal practice is to assume that promotions
have their own agenda - to stimulate sales - and thus one needs
to select and evaluate them accordingly. This view is myopic and
counterproductive. The correct method is to devise promotions
that strengthen at least one component of Brand equity.
Objective
The study aimed at arming the Brand manager with a potent
weapon in terms of a comprehensive analytical model for
selecting a suitable promotion strategy to enhance the equity of
a brand. In this context, the objectives of the study can be
stated as:
• To study the effect of consumer promotions on the
perception of a brand.
• Based on the above study, to develop a comprehensive
analytical model, for selecting suitable promotion strategies
for different product categories.
Scope
This study incorporated within its scope, an exhaustive analysis
of the various consumer promotions employed in FMCG as
well as the Consumer durable sector, across various brands and
categories, targeted at different age groups, to be able to arrive at
the above-mentioned objective.
Methodology
The methodology followed, to cover the above-mentioned
scope, and finally to achieve the objective of the study, is as
follows:
Research – I
BRAND MANAGMENT
The first stage was a questionnaire based interview,
administered to a sample size of 60 in 3 age groups - <15, 15-
30, & >30 that is 180 in all. This questionnaire was intended to
measure:
The relative importance of attributes affecting buying decision,
the difference in perception about one time and frequent
promotion, the difference in perception about promotion on
any and favorite brand for the consumer etc.
Research - II
The next stage was a research, which consisted of an extensive
literature survey and interviews with several brand managers. It
provided us with a framework to separate products into
different categories based on:
The consumers’ buying behavior
Frequency of purchase
Consumers’ age-group
Based on this research, the first classification of consumers and
of product categories is as shown.
< 15 15 – 30 > 30
FMCG Chocolates Ice creams Shampoos
Durables -- Watches Refrigerator
We have taken chocolates, ice creams and shampoos in FMCG;
watches and refrigerators in durables for the purpose of our
study. In this classification, the particular product categories
should not be understood as absolute or isolated, that is, the
category chocolates represents any product in the FMCG sector
targeted at the less than 15 age group and similarly shampoos
represent any FMCG product in the above 30 age group. The
names of product categories used are only for convenience and
for the respondents to be able to identify with them.
Consumer Research
A questionnaire was prepared for each of these product
categories which comprised 24 statements which captured the
consumers’ change of perception, on the various facets of a
brand because of promotions on a 6 point scale ranging from
completely agree to completely disagree. The promotions used
were essentially the ones that are the most prevalent in the
Indian FMCG as well as Durables industry today.
The sample size for Consumer Research was 750, spread across
the various product categories equally, that are 150 each. Factor
analysis was then performed on the data obtained for each
product category separately. The factors thus obtained repre-
sented the various facets of a brand. The factor scores were then
calculated to arrive at the direction of change in the consumer’s
perception on the various factors obtained.
Validation Research
Based on the results obtained from the first research, certain
hypotheses were formed, which described the way in which the
promotions affected the various facets of the brand. In order to
validate these results, we conducted another questionnaire-
71
 based research, employing the Quasi experimental Before-After
BRAND MANAGMENT
control group design. For this purpose, we selected 2 brands,
namely Polo and Aiwa. The next stage was to identify the type
of promotion that had actually happened on these brands in
the past. These were Bonus pack offer on Polo and a freebie on
Aiwa Walkman.
The next stage was to measure the effect of the identified
promotions. This involved a 3-step process:
In the first step, a questionnaire based survey was conducted on
the control group ,to find out the current perceptions of these
brands
In the next step, pamphlets showing the type of promotion
carried out and the corresponding advertisements was shown to
the control group audience over a period of 20 days.
Finally, another questionnaire was administered to the control
group, intended to find the difference or changes in perceptions
about these brands after the exposure to promotions for 20
days.
Once the data was obtained, a factor analysis was performed for
each brand separately. The factors thus obtained represent the
various facets of a brand. The factor scores were then calculated
before and after the promotion, and based on this the direction
of change, if any was identified and compared with the results
of the Consumer Research.
Findings
To study the effect of promotions on various brands we
initially studied the attributes any consumer looked for while
buying a product. An interesting observation that came up was
that promotion is ranked 5th in terms of attributes affecting
purchase decision way below price of the product, company
image, product attributes and even advertising. Few more
interesting observations that emerged were:
65% of the respondents believed that promotions were
nothing but gimmicks or publicity stunts
The immediate next question was “In this scenario why do
then companies go in for frequent promotions?” The answer
was obtained through this very study
In spite of the negative perception that consumers have for
promotions, 78% of the respondents had availed of promo-
tions earlier and 37% of them avail of promotions on a regular
basis.
72
We also tried to understand the impact that frequent promo-
tions have on consumers. The observations are –
60% of the respondents liked a promotion launched by any
brand in a particular product category. However if the same
brand launched many promotions, the liking dropped to 17%.
Similarly, 84% consumers approved of a promotion launched
by their favorite brand in a particular product category while only
40% appreciated their favorite brand launching many promo-
tions.
Thus we can conclude that
Repeated promotions make a consumer averse even to his
favorite brand.
A strong brand will not lose its position in the consumer’s
mind as much as a weak brand
The next logical step was to evaluate what exactly a consumer
wants from a promotion and what exactly are his preferences in
receiving some sort of incentive. The results obtained are the
following. The results revealed that monetary benefits and gifts
are the most important parameters when it comes to evaluating
a consumer promotion. The consumer ranks prizes and
continuous purchase rewards as the least important parameters
in evaluating a promotion.
Product wise Findings
Now, let us look at the changes in consumers’ perceptions on
the brands offering promotions. Towards this we will go
through the results obtained for one of the 5 product categories
that were selected as mentioned in the methodology – namely –
“Ice Creams” .
Before we begin, let us first understand what the factors that
emerged from factor analysis were. Seven factors were identified.
These were
• Brand Dilution is the phenomenon said to occur when
consumers are no longer able to differentiate a specific brand
from similar brands/products.
• Brand Conviction represents the formation of a strong
attitude towards the brand in the consumer’s mind.
• Brand Loyalty is a measure of attachment that a customer
has to a brand and reflects the likelihood of a customer
switching to another brand in case of change in that brand,
either in price or in product features.
• Perceived Value is defined as the consumers’ perception of
the overall value or superior value of the product with
respect to its intended purposes, relative to alternatives.
• Brand Association is defined as the linkage that a consumer
makes with a brand, that might include product attributes,
celebrity spokesperson or even a particular symbol.
• Esteem is a measure of the trust and regard vested in the
brand by the consumer.
• Perceived Market Position is a perception that a consumer
has about the company’s market position relative to its
competitors in the same product category
Having understood the various factors, we will now specifically
focus on the findings obtained in the Ice Creams category. The
Ice creams category as per our study is representative of any
FMCG product category targeted at the age group 15-30.
As an illustration let us now focus our attention to 2 promo-
tion tools namely Cross promotions and Continuity programs
and try to gain some insight into the consumers’ perceptions
brought about by these 2 promotions.
“Ice Creams”
In this graph the Zero on the Y-axis indicates that there is no
effect and changes whatsoever in the consumer’s perception due
to the promo. The positive side indicates that there is an
increase in that factor and the negative side indicates a decrease.
Hence we conclude that both types of promos tend to erode
one or the other aspect of brand equity though to a different
extent. Thus if the brand manager wants to have the least
losses in loyalty and perceived value at the same time, and also
increase association, he would be offering a continuity program.
The effects of other promotions were also analyzed along
similar lines and incorporated in our recommendations. In
order to generalize the findings arrived at for the “Ice Creams”
category, we validated the same with the brand – Polo. Polo –
the mint with a Hole – is in the confectionery product category
and was chosen to check out if the findings obtained for “ice
creams” can be generalized for all FMCG brands targeted at the
age group 15-30. For this purpose the effects of the Bonus pack
offer on Polo was compared with the results obtained for the
Bonus pack offer in the “Ice creams” category. The chart shows
the changes in the perceptions about the brand along the factors
earlier defined and compares them with that of the product
category “Ice Creams”.
Both of them scored nearly the same on most of the factors
indicating that we can generalize the results obtained in the “Ice
cream” product category. The slight deviation occurring here
may be attributed to sampling error and the effects of the brand
name-Polo.
Similar results were obtained for the other product categories
selected as mentioned before.
Some other insights in our studies are
BRAND MANAGMENT
CRP scores highly in increasing the perceived value of a brand
and the association of a brand.
Decrease in the perceived market position of a brand is the
highest for cross promotion.
Usually exchange offers tend to decrease the brand association
for any consumer durables.
Dilution always increases for any product category while
perceived market position usually decreases for any sort of
promotion.
Samples tend to have an increased perceived value and esteem
but not to very high levels.
Validation (Polo)
Do Promotions Erode Brand Equity?
We now elucidate the salient features of these findings.
First and foremost, every single promotion affects the compo-
nents of brand equity – be it brand loyalty, brand conviction,
perceived value or any of the others. Unfortunately the effect
diminishes most of the factors.
We now state in the most unambiguous terms that continual
consumer promotions inevitably erode brand equity.
Now to understand the reasons behind the above-mentioned
statements we need to examine how conventional consumer
promotions are designed. Consider today’s scenario – a new
brand is being introduced almost everyday; established brands
are being besieged from every direction; almost every brand is
fighting tooth and nail for survival. And hence, tactical methods
are employed to shock, mesmerise, or seduce consumers into
buying a particular brand from a plethora of different brands in
the same product category. Consumer promotions are the name
of the game.
Recommendations
We propose a model that argues in favor of consumer
promotions by contending that consumer promotions are
faulty but only in the manner in which they are implemented.
They can in fact be made to work for the brand, in building its
equity, enhancing its value and thus strengthening the brand’s
reputation by communicating the right signals. This model is
based on the proposition that like any other type of marketing
activity, consumer promotions need to be evaluated and
designed in the context of how they fit into the overall strategy
for a particular brand.
The underlying assumption of this model is our finding that
promotions affect each individual component of brand equity
to a different degree. Hence, the key is to design a promotion in
such a way so as to ensure that at least one component is
strengthened.
Source: http://www.indiainfoline.com/bisc/jbmk01.html
Discussion Questions and Assignment
1. Pick a brand. Identify all of its brand elements and assess
their ability to contribute to brand equity according to the
choice criteria identified in the chapter.
Answers will vary.
73
 2. What are your favorite brand characters? Do you think they
BRAND MANAGMENT

contribute to brand equity in any way? How? Can you

relate their effects to the customer-based brand equity
model?
Brand characters relate to the customer-based brand equity
model because they can contribute to the differential effect
in a consumer’s response to marketing. Characters can create
positive associations and feelings toward the brands they
represent, improve awareness, develop additional brand
knowledge, and lead to consumer resonance with the brand.
3. What are some other examples of slogans not listed in the
chapter that make strong contributions to brand equity?
Why? Can you think of any “bad” slogans? Why do you
consider them to be so?
Slogans could be considered “bad” for a variety of reasons.
For example, a slogan might be “bad” if it seems outdated
to consumers, if it focuses on an inappropriate or irrelevant
aspect of the brand, if it strives for humor but falls short,
if it is confusing, if it is overly complicated, and so forth.
4. Choose a package for any supermarket product. Assess its
contribution to brand equity. Justify your decisions.
Answers will vary.
5. Can you think of some general guidelines to help marketers
“mix and match” brand elements? Can you ever have “too
many” brand elements? Which brand do you think does
the best job of “mixing and matching” brand elements?
Guidelines for mixing and matching brand elements might
touch on presenting a cohesive and consistent image for the
brand, ensuring that brand elements are not too disparate,
and reinforcing the brand’s positioning.
Notes

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LESSON 12:
BRAND MANAGEMENT PROCESS
Topics Covered
Branding Process and Brand Success through integrating
marketing resources, Brand Evolution, Value of brand to
Manufacturers, Distributors and Consumers, Brand Planning
and Brand potential
Objectives
Upon completion of this Lesson, you should be able to:
• Explain the need for a branding process.
• Understand the brand development process.
• Identify the role of marketing towards brand success.
You now have a clear understanding about brand name, its
types, name change and various other terms associated with
brand. The objective of this lesson to provide an overview of
an effective brand development process and is not meant to be
comprehensive or represent strategic brand development in its
entirety. We shall also understand the branding process and
brand success through integrating marketing resources.
Do we need brands to become successful in this competitive
environment? Or can we just be a ‘me too product’ and drag
ourselves in the crowd? There’s a lot of talk about a company
and its “brand” these days, and lots of money being spent
trying to do what people call “branding.”
One recent article pointed out that all marketing, especially
advertising, works to enhance or modify brand image. But,
what is “brand” in the case of a distributor who carries many
“brands”? Is the manufacturer’s brand what drives sales, or
does the distributor, in fact, have a brand to build?
While quality manufacturer brands help bring business to
distributors, the distributors own brand is probably more
important. Unless distributors realize that, and then learn about
the true meaning of making manufacturer brands work to
support their own brands, there’s trouble ahead.
A brand is intangible, just like you are. Who are you? Are you
your work? Are you what you eat? Are you what you do? Are
you the love you feel for your family?
Just as the definition of “you” includes all of these things,
brand is everything around your company. The idea of brand-
ing started in the American West, when a rancher branded his
cattle with his mark (brand image). Along with being a means
of finding cattle that strayed from the herd, that mark was
assurance to people who bought his cattle of a specific degree
of quality. Some buyers paid more money for specific brands of
cattle. So while all cattle ranchers sold cattle, some ranchers
obtained a premium for their beef, and it was the brand that
identified one head of cattle from another.
Why Brand is Everything
Distributors are no different than ranchers when it comes to
managing their brands. While you may sell a variety of different
BRAND MANAGMENT
manufacturers (beef), it’s your name on the door that
contractors buy. Your name is their assurance that the products
you carry offer quality and reliability, and as much as a
manufacturer does to support that in your marketplace, the
bulk of brand building lies in your hands. Fortunately or
unfortunately, no matter what a manufacturer does to enhance
or harm his brand, it’s distributors that determine its eventual
success. (What would Shell Oil be without gasoline stations, or
Kellogg Cereal without food stores?)
If you take apart the entire organization of Coca-Cola Co. and
left only its brand name, management could rebuild the
company within five years because they have such a powerful
“brand.” However, if you remove that brand name,
the company would probably die within five years.
This is because over the course of the years, “Coca-
Cola” has come to stand for everything about the
company - the way the soft drink tastes, the way it’s
delivered, the way it shows up on the retail shelf.
It has become some- thing more than caramel
water, and the mark placed on the soda contents is
the consumers’ assur- ance that what’s inside is
quality. But consumers buy the product from
“distributors” (actually, a dealer distributor network).
That’s why when something goes wrong with a product,
brands get shaken up. Remember the Tylenol scare many years
ago? America could have lost a major brand. Instead, proactive
handling of the crisis helped Tylenol overcome the huge
negative implications of someone changing the contents of
their product.
Are you aware of your brand? If you take away your inventory,
computer equipment and personnel and just left your company
name, would you be able to rebuild within five years into what
you have today? Or, if you removed your name, would your
business die within five years? Can customers tell the difference
between you and your competition?
A brand is the emotional source of an organization - its very
soul. People are guided and inspired by it, and that makes
defining it extremely difficult, if not impossible. The only rule
in figuring out brand in relationship to your distributorship is
this: Beware of concise definitions. There are none because
brands, like people, are complex.
A brand generates energy. In your distributorship, it’s all of
your company’s actions - answering the phones, fulfilling
orders, advertising, customer service calls, operations practices
and employee interactions. Your brand is all that you do and do
not do. You help define your brand by “opting out” of specific
behaviors. When you decide to do or not do something a
specific way, you send a message. That message contributes to
the formulation of your brand in customers’ minds.
75
 Who are you? Think for a moment about who you are, and
BRAND MANAGMENT
how people perceive you as a person. You have a certain image
(a wild, crazy guy, perhaps, or a no-nonsense workaholic). Your
personality is your brand; people who know you count on you
to act in a certain way and to do certain things.
Just as you either know a person or you don’t, either you know
a brand, or you don’t. Everything you think you know about a
brand was created through your five senses, and you create what
you want people to know about your brand through those
same senses. People define themselves through their actions;
your company creates its brand reputation through its actions.
Those judgments are made about companies because of
behaviors or behavior patterns over time. You truly become
what you do or don’t do. Customers who know you expect
certain behaviors from you, and that becomes your “brand.”
Others you don’t do business with are unfamiliar with your
“brand.” They must learn about you. Therein lies the power of
your brand: The more people understand what to expect from
your business, the easier it is to do business.
Expectation of a behavior is really what branding is all about.
When you deliver what is expected, you contribute to building a
“good” brand; when you do not, you contribute to building a
“bad” brand. Brands can be good or bad, and they change all
the time.
A brand isn’t a logo or a letterhead; those are representations of
something more than themselves. Take the word “Marlboro.”
It conjures up a vision of a cowboy instead of a cigarette - it’s a
representation of something other than the product. A brand is
all of the communications around your company, and more.
It’s behavior around how you conduct business, and behavior,
as you know, is difficult to pin down. But pin it down you
must if you are to have a good brand.
Your markets are changing almost daily. To compete success-
fully, you must create a brand that is recognized, trusted and
means quality to your customers. Your customers remain loyal
to you not because you carry this or that manufacturer’s brands.
They buy from you because you behave the way they want,
expect and count on. It’s the company they buy - not the
product. Customers come to you not only for products and
services you provide, but for you. With every transaction you
make, you create a brand image. You either reinforce your idea
of who you are, or you harm it.
To compete successfully, distributors must maintain and
reinforce their brands. You must brand yourself each day, and
decide who you are and what you want to offer.
76
Being heard amid the roar of your competitor’s voices is a
daunting task in today’s crowded marketplace. We find this to
be shockingly true each time we read a magazine, watch the
television, or surf the web. As a result, businesses are now
seeking new and more effective ways of increasing brand
awareness and more importantly, create brand loyalty. One of
the most important tasks involved in ensuring a brand’s
success, is to develop an effective branding strategy.
To successfully position your brand above your competitor’s
continuing fight for your customers, you must develop a brand
proposition that when conveyed in marketing and advertising
campaigns, will provide an attractive, unique, and relevant
message to current and potential customers. In addition, this
proposition must be realized and consistently echoed by senior
executives, customer support, R&D teams, marketing staff,
sales staff, and strategic partners.
Why is Successful Branding So Important
Today?
Though brand development is by no means a new idea, today
consumers have more access to information and more choices
than ever before. The result is higher expectations, and the
brand’s message must captivate the consumer immediately.
Companies seeking to experience long-term success will have to
create the most compelling, relevant, and consistent brand
experiences for their customers.
Remember: “You can’t escape your brand. Either you make the
customer experience, or it gets made without you.” Prophet
Corp.
In order to successfully develop the most effective branding
strategy, a firm understanding of what a brand is must first be
answered.
The Brand is Everything
Scott Bedbury is a leading branding consultant that has worked
closely with companies like Nike and Starbucks, has written a
book titled, “A Brand New World”, published by Viking Press.
In it he gives excellent thorough definition of what a brand is.
“A brand is the sum of the good, the bad, the ugly, and the off-
strategy. It is defined by your best product as well as your worst
product. It is defined by award-winning advertising as well as by
the god-awful ads that have somehow slipped through the
cracks, got approved, and, not surprisingly, sank into oblivion.
It is defined by the accomplishments of your best employee-the
shining star in the company who can do no wrong-as well as
the mishaps of the worst hire that you ever made. It is also
defined by your receptionist and the music your customers are
subjected to when placed on hold. For every grand and finely
worded public statement by the CEO, the brand is also defined
by derisory consumer comments overheard in the hallway or in
a chat room on the Internet. Brands are sponges for content,
for images, for fleeting feelings. They become psychological
concepts held in the minds of the public, where they may stay
forever. As such you can’t entirely control a brand. At best; you
only guide and influence it.”
The Brand’s Creed
The development of a branding strategy must begin with
identifying the brand’s (the business’) core values. These are
qualities, which an organization deems most important. For
instance, an organization or business may identify its core values
to include: honesty, integrity, excellent communication, and
client satisfaction.
Though these values are usually never revealed to the public,
they are evident in every aspect of the organizations’ business
routine, from customer service, to direct marketing, to website
design, to teleconferences, to the treatment of its employees
and strategic partners. This conveys a consistent perception to
the target audience in every medium of communication that is
used.
Consideration for these values should not be taken lightly for
these values represent the “creed” for the business and become
the cornerstone for developing the brand’s proposition. And
though the brand’s proposition may change from time to time,
the brand’s core values should never change.
Great Strategy Begins with Great Research
Once the brand’s core values have been identified, the road
towards effective brand proposition development begins. To
ensure a successful outcome, comprehensive and objective
research involving at the minimum, the brand’s strengths and
weaknesses, the target audience, and the competition will be
conducted. If the resources are available, research should also
involve extensive observation into the brand’s industry, its
history, the current market picture, and potential growth and
direction.
The Target Audience Holds the Keys to Your Brand’s
Success
If I had to choose only one area of research to focus my efforts
on, it would be to identify first who the target audience is and
second, what their needs and desires are. This information
should be as comprehensive and exact as possible. Applicable
factors such as; age, gender, income, and shopping habits
(online and offline) are good places to start. Of course if your
target audience is another business, your research will involve
different factors.
Truly understanding your target audience, in addition to having
a realistic assessment of what your product offers, is invaluable
in assisting you in the development of a successful brand
proposition. This information will also provide insight into
how to convey this message in an engaging, relevant, and
consistent manner.
Some questions to consider during this process are: who is your
target audience (be specific & use more than one example if
applicable), what does the target audience currently need and
desire? What does your competitor currently offer? How does
your products/services fulfill this need better? What needs or
want may be fulfilled by your product or service that isn’t
currently being offered to them? If your competitor offers a
similar product/service, how is yours better? Do your advertis-
ing campaigns provide a more engaging, unique, and consistent
message than those of your competitors?
Developing a Brand Statement (Brand Proposition)
From the research, development of the brand statement, often
referred to as a brand proposition, commences. The brand
statement is a promise. It states that if you use our services /
products, we promise that this or that will occur, whether it is
BRAND MANAGMENT
the satisfaction from wearing well designed clothing, to the
comfort of choosing the services of particular financial planner.
The brand proposition must be clearly understood, engaging,
presented in the right context for relevancy, and offer a solution
to the target audience’s current wants and needs.
An example of effective brand propositioning can be found in a
well known computer company’s line of television commercials.
The commercials successfully convey the brand’s statement that
goes something like this; if you buy our PC’s, we’ll customize
the computer to fit all your needs, you’ll have access to our
award winning customer service, you’ll have less hassle to worry
about, and best of all, you’ll be cool.
The brand’s promise is easy to understand, engaging, unique,
relevant (to the target audience), and consistent.
A Promise is a Promise
Of course all of these promises are just that, promises. If the
company’s products, services, and customer support didn’t
support these promises, the initial surge of new customers
would quickly come to a screeching halt and the brand would
fade into obscurity along with the company.
Providing a Brand Proposition that is engaging, is easily
understood, and offers an emotionally positive solution to
needs and desires only serves to enhance the current customers’
perception of the brand and will get new customers to look
your way. Following through with an excellent product/service
and customer support will put an indelible mark in the memory
of your existing customers; one that will create brand loyalty
through good and bad times; a sure sign of a brand’s strength.
Deliver the Unexpected
When developing a brand proposition, never let your brand’s
promise be one that is already expected; this is a sure way to
NOT stand out from your competitors. Advertising efforts that
utilize adjectives like “good”, or “nice” are sure to fail when
seeking to be both engaging and unique.
How many times while driving, have you seen restaurant or dry
cleaning signs, that announce “good Chinese food”, or “good
dry cleaning service”? The answer is probably more times than
you can count. These businesses are able to survive because they
are often the only game in town. But for businesses and
organizations that are competing for a larger market, this type
of advertising is sure way toward obscurity.
Remember, you must convey an engaging, unique, relevant, and
consistent message to your target audience. Consumers already
expect “good service” from you. This isn’t an engaging message
nor is it unique. This message doesn’t lead towards a strong
positive emotional relationship.
Winning Hearts and Minds
An important aspect of brand development is to create a
positive emotional attachment to the brand, which creates a
77
 response in its audience without the audience seeing the
BRAND MANAGMENT
product or directly experiencing the service. Think of Amul for
a moment: the very name, perhaps even the logo, conjures up
an image of sinful indulgence. Yes, it represents chocolate or ice
cream, but it is the feeling and the anticipation of that feeling
that the brand conveys most compellingly.
Positive emotional bonding comes from a mutually beneficial
relationship built on intrigue, trust, understanding, and
support. These are qualities that often separate colleagues from
friends, and friends from family. Build your brand promise on
the basis that your product will deliver positive, relevant, and
unique emotional qualities.
And of course these qualities will be dictated by the current
needs and desires of your target audience.
This may be the most difficult and often overlooked aspect of
successful brand development. This is also where a lack of
comprehensive research into identifying the target audience’s
needs and desires can either make or break an attempt at
developing a positive emotional attachment between the brand
and its audience. If not done effectively, a seemingly insur-
mountable communication gap will develop between the
internal brand perception and the audience’s actual perception.
Your brand proposition should convey a message that is:
• Aligned with the brand’s core values
• Clear, Engaging, Unique, and Relevant to your target
audience
• Able to incorporate an element of positive emotional
attachment that is better than just “good”
• Echoed within your business, internally and externally
Consistent across multiple marketing and advertising
mediums (print, online presence, etc)
• Continually reinforced within the organization so that your
employees consistently deliver what is promised
• Echoed by strategic partners .
• Able to adapt to a changing marketplace.
Three Steps Toward Successful Branding
Here are three strategies you can use to enhance your brand:
Use Project Photos
Your customers want to know one thing: Will they be satisfied
when doing business with you? Persuade them with
photographs. Ask a satisfied end user to take a picture of a
building you supplied. Take the photo yourself, if you must. If
you can, take another one with you and your customer in front
of the building. Then post the photo in your distributorship
where others can see. Photos get people talking and help portray
happy customers - both those who know you and those who
walk through the front door for the first time.
See Branding Opportunities Everywhere
People get into habits easily. Habits are the enemy of
innovation, and you must do all you can to challenge your
patterns.Let’s look at an example of how one entrepreneur
could have done a better job of branding his company. Leaving
early in the morning from an airport one day, the lines through
security were enormous. There was a coffee shop outside the
security area, and the owner sat there watching the endlessly
78
long line move inch-by-inch. It took people 40 to 60 minutes to
get through the line to the security screeners. The coffee owner
was very disappointed because no one wanted to lose his or her
place in line to get coffee.But he watched potential customer-
after-customer move inch-by-inch and missed a golden
opportunity to re-position himself in the minds of his
customers: Bring the coffee to them. I would wager that people
would have paid more for the service of having coffee brought
to them while they waited in line. Instead, he sat there, holding
his head in his hand, blaming security for his misfortune. There
are opportunities for branding yourself everywhere if you only
look for them.
Educate your Customers
Much of the quality you build into every transaction is hidden
from your customers. Your job is to reveal it. I once walked
into a non-descript rug store in my town to buy a rug. A man in
a suit came up to me, and I told him I was in the market for a
throw rug for the front door. He asked me how big a rug I
needed and what kind of rug I would like. My ignorance of
rugs came immediately through, and he proceeded to give me
an education about the rugs he sold. For the next 20 minutes, I
felt like I was some guy who came into spend a million dollars
on rugs. He had workers come out and spread out rugs I
wasn’t possibly going to buy. When I said, “You don’t have to
do that,” he replied, “It’s my pleasure, don’t worry.”
Brand Success Through Integrating Marketing Resources
When you are driving a BMW and proudly turn the ignition
keys for the first time in ‘the ultimate driving machine’, you are
not only benefiting from a highly engineered car with excellent
performance, but also taking ownership of a symbol that
signifies the core values of exclusivity, performance, quality and
technical innovation. We are not just buying American Express
Travelers Cheques that are issued promptly and accepted world-
wide, or the security of having our lost cards restored quickly.
We are also paying to feel we belong to an exclusive club of
successful and extraordinary people, leading exciting and
adventurous lives. Likewise a managing director outsourcing the
IT function of a company chooses Andersen Consulting not
just because of the large resources and the expertise offered. He
or she is also buying a name that stands for commitment to:
service excellence, global recognition and sustained credibility.
While we in the consumer, service and industrial markets have
bought solutions to our individual problems, we have also
paid a price premium for the added, values provided by buying
brands. In addition to satisfying our core purchase require-
ments, we have bought an augmented solution to our
problem, for which we perceive sufficient added value to
warrant paying a premium over other alternatives that might
have satisfied our buying needs. ‘
The added values we sought, however, were not just those
provided through the presence of a brand name as a, differenti-
ating’ device, nor through the use of brand names to recall
powerful advertising. Instead, we perceived a total entity, the
brand, which is the result of a, coherent marketing approach
which uses all elements of the marketing mix. For example A
man does not give a woman a box of branded chocolates
because she is hungry. Instead, he selects a brand that, commu-
nicates something about his relationship with her. This, he
hopes, will be recognized through the pack design, her recall of
a relevant advertising message, the quality of the contents, her
chiding of him for the price he paid and her appreciation of the
effort he took to find a retailer specializing in stocking such an
exclusive brand. The same goes for a woman buying a man a
special box of cigars. These examples show that thinking of
branding as being ‘to do .. with naming products’, or ‘ about
getting the right promotion with the name prominently
displayed’, or ‘getting the design right’, is too myopic. In the
mid-1980s, we came across Scottowels when doing some work
in the kitchen towels market. Managers in the company thought
that this was a branded kitchen towel, but consumers perceived
this as little more than another kitchen towel with a name
added - one stage removed from being a commodity. It had a
brand name, but because the rest of the marketing mix was
neglected, it had to fight for shelf space on the basis of price
and was ultimately doomed because of the vicious circle driven
by minimum value leading to low price.
There are hundreds of examples of well-known brand names
that have failed commercially. There are even some, which are
reviled by the public. Such unsuccessful brands are examples of
a failure to integrate all the elements of marketing in a coherent
way.
Thus, branding is a powerful marketing concept that does not
just focus on one element of the marketing mix, but represents
the result of a carefully conceived array of activities across the
whole spectrum of the marketing mix, directed towards making
the buyer; recognize relevant added values that are unique when
compared with competing products and services and which are
difficult for competitors to emulate. The purpose of branding
is to facilitate the organization’s task of getting and maintaining
a loyal customer base in a cost-effective manner to achieve the
highest possible return on investment. In other words,
branding should not be regarded as at a critical tool directed
towards one element of the marketing mix, but rather should
be seen as the result of strategic thinking, integrating a market-
ing programme across the complete marketing mix.
Neither is this a concept that should be regarded as more
appropriate for consumer markets. Indeed, the concept of
branding is increasingly being applied to people and places, such
as politicians, pop stars, holiday resorts and the like, whilst it
has always been equally relevant to the marketing of products
and services. Strategic branding is concerned with evaluating
how to achieve the highest return on investment from brands,
through analyzing, formulating and implementing a strategy
that best satisfies users, distributors and brand manufacturers.
It is relatively recently that a strategic perspective on branding
has emerged, with firms beginning to recognize that they are
sitting on valuable assets that need careful attention, as we shall
see in the next section.
Does Marketing of Brand Help?
What is required to manage marketing as a brand asset of the
organization? We take guidance from the definition of brand as
a promise of value that is…
1. Unique
2. Relevant
BRAND MANAGMENT
3. Sustainable
These three dimensions of all brands point the way for
marketers to create value inside any organization. Regardless of
its role and expectations, marketing will win respect when it is
recognized as a contributor of value that is unique (not
generated by any other area, department or function), relevant
(supporting results for the organization) and sustainable
(ongoing and lasting).
1. Unique Value
The unique value of marketing is its focus on customers. More
than any other function, marketing leads the way for the
organization to understand, attract and keep customers.
While by no means an exclusive domain, marketing is uniquely
absorbed with this external focus in holistic terms. Marketing’s
contribution to the organization is to lead the way in customer
focus by bringing the customer perspective inside the organiza-
tion in ways that build customer equity, which, in turn, is no
less than the primary source of equity for the entire organiza-
tion.
2. Relevant Value
While the external focus of marketing is unlike most other
management disciplines, this unique perspective will not be
valued until marketing can demonstrate its relevancy to the
organization as a generator of earnings in the short term (or
revenue increases for nonprofit organizations) and top-line
growth in the long term.
Nothing is more relevant to business than results in terms of
revenue and profit growth.
Also, marketing enhances its relevancy when it skillfully
communicates throughout the organization the positive
consequences of a customer-focused strategy.
3. Sustainable Value
The unique or relevant value of marketing is ultimately of no
consequence unless the value is sustainable. That is, only if
marketing can repeat over a long period of time its ability to
bring a customer perspective throughout the organization and
generate earnings in the short term and top-line growth in the
long term will the marketing brand win lasting respect.
Marketing must therefore be both a scout to watch for change
emerging on the horizon and a vanguard leading the way to
new opportunities.
In each of these three dimensions of the marketing brand,
marketers must effectively market their work to internal
“customers.” They must recognize that it is the equity that
marketing builds within the organization, rather than the equity
that marketing builds with customers, that often makes the
difference between gaining a seat at the strategy table on the one
hand and powerlessness and marginality on the other.
79
BRAND MANAGMENT

Strategic Brand Management

Brand Building Process

• Strategic brand management involves the design
and implementation of marketing programs and
activities to build, measure, and manage brand
equity.
• The strategic brand management process is
defined as involving four main steps:
1) Identifying and establishing brand positioning and values
2) Planning and implementing brand marketing programs
3) Measuring and interpreting brand performance
4) Growing and sustaining brand equity
•Differentiation – Way in which Co. is viewed as unique in the market, what makes
you different?
•Relevance – the level to which a brand is personally important to customers.
•Esteem – that characteristic of a product or service that measures how highly
customers regard it.
•Knowledge – customer's belief that there is an understanding of what the brand
stands for. This drives the purchase decision.

Strategic Brand Management Process

STEPS KEY CONCEPTS

Brand Building Process
Identify and Establish
Brand Positioning and Values
•Differentiation – Way in which Co. is viewed as unique in the market, what makes
you different?
Plan and Implement
Brand Marketing Programs
Mental maps
Competitive frame of reference
Points-of-parity and points-of-difference
Core brand values
Brand mantra
Mixing and matching of brand elements
Integrating brand marketing activities

•Relevance – the level to which a brand is personally important to customers. Leveraging of secondary associations

Brand Value Chain

Measure and Interpret Brand audits
•Esteem – that characteristic of a product or service that measures how highly Brand Performance Brand tracking

customers regard it. Brand equity management system

Brand-product matrix
Grow and Sustain Brand portfolios and hierarchies

•Knowledge – customer's belief that there is an understanding of what the brand Brand Equity Brand expansion strategies
Brand reinforcement and revitalization
stands for. This drives the purchase decision.
13

A Case History; Its all in Building the Brand

By John R. Graham

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All the talk about creating a brand can seem somewhat ethereal
for many businesses. While it’s relatively easy to understand the
value of branding when it comes to a Coca-Cola or
NationsBank, it’s more difficult to grasp the possibilities when
it’s an insurance agency, a dry cleaner, a rivet manufacturer or an
alternative health clinic.
Because branding appears elusive, most businesses fail to build
a brand. They’re eager for marketplace visibility and want to be
thought of as competent, competitive and service- oriented by
their customers, but so does everyone else. This is why
businesses in the same industry often become a blur to
customers. There’s nothing distinctive or memorable about any
of them. Most are content to get what they call “our piece of
the pie.”
It doesn’t need to be this way. How many computer manufac-
turers are out there fighting for the next sale? Dozens. Yet,
which one stands out when it comes to building rugged
laptops? Panasonic, of course. In terms of top customer
satisfaction, there’s one company that takes top honors: Dell.
Now, how about overall quality? Which computer manufacturer
gets consistently high marks? Gateway. From then on, it’s back
to blur.
Branding associates a specific quality with a product, service or
company. When a particular product comes to mind, the
customer has a precise picture in mind. Consumers equate Wal-
Mart with maximum value for their dollar. The Hilton name
comes to mind for quality, modestly priced lodging. With Saks
Fifth Avenue, it’s high quality and service excellence. Prestige and
performance define Mercedes. Dunkin’ Donuts equals consis-
tently great coffee wherever you see the famous sign.
On the other hand, branding is not forever. Sears, for example,
owned middle America until about 1970. Then the middle class
began to change. Designer apparel became popular, except at
Sears. General Motors was long the standard until Americans
wanted well-built, smaller cars. GM lost out to the Japanese
auto companies on both counts, and became a negative brand.
Even with GM’s monumental improvements over the past few
years, some consumer segments remain skeptical.
While branding seems to be the key to success when it comes to
major manufacturers, what about a traditional business such as
a dry cleaner? What role does branding play in this business?
Anton’s Cleaners, the family-owned 39-store chain in Eastern
Massachusetts and Southern New Hampshire, is a work-in-
progress when it comes to branding. The first Anton’s Cleaners
opened in Lowell in 1913. Over the years, the company grew
and expanded. At one time, Anton’s locations could be found
in several states with one of the largest stores inside the
Pentagon. There was even a venture into uniform services.
Then beginning about the mid-1980s, a re-engineered company
began to take shape. It was just about 10 years later that the
company took aim at marketing.
It was apparent that while the company’s flag flew over more
than three dozen locations, a definitive Anton’s “image” was
missing. It was at that point that a marketing process began to
unfold. Although many issues were addressed, the brand
concept became a top priority.
Although the company had long given precedence to the actual
BRAND MANAGMENT
cleaning process, using only the finest equipment and chemicals,
and providing constant training for its employees, several
ingredients were missing.
First, the logo was tired, having been around for about 40
years. The colors were black and red, appropriate for some
businesses, but not for a company specializing in a fresh, clean
look. The first step was to update the company logo and
introduce an environmentally-friendly green and blue color
combination.
Then came the presentation of the clothes, including hangers,
hanger covers, VIP Express drop off bags, and poly bagging
for the clothes. With some of basics in place, a big third step
involved the redesign of the interior and exterior of the stores.
Although Anton’s Cleaners was a chain, it wasn’t-at least as far
as the customers could see. It was as if Anton’s had 39
individual stores. It was clear that if Anton’s Cleaners was to
become a brand, the stores must convey the message of
uniformity in much the same way that Dunkin’ Donuts
accomplishes the goal.
Attempts were made over the years to redesign the stores, but
the results were unsatisfactory. The goal was to create a clean,
bright, attractive and recognizable design, one that worked with
a freestanding location as well as in a strip mall.
A combination of window treatment, a bright green internal
awning, white walls and a well-lit call office (or customer area)
emerged as “The Anton’s Look.” The goal was to create a store
environment that mirrored the care Anton’s gives to its
customers’ clothes.
Today, Anton’s Cleaners has a consistent, unified look that gives
the company what can be called marketplace “visibility,” a goal
that could not be achieved even with extensive advertising. The
task was to transform the company into a brand, and the stores
themselves played a key role in the process.
For example, in a three month period following the opening of
a new store in a strip mall adjacent to an Interstate highway, it
was revealed that 46 zip codes were represented among the
more than 2,000 customers the store served during that period.
By creating a brand, the whole became greater than the total of
the nearly 40 stores. The idea was to demonstrate that Anton’s
Cleaners is everywhere.
A recent direct mail campaign reinforced the branding process.
Although the mailers were personalized for specific stores, there
was a list of all the stores including addresses and telephone
numbers.
There are other elements, including the development of a high
visibility community relations program, advertising and public
relations activities. Each of these contributed to reinforcing the
Anton’s image.
While Anton’s Cleaners had been in business since the early
part of the century and had an enviable track record as a
company, it took almost all those years for Anton’s to emerge as
a brand.
This case history is instructive because it involves a long
established, successful company that was just waiting to move
81
 to the next level. More importantly, it raises some of the basic Anton’s Cleaners learned an important lesson: building the
BRAND MANAGMENT

branding questions: brand is building the business.

• What market segments do you want as customers? John R. Graham is president of Graham Communications, a
Branding excludes the “we-want- everybody” type of marketing services and sales consulting firm founded in 1976.
thinking. With its rugged laptops, Panasonic appeals to Mr. Graham is the author of The New Magnet Marketing
those who work in demanding conditions. In this market (Chandler House Press, 1998), the revised and updated version
niche, Panasonic is the brand. of his original book, Magnet Marketing, and 203 Ways To Be
The CVS stores, Osco and Walgreen’s send a powerful Supremely Successful In The New World Of Selling (Macmillan
message to the consumer: “It’s easy to find it here.” Spectrum, 1996). Mr. Graham writes for a variety of publica-
Whether it’s greeting cards, motor oil, beach chairs or an ice tions and speaks on business, marketing and sales topics for
scrapper, these stores have it. In a sense, they are saying, company and association meetings.
“You can get it without going shopping.” Notes
• What do you want the customer to think about when
seeing your product? In other words, what’s distinctive?
Dozens of retail chains have disappeared for a variety of
reasons. Near the top of the list is a lack of clarity when it
came to differentiation. If customers do not have a clear
understanding of why they should shop at a particular
chain, they will go elsewhere.
Clarity pays off for many brands. When it comes to
household appliances, GE is perhaps the trusted name in
mid-priced products. It’s almost like saying, “It’s been
around. How can we go wrong?” On the other hand, the
Bosch name on an appliance conjures up a high quality
European image for the trendsetter.
• What factors will contribute to shaping that perception?
One of the most interesting brands is Best Buy, the
discount electronics and appliance retailer. In this case, the
name helps shape the perception. In fact, the Best Buy logo
is a yellow price tag. By implication, Best Buy is saying,
“Others have good prices…but see us for the best buys.”
In this same genre, Radio Shack has branded itself in an
innovative way. While these stores carry similar merchandise to
others in this category, the Radio Shack speciality is hard to find
electronic items, particularly parts. While you may go elsewhere
to buy a an extra telephone for a bedroom, for example, chances
are you would head to a Radio Shack store to pick up wiring
and outlets.
Perhaps one of the branding success stories is Apple Com-
puter. It might be more accurate to describe it as “brand
restoration.” With the arrival of the Macintosh computer in
1984, the Apple name meant user-friendly innovation. By the
early 1990s, there were still many Mac believers, but the innova-
tion cache had been lost. The introduction of the iMac restored
the brand because of unique design and affordable pricing. The
message was clear: “Apple’s back.” It was the shape of the box
and the assortment of colors that sent the Apple message to
the marketplace.
The primary value of branding is that it focuses total attention
on the customer and doesn’t allow a business to be distracted
by irrelevant and self-serving issues. One wonders if it was
“distraction” that caused the fall of J. Peterman, the catalog
company. Portraying Mr. Peterman as traveling the world-
seemingly at great expense-in the unending conquest of obscure
merchandise may have sent the message that no one is minding
the store.

82

LESSON 13:
BRAND EVOLUTION
Objectives
Upon completion of this Lesson, you should be able to:
• Historical evolution of brands
• Understand how did the branding as a concept evolved
• Explain the gradual evolution on brands
• Discuss the eight categories of brands
In your previous lesson you have studied about the branding
process and brand success through integrated marketing
resources. We will now understand the how brands evolved and
the various categories of brands.
Can any one of us tell how did the concept of branding
evolved? What made the producers and manufacturers create
brands?
Branding Decision
Branding is interwoven with religion.Mankind built branded
environments, places to go and practice religion. The chants and
bells were to bring to prople into these places, which is very
much like advertising. The concepts and ideas have been there
forever, and as society developed , brands proliferated to
differentiate and generate business.
Historical Evolution of Brands
Historically, most products were unbranded. Producers sold
goods or commodities to fulfil our core basic needs like taste,
hunger or energy. These products did not have ny identification
mark on them. The first step towards branding a commodity is
to package it, e.g. rice, papad, salt. Water , for example used to be
sold as a commodity. Today most mineral waters are sold as
brands. The company enhances the value of the commodity
functionally. Branding started formally when craftsmen put
trademarks on their products to protect them against inferior
quality. Painters started signing their art works. Pharmaceutical
companies were the first to put brand names on their products.
Today hardly anything is unbranded. If you look at yourself
you will find everything you have worn or carried is of a
particular brand, yes, some are successful brands and some are
not.
Brands start off as products made out of certain ingredients.
Over a period of time, brands are built through marketing
activities and communications. They keep on acquiring at-
tributes, core values and extended values.
Extended value
CHAPTER 3:
UNDERSTANDING
UNIT 4
THE BRANDING PROCESS
BRAND MANAGMENT
Having clarified the concept of the brand, it is worth appreciat-
ing how brands evolved. This historical review shows how
different types of brands evolved.
There were examples of brands being used in Greek and
Roman times. With a high level of illiteracy, shopkeepers hung
picture above their shops indicating the types of goods they
sold. Symbols were developed to provide an indication of the
retailer’s speciality and thus the brand logo as a shorthand device
signalling the brand’s capability was born. Use is still made of
this aspect of branding, as in the case, for example, of the
poised jaguar indicating the power developed by the Jaguar
brand.
In the Middle ages, craftsmen with specialist skills began to,
stamp their marks on their goods and trademarks. Distinguish
in between different suppliers became more common. In these
early days, branding gradually became a guarantee of the source
of this product and ultimately its use as a form of legal
protection against copying grew. Today, trademarks include
words (e.g. Duracell and Matchbox), symbols (e.g. the distinc-
tive Shell logo) or a unique pack shape (e.g. the Coca-Cola
bottle), which have been registered an which purchasers
recognize as being unique to a particular brand.
The next landmark in the evolution of brands was associated
with the growth of cattle farming in the New World of North
America. Cattle owners wanted to make it clear to other
potentially interested parties which animals they owned. By
using a red-hot iron, with uniquely shaped end, they left a clear
imprint on the skin of each their animals. This process appears
to have been taken by many the basis for the meaning of the
term brand, defined by the Oxford English Dictionary as ‘to
mark indelibly as proof of ownership, as sign of quality, or for
any other purpose’. This view of the purpose 0 brands as being
identifying (differentiating) devices has remained with us until
today. What is surprising is that in an enlightened era, aware of
83
 the much broader strategic interpretation of brands, many of
BRAND MANAGMENT
today’s leading marketing textbooks still adhere to the brand
solely as a differentiating device, for example, ‘a name, term,
sign, symbol, design, or a combination of them, which is
intended to identify the goods or services of one seller or group
of sellers, and to differentiate them from those of competitors.
Towards the end of the nineteenth century, such a view was
justified, as the next few paragraphs clarify. To regard brands as
little more than differentiating devices is to run the risk of the
replaced demise of the product or service in question.
To appreciate why organizations subscribed to brands as
differentiating devices over 100 years ago, and to appreciate why
this view held favour until the 1960s, it is necessary to consider
the evolving retailing environment, particularly that relating to
groceries, where classical brand management developed. In the
first half of the nineteenth century, people bought their goods
through four channels:
1 Retailers;
2. from those who grew and sold their own produce;
3. from markets where farmers displayed produce;
4. from travelling salesmen.
Household groceries were normally produced by small manu-
facturers supplying a locally confined market. Consequently the
quality of similar products varied according to retailer, who in
many instances blended several suppliers’ produce. With the
advent of the Industrial Revolution, several factors influenced
the manufacturer retailer relationship, i.e
• the rapid rise of urban growth, reducing manufacturer
consumer contact
• the widening of markets through improved transportation;
the increasing number of retail outlets;
• the wider range of products held by retailers;
• increasing demand.
A consequence of this was that manufacturers’ production
increased, but with their increasing separation from consumers,
they came to rely more on wholesalers. Likewise, retailers’
dependence on wholesalers increased, from whom they
expected greater services, Until the end of the nineteenth
century, the situation was one of wholesaler dominance.
Manufacturers produced according to wholesalers’ stipulations,
who, in turn, were able to dictate terms and strongly influence
the product range of the retailer. As an indication of the
importance of wholesalers, it is estimated that by 1900 whole-
salers were the main suppliers of the independent retailer who
accounted for about ninety per cent of all retail sales.
During this stage, most manufacturers were:
• selling unbranded goods;
• having to meet wholesalers demands for low prices;
spending minimal amounts on advertising;
• selling direct to wholesalers, while’ having little contact
retailers.
In this situation of competitive tender, the manufacturer’s
profit depended mostly on sheer production efficiency. It was
84
virtually commodity marketing, with little scope for increasing
margins by developing and launching new products.
The growing levels of consumer demand and the increasing rate
of technological development were regarded by manufacturers
as attractive opportunities for profitable growth through
investing in large-scale production facilities. Such action, though,
would lead to the production of goods in anticipation of,
rather than as a response to demand. Not only were manufac-
turers perturbed by having to adopt the new techniques of
planning, but also with such large investment they were
concerned about their reliance on wholesalers. To protect
investment, patents were registered and brand names affixed by
the owners. The power of the wholesalers was also bypassed by
advertising brands directly to consumers. The role of advertis-
ing in this era was to stabilize demand, ensuring predictable
large-scale production protected from the whims of wholesal-
ers. In such a situation the advertising tended to focus on
polluting awareness of reliability and guaranteeing that goods
with brand names were consistent quality. The third way that
manufacturers invested in protecting the growth of their brands
was through appointing their salesmen to deal directly with
retailers.
By the second half of the nineteenth century, many major
manufacturers had embarked on branding; advertising and
using a sales, force to reduce the dominance of wholesalers. In
fact, by 1900 the balance of power had swung to the manufac-
turer, with whom if maintained until the 1960s. With branding
and national market manufacturers strove to increase the
consistency and quality of the brands, making them more
recognizable through attractive packaging that no longer served
the sole purpose of protection. Increase advertising was used to
promote the growth of brands and with manufacturers
exercising legally backed control over prices, and more manufac-
turers turned to marketing branded goods.
This changing of the balance of power from wholesaler to
manufacturer by the end of the last century marked another
milestone in the evolutionary period of brands.
Brand owners were concerned with using their brands as legal
registrations of their unique characteristics. Besides this, they
directed their efforts towards consumers to make them aware
that their brand was different in some way from those of
competitors. Furthermore, they wanted their brands name to
encourage belief in a consistent utility level that most were
prepared to guarantee. Thus, whilst the differentiating aspect of
the concept was initially regarded as the key issue, this soon also
encompassed legal protection and functional communication.
Throughout this century, manufacturers’ interest in branding
increased and with more sophisticated buyers and marketers,
brands also acquired an emotional dimension that reflected
buyers’ moods, personalities and the messages they wished to
convey to others. However, with the greater choice to buyers
through the availability of more competing products, the level
of information being directed at buyers far exceeded their ability
to be attentive to the many competing messages. Because of
their limited cognitive capabilities, buyers began to use brand
names shorthand devices to recall either their brand experiences
or marketing claims and thus saved themselves the effort of
having continuously to seek information.
The only other major landmark in the growth of branding was
the metamorphosis from manufacturers’ brand of distributors,
brand that began to occur around the turn of this century.
Branding in the 1 990s: Brand Categorization
An advertising perspective
This brief historical review has shown you how brands evolved
and has also briefly introduced the idea of the different types of
brands. One of the weaknesses with the current views on
branding is that the term is used to encompass a very broad
range of issues, encouraging the possibility of confusion.
Two well known researchers pointed out that the problem with
branding is the surprising number of creative directors,
planners account handlers and clients who have a kindergarten
knowledge of branding processes and mechanisms. They are,
rightly critical of those who regard branding merely as process
to ensure that the name on a product or service is highly visible.
Based on a consideration of advertisements, they classified
brands into nine categories, each representing a role in advertis-
ing, varying from simple through to complex branding.
An Output Process
A key problem with many of these interpretations is that they
place too much emphasis on branding as something that is
done to consumers, rather than branding as something
consumers do things with. It is wrong, in other words, to focus
on branding as an input process. Clearly we need to consider
carefully how marketing resources are being used to support
brands, but it is crucial to understand the output process as well
since, as mentioned earlier, the final evaluation of the brand is
in the buyer’s or user’s mind. Consumers are not just passive
recipients of marketing activity. They consume marketing
‘activities sometimes with a large subconscious appetite,
twisting messages to reinforce prior expectations.
Several highly-regarded branding advisers stress the importance
of looking at brands as perceptions in our minds, a notice
which is comparatively easy to accept and which reinforces the
conclusion about the importance of what we take out of the
process rather than what marketers put into it. Whilst it is clear
marketers design the firm’s offer, the ultimate judge about the
nature of the brand is the consumer. When buying a new brand
consumers seek clues about the brand’s capabilities. They try to
evaluate the brand through a variety of perceptual evaluations,
such as its reliability, or whether it’s the sort of brand they feel
right with whether it’s better than another brand, so that a
brand becomes not the producer’s, but the consumer’s idea of
the product. The result of good branding is a perception of the
values of a product, or service interpreted and believed so clearly
by the consumer that the brand adopts a personality. This is so
well-recognized that products with little apparent functional
differences are regarded as different purely because of the brand
personality. For example, while many organizations provide
charge cards, American Express is ‘the one you don’t leave
home without’. Parker pens have a personality of their own, as
do Singapore Airlines, Fosters lager, and countless other brand
around the world.
Thus, recognizing the inherent flaw when marketers focus upon
BRAND MANAGMENT
branding as an input process, we have highlighted eight
different types of brands that practitioners employ.
An Eight-Category Typology
1 Brand as a Sign of Ownership
.An early theme, given much prominence in marketing circles,
was the distinction between brands on the basis of whether the
brand was a manufacturers’ brand or a distributors’ brand
(‘own label’, ‘private label’). Branding was seen as being a basis
of showing who instigated the marketing for that particular
offering and whether the primary activity of the instigator was
production (manufacturers’ brand) or distribution
(distributors’ brand). However, this drew a rather artificial
distinction, since nowadays consumers place a far greater reliance
on distributor brands - particularly when brands such as
Benetton and Marks & Spencer are perceived as superior brands
in their own right. In fact, some would argue that with the
much greater marketing role played by major retailers and their
concentrated buying power, the concept of USP ( Unique selling
proposition ) should now be interpreted as ‘Universal
Supermarket Patronage’ I
With escalating advertising cost, there is a move to the corpora-
tion as a brand, rather than stressing branding at the individual
product lines level. This helps form a clear identity and has
given impetus to the corporate design industry. There is a
danger, however, that consumers do not pick up the values that
the corporate brand stands for and how these run through all
the product line brands. A further danger is that as a corpora-
tion widens its brand portfolio, its core values become diluted.
2. Brand as a Differentiating Device
The historical review earlier in this lesson indicated that, at the
turn of the century, a much stronger emphasis was placed on
brands purely as differentiating device between similar products.
This perspective is still frequently seen today in many different
markets. Yet with more sophisticated marketing and more
experienced consumers, brands succeed not only by conveying
differentiation, but also by being associated with added values.
For example, the brand Persil not only differentiates it from
other washing-power lines, but is a successful brand since it has
been backed by a coherent use of resources that deliver the
added value of a higher-quality offering with a well – defined
image. By contrast the one-man operation, “Tom’s Taxi Service’,
is based upon branding as a differentiating device, with little
thought to communicating added values.
Small firms seem to be particularly prone to the belief that
putting a name on their product or service is all that is needed
to set them apart from competitors. They erroneously believe
that branding is about having a prominent name, more often
than not based around the owner’s name. Yet there is ample
evidence that brands fail if organizations concentrate primarily
on developing a symbol or a name as a differentiating device.
Brands will succeed only if they offer unique benefits, satisfying
real consumer needs. Where an organization has reason to
believe that their competitors are marketing brands primarily as
differentiating devices, there is an opportunity to develop a
85
 strategy, which gets buyers to associate relevant added values
BRAND MANAGMENT
with their brand name and hence gain a competitive advantage.
Brand distinctiveness allows customers to identify products and
services. This occurs not only from the brand itself, i.e. through
the packaging, advertising or naming, as shown in Figure 2.2.
There are further sources to distinguish the brand. First,
consumers perceive the brand in their own way. As explained
before, value is in the eye of the beholder and each person can
draw very different conclusions.
Secondly, people interacting with the consumers affect their
perception of the brand. Especially with consumer goods,
consumers focus their attention on certain brands as a result of
conversations with peer groups.
Distinctiveness of brand
From the brand From the people
From the minds of
itself
those directly
involved with
the brand user
Figure 2.2 How brand can be distinctive
3 Brand as a Functional Devise
Another category of brands is that used by marketers to
communicate functional capability. This stemmed from the early
days of manufacturers’ brands when firms wished to protect
their large production investments by using their brands to
guarantee consistent quality to consumers.
As consumers began to take for granted the fact that brands
represented consistent quality, marketers strove to establish their
brands as being associated with specific unique functional
benefits by, for example, not just marketing a credit card, but a
credit card protection policy.
Functional capabilities should always be focused on consumers,
rather than on internal considerations. For instance, providing
televisions in waiting rooms to make queues less annoying is
less likely to be appreciated than a redesigned system to
eliminate queues altogether.
A brief scan of advertisements today shows the different
functional attributes marketers are trying to associate with their
brand. For example, Dyson, emphasizes the unique features of
a carpet cleaner that needs no bag changing; SEAT strives to
convey a good value-for-money proposition; Castrol GTX
represents ‘high technology’ engine protection. Firms adopting
the view that they are employing brands as functional commu-
nicators have the virtue of being customer driven, but clearly
run the risk of an excessive reliance on the functional (rational)
element of the consumer choice, as all products and services
also have some degree of emotional content in the buying
process.
4 Brand as a Symbolic Device
In certain product fields (e.g. perfume and clothing) buyers
perceive significant badge value in the brands, since it enables
them to communicate something about themselves (e.g.
86
emotion, status, etc.). In other words, brands are used as
symbolic devices, with marketers ‘believing that brands are
bought and used primarily because of their ability to help users
express something about themselves to their peer groups, with
users taking for granted functional capabilities.
Where consumers perceive the brand’s value to lie more in
terms of the non-verbal communication facility (through the
logo or name), they spend time and effort choosing brands,
almost with the same care as if choosing a friend. It is now
accepted that consumers personify brands and when looking at
the symbol values of brands, they seek brands which have very
clear personalities and select brands that best match their actual
or desired self-concept.
For example, in the beer market there are only marginal product
differences between brands. Comparative consumer trials of
competing beer brands without brand names present showed
no significant preferences or differences. Yet, when consumers
repeated the test with brand names present, significant brand
preferences emerged. On the first comparative trial, consumers
focused on functional (rational) aspects of the beers and were
unable to notice much difference. On repeating the trials with
brand names present consumers were able to use the brand
names to recall distinct brand personalities and the symbolic
(emotional) aspect of the brands influenced preference.
Through being members of social groups, people learn the
symbolic meaning of brands. As they interpret the actions of
their peer group, they then respond, using brands as non-verbal
communication devices (e.g. feelings, status). To capitalize on
symbolic brand therefore, marketers must use promotional
activity to communicate the brand’s personality and signal how
consumers can use it in their daily relationships with others.
Nonetheless, whilst there are many product fields where this
perspective of brands is useful, it must be also be realized that
consumers rarely consider just the symbolic aspect of brands.
Consumers often evaluated brands in terms of both a symbolic
(emotional) and a functional (rational) dimension. Marketers
should therefore, be wary of subscribing to the belief that a
brand acts solely as a symbolic device.
A successful example of combining both is given by Mercedes
affinity Visa card, which offers the functional advantage of an
internationally accepted credit card with the appeal of showing
the user’s ownership of a highly prestigious car.
5 Brand as a Risk Reducer
Many marketers believe that buying should be regarded as a
process whereby buyers attempt to reduce the risk of a purchase
decision. When a person is faced with competing brands in a
new product field, they feel risk. For example, uncertainty about
whether the brand will work, whether they will be wasting
money, whether their peer group will disagree with their choice,
whether they will feel comfortable with the purchase, etc.
Successful brand marketing should therefore be concerned with
understanding buyers’ perceptions of risk, followed by
developing and presenting the brand in such a way, that buyers
feel minimal risk. An example of an industry appreciating
perceived risk is the pharmaceutical industry. One company has,
developed a series of questions which its sales representatives
use it evaluate the risk-aversion of doctors. When launching a
new drug the company focuses sales presentations initially on
doctors with a low-risk aversion profile.
To make buying more acceptable, buyers seek methods of
reducing risk by, for example, always buying the same brand,
searching for more information, only buying the smallest size,
etc.
Research has shown that one of the more popular methods
employed by buyers to reduce risk is reliance upon reputable
brands. Some marketers, particularly those selling to organiza-
tions rather than to final consumers, succeed with their brands
because they find out what dimensions of risk the buyer is
most concerned about and then develop a solution through
their brand presentation which emphasizes the brand’s
capabilities along the risk dimension considered most impor-
tant by the buyer. This interpretation of branding has the virtue
of being output driven. Marketers, however, must not lose
sight of the need to segment customers by similar risk percep-
tion and achieve sufficient numbers of buyers to make risk
reduction branding viable.
6 Brand as a Shorthand Device
Glancing through advertisements today, we become aware of
brands whose promotional platform appears to be based on
bombarding us with considerable quantities of information.
To overcome the problem of sifting through large amounts of
information, brands are used as shorthand devices by
consumers to recall from memory sufficient brand information
to make a decision. There is merit in this approach, as people
generally have limited memory capabilities. To overcome this,
they bundle small bits of information into larger chunks in
their memory, and use brand names as handles, to recall these
larger information chunks. By continuing to increase the size of
these few chunks in memory, buyers in consumer, industrial
and service sectors can process information more effectively. At
the point of purchase, they are able to recall numerous
attributes by interrogating their memory.
There is, nonetheless, the danger of concentrating too heavily
on the quantity, rather than on quality of information directed
at purchasers. It also ignores the perceptual process, which is
used by buyers to twist information until it becomes consistent
with the prior beliefs - an error fatally overlooked by the short-
lived Strand cigarette brand.
7 Brand as a Legal Device
With the appearance of manufacturers’ brands at the turn of
this century, consumers began to appreciate their value and
started to ask for them by name. Producers of inferior goods
realized that to survive they would have to change. A minority,
however, changed by illegally packaging their inferior products in
packs that were virtually identical to the original brand. To
protect themselves against counterfeiting, firms turned to
trademark registration as a legal protection. Some firms began
to regard the prime benefit of brands as being that of legal
protection, with the result that a new category of branding
appeared. Within this group of brands, marketers direct their
efforts towards effective trademark registration along with
consumer education programmes about the danger of buying
poor grade brand copies. For example, the pack details on
Matchbox products boldly state that ‘Matchbox is the
trademark of the Matchbox group of companies and is the
BRAND MANAGMENT
subject of extensive trademark registrations’, while Kodak packs
all carry the advice ‘It’s only Kodak film if it says Kodak’
8 Brand as a Strategic Device
Finally, more enlightened marketers are adopting the view to
which the authors subscribe, that brands should be treated as
strategic devices, The assets constituting the brand need to be
audited, the forces affecting the future of the brand evaluated
and, by appreciating how the brand achieved its added value, a
positioning for the brand needs to be identified so that the
brand can be successfully protected and achieve the desired
return on investment. To take full advantage brands as strategic
devices, a considerable amount of marketing analysis and brand
planning is required, yet many firms are embroiled in tactical
issues and do not gain the best possible returns from their
brands.
This section has described several different categories of brand
and has also highlighted the inherent weaknesses of each type
brand. You may wonder, however, why manufacturers under-
take the commercial risk of developing manufacturer brands
and why distributors extend their activities beyond their area of
economy expertise to develop distributor brands. We shall
discuss the value of a brand to manufacturers, distributors and
consumers in the next lesson.
The Evolution of a Brand
by Robert Wilkos
Building our company into a brand name was not on our
minds when we took the first steps in that direction. We simply
wanted to differentiate ourselves from our competitors.
During the last six years, this evolutionary process has changed
our company - and our thoughts about branding - forever. As a
result, we have managed to build the Peaden name into the
most recognized brand in our market.
The Beginning
Peaden Air Conditioning is located in Panama City, FL, with
our service territory smack in the middle of Florida’s booming
Great Northwest. Still, it’s a minor market (#159 nationwide).
We are “country contractors” so to speak, and major industry
changes or trends don’t usually affect us until much later than
the rest of the country
In the late 1990s, the major issues swirling around our industry
included utility intrusion, consolidation, giant retailers entering
the HVAC market, and manufacturers-turned contractors.
These were real threats, and any one of them could have
changed the face of our market place overnight. We wondered
how we would compete with one or all of these newcomers.
Would we roll up our sidewalk and go home or figure out
some way to profitably compete on a new playing field?
We sought exclusive product agreements, but these arrange-
ments
became increasingly rare.
Therefore, we committed to a devising a strong marketing plan.
Because we didn’t want other dealers with the same product
reaping benefits from our advertising efforts, we enrolled in a
program offered by Nordyne called, “Brand within a Brand,“
87
 where contractors could privately-label Nordyne products with
BRAND MANAGMENT
their own name.
This idea wasn’t new to me. I became familiar with this concept
and put it into play in the late 1980s while managing another
company. With a long-standing and excellent reputation in our
market, creating a line of Peaden brand equipment seemed like a
really good way to stand apart and be the sole beneficiary of our
marketing efforts.
Teamwork and Preparation
For us, building a brand was a road less traveled. The process
would have been difficult, if not impossible, to execute without
assistance from Nordyne and Remsco, a locally-owned HVAC
wholesaler. With their help, we unveiled our Peaden Signature
Series systems in 1999.
From our experience, private labeling doesn’t diminish the
manufacturer/dealer relationship; it strengthens it. To this day,
our relationship with Nordyne and Remsco is second to none,
and we have all benefited from this marketing concept, as have
our customers.
Taking this step was far from easy. There were some concerns
about reactions from existing and new customers, as well as our
staff. Fortunately, these concerns were either answered in short
order or never materialized into significant issues.
Essential to the launch of the Peaden Signature Series brand
was a concerted effort to do our homework before entering the
market.
We sent a dozen of our key staff members to St. Louis on
separate trips to inspect the Nordyne facilities and to ask all the
necessary questions. At the same time, we worked hard on our
label designs so that they were attention-getting, but not
obtrusive. As a result, we had more information at our
fingertips than we normally would with other national name
brands.
The preparation was a must because it was our name going on
the equipment. The due diligence allowed our staff to become
comfortable with the plan. Once this happened, everything that
followed became easier.
We coached our comfort consultants, service technicians, and
the entire staff. They needed to believe in the private label
concept and the products we were offering.
As far as our customers were concerned, we knew there would
be questions. We just didn’t know what they would be.
However, we felt confident telling them, “This is the product
that we have selected to carry our name and reputation.”
Then, we waited for the feedback, both from our customers’
living rooms and our office.
Confidence was crucial to the sale, but our reputation was the
key. Although there were a few awkward moments in the
beginning, they were easily overcome. When our customers
responded, “Okay, that’s good enough for me,” we knew the
program would be successful.
A Value-Added Product
We sell our Signature Series systems as value-added products.
Each system and/or unitary piece includes a six- year warranty to
88
coincide with Nordyne’s six-year parts warranty. There’s also a
complimentary one-year Energy Savings Plan.
Packaging products and services together has worked well. It
allows us to educate our customers on the importance of
maintenance during the first year of ownership because tune-
ups are built into each product price.
We also bundled service agreements with the nationally
recognized brands that we offer, such as Amana and Trane.
The renewals of these Energy Savings Plans (ESP) have
remained close to 90%. Our ESP customers now exceed 5,500.
In fact, nearly 10% of all households in Bay County, FL have a
Peaden Energy Saving Plan.
Before we embarked upon this approach, our total plans
numbered approximately 1,500. As a result, total revenues have
nearly tripled!
Adding a Second Label
A year after rolling out the Signature Series, we were invited by
Goodman to private-label their equipment. While this
opportunity was a complete surprise, we didn’t hesitate to
jump at it. Thus, the Peaden Pro Series was introduced in the
latter part of 2000.
While few companies private label two lines from two different
manufacturers, it hasn’t proven to be a problem for Peaden. We
have more than 20 years of experience with Goodman prod-
ucts, and our Pro Series systems are positioned and priced as a
no-frills, economy line. This rounded out our brand line-up,
giving us competitive products at both ends of the price
spectrum.
Other Labels
In addition to the Signature Series and Peaden Pro Series
systems, we began installing thermostats with our name and
phone number on the front cover. These thermostats are
included in all new system sales. Last year, we added a line of
privately-labeled filters and will add more products soon.
The Peaden labels in a residence, plus helpful stickers and a
magnet for the refrigerator, work together to create a constant
reminder inside and around a home or business. They represent
mini-billboards that can be easily seen by neighbors, relatives,
friends, and all potential new Peaden customers. The labels are
also just as visible as any national label.
If location, location, location is the key to real estate, then
frequency, frequency, frequency is essential to a good marketing
campaign. We take advantage of both.
Our marketing efforts get us into new doors and, once in, we
make sure our customers don’t forget us. One of our slogans
has been, “Creating customers for life.” A lifetime is exactly how
long we want to be our customers’ contractor of choice.
Private Labeling Isn’t A Stretch
We’ve attended our fair share of sales-related trade seminars,
and believe that it’s our comfort consultants and service
technicians who lead the equipment selection and purchase
process with a consumer. If you accept that basic fact, then
exclusive products and private-labeling isn’t much of a stretch.
In addition, if selling is all about selling yourself first, and you
believe in your company and the products it offers, private-

BRAND MANAGMENT
labeling can be a perfect fit.
You might ask: Is that all it takes to build your company into a
brand? Honestly, we don’t know. We’re an HVAC contracting
firm. We took the advice that many sales experts freely share,
and put a totally different spin on it. However, we don’t believe
that just putting your own name on another’s piece of equip-
ment is all there is to branding. It‘s only part of the story.
Our drive for customer service excellence has been and remains a
top priority, as well as maintaining our well-known reputation.
We believe that branding our name only works if everyone in
the company believes in our ability to provide great products
backed by exceptional service and maintenance, and then works
hard to make certain that it happens.
Also key is our on-going marketing and advertising campaign.
It covers a wide spectrum and it’s all about us, our products,
and our services. Private labeling is more successful because of
our marketing efforts, and our marketing is more successful
because of our private labeling.
Our efforts, accomplishments, and mistakes have brought the
Peaden team closer together. The Peaden team is a tight unit
and includes not only Peaden employees, but also key personnel
from our distributor and manufacturer partners. Our partners
know everything about us inside and out, and they’ve been
essential to our success.
While Peaden looks a lot different today than when we started
the private-labeling program, there’s still much more to learn.
Dare to be different! Ask yourself: What name would you rather
be promoting today? Yours or another company’s?
The most famous line from the movie, Field of Dreams, is
“Build it, and they will come.” This phrase, plus a good dose
of marketing, also applies to building your own HVAC brand.
Robert Wilkos is the business leader of Peaden Air Condition-
ing in Panama City, FL. Peaden is a member of ACCA,
Excellence Alliance and the Service Roundtable. Wilkos can be
reached by email at rwilkos@peaden.com.
Brands were Used for:
• Differentiating between competing items
• Representing consistency of quality
• Providing legal protections from copying

Evolution of Brand: 8 Types

• A sign of ownership of the branding process.
• A differentiating device.
• A communicator of functional capability
• A device to enable buyers to express about themselves.
• A risk reducing device.
• A shorthand communication device.
• A legal device.
• A strategic device.

Notes

89
BRAND MANAGMENT
LESSON 14:
VALUE OF BRANDS
Objectives
Upon completion of this Lesson, you should be able to:
• Understand the value of brands to manufacturers
• Explain the relationship between brand and distributors
• Discuss the Brand-Customer relationship
You are now aware of how brands as a concept evolved in this
lesson we shall learn more about the value of brand to
manufacturer, distributor and customer.
Value of Brand to Manufacturer
Why do you think manufacturers are more concerned about
their brands?
Manufacturers invest effort in branding for a variety of reasons.
If the trademark has been effectively registered, the manufac-
turer has, a legally-protected right to an exclusive brand name,
enabling it to establish a unique identity reinforced through its
advertising and increasing the opportunity of attracting a large
group of repeat purchasers.
With the high costs of developing new brands, the emphasis in
the 1990s is on existing brand development and line exten-
sions. The most recent examples are Budweiser, a
premium-priced beer moving into the jeans market, and
retailers such as Sainsbury and Tesco targeting the financial
service sector. Virgin provides the best example of a brand
being stretched. Already covering cola, retailing, vodka financial
investment and airlines, in 1997 it announced plans to move
into the jeans and cosmetics market. Many question whether the
Virgin brand risks shouting its value with so many different
products under its umbrella. However, its previous successes
may disprove such fears. One recent study has assessed the
degree of stretchability of brands. It suggests that only few
brands, like Marks & Spencers , Virgin and Nike, are capable of
successfully leaping into unknown territories. Clearly, good
brands keep on building a corporate image and hence reduce the
cost of new line additions carrying the family brand name.
However, marketers of overstretching the brand’s core values, as
Levis did in the early 1980s with their unsuccessful move from
jeans into the suit market. Brand extension is such a popular
choice because it offers an apparently easy and low risk way of
leveraging the brand equity, It is essential, however, to realize
that there is a cost to it. First, if a brand its credibility in one
sector, the whole umbrella range could be affected. Secondly,
even successful repetitions of brand’ extensions may dilute or
exhaust the brand value of the core product. Managers should
then carefully consider whether it is worth running the risk of
tarnishing the brand image and reducing the core brand equity.
Only by gathering sufficient information can they decide
whether to use brand extension or to develop a unique new
brand. distributors more receptive to presentations of brand
extensions or even of new brand . Those manufacturers with
90
strong brands maintain greater control over the balance of
power between the manufacturer and distributor and indeed,
some argue that this is one of the key benefits of strong
brands. For example, Kellogg’s have been quoted as saying:
The only discounts available to customers are those shown of
price list, and all those discounts relate to quantity bought and
t6.oo payment There is no possibility of special deals.
In view of the pressures facing brand manufacturers from the
powerful multiple retailers, such a comment is indeed a brave
statement about a belief in the power of strong manufacturers’
brands.
It is also possible for a manufacturer with strong brand name
to market different brands in the same product field which
appeals different segments. This is seen in the washing
detergents a soap market, where Unliver and Procter & Gamble
market different brands with minimal cannibalization between
brands from same manufacturer. Furthermore, by developing
sufficiently entailed manufacturer brands that consumers desire,
higher can be charged, as consumers pay less attention to price
comparisons between different products because of brand
distinctiveness. This clearly enhances profitability.
Retailers see strong manufacturer brands as being important
since through manufacturers’ marketing activity (e.g. advertising
point of sale material, etc.), a fast turnover of stock results.
Also, with more sophisticated marketers recognizing the
importance of long- term relationships with their customers,
many manufacturers and distributors have cause to recognize
that their future success depends on each other and therefore
strong manufacturer brands are seen as representing profit
opportunities both for distributors and manufacturers. Some
retailers are interested in stock in strong brands, since they
believe that the positive image of a brand can enhance their own
image. Recent research has provided clear evidence that a
favorable image from a manufacturer’s brand can further
enhance the image of an already well-regarded store.
Recalling the discussion in the previous section about brand
Names acting as a means of short-circuiting the search for
information consumers appreciate manufacturers brands since
they make shopping less time -consuming exponent. As
already noted, manufactures bands are recognized as providing a
consistent guide to quality consistency. They reduce perceived
risk and make consumers confident and in some product fields
(e.g. clothing, cars) they also satisfy strong status needs.
Why , then, do so many manufacturers also supply distributors
brand? First, it is important to understand why distributors are
so keen on introducing their own brands. Research has shown
that they are particularly keen on distributor brands because they
enable them more control over their product mix. With a
strong distribution brand range, retailers average rationalized
their product range to advantage of the resulting cost savings
and many stock a manufacturers brand leader, their own more by deeds than by words. It’s what your company stands

BRAND MANAGMENT
distributor’s brand and possibly and manufacturer’s brand. for and how it behaves with each of these groups. Which is
Trade interviews have also shown that distributor brands why developing a brand-customer relationship is so important-
offered better margins than the equivalent manufacturers brand, either you make the customer experience or it gets made
with estimates indicating the extra profit margin to ‘be about 5 without you.
per cent more than the equivalent manufacturer’s brand. Some
of the reasons why manufacturers become suppliers of
distributors’ brands are:
• economies of scale through raw material purchasing,
distribution and production;
• any excess capacity can be utilized;
• it can provide a base for expansion;
• substantial sales may accrue with minimal promotional or
selling costs;
• it may be the only way of dealing with some important
distributors (e.g. Marks & Spencer);
• if an organization does not supply distributor brands, their
competitors will, possibly strengthening the competitors’
cost structure and trade goodwill.
Consumers benefit from distributors’ brands through the
lower prices being charged, but it is interesting to note that our
own research found that consumers are becoming increasingly
confident about distributors’ brands and no longer perceive To create a successful brand-customer relationship, you must
them as ‘cheap and nasty’ weak alternatives to manufacturers’ develop a compelling brand identity and customer value
brands, but rather as realistic alternatives. proposition, rely on customer perspective, and have the ability
to listen and respond appropriately to evolve your company’s
Brand and its Distributors offerings to meet customers’ needs and desires.
Brand-Customer Relationship A strategy is not enough either. The organization must be
Brands should establish a relationship based on ‘love’ to collect aligned in ways that anticipate and fulfill customers’ emotional
a large number of loyal customers. The relationship based on expectations at every touch point to create meaningful relation-
‘respect’ for superior performance is difficult to sustain. In this ships and lasting competitive advantage.
millennium, brands are promoted on customer experience.
Brand Identity-the Touchstone
People today are not buying products, but experience. Even
A brand identity is the centering idea of an organization. It
acquisition experience matters and so the distribution channel
captures that which you’d like to become, giving the
must live upto expectorants. A brand gains a lot by favourable
organization something to aspire to. A common pitfall for
post-purchase experience.
many companies is not taking the time to think about who they
A consumer must have a bond with the brand. He must are or what kinds of companies they want to become. While it
advocate the brand with others. To establish this bond, a may be easy to articulate revenue goals, developing a brand
company must always try to explore the possibilities of identity requires a different thinking process.
production innovation. In addition, the consumer experience
A brand identity should be focused on customer benefits,
with the brand must always be improved upon.
differentiated from competitors, and of course, given the
When we consider the brand right from what the consumer organization’s capabilities, possible. Once defined, the brand
seeks, its conception and design accordingly, its sourcing , its identity becomes the organization’s centering set of associations
development, its pricing, its promotion and its distribution , it that it continually strives to create or maintain.
is called total brand management.
Customer Value Proposition-the Marching Orders
Are brands dead? Well, some are. Brand building, on the other
A successful customer value proposition clearly communicates
hand, is very much alive and more critical to a company’s success
the brand’s functional, emotional, and self-expressive benefits.
than ever. Unfortunately, many companies fail to understand
It is delivered in a way that is superior or unique when
how to create and shepherd strong brands. The days of brand
compared to competitors. While a brand identity is a big-picture
building defined simply by awareness and driven by marketing
vision, the value proposition provides the strategy for reaching
alone are over. Visionary companies recognize that responsibil-
that vision, linking the brand to the customer experience.
ity for brand management belongs with the
Here is another place where companies go astray. Organizational
There’s No Escaping Your Brand structures often prevent creation of a relevant, holistic customer
A brand is the collective experience of your key constituencies- experience. For example, departmental goals can too often take
customers, suppliers, investors, and employees-and is defined precedence and end up disconnected from the brand. A value

91
 proposition must be integrated across the organization so that
BRAND MANAGMENT

every functional area contributes to the overall customer

experience. Brand Management
Customer Perspective-the Continuous Thread
Customer experience is shaped by a series of interactions with • Issues in the “battle of the brands”: (1) how prices
an organization. What products or services are offered? Does are set? (2) turnover, and (3) gross margin.
the package arrive on time? Does the help desk answer the
phone promptly? If you don’t take a customer perspective
when creating the customer experience, you’ll make it much • Manufacturer brands: (1) prices are set to
easier for a competitor to copy your product or service and steal maximize profit for the brand and are influenced
market share. You should always base the brand-customer by competitive forces, (2) they have a higher
relationship on an outside-in perspective, creating a customer- turnover than distributor brands. (Why??)
centric experience.
Listen, Understand, Respond-the Way to Grow • Distributor brands: (1) prices are set to maximize
The final ingredient that binds a customer to your brand in a profit for the store and (2) they have a higher gross
lasting relationship is dialogue. Your company’s brand isn’t a
monolithic, hermetic face that the organization presents to the
What is a Brand?
margin than manufacturer brands. (Why??)
world. Rather, it’s an ongoing exchange where you listen
carefully to your customers, understand what they say, and
respond by modifying your value proposition and extending Product = Commodity
your businesses appropriately to fulfill customers’ desires. A product is a produced item always
A Brand That Works possessing these characteristics:
Hard work? Yes. The payoff however can be counted in high • Tangibility
customer satisfaction, sales, and revenue. For example, before •Attributes and Features
launching an online store, Williams-Sonoma wanted to ensure
that the customer’s online experience was consistent with the
Brand = “Mind Set”
catalog and retail brand experience it had carefully crafted. The
company defined new business processes so that every The sum of all communications and experiences received
functional area supported the new channel. This meant working by the consumer and customer resulting in a distinctive
with merchandising, inventory management, call center, image in their “mind set” based on perceived emotional
distribution center, database marketing, and financial reporting and functional benefits.
areas to make sure that the mail order systems, retail systems,
and web site worked together. Distribution center and retail
employees were trained to ensure that customers had virtually
the same experience with the Williams-Sonoma site as they did
in a physical store. The firm exceeded its revenue goals and has
been able to significantly grow its business in this specific
channel.
A brand-customer relationship is the bedrock on which great
companies rise, or mismanaged, it’s the chalk on which
mediocre companies fail. Great brands that aspire to perfect
touch points create the coherent experience to which customers Why Does A Brand Matter?
respond. If you fail, you’d better watch your back.
MANUFACTURERS CONSUMERS
• ID to simplify handling or • ID Product Source
tracing
• Assignment of
• Legal protection of responsibility to maker
unique features
• Risk reducer
• Signal of quality level to
satisfied customers • Search cost reducer
• Means of endowing • Promise, bond, or pact
products w/unique w/make of product
associations • Symbolic Device
• Competitive Advantage
• Signal of Quality
• Financial Returns

92

Alternative Branding Models
Company
dominates Brands
American Express (cards)
BMW (Motorcycles)
Colgate (Total toothpaste)
Disney (Films)
General Electric (appliances)
IBM (Technology)
L’Oreal (Cosmetics)
Sony (Electronics)
Holiday Inn (Crowne Plaza)
Notes
Company is equal
to Brands
Anheuser Busch = Budweiser
Campbell Soup = Godiva
Chrsyler = Jeep
Estee Lauder = Clinique Healthy Choice (Con-Agra)
Kraft = Maxwell House
PepsiCo = Mountain Dew
Time Warner = Warner Bros
3M = Scotch Tape
Marriott = Courtyard
BRAND MANAGMENT
Brands dominate
the Company
Skol (Am Bev)
Claridge Hotel (Savoy)
Crest (P&G)
Hidden Valley Ranch
(Clorox)
Kleenix (Kimberly-Clark)
Marlboro (Philip Morris)
MCA Records (Universal
Studios)
Wranlger (VF Jeans)
Kevin Clancy, Copernicus
93
BRAND MANAGMENT
LESSON 15:
BRAND PLANNING AND BRAND POTENTIAL
Objectives
Upon completion of this Lesson, you should be able to:
• Explain the importance of brand planning.
• Discuss the issues influencing brand potential.
• Identify the role of marketing towards brand success.
Now that you have a fair knowledge about the branding
process, the role of marketing in brand success, brand evolu-
tion, value of brand to manufacturers, distributors and
consumers, we shall understand brand planning and its
importance and issues influencing brand potential.
Why do we plan? We must have planned our day today. Does
it really help?
The Importance of Brand Planning
As the previous sections of this chapter have shown, brands
play variety of roles and for a number of reasons satisfy many
different needs. They are the end result of much effort and by’
implication represent a considerable investment by the
organization. With the recent interest in the balance sheet value
of brands, companies are beginning to question whether their
financially valuable assets in the form of brands are being
effectively used to achieve high rates on investment. To gain the
best return from their brands, firms may adopt a broad vision
about their brands and not just focus in the distribution on
tactical issues of design and promotion. Instead, they need to
audit the capabilities of their firm, evaluate the external issued
influencing their brand, and develop a brand plan that specifies
realistic brand objective strategy to achieve them
Brand planning is an important but time-consuming activity
which, if undertaken in a thorough manner involving discus-
sion, will result in a clear vision about how resource employed
to sustain the brand’s differential advantage, Unfortunately, it is
only a minority of organizations who undertake brand
planning. Without well-structured brand plans there is the
danger of what we call brand ‘vandalism’. Junior brand
manages are given ‘training’ by making them responsible for
specific brands. Their planning horizons tend to be in terms of
a couple of years(i.e the period before they move on) and their
focus tends to be on the tactical issues of advertising, pack
design and tailor-made brand motions for the trade. At best
this results in ‘fire fighting defensive rather than offensive brand
94
plan. The core values of the brand are in danger of being
diluted through excessive brand promotion. For example, one
of the key core values of the Ribena brand is vitamin C, yet by
extending the brand’ into other fruits (e.g. berry) this is
weakening the brand’s proposition and potentially weakening
the brand’s strength.
Internally, organizations may be oblivious of the fact that they
are hindering brand development. Clearly, by not preparing well
documented strategic brand plans, firms are creating their own
obstacles to success. Some of the characteristics that internally
hinder any chance of brand success are:
• Brand planning is based on little more than extrapolations
from the previous few years.
• When it doesn’t look as if the annual budget is going to be
reached, quarter 4 sees brand investment bearing cut (i.e.
advertising market research, etc.).
• The marketing manager is unable to delegate responsibility
and is too involved in tactical issues.
• Brand managers see their current positions as good training
grounds for no more than two years.
• Strategic thinking consists of a retreat once a year with the
advertising agency and sales managers, to a one-day meeting
concerned with next year’s brand plans.
• A profitability analysis for each major customer is rarely
undertaken.
• New product activity consists of different pack sizes and
rapidly developing ‘me-too’ offers.
• The promotions budget is strongly biased towards below-
the-line promotional activity, supplemented only
occasionally with advertising.
• Marketing documentation is available to the advertising
agency on a ‘need to know’ basis only.
Brand strategy development must involve all levels of market-
ing management and stands a better chance of success when all
the other relevant internal departments and external agencies are
actively involved. It must progress on the basis of all parties
being kept aware of progress.
British Airways exemplify the notion of brand development as
an integrating process, having used this to achieve a greater
customer focus. For example, the simple operation of taking a
few seats out of an aircraft can be done with confidence, as
engineering are consulted about safety implications, finance
work out the long-term revenue implication, scheduling explore
capacity implications and the cabin crew adjust their in-flight
service routines.
The Issues Influencing Brand Potential

Manufacturer Distributor
Brand
Potential
Marketing Competitor Consumer
environme
Figure Forces influencing brand potential
Manufacture
It is not unusual for an organization to be under-utilizing its
brand assets through an inability to recognize what is occurring
inside the organization. Have realistic, quantified objectives been
set for end of the brands, and have they been widely
disseminated? Aims such as ‘to be the brand leader’ give some
indication of the threshold target, but do little in terms of
stretching the use of resource to achieve their full potential.
Brand leadership may result before the end of the planning
horizon, but this may be because of factors that the
organization did not incorporate into their marketing audit. But
luck also has habit of working against the player as much as
working for the player!
Firms such as 3M and Microsoft have shown how brand and
corporate culture are closely interlinked and how they affect each
other. Their brand mission focusing on innovation is backed
up by a corporate culture encouraging experimentation, banning
bureaucracy and publicly recognizing success. Since the culture of
an organization strongly influences its brands, mergers and
acquisitions can alter brand performance dramatically.
Marketer should audit how well brand and culture match each
other.
Has the organization made full use of its internal auditing to
identify what its distinctive brand competences are, and to what
extent these match the factors that are critical for brand success?
For example, Swatch recognized that amongst fashion-
conscious watch owners its distinctive competences of design
and production could satisfy changing consumer demands for
novelty watches.
Is the organization plagued by a continual desire to cut costs,
without fully appreciating why it is following this route? Has
the market reached the maturity stage, with the organization’s
brand having to compete against competitors’ brand on the
basis of matching performance, but at a reduced price? If this is
so, all aspects of the organization’s value chain should be geared
towards cost minimization (e.g. eliminating production
inefficiencies, avoiding marginal customer accounts, having a
narrow product mix, working with long production runs, etc.).
Alternatively, is the firm’s brand unique in some way that
competitors find difficult to emulate and for which the firm can
charge a price premium ( e.g. unique source of high quality raw
materials, innovative production process, unparalleled customer
service training acclaimed advertising, etc.)? Where consumers
BRAND MANAGMENT
demand a brand which has clear benefits, the manufacturer
should ensure all departments work towards maintaining these
benefits and signal this to the market (e.g. by the cleanliness of
the lorries, the politeness of the telephones, the promptness of
answering a customer enquiry, etc.). In some instances, particu-
larly in services, the brand planning document can overlook a
link in the value chain, resulting in some inherent added value
being diminished (e.g. an insurance broker selling reputable
quality insurance from a shabby office).
Significant cultural differences within several departments of a
company can affect the brand success. The firm should not only
audit the process to deliver the branded product or service, but
also the staff beliefs, values and attitudes to asses whether the
firm’s culture is in harmony with the corporate brand identity
and whether the firm has the appropriate culture to meet the
brand’s mission.
Distributors
The brand strategy of the manufacturer cannot be formulated
without regard for the distributor. Both parties rely on each
other for their success and even in an era of increasing retailer
concentration, not withstanding all the trade press hype, there is
still a recognition amongst manufacturers and distributors that
long-term brand profitability evolves through mutual support.
Manufacturers need to identify retailers’ objectives and align
their brands with those retailers whose aims most closely match
their own. Furthermore, they should be aware of the strengths
and weaknesses of each distributor. .
Brand manufacturers who have not fully considered the
implications of distributors’ longer-term objectives and their
strategy to achieve them are deluding themselves about the
long-term viability of their own brands.
In the UK, there are numerous instances of growing retailer
power, with a few major operators controlling a significant
proportion of retail sales (e.g. groceries, jewellery, footwear). The
danger of increasing retailer power is that weaker brand
manufacturers acquiesce to demands for bigger discounts,
without fully appreciating that the long-term well-being of their
brands is being undermined. It is crucial for brand manufactur-
ers to analyse regularly what proportion of their brand sales go
through each distributor and then for each individual distribu-
tor to assess how important a particular manufacturer’s brand is
to them. For example, Table 2.5 shows a hypothetical analysis
for a confectionery manufacturer.
If this hypothetical example were for a Nestle brand, it is clear
that the particular Nestle brand is more reliant upon Tesco than
Tesco is on the particular Nestle brand. Such an analysis better
enables manufacturers to appreciate which retailers are more able
to exert pressure on their brand. It indicates that, if the brand
manufacturer wants to escape from a position of retailer power,
they need to consider ways of growing business for their
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 brands in those sectors other than Tesco at a faster rate than is
BRAND MANAGMENT
envisaged within this distributor.
Table 2.5 Power analysis
Hypothetical Nestle Hypothetical market
Brand sales to share of confectionery
Distributors brands through Tesco
--------------------------- -------------------------------------
Distributor % Brand
Sainsbury 25 Cadbury
Tesco 24
Safeway 19 Nestle
Asda 17
Co-op 10
Independent 5
100
working with a distributor, the brand manufacturers should
take into account whether the distributor is striving to offer a
good value proposition to the consumer ( e.g. Kwik Save, Aldi)
or a value-added proposition ( e.g. high quality names at
Harrods). In view of the loss of control once the
manufacturer’s brand is in the distributor’s domain, the brand
manufacturer must annually evaluate the degree of synergy
through each particular route and be prepared to consider
changes.
Does the manufacturer have an offensive distribution strategy
or is it by default that its brands go through certain channels?
What are the ideal characteristics for distributors of its brands
and how well do the actual distributor used match these criteria?
How do distributors plan to use brands to meet their objec-
tives? How do manufacturers’ and their competitors’ brands
help distributors achieve their objectives? Which other forms of
support (e.g. discounts, merchandising ) are used?
The brand manufacturers must recognize that when developing
new brands, distributors have a finite shelf space, and market
research must not solely address consumer issues but must also
take into account the reaction of the trade. One company found
that a pyramid pack design researched well amongst consumers,
but on trying to sell this into the trade it failed – due to what
the trade saw as ineffective use of shelf space!
Consumers
To consumer, buying is a process of problem solving. They
become aware of a problem ( e.g. not yet arranged summer
holidays), seek information ( e.g. go to travel agent and skim
brochures), evaluate the information and then make a decision (
e.g. select three possible holidays, then try to book one through
the travel agent). The extent of this buying process varies
according to purchasers’ characteristics, experience and the
products being bought. Nonetheless, clearly consumers have to
‘work’ to make a brand selection. The brand selection and brand
‘ usage’ are not necessarily performed by the same person.
Therefore marketers need to identify all individuals and
96
position the brand to appeal to both users and purchasers. In
business to business markets several groups are involved in the
purchase decision. Marketers need to formulate brand strategy
that communicates the benefits of the brand in a way which is
relevant to each group..
Brands offer consumers a means of minimizing information
search and evaluation. Through seeing a brand name which has
been supported by continual marketing activity, consumers can
use this as a rapid means of interrogating memory and if
sufficient relevant information can be recalled, only minimal
effort is needed to make a purchase decision. As a consequence
of this, brand strategists should question whether they are
presenting consumers with a few high quality pieces of
% information, or whether they are bombarding consumers with
35
large quantities of information and ironically causing confusion.
Mars 30
20 Likewise, in business to business markets, it is important to
Other 15 consider how firms make brand selections.
100 Not only should strategists look at the stages consumers go
through in the process of choosing brands, but they also need
to consider the role that brands actually play in this process. For
example, a business person going to an important business
presentation may feel social risk in the type of clothes he or she
wears and select a respected brand mainly as a risk-reducer. By
contrast, in a different situation, they may decide to wear and
select a respected brand mainly as a risk-reducer. By contrast, in a
different situation, they may decide to wear a Gucci watch,
because of a need to use the brand as a device to communicate a
message (e.g. success, lifestyle) to their peer group. Likewise, one
purchasing manager may buy a particular brand, since experience
has taught him or her that delivery is reliable, even though there
is a price premium to pay. By contrast, another purchasing
manager may be more concerned about rapid career advance-
ment and may choose to order a different brand on the basis
that he is or she is rewarded
Competitors
Brands are rarely chosen without being compared against
others. Although several brand owners benchmark themselves
against competition, it often appears that managers misjudge
their key managers should undertake interviews with current
and potential consumers to identity those brands that are
considered similar. Rather that collecting useless and misleading
data managers should undertake interviews with current and
potential consumers to identify those brands that are
considered similar. Once marketers have selected the critical
competitors, they need to assess the objectives and strategies of
these companies as well as fully understanding their brand
positioning and personalities. It is also essential not to be
restricted to a retrospective, defensive position, but to gather
enough information to anticipate competitive response and be
able to continuously update the strategy for brand protection.
Research has shown that return on investment is related to a
product’s share of the market. In other words, products with a
bigger market share yield better returns than those with a
smaller market share. Organizations with strong brands fare
better in gaining market share than those without strong
brands. Thus, firms who are brand leaders will become
particularly aggressive if they see their position being eroded by
other brands. Furthermore, as larger firms are likely to have a
range of brands, backed by large resources, it is always possible
for them to use one of their brands as a loss leader to under
price the smaller competitor, and once the smaller brand falls
out of the market, the brand leader can then increase prices.
The Marketing Environment
Brand strategists need to scan their marketing environment
continually to identify future opportunities and threats. Will a
shift in the development countries to a knowledge-based society
lead to armchair shopping facilitated by networked personal
computers? Will increasing awareness of ecological issues result
in the survival of only pure environment – friendly brands?
Will the consolidation of three world trade blocks undermine
the strength of powerful national brands? To draw an analogy
with military thinking, good surveillance helps achieve success.
Exercises
1. List down the attributes and values of a Levis jeans. Write
down the four main reasons, in order of importance, why
do want to buy a Levis jeans?. Then show an advertisement
for this brand (or a catalogue page describing it) to one of
your buyers and ask them to tell you what are the four key
points they took from the message. Compare both the
findings. Does the brand correctly majoring upon relevant
buyer choice criteria? Give reasons.
2. Choose two brands and explain how well positioned is each
of these brands in relation to the five forces affecting brand
potential? (Outlined in the section ‘The importance of
brand planning’.)
Brand it Like Beckham
by Kristine Kirby Webster
June 10, 2003
There is a great movie now out in the US called Bend It Like
Beckham. If you haven’t seen it, I highly recommend it. It is
the story of a British girl named Jess who lives in London with
her traditional Indian family. Jess must choose between the
traditions of her family or her desire to become a soccer
sensation like her idol, David Beckham.
The movie’s title comes from Beckham’s amazing ability to
“bend” the ball into the goal with just a simple kick, something
Jess aspires to do just as well.
No, I haven’t suddenly changed my column topic from
branding to movie reviews. But, it is amazing that an entire
movie has sprung up around the personality of one man,
David Beckham, and the team he plays for.
Mind, he is one of the world’s most recognized athletes, and
his team, England’s Manchester United (Man U) is the most
valuable sports franchise in the world-worth more than the NY
Yankees, the LA Lakers, the Dallas Cowboys, or any other team
you can conjure up. Their fan base is said to be over 53 million
worldwide.
But make no mistake, their star player-Beckham-and the team
itself is more than a sports club, it is a worldwide marketing
machine.
The Man U brand is a portfolio of staggering size and diversity,
especially when you consider it all springs from a football (soccer
in the US) team! Under the main Man U family brand they offer
BRAND MANAGMENT
financial planning services, electricity, life insurance, mortgages,
credit cards, bed linens, jewelry, ketchup(!), wallpaper,
lunchboxes, luggage, cell phones, boxer shorts, magazines, their
own TV channel...and all this from a football team.
Imagine the brand loyalty you must have from your fans in
order to make them think they would like to get their car loan
from you. Can you see yourself getting a mortgage from the
Yankees?
So how did they do this? How did Man U, helped a great deal
in the last decade by the cult of Beckham, bring about such
brand success that pretty much every brand extension they have
come up with, and ones that are so unrelated to their core
offering, are snapped up by their supporters, and even success-
ful? And most of their fans are outside the city they play for,
and even the country they are from.
The answer is by leveraging their brand personality, working
their fans’ sense of belonging and ownership in the club, and
then cashing in on their fans’ brand loyalty, and their need to
show they are part of Man U too, and the heritage that conveys.
Several years ago Pepsi teamed up with Man U to offer entrants
in Thailand a chance to attend a soccer camp in England. Pepsi
received almost 15 million entries, what they say was one of
their best responses ever. And the people who entered did so
because of the allure of Man U, not because of Pepsi. Accord-
ing to a recent article, when they played Real Madrid of Spain,
over half the United Kingdom had their TV’s tuned to that
match.
Their fan allegiance is amazing, and growing by the moment.
And other marketers are more than willing to tie themselves to
Man U. Besides Pepsi, they have deals with Nike, Vodaphone,
Fuji, and Anheuser-Busch, just to name a few.
So what can we learn from Man U to help our brands?
As with any successful brand, Man U follows the basics, and
does it well. As Al Ries says in his book The 22 Immutable
Laws of Branding, “the power of a brand lies in its ability to
influence purchase behavior.” And brands that are powerful
result in powerful marketing, as demonstrated by Manchester
United.
Brands are chosen not only for rational reasons (usually the 4
P’s), but also for emotional ones. In fact, when it comes to
brands, emotional reasons usually drive a large portion of the
purchase decision. People want to be part of success, part of a
legacy, and part of a winner. They want people to identify with
them as such.
Therein lies the appeal to the consumer of having a Man U
credit card, or Man U sheets-the halo effect they perceive from
their association with a powerhouse like the team drives their
decision. It isn’t rational, but emotional in bent.
The people who buy Man U products and services have
internalized the brand values that Man U stands for in the
marketplace at large. Their team loyalty drives them to want to
belong, and they show their loyalty by buying Man U products.
The team and brand loyalty Man U has realized makes a strong
case for branding for relationships and retention. The team is
worth roughly $1 billion, and they have operating profits that
97
 are three times greater than the next wealthiest club in the
BRAND MANAGMENT
Premier League, according to a Deloitte & Touche annual report
on English teams. Without the long-term relationships Man U
has cultivated in its fan base, they wouldn’t be anywhere near as
successful financially (they are a publicly held corporation), and
their brand wouldn’t be anywhere near the behemoth it is
globally.
By being a Man U fan, and wearing their clothes, or using their
services, or buying any of their other products, consumers
show they belong to a tribe of sorts-and they are willing to
show this for more than just cheering during a 90-minute
match. They are willing to show their loyalty 24/7. That is a
powerful brand at work.
So, ask yourself, can your company learn to brand it like
Beckham? Really, can your brand afford not to?
Kristine Kirby Webster is Principal of The Canterbury Group,
a direct-marketing consultancy specializing in branding and
relationship marketing. She is also an Adjunct Professor of
Direct Marketing at Mercy College in NY. She can be reached at
Kristine@canterburygroup.net.
Case Study
Brand Development by Identifying Brand Values
Introduction
The Cadbury brand name has been in existence since 1824 when
John Cadbury opened his first shop in Birmingham, England.
(Cadbury Ireland, as a subsidiary of) Cadbury Schweppes is the
fourth largest confectionery business in the world selling
chocolate, sugar and gum based products. Cadbury Ireland is
the number one confectionery company in Ireland. Today
Cadbury’s best tasting chocolate constitutes the main ingredient
of much of these products including everything from solid
blocks to chocolate filled bars and novelties. The Cadbury brand
is associated with best tasting chocolate. This case shows how
marketing managers at Cadbury are working to ensure this
association is continually developed through their new ‘Choose
Cadbury’ marketing strategy. Key concepts of quality, taste and
emotion underpin the Cadbury brand. These core values help
to differentiate Cadbury from other brands and ensure its
competitive advantage.
The Cadbury Family of Brands
The Umbrella Brand
Research data shows that the Cadbury brand equity is highly
differentiated from other brands with consumers. Brand equity
is the value consumer loyalty brings to a brand, and reflects the
likelihood that a consumer will repeat purchase. This is a major
source of competitive advantage. The Cadbury umbrella brand
has endured in a highly competitive market, and has established
the link, in the mind of the consumer, that Cadbury equals
chocolate. An umbrella brand is a parent brand that appears
98
on a number of products that may each have separate brand
images. The Cadbury umbrella brand image consists of four
icons namely the Cadbury script, the glass and a half, dark
purple colour and the swirling chocolate image. These elements
create a visual identity for Cadbury that communicates the
ultimate in chocolate pleasure. Consumer research is conducted
regularly so managers can learn more about how the market
perceives the brand. This research has confirmed that the
swirling chocolate and ‘glass and a half ’ are powerful images.
Both clearly portray a desire for chocolate while the half full
glass suggests core values of goodness and quality.
Product Brands
The Cadbury brand has a profound impact on individual
product brands. Brands have individual personalities aimed at
specific target markets
for specific needs e.g.
TimeOut, for example,
is an ideal snack to have
with a cup of tea. These
brands derive benefit
from the Cadbury
parentage, including
quality and taste
credentials. To ensure
the success of product
brands every aspect of
the parent brand is
focused on. A Flake, Crunchie or TimeOut are clearly different
and are manufactured to appeal to a variety of consumer
segments. However, the strength of the umbrella brand
supports the brand value of each chocolate bar. Consumers
know they can
trust a chocolate
bar that carries
Cadbury branding.
The relationship
between Cadbury
and individual
brands is symbiotic
with some brands
benefiting more from the Cadbury relationship, i.e. pure
chocolate brands such as Dairy Milk. Other brands have a more
distant relationship, as the consumer motivation to purchase is
ingredients other than chocolate, e.g. Crunchie.
Similarly issues such as specific advertising or product quality of
a packet of Cadbury biscuits or a single Crème Egg will, in turn,
impact on the perception of the parent brand. Similarly the
umbrella brand has a strong brand value and a reputation that
must be supported by its individual brands.
Identifying Brand Values
We are all consciously and unconsciously affected by brands in
our daily lives. When we go to purchase a pair of training shoes
we rarely make a purely practical decision. There are numerous
branded and non-branded options available. For many people,
a pair of trainers must sport a brand logo because that will
communicate certain values to other people.
The confectionery market elicits similar conscious and
unconscious feelings of passion, loyalty and enthusiasm. For
many people, chocolate is Cadbury, and no other brand will do.
This consumer loyalty is critical because of the value of the
chocolate confectionery market and because, in all markets, a
small number of consumers account for a large proportion of
sales. Loyal customers are the most valuable customers to have
because they will buy your product over and over again.
Branded products command premium prices. Consumers will
happily pay that premium if they believe that the brand offers
levels of quality and satisfaction that competing products do
not. The most enduring brands have become associated with
both tangible and intangible properties over time. The most
successful provoke a series of emotional or aspirational
associations and values in our minds that go way beyond the
physical product.
Cadburys has identified these brand values and adjusts its
advertising strategies to reflect these values in different markets.
Its strategy can vary from increasing brand awareness, educating
potential customers about a new product, increasing seasonal
purchases, or as is currently the case in the ‘Choose Cadbury’
campaign to highlight the positive emotional value of the
brand.
After identifying brand values the marketing manager must
match these to the
specific market. For this
reason it is important
to identify possible
segments that have
specific needs, and to
highlight appropriate
brand values that will
promote the brand in
that market.
Consumption and Consumer Lifestyles
Chocolate Consumption
Cadbury’s core markets are currently in the UK, Ireland,
Australia and New Zealand. The Cadbury brand is very well
known in these markets and consumers have established
patterns of chocolate consumption. Ireland has one of the
largest consumption rates in the world along with Switzerland.
In Ireland alone, the average person eats 8kg of chocolate and
6kg of sweets each year. In key areas such as these, the Cadbury
brand has secured significant brand status.
In Ireland, Cadbury has identified three key consumer segments
of ‘impulse’, ‘take home’ and ‘gift’. These segments reflect
consumers’ decision-making processes.
For example, impulse purchases are
typically products bought for immediate
consumption, e.g. single bars. Take
Home confectionery is generally bought
in a supermarket and is most often
driven by a specific need. A specific need
or usage can be an occasion, e.g.‘I need
something for the lunchbox’. Here
consumers make more rational
decisions, e.g. brand influence, price/value relationship. These
areas are further subdivided, for example the ‘gift’ sector
comprises special occasions (birthdays, Christmas, etc.) and
BRAND MANAGMENT
token or spontaneous gifts. If marketers successfully identify
and isolate consumer segments in this way, it becomes easier to
target products and advertising in a more meaningful way to
increase consumption.
New Products Reflecting Consumer Lifestyles
New product development has played a key role in developing
markets as brands strive to offer something to a consumer that
is truly different. We take a crumbly flake texture or honeycomb
for granted but, when introduced, they were remarkably
innovative. Changing lifestyle patterns; eating on the go, and
impulse snacking has and continues to play a pivotal role in the
confectionery market. Continued snacking or ‘grazing’ has
replaced traditional mealtimes for many people.
The Cadbury product range addresses the needs of each and
every consumer, from childhood to maturity, from impulse
purchase to family treats. For example an analysis of the ‘gift’
sector highlights the importance of developing innovative
products to address specific markets. Cadbury designs products
to coincide with Christmas, Easter, Valentine’s, Mother’s and
Father’s Day and other calendar landmarks. Cadbury use
marketing strategies such as the ‘Choose Cadbury’ strategy to
encourage a link between chocolate and these events ensuring
there is a Cadbury chocolate product suitable and available for
every occasion.
Why Advertising is Used to Promote a Brand
The confectionery market is full of
brands that need to fight for our
attention. The role of advertising
is to keep a brand in the mind of
the consumer. We are constantly
presented with countless brand
images and messages on a daily
basis. During the lifetime of a
brand, companies will develop
marketing strategies that
communicate brand identity and core values to gain our
attention. In order to keep its product competitive and
contemporary, these messages need to change over time.
Cadbury provides one of the most successful examples of how
an advertising message can be modified from one campaign to
the next to attribute new values to a brand giving consumers
more reasons to buy Cadburys. Healthy brand equity or brand
strength is critical in an impulse-driven, competitive market.
Advertising plays a key role in maintaining this strength.
Cadbury employs all types of advertising from the internet to
posters, from TV, radio and cinema to print media. This same
creative message is then communicated through point of sale,
merchandising, package design and public relations.
The ‘Choose Cadbury’
Marketing Strategy
The ‘glass and a half ’,
corporate purple and flowing
script has become
synonymous with Cadbury:
these design elements have
been used to great effect in
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 developing the connotation of goodness that this imagery uplifting, mood enhancing, providing enjoyment and
BRAND MANAGMENT

suggests. In the 1980s another vital attribute - taste - was happiness). At no stage in the evolution of the Cadbury brand
highlighted. Regardless of national preferences about how has there been as much reliance on taking ownership of the
chocolate should taste (e.g. dark chocolate is traditionally more emotional side of eating chocolate as there is now. Owning the
popular in Europe whereas Australians prefer creamier milk emotional territory for chocolate helps Cadbury to elevate its
chocolate) the implication was clear - Cadbury offers taste and product in the mind of the consumer. With the ‘Choose
texture that appeals to all. In the 1990s further emphasis was Cadbury’ campaign consumers are being offered both logical
placed on ‘taste’. The strapline ‘Chocolate is Cadbury’, which and emotional reasons to buy a Cadbury product as a first
was built upon previous brand values and allowed Cadbury to option on every occasion.
stake its claim and taking ownership of the word ‘chocolate’
Conclusion
and the chocolate eating experience.
The success of the Cadbury brand can be seen in how its image
Earlier this year, Cadbury introduced a new global marketing
is continually maintained over time. Identifying brand values,
strategy called ‘Choose Cadbury’. This strategy came about as a
and matching these to consumer lifestyles in specific market
result of extensive research into consumer behaviour and
segments can help develop a clear advertising message. In
perception. It is a campaign that perfectly illustrates how a brand
previous advertising messages quality and taste were
can evolve and how different messages can be communicated
emphasized. Cadbury is now building on this through its
without losing the core strength and brand values that are
‘Choose Cadbury’ strategy to underline the feeling a premium
already established.
brand can bring to its customers. The Cadbury brand has
The classic icons have played a major role in establishing the
proven itself to be a leader in a highly volatile and competitive
look and feel of how Cadbury’s advertisements should look
market because it has successfully established, nurtured and
through successive campaigns. These key ‘look and feel’ icons
developed its umbrella brand and growing portfolio of
were heavily researched to ensure that the messages they impart
products.
are always relevant to the Cadbury consumer. In depth
customer research is conducted to ‘test’ these messages. Tasks and Activities
Research results confirmed that colour recognition of dark 1. Explain the benefits and value an umbrella brand can bring
purple is strongly associated with Cadbury. Its logo is readily to a family of branded products.
recognised and scores a ninety six per cent recognition level
2. Define the following terms
alongside other global brands such as Coca Cola and
a. Brand
McDonalds. The glass and a half symbol, which plays a key role
b. Consumer Motivation
in the current ‘Choose Cadbury’ strategy, continues to
c. Brand Values
communicate the quality and superior taste of Cadbury’s
chocolate. 3. In your opinion why is it important to understand
The central message of the ‘Choose Cadbury’ strategy hinges on consumer lifestyles where trying to market a new product?
the established glass and a half symbol. Is the glass half full or 4. What is a ‘decision making process’? How do you think
half empty? Cadbury suggests that the glass is always half full marketers use this to ensure a product is successful?
appealing to our 5. What is the objective of advertising a brand? Explain this
emotions. Therefore, in by referring to the ‘Choose Cadbury’ marketing strategy.
choosing Cadbury we are 6. ow is Cadbury positioning the umbrella brand through its
taking a decision to ‘Choose Cadbury’ marketing strategy?
embrace the positive.
This optimistic metaphor
is, according to consumer
testing in the UK and
Australia, well
understood amongst
consumers. In this ‘Choose Cadbury’ campaign, the product
ingredient of milk has been elevated from a practical, rational
platform to an emotional one Cadbury can deliver on
optimism, happiness and a feel-good factor. If a brand can do
all this, the decision to purchase this brand over all other
chocolate brands seems to be logical and inevitable. The
‘Choose Cadbury’ strapline is a call to action designed to
motivate us. We are not expected to simply absorb the
advertising message, we are being called upon to make a
conscious purchase decision. We are reassured that the Cadbury
product will remain unchanged, (Cadbury is Chocolate and it
still tastes good), but we are given more reasons to remain
brand loyal (Cadbury is Chocolate – feels good i.e. positive,

100

LESSON 16: SECTORAL MANAGEMENT OF BRAND
BRANDS AND CONSUMER
BUYING PROCESS BRAND SELECTION CRITERIA
Topics Covered
Brand selection criteria of consumers, Brands and the
consumer’s buying process, Consumer need states, Brand
Marketing, Consumer perception of added values, Extent to
which consumers search for a brand information, Challenges to
branding, Issues associated with effective brand names and the
brand as risk reducer
Objectives
The learning objective: after this lecture you should be able to
understand
a. Consumer buying processes.
b. How consumers process information.
c. How consumers choose brands according to their cluster
needs.
d. How can a marketer make use of consumer buying decision
process?
We know of many theories about the way consumers buy
brands and debate still continues about their respective
strengths and weaknesses. For example, some argue that brand
choice can be explained by what is known as ‘the expectancy
value model’. In this model, it is argued that consumers
intuitively assign scores to two variables, one being the degree
to which they expect a pleasurable outcome the other being the
value they ascribe to a favorable outcome. When faced with
competing brands, this model postulates that consumers assign
scores to these expectancy-value parameters and following an
informal mental calculation, make a selection based on highest
overall scores.
We find this hard to accept, since people have limited mental
processing capabilities and many brands, particularly regularly
purchased brands, are bought without much rational consider-
ation. In reality consumers face a complex world. They are
limited both by economic resources and by their ability to seek,
store and process brand information. For this reason we are
also skeptical of the economist’s view of consumer behaviour.
This hypothesizes that consumers seek information until the
marginal value gained is equal to or less than the cost of
securing that knowledge.
According to a well-accepted model of consumer behavior
model, the consumer decision process that occurs as a result of
consumers seeking and evaluating small amounts of informa-
tion to make a brand purchase. They rely on few pieces of
selective information with which they feel confident to help
them decide how the brand might perform. For example, why
does someone flying from London to Amsterdam choose
British Airways over KLM? Both airlines offer excellent service,
a high degree of reliability and many convenient departure slots.
They may choose British Airways, when there is so little
UNIT II
UNIT 5
CHAPTER 4
OF CONSUMERS
difference, only because the name is more familiar and it reflects
BRAND MANAGMENT
their national pride.
The stages in the buying process, when consumers seek
information about brands and the extent of the information
search, are influenced by an array of factors such as time
pressure, previous experience, advice from friends, and so on.
However, two factors are particularly useful in explaining how
consumers decide. One is the extent of their involvement in the
brand purchase and their perceptions of any differences between
competing brands. For example, a housewife may become very
involved when buying a washing machine, because with her
large family it is important that she replaces it quickly. She will
show active interest in evaluating different brands and will
choose the brand, which closely satisfies her needs. By contrast,
the same housewife is likely to show limited involvement when
buying a packet of bread as they are of little personal important
and form only a small chunk of her grocery list. She may
perceive minimal difference between competing brands and
does not wish to waste time considering different brands.
With the appreciation of the extent of consumer’s involvement
when in a purchase decision and their perception of the degree
of differentiation between brands, it is possible to categorize
the different decision process using the matrix shown below.
Significant
Perceived
Brand Extended Tendency to
Problem Limited Problem
Differences Solving Solving
Minor Dissonance Limited
Reduction Problem
Perceived
Solving
Brand
Differences
High Consumer Low Consumer
Involvement Involvement
The strength of this matrix, as I will just tell you, is that it
illustrates simply the stages through which the consumer is
likely to pass when making different types of brand purchases.
Extended Problem Solving
Extended problem solving occurs when consumers are
involved in the purchase and where they perceive significant
differences between competing brands in the same product
field. This type of decision process is likely for high-prices
brands which are generally perceived as a risky purchase due to
their complexity (e.g. washing machines, cars, hi-fi music
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 systems, home computers) or brands that reflect the buyer’s
BRAND MANAGMENT
consumers actively searching for information to evaluates
alternative brands. When making a complex purchase decision,
consumers pass through the five stages shown in the figure.
Problem Recognition
Information Search
Feedback Evaluation of Alternatives
Purchase
Post-Purchase Evaluation
Stage 1: Problem Recognition
The decision process starts when the consumer becomes aware
of a problem. For example, a young man may have heard his
friend’s new hi-fi music system and become aware of how
inferior his own system sounds. This recognition would trigger
a need to resolve the problem and, if he feels particularly
strongly, he will embark on a course to replace his system.
Depending upon his urgency to act and his situation (e.g. time
availability, financial situation, confidence, etc) he might take
action quickly or more likely he will become more attentive to
information about hi-fi and buy a brand some time later.
Stage 2: Information Search
The search for information would start first in his own memory
and if he feels confident that he has sufficient information
already he will be able to evaluate the available brands. Often,
though, consumers do not feel sufficiently confident to rely on
memory alone(particularly for infrequently bought brands), so
they will begin to scan the external environment(e.g. visit shops,
become attentive to certain advertisements, talk to friends). As
they get more information, the highly involved consumer will
start to learn how to interpret the information in their
evaluation of competing brands.
Even so, consumers do not single-mindedly search for informa-
tion about one particular purchase. It has been estimated that in
one day people are bombarded by over 1000 different marketing
messages-of which they are attentive to less than 2 percent.
Consumers’ perceptual processes protect them from informa-
tion overload and helps them search and interpret new
information.
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Lessons For Brand Marketer
The brand manager has to overcome, amongst other issues, three
main problems when communicating a brand proposition.
First, they have to fight through the considerable ‘noise’ in the
market to get their brand message noticed.
If they can achieve this, the next challenge is to develop the
content of the message in such a way that there is harmony
between what the marketer puts into the message and what the
consumer takes out of the message.
Having overcome these two hurdles, the next challenge is to make
the message powerful enough to be able to reinforce the other
marketing activities designed to persuade the consumer to buy the
brand
Stage 3: Evaluation of Alternatives
As the consumer mentally processes messages about competing
brands, he would evaluate them against those criteria deemed to
be most important. Brand beliefs are then formed. (e.g. Sony
system has a wide range of features, it’s well priced, etc). in turn,
these beliefs begin to mould an attitude and if a sufficiently
positive attitude evolves, so there is a grater likelihood of a
positive intention to buy that brand.
Stage 4: Purchase
Having decided which brand to buy, the consumer would then
make the purchase-assuming a distributor can be found for that
particular brand and that the brand is in stock.
Stage 5: Post-Purchase Evaluation
One the system is installed at home, the consumer would
discover its capabilities and assess how well his expectations
were met by the brand. He would be undertaking post-purchase
evaluation. Satisfaction with different aspects of the brand will
strengthen positive beliefs and attitudes towards the brand. If
this happens, the consumer would be proud of his purchase
and praise its attributes to his peer group. With a high level of
satisfaction, the consumer would look favorably at this
company’s brands in any future purchase.
In Case of Dissatisfaction
Should the consumer be dissatisfied though, he would seek
further information after the purchase to provide reassurance
that the correct choice was made. For example, he may go back
to the outlet, where the brand was bought, and check that the
controls are being used properly and that the speakers are
correctly connected. If he finds sufficiently reassuring
information confirming a wise brand choice, he will be more
satisfied. Without such positive support, he will become
disenchanted with the brand and over time will become more
dissatisfied. He is likely to talk to others about his experience,
not only vowing never to buy that brand again, but also
convincing others that the brand should not be bought.
In Case of Satisfaction
In the event that the consumer is satisfied with the brand
purchase and repeats it in a relatively short period of time( buys
a system for his car of the same brand), he is unlikely to
undergo such a detailed search and evaluation process.
Instead he is likely to follow what has now become a more
routine problem solving process. Problem recognition would
be followed by memory search which, with prior satisfaction
would reveal clear intentions, leading to a purchase. Brand
loyalty would ensue, which would be reinforced by continued
satisfaction(should quality be maintained).
A Deeply Involved Customer
When consumers are deeply involved with the brand
purchase and when they perceive large differences
between brands, they are more likely to seek
information actively in order to make a decision about
which brand to buy. As such, brand advertising may
succeed by presenting relatively detailed information
explaining the benefits of the brand, as well as
reinforcing its unique differential positioning. It is
important for the brand marketer to identify those
attributes consumers perceive to be important and focus
on communicating them as powerfully as possible.
Dissonance Reduction
This type of brand buying behavior is seen when there is a high
level of consumer involvement with the purchase, but the
consumer perceives only minor differences between competing
brands. Such consumers may be confused by the lack of clear
brand differences. They would not have any firm beliefs about
the advantages of any particular brand, a choice will most
probably be made based on other reasons such as, for example,
a friend’s opinion or advice given by a shop assistant.
After he has purchased, he may feel unsure, particularly if he
receives information that seems to conflict with his reasons for
buying. He would experience mental discomfort, or what we call
as ‘post-purchase dissonance’ and would attempt to reduce this
state of mental uncertainty. He would either try to ignore the
dissonant information or will seek those messages, which
confirm his prior beliefs.
In this type of brand decision, the consumer makes a choice
without firm brand beliefs, then changes his attitude after that
purchase-often on the basis of experience with the chosen
brand. Finally, learning occurs on a selective basis to support the
original brand choice by the consumer being attentive to
positive information and ignoring negative information.
Let us take an example to explain this kind of process. A
working woman wants to furnish her newly purchased flat.
Although she is very busy she wants to buy a beautiful carpet
where her guests would leisure around. When she starts
shopping for the carpet she gets overwhelmed by the flood of
information about carpet attributes she has never heard before.
Unable to fully evaluate the advantages and disadvantages of
the different carpets, she makes a rapid decision based on her
perceptions and reassuring herself with the explanations given
by the salesperson.
At her first dinner party one of the guests spills a drink on the
carpet, which she rapidly cleans up as recommended by the
salesperson. The next morning when she checks out the stain,
the carpet is spotless. As a consequence of this experience she
starts reading leaflets to understand the different types of
carpets
So we see that when the consumers are involved in a brand
purchase, but perceive little brand differentiation or lack the
ability to judge between competing brands, the advertising
BRAND MANAGMENT
should reduce post-purchase dissonance through providing
reassurance after the purchase. And also during the purchase is
being made as the consumers are unsure about which brand to
select, promotional material is particularly important in
increasing the likelihood of a particular brand being selected.
Similarly packaging should also try to stress a point of differ-
ence from competitors and sales staff should be trained to be
‘brand reassures’ rather than ‘brand pushers’.
Limited Problem Solving
This kind of decision making happens when we do not regard
the buying of certain products as important issues, and when
we perceive only minor differences between competing brands
in these product fields, eg, pens, packaged groceries, etc. in such
circumstances the buying behavior can be called as limited
problem solving process.
Problem Recognition
Brands Beliefs formed from
Passive Learning recalled from Memory
Purchase Made
Brands ay or may not be
Evaluated Afterwards
Problem recognition will be straightforward issue. For example,
an item in the household may be running low say aata. So we
would not be particularly interested in seeking information
from different sources. We might have received the message
passively through television commercial.
Alternative evaluation, if any takes place after the purchase. In
effect, fully formed beliefs, attitudes and intentions are the
outcomes of purchase and not the cause. We are likely to regard
the cost of information search and evaluation as outweighing
the benefits.
In these cases we passively receive information and process it in
such a way that it is stored in our memories without making
much of an impact on our existing mental structure. No
behavioral change occurs until we come across a purchase trigger
at a point at which we need to purchase the product in question.
Once we have bought it and are satisfied with it, we are likely to
form a kind of a belief to be used for repeat brand buying.
When we regularly purchase these kinds of brands, we establish
buying strategies that reduce the effort in decision making like
routine problem solving. Hence, in low involvement buying the
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 ‘right brand’ is less central to our lifestyle and brand switching
BRAND MANAGMENT
becomes more easily achieved through coupons, free trial
incentives. We generally show variety seeking behavior as we feel
little risk in switching between brands. And also overtime, we
get bored buying the same brand and occasionally seek variety
by switching
Advice for the Marketer
We pay minimal attention to advertisements for these kind of
brands. Consequently, the message content should be kept
simple and the advertisements should be shown frequently. A
single or low number of benefits should be presented in a
creative manner which associates a few features with the brand.
Emphasis should be laid on brands as functional problem
solvers,(detergent as effective cleaner) rather than as less tangible
benefit deliverers(detergent as smelling fresh).Trial is an
important method by which consumers form favorable attitude
after consumption. So devices like money-off coupons, in-store
trial, free sachets are particularly effective. Secondly marketer
should ensure widespread availability. Any out-of stock
situations would probably result in consumers switching to an
alternative brand rather than visiting another store to find the
brand. Packaging should be eye-catching and simple.
Activity
Name 5 brands for which you follow the limited problem
solving approach while shopping.
List down the factors, which you consider important while
making the purchase of such products?
Tendency to Limit Problem Solving
While the ‘limited problem solving’ aspect of the matrix
describes low involvement purchasing with minimal differences
between competing brands, we believe that this can also be used
to describe low involvement brand purchasing when the
consumer perceives significant differences. When consumer feels
minimal involvement, they are unlikely to be sufficiently
motivated to undertake an extensive search for information. So
even though there may be notable differences between brands,
because of the consumer’s low involvement they are less likely
to be concerned about any such differences. Brand trial would
take place and in an almost passive manner, the consumer
would develop brand loyalty.
It is now more evident why brand owners feel concern about
competitors developing similar looking brands or ‘look-alikes’.
In packaged groceries, retailer’s own labels often employ similar
packages and designs to leading brands. Where these look-alikes
compete in low involvement categories, consumers are unlikely
to invest their time searching for information. Therefore some
of the consumers, who superficially glance along the shelves,
may pick up a pack because it appears to be leading brand.
So now that we have understood that given an appreciation of
the degree of involvement consumers have with the brand
purchase and their perception of the degree of differentiation
between brands, it is possible to identify their buying processes.
With an appreciation of the appropriate buying process, the
marketer is ten able to identify how marketing resources can
best be employed. A further benefit of appreciating consumer’s
buying processes is that brands can be developed and presented
104
in such a way that consumers perceive them as having added
values over and above the basic commodity represented by the
brand.
Consumer Benefits and Evaluative
Criteria
Evaluative criteria are the various features or benefits a customer
looks for in response to a particular type of problem.
Consumers may use a few criteria to reduce the alternatives, then
use more criteria to decide among the remaining alternatives.
• Universal set: all product classes and/or all brand
alternatives with reasonable marketplace access
• Retrieval set: subset of universal set that consumers can
bring up from memory
• Evaluative criteria: the means by which consumers compare
product classes, brands, vendors, etc.
1. Tangible: price, color, size, shape, performance
2. Intangible: brand image, ownership feelings
Measuring Evaluative Criteria
1. Direct measures for tangible criteria
• surveys
• in-depth interviews
• focus groups
2. Indirect measures for intangible criteria
• projective techniques
• perceptual mapping
How Many Criteria Do Consumers Use?
• Typically, they use from four to six criteria.
• The more important the purchase, the greater the number
of criteria used.
• Criteria may be used in combination.
• The more important the decision, the fewer the acceptable
alternatives there are.
What Is the Relative Importance of Each
Criterion?
1. Importance = salience
2. Salience varies by product, situation, and person
3. Some product attributes may be salient to some consumers,
but unimportant to others
4. Determining relative importance – the “100 points” rule
Country of Origin, Price, and Brand, as Evaluative
Criteria
• Country of origin is used to signal product quality
• Use of price as criterion varies across product categories:
1. Acceptable price range is determined by past purchases;
perception of benefits vs. costs indicates value; and the
buying situation.
2. Brand reputation
3. Brand may be viewed as an indicator of quality and/or
consistency of satisfaction - lessening risk
Consumer Decision Rules Four types of purchase situation:

BRAND MANAGMENT
1. How consumers evaluate and choose products and services • Specifically planned
in different buying situations. • Generally planned
2. They are used consciously or unconsciously • Substitute
3. Three types of rules • Unplanned
· Noncompensatory rule: one in which the weaknesses of an
Planned Purchasing Behavior
alternative are not offset by its strengths (not designed to
• Understanding “buying intention” is key to predicting and
find “winners”)
potentially influencing planned behavior
i Disjunctive: decide which criteria are determinant (or
• Measuring purchasing intention can be done through
not) and then establish a minimum score for each one.
Meet minimum “in” do not “out”. Select all (or any or surveys:
first) brands that surpass a satisfactory level on any i. Measures of intention may not provide accurate results
relevant evaluative criterion. Lower involvement products due to changing situational influences
or to reduce choices on higher involvement products. ii. The method of questioning may be flawed itself. (Yes –
Concentrate promotions on at least one important No to do something; probability of doing)
criterion.
Intervention of Planned Purchases
ii Conjunctive: consider all criteria as determinant and
• Intervening variables: changes that may have an impact on
then establish a minimum acceptable score for each one.
the actual purchase behavior
Meet all minima “in” otherwise “out”. Select all (or any
or first) brands that surpass a minimum level on each i. Financial status, employment situation, family or
relevant evaluative criterion. Used by customers for lower household size, weather, etc.
involvement products or to reduce choices on higher ii. Deliberation: the longer we put off a purchase the
involvement products. Marketers must promote higher the likelihood that either the purchase will
acceptability on several important criteria. not be made or the choice will change.
iii Lexicographic: rank each of the evaluative criteria in Unplanned Purchasing Behavior
order of importance; compare alternatives on most
• Four types of unplanned purchases
important with highest score winning; if tie for high
score those tied evaluated on second most important i. Pure impulse: those that are bought for the sake of
criterion, etc., until “winner” is found. Rank the novelty
evaluative criteria in terms of importance. Start with the ii. Reminder impulse: are routine purchases, albeit
most important criterion and select the brand that scores unanticipated.
highest on that dimension. If two or more brands tie, iii. Suggestion impulse: when a product (not
continue through the attributes in order of importance previously seen) stimulates immediate need
until one of the remaining brands outperforms the recognition
others. Marketers must exceed all other brands on each
iii. Planned impulse: responding to a special incentive
important attribute.
to buy an item considered in the past but not
• Compensatory rule: allowing for trade-offs among strengths selected
and weaknesses (find “winners”) How do Marketers Encourage Unplanned Purchases?
i Simple additive: total scores on all evaluative criteria for • Point-of-purchase displays
each alternative and the highest score wins
• Reduced prices
ii Weighted additive: assign relative weight to each criterion
• In-store coupons or specials (Kmart’s Blue Light specials)
based on perceived importance and then multiply the
score by the relative weight to arrive at a weighted score, • Multiple-item discounts
sum scores, highest weighted score wins • Packaging
• Decision heuristics: these are rules of thumb or short cuts • In-store demonstrations
that allow quick decision-making. • Store atmosphere
Examples • Salespeople
i Price: “the higher the price the better the quality”
Choice
ii Brand reputation: if it’s brand X, it must be good (or
• Outlet selection or brand choice, which comes first?
bad)
i. Brand choice first
iii Key product features: if a used car has a clean interior, a
buyer may also infer a mechanically sound vehicle. • Brand loyalty

iv Market beliefs • No outlet loyalty or preference

105
 • No need for the expertise of salespeople (knowledgeable
BRAND MANAGMENT
consumers)
a. No, outlet choice first
• High store loyalty or preference
• Low brand loyalty
• Need for helpful sales staff
a. Brand and outlet working together
• Find the best fit for the consumer’s self image
Outlet Image and Choice
• Image: the sum total of various functional and
psychological outlet attributes
a. Functional attributes: merchandise, prices, credit policies,
store layout, etc.
b. Psychological attributes: sense of belonging, feeling of
warmth or excitement, etc
• Retailers use attributes that imply certain benefits to design
an image that appeals to their target market(s)
a. Influences on outlet choice include the level of
involvement, perceived risk, advertising, prices, and
outlet size
Consumer Choice and Shopping Behavior
• Why do people shop?
• Personal and social motives
• How do people shop?
• Shopping orientation: their style or way of shopping
• Choice decision during the shopping process:
• Which product to buy, how many, which brands to buy,
which outlet to use, when to buy, how to pay, and other
(should we buy extended warranty)?
Buyer decision process for new products: Stages in the
Adoption Process
Awareness. - The consumer is aware of the new product but
lacks further information about it.
Interest. - The consumer is motivated to seek information
about the new product.
Evaluation.- The consumer determines whether or not to try
the new product.
Trial. - The consumer tries the new product on a small scale to
test its efficacy in meeting his or her needs. Trial can be
imagined use of the product in some cases.
Adoption.- The consumer decides to make use of the product
on a regular basis.
Influences of Product Characteristics on the Rate of
Adoption of New Products
Relative Advantage: Degree to which the innovation appears
superior to existing products. The greater the perceived relative
advantage, the sooner the innovation will be adopted.
Compatibility. This refers to the degree to which the innova-
tion fits the values and experiences of the potential consumers.
Increased compatibility will accelerate adoption of the innova-
tion.
106
Complexity: Degree to which the innovation is difficult to
understand or use. Greater complexity will slow the rate of
adoption of the innovation.
Divisibility. Degree to which the innovation can be tried on a
limited basis. Greater divisibility will help increase the rate of
adoption of the innovation.
Communicability. Degree to which the results of using the
innovation can be observed or described to others. Greater
communicability will increase the rate of adoption of innova-
tion.
How can A Marketer make Use Of Consumer buying
Decision Process?
Twenty-one Questions a Company should ask about its
Consumers
How many consumers do you estimate there are in the target
group?
How much money can consumers in the target group typically
afford to spend on the product/service that the company is
offering?
Are they inclined to save money to make a purchase, or are they
inclined to borrow money so that they can obtain goods/
services more quickly?
Are members of the target group considered creditworthy if
they wish to obtain loans to finance new purchases?
Are consumers in the target group concerned about matters
relating to environmental protection?
Are they likely to be influenced by environmental protection
groups?
Are consumers in the target group technology friendly i.e. are
they accepting of new technological developments and appli-
ances or do they avoid technology-based products/services?
What media channels do consumers in the target group use?
For example, which newspapers and magazines do they typically
read; which T.V. channels do they watch and at what times; what
radio shows do they listen to; are they likely to be Internet
users, etc.
In general, what type of lifestyle do consumers in the target
group lead?
Does the geographic region in which they live influence their
lifestyle?
What is the age range of consumers in the target group?
What are the typical occupations of consumers in the target
group and what is the typical salary scale for these occupations?
Are members of the group likely to have children and if so,
what is the average age of these children?
Are consumers in the target group likely to be members of
sports teams, social clubs or any other organisations?
Are they likely to be influenced by family members, friends,
work colleagues, or celebrity endorsements when making a
decision to purchase the products/services offered by the
company?
Do consumers in the target group purchase any goods/services We then experience the vacation. If our family and we are

BRAND MANAGMENT
because they see these purchases as reflecting their standing in satisfied with the vacation, then we may decide to take this
society? vacation again or recommend it to other family members or
What attitudes do members of the target group hold about the friends. If the vacation experience has been an unhappy one,
company’s products? then the negative aspects of the vacation may be related to
family and friends, discouraging them from making the same
What attitudes do they hold about competitor’s products?
purchase.
Where do consumers in the target group typically make
Understanding the consumer buying decision process is
purchases of products/services, such as those offered by the
important for a company for two reasons:
company?
• It highlights very clearly that for certain types of buying
Do they require the assistance of a sales representative to
decisions, a possibility exists to influence the consumer
provide them with product/service information prior to
prior to the actual purchase-taking place. The company
making a purchase of the company’s offering?
should identify all the sources of information that we are
Are consumers in the target group likely to spend a lot of time likely to use when coming up with alternatives. The
thinking about the product/service that they wish to buy, or are company should also determine how best to ensure that the
they likely to make a decision quickly? company’s product/service message is used as a source of
The company will need to carry out a thorough market survey if information by us.
it is to obtain all the information necessary to help it answer the • The consumer buying decision process also highlights that
questions listed above. Answering the list of questions will the purchase does not end with the sale. If our expectations
provide the company with an opportunity to create a ‘profile’ of about the product are not realized, then future sales to us
the target group that will prove very useful when generating the may be lost. Furthermore, negative reports to family and
company’s promotional plans. Another point to note is that it friends may also discourage other people from purchasing
will need to carry out a survey for each of the groups of the company’s products/services in the future, thereby
consumers that it wishes to target. One of the reasons that affecting potential sales revenues.
consumers are divided into target groups in the first place is that
each group is typically affected by key influences in different Notes
ways, even for the same categories of products or services. For
example, the type of car that a person is likely to purchase as a
parent with young children, will most likely be different from
the type of car which he/she may purchase after the children are
grown and have left the family nest! Though the category of
product is the same i.e. a car, the influences determining the
model and brand of car purchased are not!
If after answering all the questions a company is satisfied that
the target group of consumers is one that the company should
be targeting with its products/services, then it should analyse
the buying decision process of the consumers. It can then
determine the best approach to use to encourage purchases by
consumers in the target group(s).
Example
‘Purchasing a Family Vacation’
Let us say that we have to go on a family vacation. We recognize
that we wish to make a purchase, such as a family vacation.
Then we start to search for information about potential holiday
destinations, availability of hotel accommodation, flight
schedules, holiday activities for the family, etc. This information
search may involve talking to friends and family, obtaining
holiday brochures, surfing the Internet etc.
Then we evaluate the alternative vacation possibilities.
We then make a final decision about which vacation alternative
to purchase.
We purchase the vacation alternative. This may be in the form
of a single purchase through a travel agent, or may consist of
several purchases such as hotel accommodation, airline tickets,
etc.

107
BRAND MANAGMENT
LESSON 17:
CONSUMER SEARCH FOR BRAND INFORMATION
Objectives
The learning objective: after this lecture you should be able to
understand:
a. Extent to which consumers search for a brand information
b. Challenge to Branding from perception
By now you must be having a clear idea of Brand selection
criteria of consumers, Brands and the consumer’s buying
process, Consumer need states, Brand Marketing, Consumer
perception of added values. We discussed these in detail in last
two lessons. Now in this lesson we will take up in detail the
following
The Extent to which Consumers Search
for Brand Information
Information may be stored in the memory as a result of an
earlier search process, for example, of the assessment of a newly
bought brand immediately after purchase. Alternatively
information may be stored in the memory as a result of a
passive acquisition process-an advertisement in television or in
the newspaper might have been casually skimmed.
Information Sources
Memory External
Actively Passively
Acquired Acquired
The way consumer get brand information
Two relevant factors which influence the degree to which
consumers search their memory are the amount of stored
information and its suitability for the particular problem. In a
study amongst car purchasers, those repeatedly buying the same
brand of car over time undertook less external search than those
who had built up a similar history in terms of the number of
cars bought, but who had switched between brand of cars.
Repeatedly buying the same brand of car increased the quantity
of suitable information in the memory and limited the need for
external search.
If there is insufficient information in our memory and if the
purchase is thought to warrant it, external search is undertaken.
Researches have shown that external search is a relatively limited
activity, although there are variations between different groups
of consumers.
108
In one of the early studies on consumers’ search for informa-
tion, recent purchasers of sports shirts or major household
goods like T.V., fridges, washing machines, etc, were asked
about their pre-purchase information search. Only 5 percent of
electrical appliance buyers showed evidence of a very active
information search process, whilst a third claimed to seek
virtually no pre-purchase information. Just under half of
appliance purchasers visited only one store and only 35 percent
considered another attribute in addition to brand name and
price. Even less evidence of information search was found
amongst purchasers of sports shirts, the conclusion being ‘that
many purchases were made in a state of ignorance, or at least of
indifference’.
However, the apparent lack of deliberation does not indicate
irrational decision behavior. Some purchasers may have found it
difficult to evaluate all the features of a product and instead
relied upon a limited number of attributes that they felt more
comfortable with.
A further study of consumers buying cars and major house-
hold appliances again showed evidence of limited external
search. Less than a half of the purchasers interviewed (44
percent) used no more than one information source, 49 percent
experienced a deliberation time of less than two weeks and 49
percent visited only one retail outlet when making these major
brand purchases. Numerous other instances have been reported
of consumers undertaking limited external search for expensive
brand purchases in such product fields as financial services,
housing, furniture and clothing.
And not surprisingly, for low cost, low risk items like groceries,
external search activity is also restricted. There is no doubt that
due to the low level of involvement that these brands engen-
der, far more reliance is placed on memory. For example, when
we go shopping for washing powders, we simplify purchasing
by considering only one or two brands and by using only three
to five brand attributes. Amongst consumers of breakfast
cereals, only 2 percent of the available information was used to
make a decision. When using in-store observations of grocery
shopprs, 25 percent made a purchase decision without any time
for deliberation and 56 percent spent less than 8 seconds
examinig and deciding which brand to buy.
Reasons for Limited Search for External Information
There are several reasons that exist for this apparently limited
external search. We have finite mental capacities, which are
protected from information overload by perceptual selectivity.
This focuses our attention on those attributes considered
important. For example, according to a study, because of
perceptual selectivity, only 35 percent of magazine readers
exposed to a brand advertisement noticed the brand being
advertised.
Information is continually bombarding us and this informa-
tion acquisition is a continuos process. As we all understand
that the search for information represents a cost(the time or
effort) and some of us do not consider the benefits outweigh
these costs. This happens particularly for low involvement
brands. In researches on consumer behavior, a lot of emphasis
has been placed on measuring the number of sources consumer
use, rather than considering the quality of each informational
source.
The prevailing circumstances that we as consumers are in also
have an impact on the level of external search. We may feel the
time pressure or may not find the information easy to under-
stand. The search for information is also affected by the
consumer’s emotional state.
Brand Information: Quality or Quantity
Now that we know about the relatively superficial external
search for information which is undertaken in selecting brands,
as future marketers we must know its implications for us. The
question the marketers need to consider is whether increasing
levels of information help or hinder consumer brand decisions.
In a study to assess the decision making process, consumers
were presented with varying levels of information about brands
of washing powders and asked to make brand selections. Prior
to the experiment they were asked to describe their preferred
washing powder brand. The researchers found that accuracy (in
the sense that consumers selected that brand in the survey that
matched their earlier stated brand preference) was inversely
related to the number of brands available. Initially, accuracy of
brand choice improved as small amounts of brand information
were made available, but a point was reached at which further
information reduced brand selection accuracy.
In another study, housewives were given varying levels of
information about different brands of rice and pre-prepared
dinners and were asked to choose the brand they liked best.
Again prior to the experiment, they were asked about their
preferred brand. Confirming the earlier survey on washing
powders, increasing information availability from low levels
helped decision-making but continuing provision of informa-
tion reduced purchasing accuracy and resulted in longer decision
periods.
The implication is that marketers need to recognize that
increasing the quantity of information will not necessarily
increase brand decision effectiveness, even though it may make
consumers more confident.
It is becoming apparent that we follow two broad patterns
when searching for information. Some of us make a choice by
examining one brand at a time, i.e. for the first brand we select
information on several attributes, then for the second brand we
seek the same attribute information, and so on. This strategy is
known as Choice by Processing Brands.
An alternative strategy is seen when some of us have a particu-
larly important attribute against which we assess all the brands,
followed by the next most important attribute and so on. This
is known as Choice by Processing Attributes.
It is also seen that when some of us have limited knowledge of
BRAND MANAGMENT
a product or service, we tend tp process information by
attributes while more experienced of us process the informa-
tion by brands. Furthermore, choice by processing attributes
tends to be the route followed when there are a few alternatives,
when differences are easy to compute and when the task is in
general easier.
Clues to Evaluate Brands
Rather than engaging in a detailed search for information when
deciding between competing brands, we look for a few clues
that we believe will give an indication of brand performance.
For example, when people buy new car they talk about them as
being ‘tinny’ or ‘solid’, based on the sound heard when
slamming the door. Clearly, then, some people use the sound
as being indicative of the car’s likely performance.
We have many examples of consumers using surrogate
attributes to evaluate brands, e.g. the sound of a lawn mower
engine as indicative of power, the feel of a bread pack as
indicative of the freshness of bread, the clothing style of
banking staff as indicative of their understanding of financial
services, and high prices as being indicative of good quality. It is
now widely recognized that consumers conceive brands as arrays
of clues(e.g. price, colour, taste, feel, etc). they assign informa-
tion values to the available clues using only those few clues
which have a high information value. A clue’s information value
is a function of its predictive value)how accurately it predicts the
attribute being evaluated) and its confidence value(how
confident the consumer is about the predictive value assigned to
the clue). This concept of brands as arrays of clues also help us
explain why we undertake only a limited search for information.
If through experience, we recognize a few clues offering high
predictive and high confidence values, these will be selected.
More often than not, the most sought after clue, is the presence
of a brand name, which rapidly enables recall from memory of
previous experience. However, when we have limited brand
experience, the brand name will have low predictive and
confidence values and thus more clues will be sought, usually
price, followed by other clues. Learning, through brand usage,
enables us to adjust predictive and confidence values internally,
which stabilize over time.
An Important Clue
Numerous studies show that when faced with a brand decision,
consumers place considerable importance on the presence or
absence of brand names. Not only do brand names have high
predictive value, but consumers are also very confident,
particularly from experience with this clue. Of all the marketing
variables it is the brand name which receives the most attention
by consumers and is a key influencer of their perceptions of
quality.
Brand Names an Informational Chunks
Now that we know that brand names are perceives by
consumers as important informational clues, an explanation can
be given by referring to the work by Miller. A research was
carried out to understand the way the mind encodes
information. For example, if we compare the mind with the
way computers work, it can be seen that we can evaluate the
109
 quantity of information facing a consumer in terms of a
BRAND MANAGMENT
number of ‘bits’. All the information on the packaging of a
branded grocery item would represent in excess of a hundred
bits of information. Researchers have shown that at most the
mind can simultaneously process seven bits of information.
Clearly, to cope with the information deluge from everyday life,
our memories have had to develop methods for processing
such large quantities of information.
This is done by a process of aggregating bits of information
into larger groups, or ‘chunks’, which contain more informa-
tion. Hence, when we are first exposed to a new brand of
convenience food, the first scanning of the label would reveal an
array of wholesome ingredients with few additives. These
would be grouped into a chunk interpreted as ‘natural ingredi-
ents’. Further scanning may show a high price printed on a
highly attractive multicolor label. This would be grouped with
the earlier ‘natural ingredients’ chunk to form larger chunk,
interpreted as ‘certainly a high quality offering’. This aggregation
of increasingly large chunks would continue until final eye
scanning would reveal unknown brand name but, on seeing
that it came from a well-known organization, example Nestle,
Heinz, etc, the customer would then aggregate this with the
earlier chunks to infer that this was a premium brand-quality
contents in a well-presented container, selling at a high price
through a reputable retailer, from a respected manufacturer
known for advertising quality. Were the consumer not to
purchase this new brand of convenience food, but later that day
to see an advertisement for the brand, they would be able to
recall the brand’s attributes rapidly, since the brand name would
enable fast accessing of a highly informative chunk in the
memory.
The task facing the marketer is to facilitate the way we process
information about brands, such that ever larger chunks can be
built in the memory which, when fully formed, can then be
rapidly accessed through associations from brand names.
Frequent exposure to advertisements containing a few claims
about the brand should help the chunking process through
either passive or active information acquisition. What is really
important, however, is to reinforce attributes with the brand
name rather than continually repeating the brand name without
at the same time associating the appropriate attributes with it.
The Challenge To Branding From Perception
Brands and their reputations are valuable assets and a brand’s
strategy needs regularly assessing to understand its suitability in
changing environments.
To overcome the problems of being bombarded by vast
quantities of information and having finite mental capacities to
process it all, we not only adopt efficient processing rules(for
example, we use only high information value clues when
choosing between brands, and aggregate small pieces of
information into larger chunks) but we also rely upon our
perceptual processes.
Perception is the process by which physical sensations such as
sights, sounds, and smells are selected, organised, and inter-
preted. The eventual interpretation of the stimulus allows it to
be assigned meaning.
110
These help brand decision-making by filtering
information(perceptual selectivity) and help them to categorize
competing brands(perceptual organization). Bruner made a
major contribution in helping lay the foundations for a better
understanding of the way consumers’ perceptual processes
operate. He showed that consumers cannot be aware of all the
events occurring around them and with a limited span of
attention, they acquire information selectively. With this reduced
data set, they then construct a set of mental categories which
allows them to sort competing brands more rapidly. By
allocating competing brands to specific mental categories, they
are then able to interpret and give more meaning to brands.
A consequence of this perceptual process is that consumers
interpret brands in a different way from that intended by the
marketer. The classic example of this was the cigarette brand
Strand. Advertisements portrayed a man alone on a London
bridge, on a misty evening, smoking Strand. The advertising
slogan was ‘You’re never alone with a Strand’. Sales were poor,
since consumers’ perceptual processes accepted only a small part
of the information given and interpreted it as, ‘if you are a
loner and nobody wants to know you, console yourself by
smoking Strand’.
It is clearly very important that brand marketers appreciate the
role of perceptual processes when developing brand communi-
cation strategies.
Large Small
Bright Dull
Loud Quiet
Strong Weak
Unfamiliar Familiar
Stand out from Blend in with
Moving Stationary
Repeated One-off
Perception is an information –processing activity
• Once stimuli become familiar they stop being sensed
(habituation)
• Our sensory apparatus can screen out some information
• Selective attention to concentrate on some stimuli and
ignore others
Perceptivity is based on :
• Learning: (predisposition to pay attention/ignore)
• Personality: (extrovert/introvert effects on response to
stimuli)
• Motivation: (response based on intrinsic motivators/
learned experiences)
We concentrate on / rather than
Ways in which supermarket use perceptivity
• Different colours
• Placing goods (eye level/gondola ends)
• Depth of shelves
• Mirrors (especially fruit and vegetables)
• Curved shelving (eye follow-through)
Activity
Many ads use hidden messages, most of them harmless. Can
you find the hidden message in this company logo?
Perceptual Selectivity
The most important aspect of perceptual selectivity is attention.
Everything else we perceive will be based on how much and
what kind of attention we give to things around us.
Attention is the process by which the mind chooses from
among the various stimuli that strike the senses at any
given moment, allowing only some to enter into conscious-
ness.
A Generalized Model of Attention
Two main information-processing compartments:
• Automatic or pre-attentive processing- Unselective,
Unlimited in capacity, Acting in parallel on all incoming
information at once, Unconsciousv
• Controlled or attentive processing- Selective, Limited in
capacity, Acts serially on a small portion of the available
information, Partly consciousv
Theories of Attention
Based on these components theories differ in their description
of:
1. The kind of processing that occurs pre-attentively (Stage 1).
2. How the selector determines what passes into the second
compartment.
3. The kind of processing that occurs post-attentively (Stage
2).
Marketers invest considerable money and effort communicating
with us, yet only a small fraction of the information is accepted
and processed by us. First of all, their brand communication
must overcome the barrier of what is known as Selective
Exposure.
If a new advertisement is being shown on television, even
though we are attentive to the programme during which the
advertisement appears, when the commercial breaks are on, we
may prefer to engage in some other activity rather than watching
the advertisements. We either start surfing other channels or get
up to have water, etc.
The second barrier is what is known as Selective Attention.
We may not feel inclined to do anything else while the television
commercials are on during our favourite programme and might
watch the advertisement for entertainment, taking an interest in
the creative aspects of the commercial. At this stage, selective
attention filters information from advertisements, so building
support for existing beliefs about the brand)Oh, it’s that Toyota
advert. They are good reliable cars. Let’s see if they drive the car
BRAND MANAGMENT
over very rough ground in this advert’) and avoiding contradict-
ing claims(‘I didn’t realize this firm produces fax machines,
besides the PC I bought from them, in view of the problems I
had with my PC, I just don’t want to know about their
products any more’)
For example - students in class should focus on what the
teachers are saying and the overheads being presented.
Students walking by the classroom may focus on people in
the room, who is the teacher, etc., and not the same thing
the students in the class.
The third challenge facing the brand is what is known as
Selective Comprehension. We start to interpret the message and
would that some of the information does not fit well with our
earlier beliefs and attitudes. We then ‘twist’ the message until it
became more closely aligned with our views. For example, after
a confusing evaluation of different companies’ life insurance
policies, a man may mention to his brother that he is seriously
thinking of selecting a particular policy. When told by his
brother that he knew of a different brand that had shown a
better return last year, he may discount this fact, arguing to
himself that his brother as a Software engineer probably knew
less about money matters than he did as a Sales Manager.
With the passage of time, memory becomes hazy about brand
claims. Even at this stage, after brand advertising, a further
challenge is faced by the brand. Some aspects of brand advertis-
ing are Selectively Retained in the memory, normally those
claims which support existing beliefs and attitudes.
From the consumer’s point of view the purpose of selective
perception is to ensure that they have sufficient, relevant
information to make a brand purchase decision. This is known
as Perceptual Vigilance. Its purpose is also to maintain their
prior beliefs and attitudes. This is known as Perceptual
Defence. These are base on power differences, gender differ-
ences, physical surroundings, language and cultural diversity.
There is considerable evidence to show that information which
does not concur with consumers’ prior beliefs is distorted and
that supportive information is more readily accepted. One of
the classic examples of this is a study which recorded different
descriptions from opposing team supporters who all saw the
same football match. Many surveys show that selectivity is a
positive process, in that consumers actively decide which
information clues they will be attentive to and which ones they
will reject.
Thus, a consequence of perceptual selectivity, we are unlikely to
be attentive to all the information transmitted by manufacturers
or distributors. Furthermore, in instances where we consider
two competing brands, the degree of dissimilarity may be very
apparent to the marketer but if the difference, say, in price,
quality or pack size is below a critical threshold this difference
will not register with us. This is an example of what is known
as Weber’s Law-the size of the least detectable change to the
consumer is a function of the initial stimulus they encountered.
Thus, to have an impact upon consumers’ awareness, a jewellery
retailer would have to make significantly larger reduction on a
Rs.2000 watch than on a Rs.100 watch
111

BRAND MANAGMENT
Activity
How many of you have seen the movie, Kal Ho Na Ho? Those
of you who have seen tell me one thing that you liked best or
worst about it. Remember just one best or worst thing!
Now we see that our answers vary a lot, you may think why is it
so?
This variety of reporting (observing?) is commonly obtained
even though all the people are looking at the same scene. Why is
there such diversity in what people say (and see)? At least part
of the explanation is that people don’t just soak up the
information that is in front of them. They look actively at the
scene and report what they sought out and, to some extent, the
sense that they were able to make of it.
Perceptual Organization
‘Perceptual organization’ allows us to decide between
competing brands on the basis of their similarities within
mental categories conceived earlier by us. We as consumers
group a large number of competing brands into a few
categories, since this reduces the complexity of interpretation.
For example, rather than evaluating each car in the car market,
we have mental categories such as Hyundai Santro as a small
family car, Tata Safari as a sports utility vehicle and so on. By
assessing which category the new brand is most similar to, we
can rapidly group brands and are able to draw inferences
without detailed search. If some of us place a brand such as
Nanz’s own label washing powder into a category we have
previously identified as ‘own label’, then the brand will achieve
its meaning from its class it is assigned to by us. In this case,
even we have little experience of the newly categorized brand,
then we use this perceptual process to predict certain
characteristics of the new brand. For example, we may well
reason that stores’ own labels are inexpensive, thus this own
label should be inexpensive and should also be quite good.
However in order to be able to form effective mental categories
in which competing brands can be placed and which lead to
confidence in predicting brand performance, relevant product
experience is necessary. The novice to a new product field has
less weel-formed brand categories than more experienced users.
When new to a product field, the trialist has to view )based
upon perceptions) about some attributes indicative of brand
performance. This schema of key attributes forms the initial
basis for brand categorization, drives their search for informa-
tion and influences brand selection. With experience, the schema
is modified, the search for information is redirected and brand
categorization is adjusted, eventually stabilizing over time with
increasing brand experience.
112
An interesting study amongst beer drinkers is a useful example
of how learning moulds brand categorization. Without any
labels shown, the beer drinkers were generally unable to identify
the brand they drank most often and expressed no significant
differences between brands, in this instance, the schema of
attributes to categorize brands was based solely on the physical
characteristics of the brands(palate, smell and the visual
evaluation). When the study was later repeated amongst the
same drinkers, but this time with the brands labeled, respon-
dents immediately identified their most often drunk brand and
commented about significant taste differences between brands.
With the labels shown, respondents placed more emphasis on
using the brand names to recall brand images as well as their
views about how the brands tasted. As a consequence of
consumers using this new schema of attributes to evaluate the
brands, a different categorization of the brands resulted.
Whilst it may be thought that the simplest way for us to form
mental groups is to rely solely on one attribute and to categorize
competing brands according to the extent to which they possess
this attribute, evidence from various studies shows that this is
often not the case. Instead, we use several attributes to form
brand categories. Furthermore, it appears that we weight the
attributes according to the degree of importance of each
attribute. Thus, marketers need to find the few key attributes
that are used by us to formulate different brand categorizations
and major upon the relevant attributes to ensure that their
brand is perceived in the desired manner.
Gestalt psychologists provide further support for the notion of
consumers interpreting brands through ‘perceptual organiza-
tion’. This school of thought argues that people see objects as
‘integrated wholes’ rather than a sum of individuals parts. The
analogy being drawn is that people recognize a tune, rather than
listen to an individual collection of notes. The following are the
principles of Gestalt study:
1. Figure-ground - this is the fundamental way we organize
visual perceptions. When we look at an object, we see that
object (figure) and the background (ground) on which it
sits. For example, when I see a picture of a friend, I see my
friends face (figure) and the beautiful Sears brand backdrop
behind my friend (ground).
2. Simplicity/pragnanz (good form) - we group elements that
make a good form. However, the idea of “good form” is a
little vague and subjective. Most psychologists think good
form is what ever is easiest or most simple. For example,
what do you see here: : > ) do you see a smiling face? There
are simply 3 elements from my keyboard next to each other,
but it is “easy” to organize the elements into a shape that
we are familiar with.
3. Proximity - nearness=belongingness. Objects that are close
to each other in physical space are often perceived as
belonging together.
4. Similarity - do I really need to explain this one? As you
probably guessed, this one states that objects that are
similar are perceived as going together. For example, if I ask
you to group the following objects: (* * # * # # #) into
groups, you would probably place the asterisks and the
pound signs into distinct groups.
5. Continuity - we follow whatever direction we are led. Dots When a brand builds up a respected relationship with us, the

in a smooth curve appear to go together more than jagged
angles. This principle really gets at just how lazy humans are
when it comes to perception.
6. Common fate - elements that move together tend to be
grouped together. For example, when you see geese flying
south for the winter, they often appear to be in a “V”
shape.
7. Closure - we tend to complete a form when it has gaps
BRAND MANAGMENT
concept of closure can be successfully employed in brand
advertising. For example, Schweppes is such a well-regarded
brand that the name didn’t have to appear in the nearly
successful ‘Schhh… you know who’ campaign. The problem
with this campaign was that closure initially worked well for the
brand but eventually the actor was being promoted more than
Schweppes.
Notes

Closure asks us to mentally complete a picture

One of these things is not like the others,
One of these things just doesn't belong,
Can you tell which thing is not like the others
By the time I finish my song?

Similarity is a technique we use from our earliest days to help us remember

something by how it's like something else we already know

Figure/Ground implies a situation where the subject stands out easily

against the background; this can be visual, or as understood by any of the
other senses

Activity
Suppose you are marketer. Think about a product that you
want to launch in the market keeping in mind the current
scenario of the market.
Which of these 3 kinds of advertising might work best with
people who buy your product? What does that tell you about
your target market?
To form a holistic view of a brand, we have to fill in gaps of
information not shown in the advertisement. This concept
referred to as ‘closure’, is used by brand advertisers to get us
more involved with the brand. For example, Kellogg’s once
advertised on the billboards with the last ‘g’ cut off and it was
argued that our desire to round off the advertisement generated
more attention. Billboard advertising, showing a fly on a wall
with the caption ‘The Economist’ was also developed to
generate more interest through closure. Likewise, not presenting
an obvious punch line in a pun when advertising a brand can
again generate involvement through closure.

113
BRAND MANAGMENT
LESSON 18:
ISSUES ASSOCIATED WITH EFFECTIVE BRAND NAMES
Objectives
The learning objective: Upon completion of this Lesson, you
should be able to:
a. Critical issues associated with effective brand names and
b. The brand as risk reducer.
As we have discussed Sectoral Management of Brand in detail
in previous 3 lessons, let us now discuss Issues associated with
effective brand names and the brand as risk reducer. As we have
also discussed Brand Names, its importance and characteristics
in Chapter 1 so try to relate the learning with the previous
lessons.
Naming Brands: Individual or Company Name?
It should now be clear that we seek to reduce the complexity of
buying situations by cutting through the vast amount of
information to focus on a few key pieces of information. A
brand name is, from the consumer’s perspective, a very
important piece of information and is often the key piece. It is ,
therefore, essential that an appropriate brand name is chosen
which will reinforce the brand’s desired positioning by
associating it with the relevant attributes that influence buying
behaviour.
A brief consideration of some very well-known brand names
shows that rather unusual reasons formed the basis for name
selection. However, in today’s more competitive environment
far more care is necessary in naming a brand. For example, the
Ford Motor Company was named after its founder; Lloyd’s of
London because of its location; Mercedes because of friend’s
daughter; and Amstrad after conjuring various letters together
( Alan M. Sugar Trading plc). Today, however, because of the
increasing need to define markets on a global basis, idiosyncratic
approaches to naming brands can lead to failure. For example,
General Motor’s Nova failed in Spain because the name means
‘doesn’t go’, while Roll Royce’s plans to wrap a new model in
mysterious fog because of the name ‘Silver Mist’ were fortu-
nately halted when it was noted that ‘mist’ in German means
‘dung’, which obviously would have elicited different images. A
Beaujolais branded Pisse-Dru faced obvious problems, even
though the French vigneron interprets this as a wine to his
liking. Even more intriguing is the lager 36/15 from Pecheur et
Fischer marketed as La Biere Amoureuse. This brand is brewed
with aphrodisiac plants and is named after the telephone
number of a dating service advertised on French television!
When examining brand names, it is possible to categorize them
broadly along a spectrum, with a company name at one end (e.g.
British Telecom, Halifax), right the way through to individual
brand names which do not have a link with the manufacturer (
e.g. Ariel, Dreft, Daz, Bold and Tide emanating from Procter &
Gamble). This is shown in Figure.
There are varying degrees of company associations with the
brand name – there are brand names with strong company
114
endorsement, such as Cadbury’s Dairy Milk, Castrol GTX,
Sainsbury, Baked Beans and brand names with weak company
endorsement, such as KitKat from Nestle.
Brand Name Spectrum
Company Strong Weak Individual
As Company company brand
Brand name endorsement endorsement name
There are many advantages to be gained from tying the brand
name in with the firm’s name. With the goodwill that has been
built up over the years from continuous advertising and a
commitment to consistency, new brand additions can gain
instant acceptance by being linked with the heritage. We feel
more confident trying a brand which draws upon the name of a
well-established firm. For example, building upon high
awareness and strong associations of the brand with healthy
eating and children’s tastes, Nestle’s Shreddies was rebranded
Original Shreddies and augmented by two brand extensions,
Frosted Shreddies and Coco, Shreddies. The heavily promoted
new brands were able to benefit from similar associations built
up over the years by the Shreddies name. In this example,
however, the brand name was extended to a sector not dissimi-
lar from that where the original brand’s strengths were built. If
this is not the case, the company’s image could be diluted by
following a corporate endorsement naming policy.
In the financial services sector, it is very common to corporate
endorsement naming policy.
being strongly tied to the corporation (e.g. American Express,
Guardian Royal Exchange’s Choices, Abbey National 5 Star
Account, etc), With the Financial Services and Building Societies
Act during the 1980s enabling more institutions to sell financial
services, branding is quite a new concept in this sector. Con-
sumer and financial advice have traditionally evaluated policies
by considering the parent corporation’s historical performances,
so company-linked brand names in this sector are common.
Nonetheless, whilst a brand can gain from an umbrella of
benefits by being linked with a company name, the specific
values of each still need to be conveyed. For example, whilst
organizations such as Midland Bank have been promoting the
benefits associated with their corporate name, there is a danger
of not adequately promoting the benefits of the individual
brands (e.g. Meridian, Vector ,Orchard) leading to possibility of
confusion for us. Interestingly, when a corporation has
developed a particularly novel concept, then the brand is
launched without such a strong corporate name tie. Midland’s
First Directs a very different approach to banking and the brand
was launched very much as a stand-alone brand using the black there would have been some adverse perceptions about the

BRAND MANAGMENT
and white logo to communicate the no-nonsense approach. parent corporation.
There are obvious advantages in all aspects of communication Any one of the intuitive concerns below could have been
to be gained from economies of scale when an organization ties enough to keep these powerful names from ever seeing the
a brand name in with its corporate name. This advantage is light of day, if those making the decisions had forgotten that
sometimes given an undue importance weighting by firms names don’t exist in a vacuum:
thinking of extending their brands into new markets. This
Virgin Airlines
whole question of brand extension is a complex issue which
• Says “we’re new at this”
involves more than just the name. However, it is worth
mentioning here that in the 1990s more products and services • Public wants airlines to be experienced, safe and
were marketed under the same corporate-endorsed brand name. professional
Nonetheless, to help the brand fight through the competing • Investors won’t take us seriously
noise in the market, it is still essential to know what the brand • Religious people will be offended
means to the consumer, how the brand’s values compare with
competitive noise in the market, it is still essential to know what Caterpillar
the brand means to the consumer, how the brand’s value • Tiny, creepy-crawly bug
compare with competitive brands and how marketing resources • Not macho enough - easy to squash
are affecting brand values.
• Why not “bull” or “workhorse”?
There are also very good reasons why in certain circumstances it
• Destroys trees, crops, responsible for famine
is advisable to follow the individual brand name route. As the
earlier Procter & Gamble example showed, this allows the Banana Republic
marketer to develop formulations and positionings to appeal to • Derogatory cultural slur
different segments in different markets. However, the econom-
• You’ll be picketed by people from small, hot countries
ics of this need to be carefully considered, since firms may, on
closer analysis, find that by trying to appeal to different small Yahoo!
segments through different brand offerings, they are encounter- • Yahoo!! It’s Mountain Dew!
ing higher marketing costs resulting in reduced brand • Yoohoo! It’s a chocolate drink in a can!
profitability.
• Nobody will take stock quotes and world news seriously
When striving to have coverage in each segment of the market from a bunch of “Yahoos”
as, for example, Seiko do with their watches, it is important that
in dividable brand names sufficiently reinforce their different Oracle
brand positioning. Some firms try to differentiate their brands • Unscientific
in the same market through the use of numbers. When this • Unreliable
route is followed, however, the numbers should be indicative
• Only foretold death and destruction
of relative brand performance – in the home computer market
the ‘2000’ model could have approximately double the func- • Only fools put their faith in an Oracle

tional capability of the ‘1000’ model. In some markets, firms • Sounds like “orifice” – people will make fun of us
do not appear to have capitalized on naming issues. For The Gap
example, in the telephone answering machine market where it
• Means something is missing
has a notable presence, Panasonic brands four of its models as
T1440BE< T1446, T2386DBE and T2445BE. Consumers • The Generation Gap is a bad thing - we want to sell clothes
cannot infer much about relative differences from these brand to all generations
nomenclatures. • In need of repair
Another advantage of using individual brand names is that if • Incomplete
the new line should fail the firm would experience less damage • Negative
to its image than if the new brand had been tied to the
corporation. The following example shows how a failed brand Stingray
extension damaged the whole company’s image. Continental • A slow, ugly, and dangerous fish – slow, ugly and
Airlines, inspired by the success of Southwest, decided to enter dangerous are the last qualities we want to associate with
the low-budget no-frill cheap flights market using the brand, our fast, powerful, sexy sports car
Continental Lite. However, at the same time it continued to • The “bottom feeding fish” part isn’t helping either
offer a full service under the original Continental brand. The
company believed that it was possible to serve both markets Fannie Mae / Freddie Mac
and ignored the inevitable trade-offs on cost, service and • I don’t want hillbilly residents of Dogpatch handling my
efficiently. When Continental Lite was ultimately forced to with finances.
draw from the market, consumers became aware of the failure They don’t sound serious, and this is about a very serious
of this venture and, due to the common use of ‘Continental’, matter.

115
 A Strategic Approach To Naming Brands
BRAND MANAGMENT
When looking at the way companies select brand names, many
appear to follow a process of generating names and then
assessing these against pre-determined criteria. For example,
with the opportunities presented by the opening of European
markets, the following stages of questioning are usual in brand
name selection:
• First, in which geographical markets does the firm intend its
brand to compete? The decision becomes, if for no other
reason than the pronounce ability of the name. For
example, in 1988 Whirlpool, the American white goods
manufacturer, acquired 53 percent of Philips’ home
appliances business and are obliged by the agreement to
phase out the Philips brand name by 1998. A dual brand
name policy is currently being run, raising consumers’
awareness of Whirlpool across Europe. However, in France
Whirlpool is an extremely difficult name to pronounce.
• Secondly, even if the consumer can pronounce a name, the
next question would focus on any other meanings or
associations the name might have in different countries.
• Thirdly, if these issues do not raise problems, the next
problems is whether the brand name is available for use on
an international basis and whether it can be protected. A
major cosmetics house had to reschedule the launch of one
of its brands since the legal aspects of the pan-European
brand name search revealed that the original name was
already being used by a distant competitor in one part of
Europe.
Whilst the approach described has the strength of chiding the
name against a set of criteria, its weakness is that its tactical
orientation doesn’t relate the brand name to the wider company
objectives that the brand is attempting to satisfy. A better way
of developing the brand’s name would be to follow the flow
chart in Figure.
Marketing objective
Brand audit
Brand objective
Brand strategy alternatives
Brand name criteria specified
Brand name alternatives generated
Screen brand names and select name
What little has been published about the way firms select brand
names shows that few follow a systematic process. The scheme
developed in Figure builds on best current practice.
Let us now consider each of these steps in turn.
116
Marketing Objective
The marketer needs to be certain about the marketing objectives
that the brand must contribute towards. Clearly stated,
quantified targets must be available for each segment showing
the level of sales expected from each of the product groups
comprising the company’s portfolio. The marketing objectives
will give an indication as to whether emphasis is being placed
on gaining sales from existing products to existing customers,
or whether new horizons are envisaged (e,g. through either
product extensions or new customer groups). By having clearly
defined marketing objectives, brand managers are then able to
consider how each of their brands needs to contribute to wards
satisfying the overall marketing objectives.
The Brand Audit
The internal and external forces that influence the brand need to
be identified, such as company resources, competitive intensity,
supplier power , threats from substitutes, buyer concentration,
economic conditions, and so on. This audit should help
identify a few of the criteria that the name must satisfy. For
example, if the brand audit showed that the firm has a superior
battery that consumers valued because of the battery’s long life,
then one issue the name would have to satisfy would be its
reinforcement of the critical success factor ’barter long life’.
Brand Objective
In the brand-planning document, clear statements about
individual brand objectives should be made, again helping
clarify the criteria that the brand name must satisfy. Statements
about anticipated levels of sales, through different distributors,
to specified customers, will help the marketer to identify criteria
for the name to meet. For example, if the primary market for a
new brand of rechargeable batteries is 10-14 year old boys who
are radio-controlled car racing enthusiasts, and if the secondary
market is fathers who help their sons, the primary target’s need
may be for long inter-charge periods, whilst the secondary
market may be more concerned about purchase cost. The
primary need for the brand name would be to communicate
power delivery, with an undertone about cost.
Brand Strategy Alternatives
The marketer must be clear about what broad strategies are
envisaged for the brand in order to satisfy the brand objectives.
Issues here would include:
• Manufacturer’s brand or distributor’s brand?
• Specialist or niche brand?
• Value-added or low-price positioning?
Again, these would clarify issues that the name must satisfy.
Brand Name Criteria Specified
The marketer should be able to list the criteria that the brand
name must satisfy. They might also’ wish to be learn from
other companies’ experiences w/hat appears to work best with
brand names.
Brand Name Alternatives Generated
With a clear brief about the challenges that the new brand name
must overcome, the marketer can now work with others to
stimulate idea, for possible brand names. It is unlikely that the
brand managers would work on this alone. Instead, other
would join them from the marketing department, by
advertising agency staff, by specialist name-generating agencies
where appropriate, and by other company employees. Also at
this stage a market research agency may be commissioned to
undertake some qualitative research to help generate names.
Some of the methods that might be used to generate names
would be:
• Brainstorming
• Group Discussions
• Management Inspiration
• Word Association
• In-company competitions amongst employees
• Computer generated names.
It is important to stress that, during the name generation stage,
any intentions to judge the names must be suppressed. If
names are evaluated as they are generated, this impedes the
mind’s creative mode and results in a much lower number of
names.
Screen and Select The Brand Name
By scoring each name against the criteria for brand name
effectiveness, an objective method for judging each option can
be employed. Each name can be scored in terms of how well it
matches each of the criteria and, by aggregating each name’s
score, a value order will result. The more sophisticated marketer
can weight each of the criteria in terms of importance, and arrive
at a rank order on the basis the highest aggregated weighted
score. Whatever numerical assessment procedure is employed, it
should be developed only on the basis of an agreed internal
consensus and after discussions with key decision makers. Not
only does this enhance commitment to the finally selected brand
name, but it also draws on the relevant experience of many
executives
By following this schema, the marketer is able to select a name,
which should satisfy the company’s ambitions for long-term
profitable brand growth. This process should also result in a
name, which is well able not only to defend a sustainable
position against competitive forces, but also to communicate
added values to consumers effectively. For example, the
international courier service ‘TNT Overnite’ and the pesticide
‘Kill’.
Issues Associated with Effective Brand
Names
When considering criteria for brand name effectiveness, there is
much to be gained by drawing on the experience of other
marketers. Some of the guideline to be found there includes:
• The brand name should be simple The aim should be to
have short names that are easy to read and understand.
Consumers have finite mental capacities and find it easier to
encode short words in memory. This is the reason why
names with four syllables or more are usually contracted.
Listening to consumers talk clarifies the way that long brand
names are simplified (e.g. Pepsi rather than Pepsi Cola,
Lewis’s rather than John Lewis). When consumers get
emotionally closer to brands, they are more likely to contract
the name, for example, Mercedes becomes Merc.
• The brand name should be distinctive Brand names such
BRAND MANAGMENT
as Kodak and Adidas create a presence through the
distinctive sound of the letters and the novelty of the
word. This creates attention and the resulting curiosity
motivates potential’ consumers to be more attentive to
brand attributes.
• The brand name should be meaningful Names that
communicate consumer benefits facilitate consumers’
interpretations of brands. Creativity should be encouraged
at the expense of being too correct. A battery branded
‘Reliable’ would communicate its capability, but would not
attract as much attention as the more interesting ‘Die Hard’.
The brand name should also support the positioning
objectives for the brand, e.g. Crown Paints.
• The brand name should be compatible with the product
The appropriateness of the name Timex with watches is
more than apparent, reinforcing the meaningfulness of the
brand name. However, marketers should beware of
becoming too focused on specific benefits of the product,
especially in a mature market. Orange offered a dramatic and
refreshing alternative in a sector where the tradition of
brand naming was built on suffixes ‘tel’ and ‘corn’, such as
Betacom, Vodacom and Cabletel.
• Emotion helps for certain products For those product
fields where consumers seek brands primarily because they
say something about the purchaser, as for example in the
perfume market, emotional names can succeed. Examples
here include Poison and Opium.
• The brand name should be legally protectable. To help
protect the brand against imitators, a search should be
undertaken to identify whether the brand name is available
and, if so, whether it is capable of being legally registered.
• Beware of creating new words Marketers developing new
word for their brand have to anticipate significant
promotional budgets to clarify what their invented word
means. For example the successfully invented names of
Kodak, Esso and Xerox Succeeded because of significant
communication resources.
• Extend any stored-up equity When firms audit their
portfolio current and historical brands, they may find there
is still considerable goodwill in the market place associated
with brands they no longer produce. There may be instances
when it is worth extending a historical name to a new line
(e.g. Mars to ice cream and milk drink), or even relaunching
several historical lines(e.g. Cadbury’s Classic Collection of
Old Jamaica, Turkish Delight, etc.)
• Avoid excessive use of initials Over time some brand
names have been shortened, either as a deliberate policy by
the firm, or through consumer terminology(e.g.
International Business Machines to IBM, Imperial
Chemicals Industries to ICI and British Airways to BA). It
takes time for the initials to become associated with brand
attributes and firms generally should not launch new
brands as arrays of initials. The hypothetical brand North
London Tool and Die Company certainly fails the criteria of
117
 being short, but at least, unlike the initials NLT&D it does
BRAND MANAGMENT
succeed in communicating its capabilities.
• Develop names that allow flexibility The hope of any
marketer is for brand success and eventually a widening
portfolio, of supporting brands to better satisfy the target
market. Over time more experienced consumers seek a
widening array of benefits so, if possible, the name should
allow the brand to adapt to changing market needs. For
example, with the recognition of the reliability of Caterpillar
Tractors, the company wished to diversify further into the
earthmoving equipment market, but the word ‘Tractor’
blocked diversification. By dropping this word, Caterpillar
was better able to diversify.
• Develop names, which are internationally valid, It is
essential to establish during the naming process what
geographical coverage the brand will assume. When a name
is intended for only one nation or one culture, the cultural
associations linked to it are immediately evident. Whenever
the brand name spans different languages and cultures, it
becomes more difficult to forecast customers’ responses.
For instance, the Spanish coffee Bonka has different
implications in the UK market from those intended in
Spain.
Whilst these points should contribute to the way organizations
think about the appropriateness of different brand names, we
should never lose sight of the fact that it is consumers who buy
brands, not the managers who manage them. For this reason it
is always wise, when short-listing potential names, to undertake
some consumer research and evaluate consumers’ responses.
For example - are the words harsh sounding? Are there any
negative associations with the words? Are the names appropri-
ate for the proposed brand? Do the words ‘roll off the tongue’
easily? Are the words memorable? - and so on
Once a decision has been taken about the brand name and the
brand has been launched, the firm should audit the name on a
regular basis. This will show whether or not the meaning of the
brand name has changed over time as a result in changes in the
market place. If the environment has changed to such an extent
that the firm is missing opportunities by persisting with the
original name, then consideration should be given to changing
the name. For example, Mars saw economies of scale with a
unified pan-European brand name strategy and changed the
name Marathon to Snickers in order to capitalize on this.
The Brand as A Risk Reducer
The final issue of relevance to branding to be considered today
is the concept of perceived risk. Earlier parts showed that
products and services can be conceived as arrays of clues and
that the most-consulted clue when making a brand choice is the
presence or absence of a brand name. This reliance upon brand
name is also confirmed by the considerable volume of
consumer behaviour research on the concept of perceived risk.
It is clear that, when buying, consumers develop risk-reducing
strategies. These are geared to either reducing the uncertainty in a
purchase by buying, for example, only advertised brands, or to
minimizing the chances of an unpleasant outcome by buying,
for example, ‘only previously tried brands.
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It must be stressed that we are talking only about consumers
perceptions of risk rather than objective risk, since consumers re
only as they perceive situations. Whilst marketers may believe
they have developed a brand that is presented as a risk-free
purchase this may not necessarily be the perception consumers
have. Consumers have a threshold level for perceived risk,
below which they do not regard It as worth while undertaking
any risk-reduction action. However, once this threshold level is
exceeded, they will seek ways of reducing perceived risk
We can now start to view brands as being so well formulated,
distributed and promoted that they provide us with the added
value of increased confidence. For example, if the brand is
available from a quality retailer, this should signal increased
certainty regarding its performance. If there has been a lot of
supporting advertising this would also be read as being
indicative of a low-risk product. Furthermore, should there also
be favorable word-of-mouth endorsement, this too would allay
concerns about the brand. Marketers can gain a competitive edge
by promoting their brands as low-risk purchases
By viewing risk as being concerned with the uncertainty felt by
consumers about the outcome of a purchase, it is possible to
appreciate how marketers can reduce consumers’ risk in brand
buying. For example, appropriate strategies to reduce consumers
worries about the consequences of the brand purchase would
include developing highly respected warranties, offering money
back guarantees for first time trialists and small pack sizes
during the brand’s introductory period. To reduce their
uncertainty, consumers will take a variety of actions, such as
seeking out further information, staying with regularly used
brands, or buying only well-known brands. Marketers can
reduce concerns about uncertainty by providing consumers with
relevant, high quality information, by encouraging independent
parties such as specialist magazine editors to assess the brand,
and by ensuring that opinion leaders are well versed in the
brand’s potential. For example, by tracking purchasers of a
newly launched microwave oven brand, using returned guaran-
tee cards, home economists can call on these innovative trialists
and, by giving a personalized demonstration of the new
brand’s capabilities, ensure that they are fully conversant with
the brand’s advantages. This can be particularly effective, since
early innovators are regarded as a credible information source.
The favored routes to reduce risk vary by type of product or
service and it is unusual for only one risk-reducing strategy to be
followed. It is, however, apparent that brand loyalty and reliance
on major brand image are two of the more frequently followed
actions
When consumers evaluate competing brands, not only do they
have an overall view about how risky the brand purchase is, but
they also form a judgment about why the brand is a risky
purchase. This is done initially by evaluating which dimensions
of perceived risk cause them the most concern. There are several
dimensions of risk. For example:
• Financial risk: the risk of money being lost when buying an
unfamiliar brand performance risk: the risk of something
being wrong with the unfamiliar brand.
• Social risk: the risk that the unfamiliar brand might not
meet the approval of a respected peer group.
• Psychological risk: the risk that an unfamiliar brand might
not fit in well with one’s self image.
• Time risk: the risk of having to waste further time replacing
the brand.
If the marketer is able to identify which dimensions of
perceived risk are causing concern, they should be able to
develop appropriate consumer-orientated risk-reduction
strategies. The need for such strategies can be evaluated by
examining consumers’ perceptions of risk levels and by gauging
whether this is below their threshold level. It should be
realized, however, that the level of risk varies between people
and also by product category. For example, cars, insurance and
hi-fi are generally perceived as being high-risk purchases, while
toiletries and packaged groceries are low-risk purchases.
Table shows the results of a seminal consumer study by Jacoby
and Kaplan (1972) indicating how some of the dimensions of
perceived risk vary by product field. From these findings, it can
be seen that marketers of life insurance policies need to put
more emphasis on stressing the relative cost of policies and
how well protected consumers are compared with other
competitors’ policies. By contrast, the suit marketer should place
more emphasis on reference group endorsement of their brand
of suit by means, for example, of a photograph of an appro-
priate person in this suit
Table Consumers’ views about the dimensions of risk (after
Jacoby and Kaplan /972)
Life Insurance Suit
Financial Risk 7.2 6.4
Performance Risk 6.7 5.8
Psychological Risk 4.9 6.9
Social Risk 4.8 7.3
Overall Risk 7.0 5.9
1=very low risk, 10=very high risk
Qualities of Powerful Names
Once you have a clear idea of the brand positioning for your
company or product, the name you pick should contain as
many of the following qualities as possible. The more of them
that are present, the more powerful the name:
Self-propelling
• A name that people will talk about.
• A name that works its way through the world on its own.
• A name that’s a story in itself, whether it’s at the local bar,
on the job, or on CNBC.
Emotional Connection
• What does the name suggest?
• Does it make you feel good?
• Does it make you smile?
• Does it lock into your brain?
• Does it make you want to know more?
Poetry
• How does the name physically look and sound?
• How does it roll off the tongue?
• How much internal electricity does it have?
BRAND MANAGMENT
• How does it sound the millionth time?
• Will people remember it?
Personality
• Does the name have attitude?
• Does it exude qualities like confidence, mystery, presence,
warmth, and a sense of humor?
• Is it provocative, engaging?
• Is it a tough act to follow?
Deep Well
• Is the name a constant source of inspiration for advertising
and marketing?
• Does it have “legs”?
• Does it work on a lot of different levels?
The key is to step outside the box that the industry - any
industry - has drawn for itself, and to do it in a fresh way that
hits home with the audience. To accomplish this, it is necessary
to think about names in this fashion:
Virgin
• Positioning: different, confident, exciting, alive human,
provocative, fun. The innovative name forces people to
create a separate box in their head to put it in.
• Qualities: Self-propelling, Connects Emotionally,
Personality, Deep Well.
Oracle
• Positioning: different, confident, superhuman, evocative,
powerful, forward thinking.
• Qualities: Self-propelling, Connects Emotionally,
Personality, Deep Well.
As an exercise, go back and see how the other names
deconstructed above - Apple, Caterpillar, Banana Republic,
Yahoo!, The Gap, Stingray, and Fannie Mae / Freddie Mac -
stand up when held to these high standards. These are the
qualities that separate a potent, evocative name from a useless
one that is built without a considered positioning platform,
such as BlueMartini or Razorfish. Random names like these
disallow audience engagement, because there are no pathways
between the image and the product, and no room for connec-
tions to be made.
Tutorial
Exercise Questions
1. For each of the four Ps, have identify an exemple brand
whose strategy is different from and superior to that of its
competition. Discuss the role the particular strategy plays in
the brand’s success.
2. Survey consumers to identify product categories in which
they engage in brand switching and determine what
influences their behavior. Discuss the implications for
marketing strategy of those influencing factors.
3. Find a brand whose sole or primary distribution channel is
relationship marketing. Discuss the likely reasons for the
119
 brand’s highly focused strategy and the positive and
BRAND MANAGMENT
negative consequences of it. (For example: Amway or
Oriflame)
A Study
Developing an Effective Brand Name
DTC Perspectives Magazine Article
Abstract: By utilizing proven methods for nomenclature
development, one can change a process traditionally thought to
have no real guidelines into a more scientific process. The recent
emphasis on direct-to-consumer marketing in the pharmaceuti-
cal industry has made it necessary for pharmaceutical companies
to change the way they approach brand name development.
Body: When managing your business, the emphasis is on
“owning your market.” The first step towards this goal is to
establish brand equity and support a powerful brand image
through effective brand management. Each of the following
must be carefully considered before creating a brand name:
• Nomenclature Strategy/Architecture Positioning
• Creative Development
• Trademark Clearance
• InterNIC/Internet Clearance
• Linguistic Appropriateness
• Market Research
It is the successful combination of these elements that creates
“a company’s most valuable asset,” its brand name. Following
are more details about each component that plays a role in
developing an effective brand.
Nomenclature Strategy/Architecture Positioning - Many
companies forget to consider this step in the process of creating
a brand which can lead to inappropriate results. This compo-
nent involves identifying which brands compete in consumer’s
minds and how your brand can be positioned to maximize
preference. Using the results from this evaluation will help
shape the personality or image of your brand. The importance
of deciding on a personality or image cannot be stressed
enough. Once this has been established, the rest of the process
becomes much easier. You now know what kind of names you
want to create and you can better evaluate the quality of the
name candidates that are being created because you have a clear
vision of what the brand name should accomplish.
Creative Development - While some companies might prefer to
have an internal contest and ask employees submit some name
candidates for the new product that is being introduced, most
understand that there is a better and more systematic way to
approach creative development. Brand Institute, for example,
has developed a six-fold approach to creative name generation
that involves input from many different people some of which
are involved very closely to the project and some that are far
removed. It is important to have input from people that are
not too close to the project because they can bring a fresh
perspective to the creative process. This methodology includes
brainstorming techniques designed for evaluation of names
and concepts for creative refinement.
120
The creative development process was once thought to be a job
that needed little or no direction - just think of some names
and we will pick the ones we like best. Now the industry is
putting together a well thought out plan to meet well-defined
objectives. The old adage remains true: failing to prepare is
preparing to fail. Using a systematic approach to creative
development helps ensure that the nomenclature strategy is
followed.
Trademark Clearance - One of the hurdles to be crossed in the
branding process is ultimately having the trademark accepted by
the USPTO. In the pharmaceutical industry it is becoming
increasingly difficult to obtain an international trademark. It is
important to have a trademark attorney involved in the project
to help the project team steer clear of obvious trademark
conflicts.
Thorough trademark screening should be conducted against the
appropriate U.S., international and Internet trademark registries
on all name candidates prior to conducting market research. If
not, it is possible that costly market research can be conducted
on name candidates that are all unavailable due to trademark
conflict.
InterNIC/Internet Clearance - Consumers are searching for a
complete experience when shopping for brands, even pharma-
ceuticals and pharmaceutical companies must adjust their
marketing campaigns accordingly. One element of the complete
experience is the need for a web site devoted to new product
information. It is important to find a name candidate that also
has domain name availability.
Linguistic Appropriateness - With the global complexities of
international marketing and the existence of cultural sub-
markets within the domestic market, linguistic screening is a
must. Every name candidate that clears trademark screening
should undergo linguistic screening. Linguistic screening should
identify negative associations or pronunciation issues in the
countries and languages that the product will be marketed.
Market Research - Pharmaceutical branding requires stringent
name testing due to the importance of patient safety. Physicians
and pharmacists can evaluate name candidates to identify
sound-alike and look-alike issues that can lead to errors in the
prescribing/dispensing chain as well as provide information on
marketing related questions. It is becoming more and more
difficult to get name candidates approved from regulatory
agencies. Conducting market research proactively prior to
submitting name candidates to regulatory agencies helps
increase the likelihood for approval, minimizing costly delays
that result from rejections.
Again, pharmaceutical companies must also consider the
consumers in addition to the medical professionals. To
accomplish this, it is important to include consumers in the
evaluation of the name candidates to identify which ones
resonate best with the consumer audience. The goal is to
identify safe name candidates that also offer the best marketing
potential.
In today’s competitive marketplace physicians and consumers
have many products from which to choose. An effective brand
name can communicate to physicians and consumers the
features and benefits of your product and will create brand

BRAND MANAGMENT
equity. The importance of having an effective brand makes it
necessary to follow a scientific approach to nomenclature
development so that you can “own your market.” Following
the steps of the nomenclature process will allow you to start
out with the best name possible.
Notes

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LESSON 19: HOW CONSUMER BRANDS SATISFY
ADDED VALUES BEYOND
SOCIAL AND PSYCHOLOGICAL NEEDS
FUNCTIONALISM
Objectives
BRAND MANAGMENT
Learning objective from this chapter is
a. The social and psychologi-cal roles played by brands.
b. Focus on consumer brands rather than organizational
brands,
As we all know that brands succeed because they represent more
than just utilitarian benefits. The physical constituents of the
product or service are augmented through creative marketing to
give added values that satisfy social and psychological needs.
Surrounding the intrinsic physical product with an aura, or
personality gives us far greater confidence in using well-known
brands. Evidence of this can be seen in one study which
investigated the role that branding played in drugs sold in retail
stores. People suffering from headaches were given an analgesic.
Some were given the drug in its generic form, lacking any
branding. The branded analgesic was more effective than the
generic analgesic and it was calculated that just over a quarter of
the pain relief was attributed to branding. What had happened
was that branding had added an image of serenity around the
pharmacological ingredients and in the consumers’ minds, had
made the medication more effective than the unbranded tablets.
It is interesting to know that images surrounding brands enable
us to form mental vision of what and who brands stand for.
Specific brands are selected when the images they convey match
the needs, values and lifestyles that we as consumers have. For
example, at a physical level, drinkers recognize Guinness as a
rich, creamy, dark, bitter drink. The advertising has surrounded
the stout with a personality, which is symbolic of nourishing
value and myths of power and energy. The brand represents
manliness, mature experience and wit. Consequently, when
drinkers are choosing between a glass of draught Guinness or
Murphys, they are subconsciously making an assessment of the
appropriateness of the personality of these two brands for the
situation in which they will consume it, be it amongst col-
leagues at lunch or amongst friends in the evening.
Now that we understand that brands are an integral part of our
society and each day we have endless encounters with brands.
Just think of the first hour after waking up and consider how
many brands you come a cross. From seeing the brands used,
people are able to understand each other better and help clarify
who they are.
Consider yourself as a working professional and imagine a
normal day in your life.
You brush your teeth with either colgate or pepsodent or close-
up. Then you use either lux, cinthol, pears, sunsilk, clinic plus,
pantene, etc for having a bath. Then you use either Indian or
International deodrant or perfume. You dress up in a peter
England shirt and an allen solly trousers. To wear your titan or
timex or swatch or rado watch. Put on your red tape or
woodland or lakhani shoes.
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CHAPTER 5:
On returning home, you put on your levi jeans and polo t-shirt.
Put on your nike or adidas shoes and move out with your
friends to either barista or pizza hut or mcdonalds. On
returning home you either watch bbc or espn or star news to get
hold on the happenings in the world.
So we realize that in a normal day a normal man come across a
series of brands ranging from all fields. A study by the advertis-
ing agency BBDO found that consumers are more likely to find
differences between competing brands where emotional appeals
are used, than between those predominantly relying on rational
appeals. Functional differences between brands are narrowing
due to technological advances, but the emotional differences are
more sustainable.
We must understand that having a functional advantage, such
as a particular car design, may be a competitive advantage today,
but over time it becomes dated. By contrast, when associating a
brand with particular values, such as being honest and depend-
able, these values have a greater chance of lasting as they are
more personally meaningful and thus help ensure the longevity
of the brand.
Particularly for conspicuously consumed brands, such as those
in the beer and car market, firms can succeed by positioning
their brands to satisfy consumers’ emotional needs. Consumers
assess the meanings of different brands and make a purchase
decision according to whether the brand will say the right sort
of things about them to their peer group and whether the
brand reflects back into themselves the right sort of personal
feeling. For example, a young man choosing between brands of
suits may well consider whether the brands reflect externally that
he is a trendsetter and reflect back into himself that he is
confident in his distinctiveness. In other words, there is a sort
of dialogue between consumers and brands.
In the main, consumers do not just base their choice on
rational grounds, such as perceptions of functional capabilities,
beliefs about value for money or availability. Instead, they
recognize that to make sense of the social circles they move in
and to add meaning to their own existence, they look at what
different brands symbolize. They question how well a particular
brand might fit in with their lifestyle, whether it helps them
express their personality and whether they like the brand and
would feel right using it.
Brands are part of the culture of a society and as the culture
changes so they need to be updated. For example, the Surf
brand has been portrayed in television advertisements by the
personality ‘Lalitaji’. She epitomized the home-centred house-
wife devoted solely to the well being of her family along with
intelligence of buying the right thing in the right budget. With
the changing role of women in society, the brand has1 had to
move with the times. Today the mother in Surf ads is an
independent, busy woman with a fulltime job as well as a
growing family to take care of. In both if these roles she is
shown as a successful person who conveys a no-nonsense,
warm, modern personality. Surf ’s brand image has been
updated to match the lifestyle of the modern consumer and its
continuing success is partly due to this.
Brands and Symbolism
In the marketing circuit, a criticism is often voiced that many
models of consumer behaviour have not paid sufficient
attention to the social meanings people perceive in different
products. A lot of emphasis has historically been placed on the
functional utility of products, and less consideration has been
given to the way some people buy products for good feelings,
fun and incase of art and entertainment, even for fantasies.
Today, however, consumer research and marketing activity is
changing to reflect the fact that consumers are increasingly
evaluating products not just in terms of what they can do, but
also in terms of what they mean. The subject of symbolic
interactionism has evolved to explain the type of behaviour
whereby consumers show more interest in brands for what they
say about them rather than what they do for them. As we as
consumers interact with other members of society, we learn
through the responses of other people the symbolic meanings
of products and brands. Their buying, giving and consuming
of brands facilitates communication between people. For
example, blue jeans symbolize nformality and youth. Advertis-
ing and other types of marketing communication help give
symbolic meanings to brands, the classic example of this being
the advertising behind Levi jeans.
The symbolic meaning of brands is strongly influenced by the
people with whom the consumer interacts. A new member of a
social group may have formed ideas about the symbolic
meaning of a brand from advertisements, but if such a person
hears contrary views from their friends about the brand, they
will be notably influenced by their views. To be part of a social
group, the person doesn’t just need to adhere to the group’s
attitudes and beliefs, but also to reflect these attitudes and
beliefs through displaying the right sorts of brands.
Now that we have a fair idea of how people use symbolism for
choosing brands, let us now understand the importance of
design and visual representations in conveying meanings,
especially in the service sector where no tangible product is
available. For instance, visual representation of Merrill Lynch’s
bull is used to suggest strength and optimism. Visual represen-
tations also have the advantage of avoiding the logical
examinations to which verbal expressions are subjected and are
therefore more likely to be accepted. Customers are less likely to
challenge the symbolic freshness of Mother Diary’ vegetables
than the verbal claim stating that our vegetables are fresh.
We see that some brands have capitalized on the added value of
symbolism, i.e. meanings and values over and above the
functional element of the product or service. Symbolism is
sought by people in all walks of life to help them better
understand their environment. Different marques of cars
succeed because they enable drivers to say something about who
they are. We may buy different brands of ties, such as Satya Paul
as opposed to Marks & Spencer, not just for their aesthetic
BRAND MANAGMENT
design, but to enhance self-esteem.
From our own experience, we can say that consumers perceive
brands in very personal ways and attach their own values to
them. Elliott’s study of the trainers market shows that even
though competing firms were striving to portray unique values
for their brands, the symbolic interpretation of each brand
varied according to people’s age and gender. This challenges the
assumption amongst marketers that the brand’s symbolic
meaning is the same amongst all the target market.
To cope with the numerous social roles we play in life, brands
are invaluable in helping set the scene for the people we are
with. As such, they help individuals join new groups more
easily. New members at a golf club interpret the social informa-
tion inherent in the brands owned by others and then select the
right brand to communicate symbolically the right sort of
message about themselves. When playing golf, smart trousers
may be seen to be necessary to communicate the social role, but
to play with a particular group of people it may be important to
have the right brand as well. The symbolic meaning of the brand
is defined by the group of people using it and varies according
to the different social settings
We must know by now that brands as symbols can act as
efficient communication devices, enabling people to convey
messages about themselves and to facilitate expressive gestures.
Using the Jaguar Visa card, rather than the standard Visa card,
enables the owner to say something about themselves to their
friends when paying for a meal in a restaurant. Giving Black
Magic chocolates for instance, says something about a sophis-
ticated relationship between two people, while After Eight
Mints imply an aspiration for a grand and gracious living style
We should not forget that advertising and packaging are also
crucial in reinforcing the covert message that is signified by the
brand. Charles Revlon of Revlon Inc succeeded because he
realized that women were not only seeking the functional
aspects of cosmetics, but also the seductive charm promised by
the alluring symbols with which his brands have been sur-
rounded. The rich and exotic packaging and the lifestyle
advertising supporting perfume brands are crucial in
communicating their inherent messages. On a similar basis,
Marlboro used the symbol of the rugged cowboy to communi-
cate the idea of the independent, self-confident, masculine
image. Consumers of this brand are not only buying it for its
physical characteristics, but also as a means of saying something
about themselves.
Brands are also used by people as ritual devices to help celebrate
a particular occasion. For example, Moet et Chandon cham-
pagne is often served to celebrate a wedding, a birthday, or
some other special event, even though there are many less
expensive champagnes available.
A Special Case Study
There are also effective devices for understanding other people
better. The classic example of this was the slow market
acceptance of Nescafe instant coffee in the USA. In interviews,
American housewives said they disliked the brand because of its
taste. Yet, blind product testing against the ten widely accepted
drip ground coffee, showed no problems. To get to the heart
123
 of the matter, housewives were asked to describe the sort of If a brand is to be used as a communication device, it must
BRAND MANAGMENT

person they thought would be using a particular shopping list.
Two lists were given to the samples. Half saw the list of
groceries including Nescafe instant coffee, and the other half
saw the same list, but this time with Maxwell House drip
ground coffee rather than Nescafe. The results of these
interviews using different coffee brands led respondents to infer
two different personalities. The person who had the Nescafe
grocery list was perceived a being lazy, while drip ground person
was often described as a good, thrifty housewife. As a
consequence of this research, the advertising for Nescafe was
changed. The campaign featured a busy housewife who was able
to devote more attention to her family because Nescafe had free
up time for her. This change in advertising helped Nescafe
successfully establish their brand of instant coffee.
Her we will refer to one for significance of brands as effective
devices for expressing something to ourselves symbolically. For
example, amongst final year undergraduates there is s ritual
mystique associated with choosing the right clothes for job
interviews and spending longer on shaving or hair grooming
than normal. These activities are undertaken not only to
conform to the interview situation, but also to give the person
a boost to their self-confidence. In these situations, the
consumer is looking for brands that will make them ‘feel right’.
A further example of this is in the specialist tea market, where
Twinings advertised their teas using the theme ‘Teas to match
your mood’. The emphasis of brands here is to help consum-
ers communicate something to themselves.
Till this point in the chapter, we have understood that consum-
ers look for brands in highly conspicuous product fields as
symbolic devices to communicate something about themselves
or to better understand their peer groups. The symbolic
interpretations of some brands are well accepted. For example,
Pears Soap uses rising sun, rain drops in its advertisements to
reinforce the symbolic association between their soap and the
purity and softness of sunrays and rain drops. As we all know
that early monsoon rain and rays of a rising sun are soft and
refreshing hence the company uses them to reinforce the
association in the commercial.
We as consumers also strive to understand our environment
better through decoding the symbolic messages surrounding
us. A client working with an architect sees things like certificates
on the architect’s wall, the tastefully designed office, the quality
of the paper on which a report is word-processed, the binding
of the report and the list of clients the architect has worked for.
All of these are decoded as messages implying a successful
practice.
Symbols acquire their meaning in a cultural context, so the
culture of the society consuming the brands needs to be
appreciated to understand the encoding and decoding process.
People learn the: inherent meaning of different symbols and
through regular contact with each other there is a consistent
interpretation of them. To take a brand into a new culture may
require subtle changes to ensure that the symbol acquires the
right meaning in its new cultural context. For example, Red
Cross becomes Red Crescent in the Middle East.
meet certain criteria. It must be highly visible when being
bought or being used. It must be bought by a group of people
who have clearly distinguishable characteristics, which in turn
facilitates recognition of a particular stereotype. For example,
The Guardian newspaper reader has been stereotyped as a well-
educated person, possibly working in education or local
government. In the newspaper market some readers select
different brands as value-expressive devices. They provide a
statement about who they are, where they are in life and what
sort of person they are. Since brands can act as self-expressive
devices, users prefer brands, which come closest to meeting their
own self-image. The concept of self-image is important in
consumer branding and is reviewed in the
An Article on Symbolic Branding
For the Ultimate Bonding
S. Ramesh Kumar
Symbolic branding helps a brand to build a long-lasting
relationship with the customer. But such branding can take
place only on a strong foundation of functional utility. For
sensory products, however, it can be based on the sensory
experience and emotional appeal.
The Mercedes is a prime example of brand connecting to the
consumer through a symbol, that of status.
RAYMOND, Scorpio (from Mahindra & Mahindra), Omega
and Mont Blanc are brands that have symbolic and emotional
overtones besides the regular functional features associated with
the respective offerings.
While emotional benefits have been recognised by marketers as
a prerequisite for sustaining brand success, they would have to
follow a structured approach to create and nurture emotional
branding.
Symbolic branding is useful in a number of ways to the
marketer. It is able to build a relationship with the consumer
and if this is sustained, the loyalty, which is so formed, has a
lasting psychological impact. Harley Davidson in bikes,
Mercedes in cars and Ray Ban in goggles are examples of
symbolism attached to brands in various ways - status, fun and
adventure or simply gratification of inner needs. In fact, an

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emotional brand could also become a cult brand over time with
appropriate marketing mix elements.
Basics
It may not be possible for most brands to become symbolic/
emotional brands without establishing themselves on the
functional platform. In most product categories (even in service
categories such as banks, hotels and travel services), consumers
seek benefits that can add value to their time, convenience or
performance. In apparels, easy maintenance adds to conve-
nience; goggles’ protection of the eyes adds value to the
well-being of the consumer and his performance in various
activities.
There are some exceptions. Soft drinks, ice creams, perfumes,
cigarettes and chocolates are categories which convey sensual
gratification and hence they are sensory products. The difference
between functional and sensory product categories is that
consumers can have a tangible and realisable perception of
functional benefits but with regard to sensory experience, it
would be difficult to have a firm assessment of the sensory
experience. Given the nature of such experiences, an individual
may perceive them to be ‘better’ or average depending on a
variety of sensory inputs which change from time to time -
interest levels, priority given to such an experience, mood
during consumption, and so on.
The basics of symbolic branding involve identifying the specific
category of service or product to find out how amenable the
category is to emotional branding. The magnitude and intensity
(or even the time frame involved) could be different for
different categories. Coke advertises with the words ‘Sparkle on
your tongue’ (in the US context), emphasising the sensory
experience. Cadbury’s World, a well-known visitor’s centre in the
UK, emphasises sensory experience and even the Cadbury’s
moulded version advertised in India does that. In all these
examples, the focus is more on experience than emotion.
In contrast, Cadbury’s Temptations uses emotional appeal in its
TV commercial. Symbolism in this context is broad-based and
could be the feeling of belonging to a group, self-concept,
relationships and self-esteem. There are a number of brands of
perfumes and deodorants that are relationship-oriented appeals.
Pepsi, another product in the sensory category, uses the feeling
BRAND MANAGMENT
of belongingness through reference group appeals. Coke, in
India, also uses group appeals, which generally involve ‘groups
and activities’ appealing to the target segment. A brand in the
sensory category can either highlight sensory consumption
(consumption situation) or resort to emotional appeal. A
powerful brand such as Coke or Pepsi could even alternate
between the two kinds of positioning, taking care to ensure
such strategies complement one another.
Lifebuoy uses the functional benefit of doing away with germs
to create a bond.
Functional Product
The next approach is towards those categories that are not
sensory in nature, namely utility-oriented categories. One
category is the typical FMCG category and the other category is
that of durables. There seems to be a proliferation of
emotional branding in FMCG categories. Chakra Tea, Close Up
toothpaste, Dettol antiseptic lotion, Johnson & Johnson’s baby
powder and Saffola in the edible oil category are just some
examples. Most of them have also conveyed a functional
proposition in the seemingly emotional proposition protection
- Dettol, whiteness of the teeth in Close Up and taste (sensory
benefit) in Chakra Tea.
While it is interesting to observe this combination, there are
also a number of FMCG brands which have used strong
functional benefits and have achieved significant success as well.
These examples could include the garden freshness of Kanan
Devan, the germ-killing action of the relaunched Lifebuoy soap,
the natural ingredients of Hamam, the moisturiser of Dove
and the 12-hour protection of Colgate Total.
Culture-based emotion is another category which some brands
have used effectively. Here, an emotional belief is attached to a
cultural belief. Reliance Mobile shows an advertisement in which
the father gifts a mobile to his daughter who is married - an
emotion clearly tied to the cultural belief of marrying off the
daughter. Even today, Vicco Turmeric Vanishing Cream uses the
occasion of marriage in its advertisements. Godrej’s Storwel
cupboard was one of the earliest brands to position itself as a
‘gift for the bride’, with the advertisement having all the
trappings of a typical wedding. Mecca Cola, a fast selling cola in
Paris and the UK, draws upon the emotion strongly associated
with the cultural feeling that the cola has a religious anchoring.
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 In the category of durable products too, emotional branding
BRAND MANAGMENT
seems to play an important role in influencing the psyche of the
consumer. Santro, one of the fastest selling passenger cars, has a
strong celebrity-based emotional overtone. Tata Safari has
repositioned itself as the ‘in thing’ for the segment, which
requires a lifestyle statement. It may be observed that in both
these examples, the functional utility of the brand was well
projected before the emotional approach was tried out in
communication.
Titan is another example where the emotion surrounding the
gift proposition was effectively captured by the watch brand.
Currently, the brand is attempting to position itself as a lifestyle
accessory. Caliber, the successful bike brand from Bajaj, was
completely based on symbolic branding built around personal-
ity characteristics. Scooty, the scooterette, also used a symbolic
association to position itself.
Can brands use both benefits and symbolic associations?
Whirlpool with its ‘quick-ice’ proposition has combined both
symbolic and functional propositions (the present TV commer-
cial shows family members delighting the lady of the house).
LG, in the positioning with regard to its televisions, washing
machines and refrigerators has creatively combined the emo-
tional proposition. In refrigerators, the emotion is safety and
trust (preservation of nutrients); in washing machine, it is fabric
care (trust); and in television, it is Golden Eye (care). Such a
positioning backed by a good product and service is certain to
get positive word of mouth.
There may be categories which fit into such functional-emo-
tional combination. Marketers would have to consider the
category along with the target segment to visualise such
combinations. The Vicks advertisement of yesteryear is a classic
- the son drenched in the rain offering a bouquet to the mother
on her birthday and the mother using Vicks for the occasion.
Baby products involving infants and mother (J&J uses this) are
another example.
Clinic Plus initially positioned itself on the mother-daughter
bonding. Pepsodent uses the down to earth ‘mother-son’
problems to highlight how the brand takes into consideration
the realities of life, which the mother has to accept as a part of
her child’s life.
The Ultimate in Symbolism
Cult brands have entered the lexicon of marketers and the
Harley Davidson motorbike is a frequently cited example of a
cult brand. A cult brand is one that offers an experience to
consumers who are passionate about the brand and promotes
the relationship within the members of the ‘cult’.
Drawing from the example of Harley Davidson, a cult brand
cuts across demographics and psychographics and brings
together various kinds of people to ‘experience’ the brand. The
bike brand has members from various segments like engineers,
executives, doctors, students and blue-collar workers. A cult
brand cannot be created overnight; it has to evolve over time by
word of mouth on the ‘experience’ created by the brand. Riding
a Harley Davidson with the accessories associated with adven-
ture is an experience enjoyed, communicated and nurtured by
126
thousands of brand loyalists through various offline and
online clubs.
Symbolic branding makes a brand an inherent part of the
consumer’s psyche and provides the ultimate bonding any
brand can hope to achieve.
Self-concept and Branding
In consumer research, it is argued that consumers’ personalities
can be inferred from the brands they use, from their attitudes
towards different brands and from the meanings brands have
for them. Consumers have a perception of themselves and they
make brand decisionson the basis of whether owning or using
a particular brand which has a particular image, is consistent
with their own self image. They consider whether the
ownership of certain brands communicates the right sort of
image about themselves.
Brands are only bought is they enhance the conception that
consumers have of themselves, or if they believe the brand’s
image to be similar to that which they have of themselves. Just
as people take care choosing friends who have a similar person-
ality to themselves, so brands, which are symbolic of particular
images, are chosen with the same concern. As brands serve as
expressive devices, people therefore prefer brands whose image
is closest to their own self-image.
Now these concepts can be related to what we studied in OB.
This way of looking at personality in terms of a person’s self-
image can be traced back to Roger’s self theory. Motivation
researchers advanced the idea of the self-concept, which is the
way people form perceptions of their own character. By being
with different people, they experience different reactions to
themselves and through these clues start to form a view about
the kind of people they are. A person’s self-concept is formed in
childhood. From many social interactions, the person becomes
aware of their actual self-concept, i.e. an idea of who they think
they are. However, when they look inward and assess them-
selves, they may wish to change their actual self-concept to what
is referred to as the ideal self-concept , i.e. who they think they
would like to be. To aspire to the ideal self-concept, the person
buys and owns brands which they believe support the desired
self-image.
One of the fact that we know from our own experience is that
one of the purpose of buying and using particular brands
either to maintain or to enhance the individual’s self-image. By
using brands as symbolic devices, people are communicating
certain things about themselves. Most importantly, when they
buy a particular brand and receive a positive response from their
peer group, they feel that their self-image is enhanced and will be
likely to buy the brand again. In effect, they are communicating
that they wish to be associated with the kind of people they
perceive as consuming that particular brand.
There is considerable amount of research supporting this idea
of the self-concept, based on research in product fields such as
cars, cleaning products, leisure activities, clothing, retail store
loyalty, electrical appliances and home furnishing. Several studies
have looked at car buying and have shown that the image car
owners have of themselves is congruent with the image of the
marque of car they own. Owners of a particular car hold similar
self-concepts to those they attributed to other consumers of the
same car. Also, if the car purchaser’s self-image is dissimilar to
the image they perceive of different brands of cars, they will be
unlikely to buy one of these brands.
To check whether an appreciation of self-image as an indicator
of buying is as useful for conspicuously consumed brands as it
is for privately consumed brands(conspicuous consumption)
and magazine brands(private consumption). In both of these
product fields, people chose brands whose images came closest
to matching their own self-concepts. What this study also
showed was that for less conspicuously consumed product
fields actual, rather than ideal self-image appeared to be more
strongly related to brand choice.
There has been a lot of debate about which type of self-
concept(actual or ideal) is more indicative of purchase
behaviour. To understand this better, a study was designed
which looked at nineteen different product fields ranging from
headache remedies, as privately consumed products, through to
clothes, as highly conspicuously consumed products. There was
a significant correlation between the purchase intention for the
actual and ideal self-concept results. This indicated that both are
equally good indicators of brand selection.
However, the behaviour of individuals varies according to the
situation they are in. take your own case, the brand of beer
bought for drinking alone at home in front of the television is
not necessarily the same as that bought when out on a Saturday
night with friends. Situational self-image-the image the person
wants others to have of them in a particular situation – is an
important indicator of brand choice. According to the situation,
the individuals match their self-image to the social expectations
of that particular group and select their brands appropriately.
The impact of situation on brand choice can be modeled as
shown in the figure.
Perception of others in Individual’s repertoire of
the situation self-images
Situational Self-Image
Scan of brand images for most
appropriate
Comparison of brand
image and situational self-
Brand choice
The impact of situation and self-image on brand choice
Consumers anticipate and then evaluate the people they are
likely to meet at a particular event, such as those going to an
important dinner party. They then draw on their repertoire of
self-images to select the most appropriate self-image for the
situation(I can’t let my hair down on Saturday night as there are
too many of my husband’s colleagues there. Better be a lot
more reserved, especially as his boss is hosting this party). If
the situation requires products to express the situational self-
BRAND MANAGMENT
image, such as certain type of clothing, the consumer may
decide to buy new clothes. When shopping they will consider
the images of different clothes and select the brand which
comes closest to meeting the situational self-image they wish to
project at, for instance, the dinner party.
Finally, it needs to be realized that there is an interaction
between the symbolism of the brand being used and the
individual’s self-concept. Not only does the consumer’s self
image influence the brands they select, but also the brands have
a symbolic value and this in turn influences the consumer’s self-
image.
A Sample Study
Making Products Psychologically Fulfilling
Consumers buy products to satisfy needs. These needs range
from basic physiological ones (e.g., need for food) to higher
psychological ones (e.g., acceptance by others, self-fulfillment). A
product may satisfy more than one need and at more than one
level. For example, an anti-bacterial soap may satisfy the basic
needs for cleanliness and safety (with its germ-killing qualities)
as well as a higher psychological need to feel like one is being a
good parent (i.e. “because I am keeping germs away from my
children”). This example also shows that satisfying a need may
involve a causal link: being able to feel like one is being a good
parent is dependent on having been able to provide a clean and
germ-free environment. Such multiple layers of interrelated
needs can be thought of as “ladders.” The lower rungs of such
ladders represent product benefits (e.g., cleans dirt, gets rid of
bacteria) and the upper rungs represent needs satisfied by the
product benefits, ascending from basic to higher psychological
needs (see figure 1).
Building Ladders on the Internet
Traditionally, laddering research is done qualitatively. Ladders are
constructed via an interviewer’s continuously asking probing
questions to consumers as to why they buy certain products.
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 The disadvantages of qualitative laddering are small sample
BRAND MANAGMENT
sizes and high costs. So we decided to see if there was an
alternative.
To aid a major consumer packaged goods company in planning
brand differentiation strategies, we fielded a study to develop
ladders for six brands within a specific CPG (consumer
packaged goods) category-and we conducted it on the Internet!
The piping technology of online research allowed us to emulate
the probing questions involved in traditional laddering research.
Specifically, respondents answer a “why” question; and these
answers are piped into a subsequent screen, which would ask
them “why” (again!) they gave their previous response.
Despite initial skepticism from our client, the study turned out
to be a huge success. The ladders that emerged for each brand
were rich in consumer language, differentiated, and most
importantly, informative to the client’s developing its brand
strategies. Following are two ways that laddering can be used:
1. Using Existing Ladders
With this application, the key is acknowledging perennial
consumer needs as they relate to a category or to specific brands.
Using the previous example, if you’re developing an ad for an
anti-bacterial soap, you can be fairly certain that you’re going to
want to convey the product’s germ-killing attributes as well as
its ability to make the potential buyer feel like they’re being a
good parent. From there, by studying the ladders for specific
brands, you can find insights into what can differentiate your
offering or reduce its parity to the competition’s.
2. Creating New Ladders
Here, the idea is that expanding marketing opportunities may
require the development of new ladders (or, in English, finding
new relationships between needs and product attributes). To
expand marketing opportunities, it can be useful to (1)
introduce new ways to satisfy old needs, and (2) introduce new
needs into a laddering structure. As an example of the first
possibility, the need to spend less time cleaning the kitchen may
be met by products with dirt-repelling benefits instead of
traditional quick clean-up benefits. And, as an example of the
second (introducing new needs), we can look to oil companies’
premium gas, which has the benefit of making cars start easily
and last longer. Who knew we “needed” gas that helps to
maintain our cars, even as it fuels them? Now we do!
Article To Add Valuefmcgs
Being Pushed to Add Value
Aarati Krishnan
128
SEVERAL of the myths surrounding the FMCG business,
once considered a haven for defensive investors, have been
shattered over the past couple of years. As the recent shrinkage
in offtake for some FMCG categories proves, the business is
not slowdown-proof. Also proved wrong is the belief that
entry barriers to the industry are high, as it calls for large
investments in acquiring distribution reach and brand building.
Regional and local FMCG brands have proliferated lately, some
managing to chip away at the market shares of the large players,
by focussing on regional pockets. As competition hots up in a
slowing market, the players are having to cope with a hitherto
unknown variable - pricing pressure. In quite a few categories,
the players are using price cuts to woo consumers.
The turmoil is increasingly being reflected in the financials of
the major listed companies. Sales growth has hovered at single
digits for at least two years now. Until recently, most companies
managed a healthy growth in profits despite stagnating sales,
through belt-tightening exercises. But profit growth, too, is
declining. In the first quarter of 2003, profit growth (before
non-operational items) of major FMCG companies, such as
Hindustan Lever, Nestle India and Colgate-Palmolive, has been
in the single digit.
Well-spread-out Slowdown
The slowdown in demand growth has been under way for
some time now. But there are a couple of new facets to it.
One, it is no longer restricted to rural demand - growth rates
have also been flagging for companies which target only urban
and semi-urban consumers.
Two, it is not restricted to the supposedly ‘mature’ categories
such as soaps and detergents. Over the past year, growth rates
have dwindled even for low-penetration categories, such as
toothpastes, shampoos and skin products, with some of these
actually shrinking in value.
Economic data show that there has been an actual decline in
consumer spending over the past four years. One key reason for
this is the sharp fall in rural purchasing power due to declining
commodity prices. This has had an impact on companies such
as Colgate Palmolive India and Hindustan Lever, which derive
over 40 per cent of revenues from the rural market.
But going by the dwindling sales growth for urban-oriented
products such as cosmetics, urban consumers have cut back on
FMCG spending too. An important reason appears to be a re-
allocation of consumer-spend from FMCGs to other avenues.
The boom in housing and consumer credit, coupled with the
emergence of a whole host of new products and services
(mobile phones, leisure, travel and entertainment), also appear
to have diverted spending away from FMCGs.
Ebbing Brand Loyalty
As regional FMCG brands have mushroomed by offering lower
prices, brand loyalty has been given the short shrift, as
consumers switched from brands, which were seen as not
offering “value” for the price paid. Consumers have responded
to the multiplying choices by switching brands, based on who
offers the best bargain. This trend has probably been helped
along by the players themselves.
In categories such as toothpastes, sharp increases in selling
prices over the past four years appear to have led to consumer
resistance, allowing local brands to gain a toehold through the
simple expedient of offering low-priced alternatives.
In the food business, especially in branded staples and in
categories such as tea and edible oils, the listed players, such as
Hindustan Lever, Tata Tea and Marico Industries, have had to
contend with a shrinking organised market, as consumers
switched to loose tea and low-priced substitutes.
From Give-aways to Price Cuts
In 2001 and 2002, most FMCG players, especially in high-
penetration categories such as soaps and detergents, responded
to the slowdown by re-allocating their spend on brand-building
from advertising to below-the-line promotional efforts.
The trend started with give-aways such as the “buy two, get one
free” offers on soaps and has culminated in discounted combi-
packs on toothpastes. But such offers have been supplemented
of late, with discounts on selling prices on carefully chosen
products and pack sizes. These are intended to prompt
consumer upgradation or pep up the quantity of products
bought.
In the detergents market, P&G has dropped prices by close to
30 per cent in 2002. Hindustan Lever’s Surf Excel has slashed
prices by close to 15 per cent. HLL has also cut prices, of the Rin
Shakti and 501 detergent bars. Toothpaste brands such as
Colgate, Pepsodent and Close Up have re-aligned prices and
pack sizes at lower points to woo consumers and ward off low-
priced regional competitors.
Evidence suggests that price cuts do invariably help to jump-
start volume offtake. P&G for instance claimed a 200 per cent
expansion in Tide volumes after the price cut. Pepsodent has
reported a 41 per cent volume growth in the March 2003
quarter.
Roping in New Users
Earlier, extending the distribution reach was seen as the way to
rope in new consumers for FMCGs. But, lately, players have
also worked at making their products more affordable, to
induce trials. The concept has paid off in shampoos, where
BRAND MANAGMENT
sachets priced at Re1 and Rs 2 have helped improve market
penetration for the category as a whole. Trial packs of
toothpastes such as Pepsodent and Colgate at Rs 10 each aim at
upgrading toothpowder users to using toothpaste.
Similar experiments have been extended to skin cream, malted
beverages, sauces and even soaps. But low unit packs usually call
for some sacrifices on price. So the challenge in the low unit pack
strategy would lie in retaining the new consumers and driving
them to gradually upgrade to larger unit packs.
Nestle India has had considerable success with this, without
necessarily sacrificing prices. Chocostik, at Rs 2, and Maggi
noodles, at Rs 5, have helped its chocolate and noodles markets
grow at 15 per cent and 26 per cent respectively over the past
year.
Sniffing Out Nascent Markets
Milking large categories, such as soaps, detergents or
toothpastes, for further growth calls for investments in
distribution and sacrifices on the price front. But there are still
quite a few FMCG markets, which are just evolving and are not
too competitive. Godrej Consumer’s focus on hair colours, a
market with robust growth rates, has helped it ward off the
slowdown in the soaps business over the past couple of years.
Similarly, markets for ready-to-use-foods, culinary products,
household cleaners and some of the segments in personal
products also offer scope for expansion. But competition in
these categories is picking up as more players sense the opportu-
nity.
Room at the Higher End
If the FMCG markets in mature economies, such as the US,
have registered high growth rates in the recent past, this has
been mainly through innovative high-end products such as
teeth-whitening products, detergent tablets and liquid body-
wash. Only a fraction of the wide range of FMCGs offered in
the developed world is as yet available in India.
The MNCs have, of late, made a few attempts at persuading
consumers to try out higher-end products in traditional
categories. Henkel SPIC’s Pril liquid dish-wash, compact
detergent powders and the Lux liquid body-wash range are such
attempts.
These are still relatively small markets and expanding them may
be a time-consuming task. Yet, this may be a worthwhile route
for the MNCs to take, as such products would make a dispro-
portionate contribution to margins with minimal threat from
regional or local players.
An Uphill Task
Many of the recent measures may help put the FMCG market
back on the growth track. But the way ahead is going to be quite
difficult for key players in the industry. For one, the pricing
power that players enjoyed in the past to effortlessly pass on
cost increases to consumers no longer exists. Therefore, profit
margins may be more vulnerable to spikes in input prices.
Two, having re-aligned selling prices to offer better value to
consumers, FMCG companies cannot afford to raise selling
prices anytime in the near future. Even if these reductions do
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 help pep up volume offtake substantially, it could trim profit
BRAND MANAGMENT
margins for some time to come. This is especially true of
players which have taken price cuts on a large part of their
portfolio.
Third, having tapped most of the consumers who were
exposed to and willing to try FMCGs, companies will now have
to brace up for the more difficult task, of actually driving
consumption. This may call for heavy investments in technol-
ogy (to develop new products) and distribution reach.
But the silver-lining is that after experimenting with various
short-term measures to prop up growth rates, the players finally
appear to be on the right track. For long, there has been an un-
bridged gap between the potential offered by the Indian market
and the low per capita consumption. By improving the
affordability and range of products on offer, they may actually
succeed in bridging this gap and pushing growth rates into a
higher trajectory for the long term.
Any revival in disposable incomes, brought about by any
industrial or farm recovery, may only speedup the process.
Case Study
That’s Entertainment – Do Games Really Add Brand
Value?
Games are now one of the most popular forms of online
entertainment. More and more websites now offer games as a
key piece of content. But do they really help build a relationship
with target audiences?
The FMCG market has particularly warmed to online gaming
delivered via their brand website. Companies like Coca–Cola
and Nestlé have been using interactive games as a part of their
content for some time. Kelloggs have no fewer than 13 games
on their website (www.kelloggs.co.uk). Even brands that have
traditionally steered clear are slowly moving into the market –
Mr Kipling, for example. Games are seen as a quick and easy
way of providing extra content. But they need to be cleverly
conceived and developed if they are to help enhance brand
differentiation and audience relationships. So who are brands
targeting with these games? Unsurprisingly, the largest concen-
tration of games can be found in the brands and websites
targeted at kids. The logic is: ‘Kids play online games and if we
offer one, then they’ll keep coming back to our site and will
build an affinity with our brand.’ But it’s not that simple.
With younger children, parents may be concerned if they spend
too long onscreen. They want to help and supervise and games
need to be part of child and parent learning and experiencing
together. Older kids have greater independence. But here, the
reality is that online games must compete with offline consoles
that provide a gaming experience with both superior looks and
game play. And this is a highly discriminating consumer. Failure
to provide novelty and an exciting experience can actually
damage the brand.
For adults, online games are less of an attraction. They are often
too time pressured to play games or lack the opportunity – lots
of people still browse the internet at work and it is concern
(rightly or wrongly) about ‘inappropriate use’ that has been a
barrier to many companies giving employees open access to the
Internet.
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It is very easy to get it wrong with online games, generally
through a lack originality. Rehashing an old favourite may be
tempting, but it does nothing to underpin what’s unique about
the brand. The old 1970s stalwart, Space Invaders, is a prime
example. Too many brand owners buy a standard game, add
their own creative look and put it on the site, offering nothing
more to potential consumers than dozens of other sites,
targeting similar audiences.
However, it is not all doom and gloom, games can add value to
the brand - if you take the time to get the concept right. Some
of the most successful and imaginative games have been
targeted at adults where adding humour has been a key success
factor. These will often have a viral element where users who
enjoyed the game will tell their like–minded peers.
Other routes to success are moving beyond solo gaming to
developing a community - putting consumers in touch with
fellow enthusiasts, making the brand site a club and a meeting
place. An example of these newer multiplayer games can be seen
on the Alive website by Coca Cola (www.aliveis.com). Role
playing games allow interaction between like minded consumers
from Cardiff to Connecticut. Even on a parochial level, beating
your mate’s top score can be incentive enough to come back to
the game and the brand.
If they are to provide maximum value, games should fit within
overall brand communication and marketing plans, tying in
with offline promotions or interacting with seasonal packaging.
Ultimately, if a game is original, relevant to the brand and the
audience, and works well technically then an online game has
earned its space on the website. If the cost benefit of a game or
the relevance to the brand website is in question, then sponsor-
ing a game may be more appropriate. For example, Dairylea
help promote a game in conjunction with a children’s TV
character on the Nickelodeon website. Have any brands made a
real success of games on their website? Cartoon Network is
probably one of the better examples. They have successfully
created online games that fit with the Cartoon Network brand
and all games have a relevance to characters available on the TV
channel.
With the increase in sophistication of Internet users and the
ever increasing speed of the Internet, games will inevitably
become more popular. More sites will include more games and
it will only get tougher to expect them to pull in target audi-
ences. Only the smart and the imaginative will truly win
through.
 BRAND MANAGMENT
LESSON 20:
BRAND PERSONALITY

Objectives example of a characteristic is confidence. This is not a belief, but

The learning objective: After reading this lesson you should be more of a behaviour. There are, of course, many values/beliefs
able to and characteristics that a person may have, but there are some
a. Understand the concept of Brand personality, that are particularly likeable. It is to these likeable values and
characteristics that people are inevitably attracted. Examples of
b. Brand Value and personality
these include dependability, trustworthiness, honesty, reliability,
c. Reflecting the greater emphasis placed on brand personality friendliness, caring, and fun-loving.
and symbolism in consumer marketing. The self-concept
There are about two hundred words that describe personality
theory would explain how consumers seek brands with
characteristics, and these can be used for putting personality into
images that match their own self-image.
brands. To illustrate how people think in personality terms
Based on the premise that brands can have personalities in when making judgments about brands, here are the results of
much the same way as humans, Brand Personality describes consumer research into how people feel about two companies.
brands in terms of human characteristics. Brand personality is When asked the question: “If these two companies were
seen as a valuable factor in increasing brand engagement and people, how would you describe them?” their replies were:
brand attachment, in much the same way as people relate and
bind to other people. Much of the work in the area of brand
personality is based on translated theories of human personal- Company A Company B
ity and using similar measures of personality attributes and
factors Sophisticated Easy going
Many of the world’s most powerful brands spend a great deal
Arrogant Modest
of time putting personality into their brands. It is the personal-
ity of a brand that can appeal to the four functions of a Efficient Helpful
person’s mind. For example, people make judgments about
products and companies in personality terms. They might say, Self-centered Caring
“I don’t think that company is very friendly,” “I feel uneasy
when I go into that branch,” “I just know that salesmen is Distant Approachable
not telling the truth about that product,” or “That offer Disinterested Interested
doesn’t smell right to me”. Their minds work in a personality
driven way. Given that this is true, then how can a company
create a personality for its product or for itself? The answer lies
These two companies are actually competitors in a service
in the choice and application of personality values and character-
industry. If you were asked which of these two companies you
istics.
would like to be your friend, you would probably choose
To be more clear let us imagine a person as a brand. She may be Company B, as did 95% of other respondents. It is not
around 28 years of age, have fair features, a small build and be surprising that the service level of Company B can be a better
pleasant-looking. These would be similar to a product’s experience for customers than that of Company A. It is also
features. When you get to know her a little better, your relation- easy to conclude that if consumers consistently experience these
ship may deepen, and you will be able to trust her, enjoy her differences between the two companies, then the brand image
company, and even miss her a lot when she is not around. She of Company B will be much better than that of Company A.
is fun to be with and you are strongly attracted to her values and
A further point of interest arising out of this research is that
concerns. These are emotions similar to the associations that
people tend to prefer brands that fit in with their self-concept.
people develop with brand personalities. People, generally, like
Everyone has views about themselves and how they would like
people. So, if a personality can be created for a brand, it will be
to be seen by others. And they tend to like personalities that are
easier to attract consumers to the brand. As brands grow, so do
similar to theirs, or to those whom they admire. Thus, creating
human relationships, it is the emotional dimension that tends
brands with personalities similar to those of a certain group of
to become dominant in loyalty. Personality grows brands by
consumers will be an effective strategy. The closer the brand
providing the emotional difference and experience.
personality is to the consumer personality (or one which they
Values and Characteristics of Brand Personality admire or aspire to), the greater will be the willingness to buy
People’s personalities are determined largely through the values the brand and the deeper the brand loyalty.
and beliefs they have, and other personality characteristics they
develop. An example of a value or belief is honesty. Many
people believe in being honest in everything they do and say. An

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 Creating Brand Personality
BRAND MANAGMENT
Whether a brand is a product or a company, you as a manager
have to decide what personality traits your brand is to have.
There are various ways of creating brand personality. One way is
to match the brand personality as closely as possible to that of
the consumers or to a personality that they like. The process will
be
• define the target audience
• find out what they need, want and like
• build a consumer personality profile
• create the product personality to match that profile
This type of approach is favored by companies such as Levi
Strauss, who research their target audience fastidiously. For Levis
the result is a master-brand personality that is:
• original
• masculine
• sexy
• youthful
• rebellious
• individual
• free
• American
A related product brand personality (for a specific customer
group) such as Levi’s 501 jeans is:
• romantic
• sexually attractive
• rebellious
• physical prowess
• resourceful
• independent
• likes being admired
Both profiles appeal mostly to the emotional side of people’s
minds - to their feelings and sensory function. This profiling
approach aims to reinforce the self-concept of the consumers
and their aspirations. The approach is ideal for brands that
adopt a market-niche strategy, and can be extremely successful if
a market segment has a high degree of global homogeneity, as
is the case with Levis.
Adding personality is even more important if the task is to
create a corporate as opposed to a product brand, as every
encounter with the customer gives the opportunity to put
across the brand personality.
Brand and Brand Users Galore!
Branding is Image Building
Today, businesses are fighting out their marketing warfare not
merely at the product attributes level or at the advertising
campaigning level, but it is also happening at several other
levels.
It is at the totality of the image that brands create in the minds
and hearts of their customers. Marketers are concentrating on
building Brand Values, images, power and authority centered
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around customers - their self esteem., their dreams and
aspirations - whether the fight is between Coke and Pepsi, HLL
and P&G, Siemens and L&T.
Consumer Brands ans Brand Personalities
Consumer Brand creators concentrate around creating brand
personalities around their products. If Gold Flake were a
person, how could he be? Do you not picture him as being
more suave? More successful? More gracious?
What kind of personality do we attribute to Charms and Coke?
Would not Mr. Charms be younger, more fun-loving? Would
he not be like your college-going son? For that matter, would
Mr. Coke not be smart, fun-loving, bright, full of spirit and
success?
If we look around, we find hundreds of examples. The
Marlboro Cigarette gave birth to the Marlboro man - the
ultimate specimen of manhood from the Marlboro country.
Camel brands’ Camel Cartoon Mnemonic has captured such a
strong “I am cool” personality that in US children recognize this
cartoon far more than even Mickey mouse.
Also look at the personalities of our local brands; the strong
associations of Liril, personified by Kren Lundl with the
effervescent image of the water nymphet; that of Rasna with
the lovable child offering her tired daddy Rasna and that of
Onida evoking the hidden devil in us or Lalitaji insisting that it
makes better sense to buy Surf because of good logic devel-
oped on her own.
As we have already discussed building successful brands in
Lesson 5, chapter No 1, let us try to relate it with Brand
personality.
Principles of Building Successful Brands
A successful brand is built around 4 principles:
1. Quality Product meeting or exceeding continuously the
functional needs.
2. An attractive Wrap-around to differentiate and enhance
appeal.
3. Delighting customers with additional products or services
to augment basic appeal and
4. Ensuring origin of trials leading to repeat-buys.
Advertising, promotion, PR etc are used as triggers for the
mechanism of repeat buys and for starting the wheel of usage -
experience and keep it recurring.
The Acid Tests of Successful Brands
Firstly, they have a leading share in their segments and
distribution channels. Secondly, they command prices sufficient
to provide a high profit margin. Thirdly they sustain their
strong share of profit when competitive and generic versions of
product hit the market.
How Do Brands Wield Their Magic Touch on Their
Owners and Consumers?
The two laws of brand are quite interesting. The first law
pronounces “The bigger the brand, the more is total spent on
marketing” and the second law is “ the bigger the brand is the
less in Unit Cost terms is spent on marketing.”
This gives rise to the triple leverage effect of brands on high
volumes (higher asset use and economies of scale), higher price
(at consumer level and more so at retailer or distributor level)
and lower Unit Costs in R& D, Production, Marketing (Sourc-
ing and operating advantage).
The result is that the brand leader’s market share advantage is
substantially magnified at the profit level. It is not unusual for a
brand leader having three times the market share of immediate
follower to get six times higher profit!
Wear Someone Else’s Name on Your Back and
Quickly Become Somebody Your Self!
Now let us see the joy of the consumers. Brand names-
obsessed executives are spending big money on big Brands.
Any doubt? Look at the favourite of some Indian executives.
Van lack shirts (Rs. 6,000-7,000 each), Aquascutum suits (Rs.25,
000- 30,000)& Burberry socks (yes, socks at Rs.600 a pair!)
provide the necessary classification.
Business barons and executives alike are making a beeline for
the Big Names and in both outer and inner wear. The annual
budget of life style practitioner young executives is upward of
Rs. 50,000/- on an average of such things such as jockey briefs,
Vanity Fair lingerie, and Louis Fraud jackets Murray Allen
Cashmeres, Lotus Bawa or Bally shoes. Look at the prices!
Hermes scarf (hand printed Rs.12, 500; Mont Blanc in sterling
silver & 18K gold plate pen Rs.37, 000, Unisex Undies (Calvin
Klein in white cotton) Rs. 5,000 a pair, Piaget watch Rs.1,
50,000. a made to order Ray Ban in 14K Gold Rs.1 lakh.
“Brands: Love, Hate and In Between”
Fournier has classified 15 types of relationships that can exist
between a consumer and a brand.
Committed Partnership: Long term and voluntary relation-
ship. For example, a man is so involved with his brand of
bicycle that he becomes an advocate for it, singing its praise to
his friends.
Marriage of convenience: Long term bond that springs from
a chance encounter. A woman becomes a fan of a particular
salad dressing after a bottle is left at her workplace.
Arranged Marriage: Long term commitment imposed by
third party. A consumer uses a particular brand of wax to clean
cabinets because it was strongly recommended by the cabinet
manufacturer.
Casual Friendship: Friendship that is low in intimacy, with
only occasional interaction and few expectations. A consumer
rotates among different brands of breakfast cereals, avoiding a
long-term commitment.
Close Friendship: Voluntary union based on sense of shared
intimacy and rewards. A consumer believes a brand of sneakers
is a comrade in daily athletics activities.
Compartmental Friendship: Highly specialized friendship,
often dependent on the situation and characterized by low
intimacy. A woman uses different brands of perfumes for
different activities.
Kinship: Involuntary union of the cost associated with family.
A cook feels obliged to use the same kind of flour his or her
mother used.
Rebound Relationship: Union based on desire to replace a
BRAND MANAGMENT
prior partner. One woman Fournier interviewed switched
mayonnaise brands because she didn’t want to use the one her
ex-husband preferred
Childhood Friendship: Affectionate relationship of infrequent
interaction dating back to childhood. A man buys a brand of
instant dessert because he remembers eating it in his childhood.
Courtship: Period of testing before deciding on a committed
partnership. Fournier cites the example of a woman experi-
menting with two brands of perfume before committing to
one.
Dependency: Obsessive attraction that results in suffering
when the partner is unavailable. A consumer is upset when a
favourite peanut butter is out of stock.
Fling: Short term engagement with great emotional rewards. A
consumer loyal to one kind of coffee enjoys (bur feels guilty
about) sampling a competitor’s brand.
Adversarial Relationship: Intense relationship characterized
by negative feelings and a desire to inflict pain. A man refuses to
buy a brand of computer that he hates, buying a competitor’s
brand out of spite.
Enslavement: Involuntary relationship governed exclusively by
partner’s wishes and desires. A consumer is unhappy with the
local cable operator but has no alternative source for this service.
Secret Affair: Highly emotional, private relationship that is
considered risky. A consumer hides a favourite brand of frozen
dessert in the freezer and sneaks some late at night.
Activity
Check it for yourself. Look towards yourself top to bottom.
Note down what all brands you are wearing or are otherwise
your favourite. See from above discussion what relationship
you have with these brands.
Watch Out, We are World Class Customers Now
Tastes have been changing. We change with the changes in our
demographics and psychographics. We keep demanding goods
with higher and higher value as or careers progress and our
aspirations, disposable incomes and status grow. For many
years refrigerators and washing machines were available only in
one color-white. No longer. For many years telephones were
available only in one color-black. No longer. For many years
only men smoked and women wore earrings. No longer. Now
women cut their hair short and men sport ponytails and wear
earrings.
Not only this, there are several changes technology has brought.
Today you need not be strikingly rich, but you will still need the
feel for a mobile phone, a fax, a PC etc .if you value time and
believe that technology can improve your quality of life.
Look at the opportunities for branding and offerings matching
products and services and to build Brand and Brand extensions
around them.
Will The Indian Brands Survive?
A product is what a company makes. A brand is what a
consumer buys. A brand is a set of perceived values, which the
customer develops for a particular product. It is not the
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 product, but its source, its meaning and its direction which
BRAND MANAGMENT
defines its identity on time and space.
In the light of the above mentioned, during the post liberaliza-
tion period, the Indian brands have not done too badly. Look
at Telco, Onida, Vicco, Dabur, Dey’s Medical etc. who have been
able hold their own against multinational brands in their own
ways. At the same time some of the MNC brands such as Ray
Ban, Kellog’s, Sony had initially fallen victims either to Indian
customer’s equations of value for money or fake rivals or the
engrained consumers habits.
On the other hand, local brands have one common advantage -
their intuitive understanding of the local markets. Some of
their winning strategies are indigenous engine research and
development (Telco), leveraging ethnic connections (Dabur and
Vicco), capturing niches (Dey’s medical with Keo Karpin),
encashing on the large-scale consumption of commodity items
(Tata Tea, Tata Salt, etc.) Strategic alliances (Titan with Timex for
plastic watches), consistent promotion (Amul, Frooti, Rasna
etc.).
To understand whether a brand will survive, you have to go to
the core-beyond the great product and the core benefits, the
continuous improvements per changing needs of the consum-
ers, the continuous additions of distinctiveness through
effective communication; the image of the company behind it
and not least of all the people behind running the company
and the brand.
Effective Branding is the continuous process of wrapping
distinctiveness and add values around products and services
that are highly appealing, themselves, to offer consumer’s
quality, delight and feelings of faith and confidence in meeting
their aspirations. Finally it is only the fittest brands that survive
isn’t it? The secret lies in invigorating and rejuvenating to keep
the Brands in a fit condition. More than a century old Brands
like Coke, Levi’s etc. are still young and kicking. Aren’t they?
V.V Rama Shastry
Activity
Identify 5 Indian companies and 5 that of foreign origin in
FMCG sector. Collect data for their related brands. Comment
on how they have been able to maintain their brand in the
market for past 5 years.
Brand Personality - The Relationship
Basis Model
Source: Building Strong Brands by David Aaker
Some people may never aspire to have the personality of a
competent leader but would like to have a relationship with
one, especially if they need a banker or a lawyer. A trustworthy,
dependable, conservative personality might be boring but
might nonetheless reflect characteristics valued in a financial
advisor, a lawn service, or even a car-consider the Volvo brand
personality. The concept of a relationship between a brand and
a person (analogous to that between two people) provides a
different perspective on how brand personality might work.
To see how the relationship basis model works, consider the
personality types of people with whom you have relationships
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and the nature of those relationships. Some of the types might
be as follows:
• Down-to-earth, family oriented, genuine, old-fashioned
(Sincerity). This might describe brands like Hallmark,
Kodak, and even Coke. The relationship might be similar
to one that exists with a well-liked and respected member
of the family.
• Spirited, young, up-to-date, outgoing (Excitement). In the
soft drink category, Pepsi fits this mold more than Coke.
Especially on a weekend evening, it might be enjoyable to
have a friend who has these personality characteristics.
• Accomplished, influential, competent (Competence).
Perhaps Hewlett-Packard and the Wall Street Journal
might fit this profile. Think of a relationship with a person
whom you respect for their accomplishments, such as a
teacher, minister or business leader; perhaps that is what a
relationship between a business computer and its customer
should be like.
• Pretentious, wealthy, condescending (Sophistication). For
some, this would be BMW, Mercedes, or Lexus (with
gold trim) as opposed to the Mazda Miata or the VW Golf.
The relationship could be similar to one with a powerful
boss or a rich relative.
• Athletic and outdoorsy (Ruggedness). Nike (versus LA
Gear), Marlboro (versus Virginia Slims), and ICICI
(versus State Bank of India) are examples. When planning
an outing, a friend with outdoorsy interests would be
welcome.
Two elements thus affect an individual’s relationship with a
brand. First, there is the relationship between the brand-as-
person and the customer, which is analogous to the
relationship between two people. Second, there is the brand
personality-that is, the type of person the brand represents. The
brand personality provides depth, feelings and liking to the
relationship. Of course, a brand-customer relationship can also
be based on a functional benefit, just as two people can have a
strictly business relationship.
The Brand As A Friend
One important relationship for many brands is a friendship link
characterized by trust, dependability, understanding, and caring.
A friend is there for you, treats you with respect, is comfortable,
is someone you like, and is an enjoyable person with whom to
spend time. General Foods, in fact, defines brand equity as a
“liking” or a “friendship” relationship between the customer
and the brand. WordPerfect, a software company that has always
been a leader in customer service, would rate high on the
friendship dimension.
A friend relationship can involve very different brand personali-
ties. Some friends are fun and irreverent. Others are serious and
command respect. Others are reliable and unpretentious. Still
others are just comfortable to be around. A focus on the friend
relationship rather than the brand personality can allow more
scope and flexibility in the implementation of the brand
identity.
Fred Posner of Ayer Worldwide has observed that people live
in a world characterized by stress, alienation, and clutter.
[footnote omitted] Noting that people cope by developing
escape mechanisms and meaningful friendships, Posner
suggests that brands can provide these roles by being either an
“aspirational” or a “trusted” associate. Escape can take the form
of aspirational relationships which provide a social lift or
trusting relationships which provide some expertise or knowl-
edge of a subject in which a given person is interested. Posner
believes that either relationship can be the basis for real
differentiation and competitive advantage. He further suggests
that the chosen relationship should be the centerpiece of brand
strategy and execution.
What If The Brand Spoke to You?
When considering brand personality, the natural tendency is to
consider the brand to be a passive element in the relationship.
The focus is upon consumer perceptions, attitudes, and
behavior toward the brand; attitudes and perceptions of the
brand itself are hidden behind the closed doors of the
organization. Yet your relationship with another person is
deeply affected by not only who that person is but also what
that person thinks of you. Similarly, a brand-customer
relationship will have an active partner at each end, the brand as
well as the customer.
One approach to obtaining this information is to ask what the
brand would say to you if it were a person. The result can be
illuminating.
Blackston illustrates this approach with a doctor-patient
example. Consider a doctor who is perceived by all to be
professional, caring, capable, and funny—characteristics that
most would like in a doctor. But what if the doctor also felt
you were a boring hypochondriac? The resulting negative
relationship would be impossible to predict based only upon
perceptions of the doctor’s personality or external appearance.
Blackston’s approach was used in a research study of a credit
card brand. Customers were divided into two groups based on
how they thought the personified brand would relate to them.
For one customer segment (labeled the “respect” segment), the
personified brand was seen as a dignified, sophisticated,
educated world traveler who would have a definite presence in a
restaurant. These customers believed that the card would make
supportive comments to them like the following:
• “My job is to help you get accepted.”
• “You have good taste.”
A second “intimidated” segment, however, described a very
different relationship with the brand. This group’s view of the
brand personality was similar to that observed in the respect
segment, but had a very different spin. The credit card was
perceived as being sophisticated and classy but also snobbish
and condescending. This segment believed that the personified
card would make negative comments such as the following:
• “Are you ready for me, or will you spend more than you can
afford?”
• “If you don’t like the conditions, get another card.”
• “I’m so well known and established that I can do what I
want.”
• “If I were going to dinner, I would not include you in the
BRAND MANAGMENT
party.”
These two user segments had remarkably similar perceptions of
the brand personality especially with respect to its demographic
and socioeconomic characteristics. The two different perceived
attitudes of the credit card toward the customer, however,
reflected two very different relationships with the brand which
in turn resulted in very different levels of brand ownership and
usage.
Contexts in which it is often worthwhile to consider what a
brand might say to a customer include those listed below.
Upscale brands with a snobbish spin. Nearly any prestige or
badge brand risks appearing snobbish to some in the target
market. This risk is often much greater for those on the fringe
of or just beyond the target market. In part, this perceived
attitude restricted the market for Grey Poupon, advertised as the
mustard of limousine riders. The brand has since tried to
soften this message in order to expand its market and the usage
rate.
Performance brands talking down to customers. Talking
down to customers is a common danger for performance
brands. Consider the VW Fahrvergnugen campaign. The use of
the German word provided some nice associations (especially if
one knew German) but risked implying that the brand looked
down on those who did not “get” the clever symbol and
campaign. A discarded campaign for Martel—”I assume you
drink Martel”—ran the risk of talking down to all customers
who were drinking a competitor’s brand.
Power brands flexing their muscles. A brand that has power
over the marketplace, like Microsoft and Intel in the 1990s or
IBM in the past, has a real advantage as a result of being the
industry standard. The risk is that by promoting this advantage,
the brand may be perceived as being arrogant and willing to
smother small, defenseless competitors. One respondent in a
focus group reportedly said that if IBM was a vehicle, it would
be a steamroller and would park in a handicapped space.
Intimidated brands showing their inferiority. A brand might
risk appearing inferior if it tries too hard to be accepted into a
more prestigious competitive grouping. Thus Sears could
attempt to associate itself with trendier retailers and simply
come off as being pathetic. The humorous thrust of the Sears
campaign from Young & Rubicam, in which a woman goes
there for a Die Hard battery but ends up buying great clothes,
helps avoid this pitfall.
Any active brand relationship, though, needs to be managed.
Sometimes adding a sense of humor or a symbol can help. In
one study for a cigarette brand, the brand personality profile was
a sophisticated individualist, stylish and corporate but also
aging. Further, there was a segment, most of whom did not
use the brand, who saw it as snobbish. This segment rejected
the brand in part because it felt rejected by the brand. To combat
this problem, the brand kept its upscale imagery but added,
with gentle humor, a sense of irony about its status and
prestige to soften the hard edge of the image.
135
 Relationship Segmentation example, I had to close my account in a foreign bank and shift
BRAND MANAGMENT

Research International routinely segments consumers by brand to a public sector bank.” And he explained how a cheque he had
relationship. In a first-phase research effort, fifty to a hundred issued bounced in his foreign bank because he forgot to write
subjects are interviewed, usually by phone. A series of open- ten paisa in words. He felt that a Vijaya Bank would have called
ended questions are asked, including word associations, brand him and rectified the error, whereas the foreign bank, which
personalization, characteristics of liked and disliked brands, and talked of technical excellence and customer relationship
a dialogue section (based on what the brand would say if it orientation, had been unable to walk the talk.
were a person). And so the conversation went on...
The first analysis stage involves scanning the data and forming Dinesh Maru (a banker): “But the GS, which claims to be at the
hypotheses about the types of relationships that exist. In the service of citizens, needs to develop customer orientation. For
second stage, respondents are allocated to relationship categories example, my driver’s medical claim was rejected as his illness was
on the basis of the hypothesized relationship groupings. In the not explicitly mentioned in the insurance company’s nebulous
process, the relationship typology is refined. The relationships list of ‘claimable diseases’! How will a consumer feel assured
are then formalized into specifications, and coders classify the that there is an intention to deliver service if there is such
respondents into those relationships. The groups are then vagueness?”
profiled. Often the relationship groupings correspond to like, Akhila: “A detergent also does the same when it advertises:
dislike, and neutral segments. The “dislike” group for credit Removes all stains such as..., or when it claims to whiten your
cards, for example, perceived the brand as being snobbish; the clothes. These are, in fact, promises that the PS ads make! The
“like” group, in contrast, felt that they were accepted by the government does not make such promises!”
brand.
Questions
Case Study 1. Comment on the Brand equity of the brand India
The Brand That is India - I 2. What do you think are the critical factors for this
Private and pubic sector employees debate if the positioning of brand India.
government system is truly inefficient or if ...
3. Give a plan to reposition brand India in terms of products
Meera Seth and services.
Akhila Goel listened quietly to the voices raging around her - Notes
arguing, accusing, defending. How often had she heard these
allegations before! But this time, it came from her old
batchmates; men and women who had spent four years
together on campus, albeit 20 years ago! This year at the alumni
meet, Akhila had become the centre of their attention, thanks
to her ‘public sector officer’ status.
”Sarkari madam, kuch karo. Make this government work!” went
the refrain. Akhila, a senior officer in a government department,
saw that her friends from the private sector (PS) had started
some sort of a government bashing plan. A fresh outburst of
complaints followed. “The government is inefficient, corrupt
and slothful. It works only if you know someone high up...,”
someone said. That is when Akhila broke her silence.
”How is your PS any different from the government sector (GS)
on efficiency, service or even corruption? Even the PS’s customer
service works only if you know someone high up!” Akhila said.
“Even I have examples to prove my point. When my washing
machine broke down, we called the customer service seven
times. Nothing happened. Then my husband, who knew the
company’s CMD, rang him up. A seven-person team promptly
came and replaced the machine. Now what do you say?
”You compare a Whirlpool or an LG with the government. But
understand, the government’s target market is 1 billion-strong;
it cannot pick and choose according to SEC classes! Naturally, it
will get far more complaints than an LG! Given its smaller size,
the PS should be able to redress each and every complaint.
Besides, your mantra of customer service didn’t work despite
all your foreign tie-ups. So why compare the two?”
More arguments followed. Rudra Aggarwal, a practicing
consultant, said: “Inefficiency is rampant in the PS too. For

136

LESSON 21:
BRANDING TO MAKE TANGIBLE
THE INTANGIBLE
Objectives
After the completion of the chapter, you would be able to
understand:
a. How the marketers try to deal with the intangible offerings.
b. How to provide consistent service brands through staff.
c. How consumers contribute to the development of the
service brand.
After undertaking such an elaborative exercise on the nature of
services, you now clearly understand how services are different
from products. And because the vary offering is intangible it
creates a lot of problems for the marketer to communicate it
and convince the customers into buying it.
Services
One of the most problematic aspects associated with service
brands is that consumers have to deal with intangible offerings.
In an attempt to overcome this problem, marketers put a lot of
emphasis on the company as a brand, especially in sectors such
as financial services, since this is one way of making the service
more tangible. Research in the financial services sector has
shown that consumers know little about specific products,
often they do not want to know more and they are content to
assume that the best-known companies have the best financial
products. This further compounds the problem of service
branding! A study by Boyd et al showed that the most
important criterion for customers selecting a bank is reputation,
and the next most important the interest on savings accounts.
Because of their intangible nature, service brands run the risk of
being perceived as commodities. To overcome this problem,
strong brands with a clear set of values which result in positive
CHAPTER 6:
SERVICE BRANDS
perceptions amongst consumers are essential. However, these
BRAND MANAGMENT
common and consistent perceptions amongst consumers are
difficult to establish for intangible offerings. Service brands
need to be made tangible to provide consumers with well-
defined reference points.
Let us now understand that an effective way to make brands
tangible is to use as many physical elements as possible that can
be associated with the brand, such as staff uniforms, office
décor, and the type of music played to customers waiting on
the telephone. A service brand can project its values through
physical symbols and representations, as Virgin airlines has to
so successfully done with its vibrant red colour reflecting the
dynamic, challenging position being adopted.
The first points of contact with a service organization, such as
car parking, design of building and appearance of the reception
area, all interact to give consumers clues about what service
brand will be like. Other ways that brands communicate with
consumers are through tangible elements such as stationery, the
way employees dress and brochures.
One major retailer had a full-length mirror that its entire staff
passed as they left the canteen to go into the store. Above the
mirror was a sign saying, ‘This is what the customer sees’, to
draw their attention to the importance of thinking about the
tangible cues consumers are presented with as representative of
the brand.
Package design plays an important role for branded goods, and
in service brands this likewise represents an opportunity for
more effective differentiation. McDonald’s boxes for children’s’
meals, for instance, have been shaped as toy houses to reflect
the playful element associated with the experience of a lunch in
the fast-food chain. The tangible elements surrounding the
brand can also serve to facilitate the service performance: the
setting within which the service is delivered may either enhance
or inhibit the efficient flow of activities.
The yellow and blue stripes in IKEA stores, for example, not
only allude to the Scandinavian tradition of the company but
also guide consumers through the different sections. The
design of the surroundings also plays a socialization function,
informing consumers about their expected behaviour, the roles
137
 expected of staff and the extent to which interactions are
BRAND MANAGMENT
encouraged between them. Club Med dining facilities are
structured so that customers can easily meet and get to know
each other. Finally, the design of the physical facilities may be
used to differentiate the service brand from its competition.
The polished steel interiors of Pret-a.-Manger restaurants allow
consumers to distinguish them clearly from other sandwich
bars bistros.
The tangible elements of a service brand encourage and
discourage particular types of consumer behaviour. For
example, a 7-Eleven store played classical symphonies as
background music to retain their ‘wealthier’ customers while
driving away teenagers who tended to browse the shelves rather
than spend any money. Different aromas can elicit emotional
responses and thereby influence consumer behaviour-some
food retailers pump the fragrances of freshly baked bread into
their stores, evoking a more relaxed, homely feeling.
The previous example that we talked about showed different
ways in which service organizations can make their brands more
tangible. The approach adopted when ‘tangibalizing’ the service
brand must be consistent with the service and should not
promise more than the service will actually deliver. British
Airways and Forte ensure that the perceptions of their consum-
ers are affected in a consistent manner by taking a holistic
approach to presenting their brands: they use the same music
from their television advertising while customers are put on
hold on the phone. The elegant uniforms worn by sales
assistants at Marks & Spencer clearly communicate the brand
message of fashion and excellence, and the staff dress at
Woolworths is representative of good value-for-money core
brand values. If the physical evidence of the brand is un-
planned, inconsistent or incompatible with the message of the
added values the brand aims to convey, consumers will perceive
a gap and reject the brand. The following questions can help
marketers to assess the extent to which they are capitalizing on
tangible cues to support their brand strategy:
• Do all the elements of the physical evidence convey a
consistent message?
• Do the physical evidence and the conveyed message appeal
to_ the target market?
• Does the physical evidence appeal to employees and
motivate them to develop the brand?
• Are there additional opportunities to provide physical
evidence for the service?
• What are the roles of the surrounding elements of the
service? How does each tangible element contribute to the
development of the brand?
Consistent Service Brands Through Staff
Even though the service organization may have developed a
well conceived positioning for their brand and devised a good
communication programme, the brand can still flounder
because a insufficient attention to the role the staff play in
producing and delivering the service. In particular, the following
factors can compromise the success of the brand:
• Ineffective communication.
138
• Conflict in the duties staff are required to perform.
• Poor fit between staff and technology.
Furthermore, unlike products, the quality and process of every
service performance can vary and often requires the involvement
of several employees, empowering employees and building a
culture based on teamwork is likely to enhance consumer
satisfaction.
You all must understand this very carefully that the staff
embody the service brand in the consumer’s eyes. In many cases
the service staff are the only point of contact for the consumer
and by thoroughly training staff and ensuring their commit-
ment to the brand, its chance of succeeding are greater. The
success of the Disney brand results from the firm’s insistence
that employees recognize they are always ‘on stage’ whenever in
public, encouraging them to think of themselves as actors who
have learnt their roles and are contributing to the performance
and the enjoyment of visitors.
The staff of a service organization can positively enhance the
perception consumers have of the service quality through their:
• Reliability – for example, Lufthansa pilots strive to ensure
that their brands has an outstanding track-record of
punctuality.
• Responsiveness – a member of cabin staff may be
sympathetic to the family who have been split up on their
flight and take the initiative to enable them to sit together.
• Assurance – while the plane is kept waiting before taking
off, the pilot informs travelers of the reason, the expected
length of delay and that all is being done to minimize the
delay.
• Empathy – cabin staff may show empathy by conforming
a crying child who is flying for the first time.
• Appearance – the uniform worn by the Alitalia crew is
perceived as particularly elegant and fashionable as some
travelers recognize that it is designed by Armani.
Failing to take heed of these factors can have a negative impact
on the perceived quality of the service.
Empirical analysis has shown that not only are the actions of
employees fundamental to a high-quality delivery of the service,
but also that the morale of staff influence consumer satisfac-
tion with a service brand. A study about a British bank revealed
that the branches with the lowest staff turnover and absentee-
ism were also those with the highest levels of profitability and
customer retention. A good example of the link between
satisfied staff and satisfied consumers is shown by Southwest
Airlines. In 1995, the employees of this airline paid $60 000 for
an advertisement in USA Today to thank Herb Kelleher, their
CEO, for the success of the company.
Marketers should know that to ensure the willingness of the
staff and the ability to deliver high-quality services, the organi-
zation should motivate their staff and encourage
customer-orientation culture by considering the following:

• Recruit the right people – successful companies such as
Hewlett Packard or Microsoft are regarded as preferred
employers. The brands of the major consultancy firms are
built on their policy of hiring only the best people. Some
firms explore the values of potential staff to assess whether
these are similar to the values of their firm.
• Train staff to deliver service quality – the consistency of
the McDonald brand is ensured by the formal education
employees undergo at the famous ‘hamburger University’.
To enhance their brands, companies such as Federal Express
invest heavily in the training of their employees.
Nordstrom, the American retail store, is a good example of
a brand built on staff empowerment: the only rule staff
need to regard each other as internal customers within the
service process, enhancing the quality of the brand through
teamwork and cooperation.
• Provide Support Systems – appropriate technology and
equipement are essential to support staff in delivering
quality service. For example, bank clerks need to have easy
and fast access to up-to-date customer records if they are to
deliver accurate and prompt customer service.
• Retain the best people –although many organizations are
aware of the importance of recruiting the best people, there
are instances where firms do not put as much effort into
retaining them as they could do. A high staff turnover
usually translates into low consumer satisfaction and poor
service quality. In order to retain their employees,
organizations need to involve them in the company’s
decision-making process and devote as much attention to
them as to their customers. Moreover, they should reward
employees for good service delivery through financial and
non-financial measures, such as McDonald’s scheme ‘The
employee of the month’.
By addressing some of these issues a company can establish
more customer-focused service culture, which is a prerequisite
for delivering consistently high-quality services and for building
successful service brands. A customer-centred focus should
pervade the whole organization so that the commitment to
customers becomes second nature for all employees. The
development of a genuine service culture is neither easy nor
quick, but companies that have overcome this challenge have
been duly rewarded. The development of a service culture at
SAS, for example, contributed to turning the loss-making
business into a successful brand.
Service Brands with The Optimum Consumer
Participation
While in the previous section it has been shown how service
organizations can enhance their brands by building on the role
employees play during the service delivery, now we will focus on
how consumers contribute to the development of the service
BRAND MANAGMENT
brand. The way consumers evaluate a service brand depends
largely on the extent to which they participate in the delivery of
the service. If a yachting enthusiast did not get on too well with
an instructor at Club Med, this interaction would affect their
view of the brand. When subsequently hiring a dinghy at the
end of the course and having difficulties rigging the sail, he may
complain to his friends about ageing equipment. Yet the real
reason for his problems is that he did not pay proper attention
to his instructor.
If the service performance requires a high degree of consumer
involvement, it is vitally important that consumers understand
their roles, and are willing and able to perform their roles,
otherwise their inevitable frustration will weaken the brand.
Large, easy to read signs and displays at the entrance of IKEA
stores inform consumers how they are supposed to take
measurements, select pieces of furniture and collect them.
The level of consumer participation varies across services. In
service sectors such as airlines and fast-food restaurants, the
level of consumer participation is low, as all that is required is
the consumer’s physical presence and the employees of the
organization perform the whole service. In sectors such as
banking and insurance, consumers participate moderately and
provide an input to the service creation through providing
information about their physical possessions. When consumers
are highly involved in the service, for example participating
Weight Watchers, they need to be fully committed and actively
participate.
Consumers can be regarded as productive resources and even as
partial employees of the service organization, because they
provide effort, time and other input for the performance of the
service.They are also contributors to the quality and value of the
service thereby influencing their assessments about the service
brand. Consumers who believe they have played their part well
in contributing to the service tend to be more satisfied. The
IKEA brand is built on the principle that consumers are willing
to be involved in ‘creating’ the service, not just consuming it.
Since actively-involved consumers feel the responsibility is theirs
when the service turns out to be unsatisfactory, they are
particularly pleased when the service provider attempts to
redress the problem.
You must know that to involve consumers in the service-
delivery process, organizations can implement different
strategies which are based on the following three factors:
• Defining the role of consumers
• Recruiting, educating and rewarding consumers
• Managing the consumer mix
The organization needs to determine the level of customer
participation by defining the consumer’s job. Some strong
brands such as Federal Express and DHL are built on low
consumer involvement, as consumers rarely see the service
provider’s facilities and have only very brief phone contact with
its employees. In these cases, as consumers are minimally
involved in the service delivery process and their role is ex-
139
 tremely limited, strong service brands can be developed through
BRAND MANAGMENT
standardized offerings and precisely defined procedures. On the
other hand, for service organizations like business school and
health clubs, there are higher levels of consumer participation
and more tailored offerings can be developed.
Last but not the least, effective consumer participation may
require that consumers go through a process similar to a new
company employee-a process of recruitment, education and
reward. In telephone banking, consumers are first recruited, and
then they receive formal training and information about the
service. Only then will they be rewarded with easier access to
financial services. Brands such as First Direct have been success-
ful because they have effectively communicated the benefits
consumers can gain from their participation. Service brands can
be strengthened through an effective management of the mix
of consumers who simultaneously experience the service. All
major airlines, for example, are aware of the need to separate
different segments.
Article On Financial Services Branding
Making Investments a Tangible Commodity.
Arnold Wechsler is CEO of Wechsler Ross & Partners, New
York, a marketing and design consultancy for the financial
community. He con be reached at (212) 924-3337.
Branding. In the Old West, if it wasn’t done carefully, there was
the risk of a stampede. In today’s crowded marketplace,
however, most companies look to branding to start a stam-
pede... to their product or service. But in their rush to separate
themselves from the herd, far too many marketers are branding
by rote, applying the same techniques used by packaged goods
to less tangible products.
140
This trend is nowhere more evident than the investment
product category, where many mutual fund companies are
doing it wrong. In recent years, mutual funds have become a
“mass consumable,” with over 8,000 of them jostling for
attention among the 66.5 million individuals in 37.4 million
American households owning mutual funds. Yet, contrary to
what many marketing types believe, a brand is not created for a
financial service provider the way it is for a car or a beer or a
laundry detergent. A mutual fund brand is not created primarily
through advertising, nor should branding and advertising be
viewed as one and the same.
First, “investment branding” is not an oxymoron. It is reaching
an expanding customer base by understanding the convergence
of existing distribution channels and the emergence of new
ones.
Today, first-time investors are very often buying direct, rather
than through brokers. And to confuse things even more,
investors who, in the past, have bought funds direct, are now in
many cases turning to fee-only financial advisors to help select
funds. At the heart of that success is the understanding that
selling investment products requires winning the consumer’s
heart and mind, with both the sizzle and the steak.
All it takes is brains. The left-brain types disregard the fact that
investors are looking for a fund company that “feels” safe and
comfortable. Performance, though important, is only part of
the equation. A brand is more than an emotional trigger. Done
well, it creates a personality to which a customer can relate.
Right-brainers overlook the fact that information and full
disclosure are more important than in other product categories,
which means that emotion alone can’t carry the day.
Branding of investment products is unique because these
products are unique. They’re largely intangible; and they’re
intellectually challenging because selecting investments requires a
certain degree of study, thought and cognitive understanding.
It’s also a different animal because, unlike consumer brands that
state or imply a promise, a mutual fund cannot legally make a
promise. Thus, the special challenge is to find a way to make a
credible and meaningful pledge to the consumer without
running afoul of regulators.
With most consumer product marketing, a strong ad campaign
drives a multi-front communications and branding strategy
encompassing media placement, direct marketing and collateral
materials. With investment product marketing, the main
branding engine isn’t advertising. It’s printed communications
and, growing rapidly, the Internet.
Vanguard Fund Group is an outstanding example in this realm.
They do no TV advertising and only minimal print advertising,
yet they have become the industry’s second largest fund group
with an exceptionally strong brand that has been built through
marketing communications, the Internet and public relations.
By way of another example, Citibank successfully launched a
new family of mutual funds-called CitiFunds-utilizing a strong
marketing communications strategy which emphasized
information-based materials to both potential investors and the
bank’s brokers.
It is important to create a consistent graphic look and feel for
the communications. Visual appeal is certainly important, but
effective design is more than a pretty face, and the overall “look”
must work hard to organize and communicate what is often
complex information and amplify the company’s positioning.
The end result is communications that give life to the position-
ing. The goal is to make the intangible tangible. Thus, in the
absence of a physical product, marketing communications
becomes the product. The branding of investment products is
not a magic bullet. In a field with over 8,000 players, it can be
difficult to fashion a distinctive identity for mutual fund
companies that have little to set them apart. But for a company
with a story to tell and real value to add, branding can be a
potent marketing tool ... one that, like product advertising, can
make effective use of both information and emotion.
It’s just that, in this challenging industry, emotion can only
attract the customer. It takes information to close the sale.
Article
Brand Processes, Not People
You brand the process. You NEVER brand the person.
Branding people offends their humanity. Nobody wants to
become like the brands they purchase. What a loss of power.
“Nobody’s going to turn ME in to a robot.” And yet – there is
no escaping it. To have a strong brand in a service economy, you
need human beings to deliver.
How do you get that to happen? Let’s take a step back before
we answer that.
What makes a brand strong in the first place? If you think
about it, a fundamentally paradoxical thing: the consistent
personality.
• Personality is uniquely human. People have personalities.
• Consistency is artificial. Only a machine can be the same all
the time.
Now read this:
Personality + Consistency = Great Brand
So you go into, let’s say, the Nike store because you will
experience a certain “personality.” Every single time. But it’s also
nice to know that you can leave the store without any commit-
ment. Leave Nike, go to Reebok. Nike doesn’t care. Because
Nike Has Personality, But It’s Not A Real Person.
And this is EXACTLY why you can’t just ‘brand people’ the
way you brand products. Because guess what? People do have
feelings. Once you have formed a relationship with a person,
the person does care if you leave. They get angry if you’re rude.
They run away if you smell. So how does it make any sense to
try and turn a human customer service representative into a
computer hologram?
Branding techniques are geared toward humanizing products.
But you can’t just transfer the same techniques to people. Just
because you can lend personality to a car, doesn’t mean you can
freeze a human personality in time and space. Anyway, even if
you could, why would you want to? Just like I don’t want to
become a robot, I don’t want to buy things from a robot either.
Neither do you, I expect.
So, assuming that you’ve woken up to the fact that your
BRAND MANAGMENT
business is ‘brand-driven’, what do you want from your people,
anyway? And how can you make sure they act in ways that add
value to your brand?
Again, let’s take a step back before we get to that. Because you
are thinking that ‘people brands’ do exist. And do incredibly
well, too. So obviously I’ve missed a step here .But you forget –
these brands are born, so to speak, of people who have
willingly productised themselves. And it is painful to be a
brand. How many icons have we watched crash and burn on the
altar of their own success? Also, how many others would ‘just
die’ to be a brand, if only they could get someone to demand
their particular constellation of personality traits? Think of your
favourite reality TV show, chock full of people-brand
wannabes. Most of them will fail.
So if individuals who WANT to brand themselves have trouble
being ‘productised’, whether they are successful or not, how
egotistical are we to think that we can just ‘convert’ masses of
people to a marketing theme? (Yes, let’s be honest, it is a
marketing theme, not a religion.)
OK, so now to the answer. Or at least a working hypothesis.
To build an organisational brand you have to bring people
together and see what happens. You cannot plan. You cannot
calculate. You cannot “move the needle.” You do not tell them
what to do. It’s NOT AT ALL like product branding. You live
there. You listen. You learn. You respect. You struggle. You
wait. You get a sense of what it is they need to do, who they
need to be in order to survive. And you subtly, ever so subtly,
shift things into gear, using whatever tools you have. And you
pray. Because you can study organisations from today until
tomorrow. The reality is, you really never know how it will turn
out.
I think that’s why most of the case studies I read seem so
phoney. Because really branding people is TOUGH. It’s about
getting the organisation to work TOGETHER in the face of
immense instability, difficulty, even chaos.
Branding people is a little like being a cultural therapist. The key
difference however is in the emphasis. Whereas culture looks
inward, branding looks around. You want the image inside to
be the same as the image outside, transparent, adaptable,
compelling, and clear. You are helping people to grow, but you
are influencing them to behave in ways that the market will
reward.
People really want to belong. They just don’t want to be
brainwashed. Ever see Star Trek? One of its most powerful
alien species is the Borg, which ‘assimilates’ individual person-
alities into the ‘collective’. Sure it makes you feel like you belong,
but at the cost of your own individuality – which is to say your
humanity. Numerous episodes, and in fact an entire spin-off,
focused on the assimilatee’s struggle to escape and become an
individual again.
So to make an organisation brand work, you take the focus off
of changing people. In fact, it’s just the opposite. You WANT
THEM TO BE THEMSELVES. And you ask them to help,
each in her or his own individual way, to build and support a
living brand.
141
 ‘How do we do that?’ They ask. And you say: ‘By using our
BRAND MANAGMENT

human gifts to develop shared processes, around a meaningful

purpose, that makes sense to all of us.’ Service Continuum
‘What is a brand anyway?’ They will ask. ‘Who cares? I don’t feel
like a Coca-Cola.’ And you say: ‘Our brand is nothing more or
less than the way others perceive us. We have a brand already.’
Pure
And then you tell them, or better yet SHOW THEM (use a Major
service
service;
no tangible
Hybrid: good
video) what others see when they look at the company. The Pure
Tangible
goods with
equal part
goods and
with
minor
good
moment of truth. tangible
good; no
some
services
service

service
‘How do we make it better?’ They will ask after that. And then Milk Computer Meal at Hair Legal
you say: ‘Help us! Collaborate! Make the brand together!’ & Warranty Restaurant Styling Advice
Prenticehall 2003 Kotler Slide

You go on to explain that OUR efforts will:

• establish a set of consistent processes,
• aimed at a specific purpose,
• that define, differentiate, and add value to the organisation.
So, the organisation needs to have consistent ways to do things The Servuction Model
– consistent processes. Any employee can understand that.
Having a clear, meaningful system in place makes the
organisation more successful, more reputable, more unique,
and more valuable. It also makes it easier for employees to
Figure 12-1:
know what is expected of them, what behaviours will be Elements in
rewarded and which will not. a Service
Encounter
And-robots cannot build an organisation brand. Only people
can. Because though any robot can mimic a process, it takes
human intelligence to adapt the process as necessary to achieve
the corporate purpose effectively.
Finally – the customer service representative who works at the
Prenticehall 2003 Kotler Slide

Nike store is most compelling, from the consumer standpoint,

when they act like a HUMAN BEING. Not just any human
being – but one who understands what Nike stands for,
believes in it, and helps them to achieve it. When the rep really
believes, and acts on that belief, then the customer believes too.
(c) 2003 Dannielle Blumenthal, Ph.D.
Marketing Strategies
Discuss
Some writers argue that service providers often miss Figure 12-2:
opportunities to increase customer satisfaction and loyalty Three Types of Marketing
in Service Industries
because they do not exert enough effort to “tangibilize” their
services. Pick three frequently purchased services and illustrate
how they are tangibilized and how they might be better
tangibilized
Summary

Prenticehall 2003 Kotler Slide

What is a service?
A product characterized by:
n Intangibility
n Inseparability
n Variability
n Perishability

n These are the characteristics that distinguish

goods from services

142
 BRAND MANAGMENT
Marketing Strategies GAPS Model
n People , physical evidence, and process must
be considered in addition to the 4 “P’s” when
creating external marketing plans.
n Successfully delivering a service often
depends on staff being trained via internal
marketing efforts.
n Interactive marketing occurs in all places
where the customer intersects with the firm.

Prenticehall 2003 Kotler Slide

People – E m p loyees Discuss

The University of Wyoming provides services to various
n Service providers are “boundary spanners”
n Liaison between “inside” and “outside” world publics.What “consumer” groups do Universities serve?
n Primary roles Using the Service Quality Model as your guide, discuss specific
Information transfer
examples of different service gaps for a particular type of
n

n Representation
n W ide range of boundary spanners – consumer.
professionals to subordinates
Notes

People – Employees
Production Line Approach
n Low cost, high volume
n Transaction, short term
n Routine, simple
n Predictable, few surprises
n Theory X managers,
employees with low growth
needs, low social needs, and
weak interpersonal skills
Empowerment Approach
n Differentiation, customized,
personalized
n Relationship, long term
n Nonroutine, complex
n Unpredictable, many
surprises
n Theory Y managers,
employees with high growth
needs, high social needs,
and strong interpersonal
skills

Reward Systems matter as well*

People – Customers
n Must understand perceived service quality
n Dimensions of service quality
n Reliability
n Responsiveness
n Acceptance
n Empathy
n Tangibles
n Often studied by:
n Gaps model
n Importance Performance Results
n Often managed through:
n Database marketing
n Reward and recognition programs

143

LESSON 22:
RETAILER ISSUES IN BRANDING
RESPONSE OF WEAK AND STRONG
MANUFACTURERS
Objectives
BRAND MANAGMENT
Upon completion of this chapter, you should be able to
understand:
a. Response of weak and strong manufacturers to brands
b. The role of the brand
c. Role of retailers in maintaining Brand Loyalty and
Positioning of a Brand
Weaker brand manufacturers, particularly those lacking a long-
term planning horizon, were unable to find a convincing
argument to counter retailers’ demands for extra discounts.
They were worried about being de-listed and saw no other
alternative but to agree to disproportionately large discounts.
Many erroneously viewed this as part of their promotional
budget and failed to appreciate the implication of biasing their
promotion budget to the trade at the expense of consumers.
Retailers’ investment in own labels brought them up to the
standard of manufacturers’ brands. For example, a Lockwood’s
subsidiary supplying own labels invested in new equipment,
which cut down the soaking and blanching of baked beans
from the traditional 20 hours to less than an hour, before most
of its major competitors. With increasing investment in own
labels and less support behind manufacturers’ brands, consum-
ers began to perceive fewer differences between brands and own
labels, and choice began to be influenced more by availability,
price and point of sale displays. As retailers had more control
over these influencing factors, weaker brands lost market share
and their profitability fell.
Weak manufacturers’ brands were not generating sufficient
returns to fund either maintenance programmes or investments
in new products. At the next negotiating round with retailers, it
was made clear that their sales were deteriorating and again they
were forced to buy shelf space through even larger discounts. In
the vicious circle shown in the figure, they were soon on the
spiral of rapid decline.
The weakening manufacturer’s brand
144
CHAPTER 7:
UNIT 6
From the vicious circle of deteriorating brand position, it can be
appreciated that own labels are particularly strong in markets
where:
• There is excess manufacturing capacity;
• Products are perceived as commodities: inexpensive and low
risk purchases;
• Products can be easily compared by consumers;
• Low levels of manufacturer investment are common and
the production processes employ low technology;
• There are high price gaps in the market and retailers have the
resources to invest in high-quality own label development;
• Variability in quality is low and distribution is well-
developed; the credibility of a branded product is low
because of frequent and deep price promotions as opposed
to the increasing credibility of own labels;
• Branded products are offered in few varieties and with rare
innovations, enabling the own label producer to offer a clear
alternative.
Examples of markets in 1995, where own label shares were
particularly high and where these characteristics were evident,
include fresh poultry (78 per cent own label), cream (74 per cent
own label!), kitchen towels and clothes (64 per cent own label)
and pre-cooked sliced meat (60 per cent own label),
By contrast, strong brand manufacturers such as Unilever,
Heinz and Nestle, realized that the future of strong brands lies
in a commitment to maintaining unique added values and
communicating these to consumers. They ‘bit the bullet’,
realizing that to succeed they would have to support the trade,
but not at the expense of the consumer. Instead, they invested
both in production facilities for their current brands and in new
brand development work. With strong manufacturers commu-
nicating their brands’ values to consumers, these were
recognized and choice in these product fields became more
strongly influenced by quality and perceptions of brand
personality. Retailers recognized these manufacturers’ commit-
ment behind their brands and wanted to stock them,
Distribution increased through the right sorts of retailers,
enabling brand sales and profits to grow, Healthy returns
enabled further brand investment and, as Figure 7.4 shows,
strong brands thrived.
 How does a consumer decide?

BRAND MANAGMENT
S. Ramesh Kumar
Exploring the motivation behind a consumer’s purchase
decision can give marketers useful insights, says S. Ramesh
Kumar.

Strong brand’s response

The confectionary market in the UK is a good example of a
sector where strong manufacturers’ brands dominate. The
major players Mars, Nestle and Cadbury are continually
launching new brands and heavily advertising their presence.
Interestingly, the power of multiple retailers is also dissipated
by virtue of a significant proportion of sales going through
confectioners, tobacconists and newsagents, along with vending
machines and garage forecourts. The same circumstances apply
to Coca-Cola and Pepsi-Cola, who are less dependant on the
multiple retailers.
Convenience Versus Non-convenience Outlets
In the broadest terms, retail outlets can be classified as being WHILE a number of psychological variables are useful in
convenience or non-convenience outlets, for which two different obtaining a glimpse of the consumers’ psyche, it would be
types of brand strategies are appropriate. Convenience outlets worthwhile to probe specific aspects of consumer decision-
have a geographical coverage, making it easy for consumers to making (CDM) to formulate marketing strategies. CDM could
access them. The goods sold are not specialty items and enable marketers to visualise a broad framework made up of
consumers generally feel confident making brand selections. stages and apply psychological or/and group variables to a
Consumers do not need detailed pack information to make a specific product/market/brand situation. The process of
choice between alternatives. In convenience outlets, retailers decision-making could provide several trigger points on a
strive for volume efficiencies. They typically include retailers of conceptual level, especially when a brand wants to position itself
grocery and home improvement products. in a crowded product category or when it wants to enter a ‘new-
concept’ product category or when it attempts to reposition
In convenience outlets, manufacturers’ brands will thrive only if
itself. There are a number of dimensions that could be
they are strongly differentiated. This necessitates having added
associated with the consumer’s decision-making process. The
values that consumers appreciate, a strong promotional
following are some:
commitment and packaging that rapidly communicates the
brands’ added values. Displaying a lot of information on the What kind of approach (strategy) should a brand adopt when it
packaging may well be ineffective, since consumers want to enters a crowded category with which consumers are familiar?
make fast brand selections with minimal search effort. Brand (Soaps, shampoos, two-wheelers, and so on)
manufacturers need to ensure that they gain listings in retailers • How should a brand promote a ‘new-concept’ product and
with the broadest coverage, ensuring minimal travel difficulties how are the stages in the CDM framework useful?
for consumers. • What strategies other than advertising may be useful in
In non-convenience outlets, such as jewelers and electrical specific stages of consumer decision-making?
retailers, consumers will be more likely to seek more informa- • How could celebrities be used at different stages in the
tion and may well be prepared to spend time visiting a few decision-making process?
retailers. To thrive in these outlets, manufacturers need to
• What are the different kinds of decision-making consumers
ensure that clear information is available at point of purchase.
indulge in?
In particular, retailers’ staff needs to be fully aware of the
brand’s capabilities, since consumers often seek their advice. • What are specific differences in CDM between FMCG
Unless sales assistants display a positive attitude about the products and durables?
brand and correctly explain its capabilities, they will not help it • Can needs be differentiated based on what a brand offers?
sell.

145
 • Do consumers have different kinds of ‘sets’ from which new brand which they may have become aware of either
BRAND MANAGMENT

they select brands? through TV or POP material at the point of sale. An existing
• What kind of strategies could a brand use when consumers brand could probably bring in a variant (possibly Hindustan
search for information? Lever brought in Lifebuoy Active at a competitive price to
ensure loyalists of Lifebuoy do not pick up a competitive brand
• How do consumers use evaluative criteria to take a decision
during the purchase cycle) or relaunch the brand (Margo) to
across brands?
ensure most consumers stay with the brand. Hamam’s herbal
• What kinds of factors influence the selection of retail variant in soaps and Colgate’s herbal variant in toothpastes are
outlets when a decision is taken to buy a product? examples of retaining consumers at the purchase stage with the
The dimensions mentioned have strong links with one another equity and loyalty of the brand.
and also play a significant role in CDM. They focus the attention
Strategy for Durables
of any marketer in consumer product categories towards the
In the category of durables, a different approach may be
consumers’ perception of a category, a brand and their own
required to make use of the basic CDM model. Information
needs.
search stage (for categories with which consumers are familiar) is
an important stage, especially for those which provide value or
which provide new features. LG and Samsung in televisions
(and LG in refrigerators) used the print media extensively to
The chart above shows the several stages involved in consumer highlight the new features offered in their brands. This is one
decision-making. It is useful to understand the basic model of of the reasons for their ‘above- average’ performance in these
CDM and its implications for marketers before considering its categories.
other aspects. Whenever a new product category is introduced
The information search stage is also important for certain
by marketers with a new concept, concept selling would have to
categories such as microwave ovens and electric cookers for
be done at the need stage, examining the actual and desired
which the needs may have been created by the brands over the
states of the consumer. Ceasefire, the mini fire-extinguisher
last decade (niche markets). This stage provides the consumers
which kick-started a new wave of demand among households,
with specific benefits and ‘pulls’ them towards the ‘purchase’
was able to market the concept using primary advertising. (The
stage. It may be a good idea for a brand of microwave oven or
brand no longer retains the same hold over the market now due
electric cooker to make use of the ‘information search stage’ in
to a variety of reasons.) Though the fire extinguisher concept
conjunction with the ‘purchase’ stage. The ‘purchase’ stage
was not new to the market, a mini version was. It was able to
occurs when consumers are ‘pulled’ to retail outlets through the
trigger a perception very different from the huge and heavy
information provided by the brand. Demonstration is vital at
traditional ones that were widely used in cinema halls. The
the ‘purchase’ stage as this provides heightened motivation for
primary advertising mentioned the fact that different kinds of
purchase. (Some consumers may also be impressed by the
fires (with an overtone of fear appeal) required different kinds
brand and may tuck it away in their minds for later reference.)
of extinguishing gases and that Ceasefire was the ideal solution
for the need. Concept selling has to discuss in detail the benefits Evaluation of alternatives in such cases also happens along with
of the product and how these solved the existing problem of the purchase stage, based on their perception of brand benefits,
consumers or how they helped consumers to reach a ‘desired price, service and the demonstration provided at the retail outlet
state’. (for new-concept products). It may be a conceptual error to
‘take’ the consumer to the purchase stage by offering the new-
While primary advertising concentrates more on the benefits of
concept product as a freebie along with another product costing
the product, with the objective of creating a market for the
much more than the ‘new-concept’ product (for example, if an
product, secondary advertising has a focus on the brand. In case
electric cooker brand is given free with a refrigerator when the
of a pioneering brand bringing in a new concept, primary
consumer is not even clear about the product, the following
advertising has to be supplemented simultaneously with
could take place: Due to the high visibility campaign to high-
secondary advertising to ensure the pioneering brand gets the
light the sales promotion, prospective consumers could think
competitive advantage of having marketed the concept. Titan
that the ‘new-concept’ product has failed in the market and
may not have been a pioneering brand in quartz watches but it
hence is being advertised as a freebie and/or the consumer may
is currently a leading brand because of the brand-building
not put the ‘new concept’ product to use for lack of adequate
efforts undertaken by the brand though it was a ‘follower’
knowledge either about the usage or it benefits.
brand.
It is to be emphasised at this stage that for any ‘new-concept’
Which Stage to Target? product to succeed (especially durables), good word-of- mouth
While the need stage is important for new-concept products,
publicity is required at the post-purchase stage. A satisfied
there may be a number of categories where most consumers
consumer of a brand of microwave oven would be an opinion
may be in the purchase stage. For example, in the category of
leader among prospective target segments. This kind of
soaps (in most markets in the country), consumers are in the
opinion leadership has a tremendous amount of credibility
purchase stage and they may not get too involved with the
associated with it. Another important aspect with regard to
information search or the evaluation stage given the nature of
‘new to market’ durables is the after-sales service at the post-
this low-involvement category. They may attempt a variant or a
purchase stage. A company would do well to allocate an

146
exclusive team to look into/follow up with consumers who are
about ‘six-months-old’ with regard to the product (the team
should make frequent visits/phone calls to these consumers
until they are familiar with regard to the usage, features and
benefits and a period of six months is recommended as ‘usage
warm-up’ time). This would be an investment for a brand
though it could lead to higher overheads in the short run. A
fully satisfied buyer (within the ‘usage warm-up’ period) is likely
to become an advocate of the brand.
Akai’s approach
Providing value at the information search stage could also take
the shape of a high visibility campaign for conventional
durables such as TVs and refrigerators. Akai had phenomenal
success (though the period of success was limited due to a
variety of reasons) in the colour television category when the
brand entered the Indian context. The ‘value’ was the exchange
scheme provided by the brand taking into consideration the
scope and potential for second-hand TVs. There was huge
potential for such TVs in the semi-urban markets and urbanites
had the need to replace their sets. Akai successfully used the
‘need’ aspect of these segments along with a high visibility
campaign to capture a sizable chunk of the market during a
short time. It should also be noted that the brand came out
with campaigns that reassured consumers about the quality of
components used in the brand and this ensured there was no
post-purchase dissonance after purchase. CDM models offer
several alternatives that marketers could explore.
(The writer is Professor of Marketing, IIM-Bangalore. For
further information, the author’s book Conceptual Dimensions
in Consumer Behavior - The Indian Context, published by
Pearson Education could be consulted.)
The Role of The Brand
Before discussing what brand management involves, we will
examine why it is considered a pertinent marketing tool for
retail companies in the current developed and highly
competitive markets. As the marketplace becomes mature, there
is a need to rise above the mass and confusion of competing
offers. The brand, if managed properly, confers individuality -
something different among the crowd. In a mature market,
companies experience slow growth and declining returns. Each
BRAND MANAGMENT
company will, therefore, attempt to defend its market share,
encourage consumers’ purchase loyalty and profitably
differentiate their outlets and offer. I believe a brand provides
an icon or symbol, which helps to identify the promise of a
particular retail offer or service and helps to distinguish it from
competing offers
Successful retail outlet brand building enables organisations to:
1. Build stable, long-term demand based upon increasing
store brand name strength;
2. Build and hold better margins than stores which have weak
or unsuccessful brand names;
3. Differentiate themselves through creating associations that
can endure over long periods of time;
4. Add values that entice customers to visit and buy;
5. Act as a signal to the customer implying trust in the
fulfilment of service expectations;
6. Promote customer loyalty and launch relationship
marketing schemes for their retail offers/services;
7. Protect themselves against the growing competition of
alternative intermediaries and to gain leverage in the
distribution channel;
8. Protect themselves against aggressive competitors by
strengthening barriers to entry;
9. Transform themselves into companies that are attractive to
work for and to deal with;
10. Negotiate with suppliers from a position of improved
strength.
The latter are the potential results .of successful retail outlet
brand building, but all involve substantial initial, and ongoing,
investments to ensure there are long-term returns. Further-
more, brand building needs to be a comprehensive exercise,
which covers every aspect of the company and every point of
contact with the consumer. This puts brand building under
severe pressure in modern markets where short-term profits are
more commonly the measures of success.
A company may introduce a brand and keep it exclusively for
itself, or it can either franchise a brand or manufacture a brand
of another company under licence. Franchising is being used
extensively by companies in order to expand the brand as
quickly as possible in a domestic or global marketplace. With
franchising, the company owning the brand will allow others to
utilise the brand but with certain preconditions attached. These
may be related to an obligation to purchase goods exclusively
from the franchiser or to pay a certain percentage of the
turnover as part of a royalty payment. The consumer is offered
the benefit of the consistency and recognised standards of
quality which have been built up in conjunction with the brand.
This has led to a number of successful retail operations such as
Pizza Hut, Caffe Uno, McDonald’s, KFC and Hilton Interna-
tional.
Brand Loyalty
Some consumers use the same retail outlet or purchase the
same brand of product on most occasions or on a regular basis.
147
 This buyer characteristic is known as store or brand loyalty. In
BRAND MANAGMENT
particular, brand or store loyalty will mean that a person will:
• Feel positively disposed to the brand, based upon brand
attitude;
• Utilise the store more than other stores or buy the brand
more frequently. This will be
• Based upon store or brand preference
• Continue to utilise the store or brand over time. This is the
brand allegiance
This is not to say there is just one type of loyalty; loyalty may be
expressed for one Or more brands. If we assume that there are
five brands, or five properties of brands, that the consumer can
choose from - A, B, C, D and E - then we can further segment
the demand, based upon brand loyalty, as follows
1. Hard core loyals. These consumers buy one brand all the
time and demonstrate strong allegiance. They would
therefore on five occasions buy AAAAA, because they have
undivided loyalty to the brand.
2. Soft core loyals. These consumers will be loyal to two or
three brands. Thus a buying pattern of ABABA represents
a consumer whose loyalties are divided between two
competing brands.
3. Shifting loyals. This type of consumer shifts their loyalty
from one brand to another. The buying pattern AACCC
suggests a consumer whose loyalty has shifted from one
brand ‘A’ to brand ‘C’.
4. Switchers. These consumers show no loyalty to anyone
brand. The pattern ABCDE suggests a switcher who is
prone to buy when there is deal being given (price offers,
sales, extra benefits). They may equally be a variety shopper
and wants something different each time they purchase.
Brand loyalty can be explained in a number of ways: habit;
maximisation of value over price; a cost may be involved in
switching brand; the availability of substitutes; perceived risk of
alternatives is high; past satisfaction with the brand; the
frequency of usage; influence of the media; the awareness of
the alternatives; and so on. For obvious reasons, the loyal
customer is of key importance to the retail industry, especially
those loyal customers who are high spenders or provide long-
term patronage. Loyalty schemes are being introduced in an
attempt to retain customers over longer periods of time. Such
schemes are often based upon database programmes which
provide benefits such as for those with loyalty shopping cards
whose expenditure and frequency of purchase can be assessed.
The database can identify individuals’ birthdays, when a person
is 21 for example, or it can identify lapsed customers to whom a
special offer can be made. In addition, the information can be
used to understand the patterns of preference and demand at
different periods so as to convert soft core loyals and other
customers, into hard core loyals.
Positioning of A Brand
The positioning of a brand places it in its competitive context.
It may be determined on the basis of product usage, for
instance Muller yoghurt may be positioned as a substitute for
dairy cream or as a child’s pudding, alongside ice cream.
148
Alternatively, a brand’s position may be determined on the basis
of price. For instance, top designer branded clothes have a high
upper market position which will attract customers who want
exclusivity and a positioning which is associated with other
luxury items. Benetton’s bold and distinctive colours, Laura
Ashley’s English country. patterns and The Gap’s understated
American casual wear all provide for brand differentiation.
Registering a clear brand positioning is becoming increasingly
difficult because competirors proliferate, media costs escalate,
and shelf space becomes more difficult ro negotiate as retailers
exert more influence over manufacturers’ brand strategies
Theorists maintain that focusing on brand positioning is
essential for a brand to survive. They express their lack of faith
in the intellectual ability of brand managers to assess fully the
competition and in the intellectual ability of the consumers
similarly to assess the range of brands available to them. The
brand managers, who regularly take a sounding of consumer
opinion, are the most likely to maintain a brand’s positioning
successfully. Once the target has been clearly identified, attention
needs to be lavished on planning the brand. Furthermore, a
brand which is not differentiated_from others in its sub-group
of brands risks having no distinguishing characteristics and a
weak brand position:
Brand differentiation x Brand ,segmentation = Brand
position
Branding places a premium on achieving appropriate
positioning. A brand may be made distinctive by its positioning
relative to the competition_ the main objective is to develop
sustainable competitive advantage. As such, a key task for the
strategist is to identify those bases which offer the most
potential for defensible positioning. In marketing, choosing
segments and positioning strategies are inseparable. While
segmentation identifies homogeneous groups of potential
customers, positioning needs to take into account how
customers perceive the competing retail srore brands,
merchandise offers or services. Both segmentation and
positioning research are, therefore, ways of focusing on how
customers in a market can be identified and grouped, and then
how those customers (segments) perceive the variety of retailers
or brands in the marketplace. The furniture maker MFI adopted
the strategy of-repositioning its retail offer in the late 1980s by
the acquisition and use of the Schreiber brand name so that it
could sell its higher priced kitchen and bedroom furniture more
easily. This complemented its other brands such as its self-
assembly Hygena brand, Pronto its low price point products,
and Greaves and Thomas and Ashton Dean for upholstery
products. The brand segmentation benefits of Schreiber
allowed MFl to attract older ABC1 customers and to produce
differentiation based upon style and quality. The new brand
position can be created by deliberate strategic repositioning.
The use of positioning in marketing shifts the emphasis away
from the tangible changes a retailer makes towards the mental
perception of the prospective customer. It emphasises the share
of mind and judgement of mind based upon brand identity.
This is what Ries and Trout (1981) referred to as the ‘battle for
your mind’. Positioning is the clearest way to establish a distinct
place in the minds of the consumer and counteract the procla- • Able to be achieved, and then defended if attacked by

BRAND MANAGMENT
mations and cal1s for attention by the competitors. competitors (British Home
The market is the ultimate judge of any organisation’s work • Stores were unable to position their brand as the first choice
and, although customer perception can be irrational and ill- for dressing the modern woman and family due to the
informed, the way a consumer perceives the brand and the strength of the Marks & Spencer brand).
image of the brand is a powerful influence on the way the retail
The Risks of Poor Positioning
marketplace reacts to different initiatives and changes. In the
A poorly positioned brand with a fuzzy position or not
fluidity of retail market conditions, the more powerful brands
offering a clear proposition, is likely to be eclipsed or weakened
will be successful. The chal1enge, therefore, for any organisation
by a stronger competitor. Weak positioning can occur if a retailer
is to position its offer in a way which will be most appealing to
consistently cuts a brand’s price. The Ratner stratagem of
the ‘target audience. Market position can also be affected by
bringing in foreign stock which was cheaper but not hallmarked
pricing, distribution and, of course, the product itself
was at first successful. However, the overstretching of the
A firm can position a product to compete head on with another business in takeovers to expand the brand and then a widely
brand. Like for like positioning is relevant if the product’s reported statement by Ratner himself that his products were
characteristics are at least equal to competitive brands and if the ‘crap’ led to the demise of the group. Ratner had to leave the
product is priced lower; it may be appropriate, even when the company and the brand name was subsequently changed to
price is higher, if the product’s performance characteristics are Signet. In effect, Ratner management had repositioned the
superior. Conversely, a product may be positioned to avoid brand without thinking beyond the ‘price’ effect to the ‘brand’
competition. This may be the best approach when the product’s effect. This led to the alienation of the company’s target market
performance characteristics are not significantly different from There are other undesirable consequences of not having the
those of competing brands, or when that brand has unique right positioning strategy for a product or service in the
characteristics that are important to some buyers. For example, marketplace. Among the most common in retail trade are:
Aldi sells many items which are sold at Tesco but at deeply
• The retail organisation (or its own-label products) may find
discounted prices
itself in a position where
Brand strategy is essentially about two variables: the exact
• It cannot escape from direct competition from stronger
composition of the offer made to the market and the part(s) of
the market to which the offer is made (that is, brand differentia- competitors;
tion and brand segmentation), either of which may provide a • The retailer may find itself in a position which is weak as
competitive advantage. Within this approach brand positioning demand may be falling and
provides the vehicle to integrate the marketing mix and create • Others have left that position knowing there is little
overall consumer perception. The Argyll Group decided in the customer demand there;
early 1990s to build their business around the positioning of • The retailer’s position, or that of its own-label products, is
three store brands: Safeway, Presto and Lo-Cost. Safeway was so confusing that nobody
the leading brand, bringing in about 85 per cent of Argyll’s
• Knows what its distinctive competence or personality really
profits, and therefore this brand was retained as the major
is;
flagship. This use of different brands was in direct opposition
to the brand strategies of most of their competitors. The larger • The retailer has no apparent position in the marketplace
stores with the Presto brand were progressively refurbished and because there is little
rebranded as Safeway stores and this allowed the Presto brand • Awareness of the brand or its personality.
to be related to mediumsized units of around 5000 sq. ft. The
Lo-Cost brand was positioned as a discount brand and was
made up of the smallest units - around 3000 sq. ft. The
positioning of the brands allowed the Safeway brand to
compete head-to-head with Sainsbury and, due to the brand
rationalisation, it provided a clear positioning statement for its
customers.
It can be seen that the positioning process is to make the offer
into a clearly defined brand. Ideally the strategist should
consider whether the position is:
• Apparent to consumers and offers real added value to them;
• Built upon real brand strengths which reflect performance
potential;
• Clearly differentiated from competitor brand positions but
not too narrow;
• Capable of being understood and communicated to all
stakeholder groups;

149
 Exercise on Retail Distribution
BRAND MANAGMENT

The purpose of this assignment is for students to learn first

hand the differences between different kinds of retail outlets.
Strategic Issues in Retailing
For this assignment students choose any product (not a brand
name but a product). Some examples might be oil, a small (cont’d)
appliance, a computer, a VCR, a coffee maker, etc. Traditional Shopping Centers
Neighborhood shopping centers
Then students visit at least three different types of stores that Usually consist of several small convenience and
specialty stores.
sell this kind of product (i.e., department store, discount store, Community shopping centers
supermarket, etc.). For each store answer the following ques- Include one or more department stores (anchors), some
specialty stores, and convenience stores.
tions: Regional shopping centers
Have the largest department
1. Store name, location, type of store. stores, the widest product mix,
and the deepest product lines
2. Location of the product within the store. of all shopping centers.

3. How is the product displayed? Any special displays or 17

promo-tions?
4. What brands, sizes, etc. are available at this store. (In stores
with very large selections only a general description of
available products is necessary.)
5. What are the price ranges for this product in this store?
6. Optional Bonus Question:
Find a manager in the store or department and ask them:
a. How important is this product to this store (relative
volume sold)?
b. How does the product get to the store?
Strategic Issues in Retailing
Strategic Issues in Retailing
(cont’d)
Nontraditional Shopping Centers
Factory outlet malls
Shopping centers that feature discount and factory outlet
stores carrying traditional brand name products
Miniwarehouse mall
Loosely planned centers that lease space to retailers
running retail stores out of warehouse bays
Nonanchored malls
Do not have traditional department store anchors;
instead combine off-price and category killer stores in a
“power center” format
Home Depot is the anchor instead of department stores

Retail Store Location 18

Location, location, location

Types of Locations
Free-standing structures
Position relative to competition
Customer access and parking
Traditional business districts Strategic Issues in Retailing
Redevelopment of decaying
downtown infrastructure (cont’d)
16
Retail Positioning
Identifying an unserved or underserved market
segment and serving it through a strategy that
distinguishes the retailer from others in the minds
of consumers in that segment
Neiman Marcus
Store Image
Atmospherics
The physical elements in a store’s design that appeal to
consumers’ emotions and encourage buying
Interior layout, colors, furnishings, and lighting
Exterior storefront and entrance design, display
windows, and traffic congestion
19

150
 BRAND MANAGMENT
Strategic Issues in Retailing
(cont’d)
Scrambled Merchandising
The addition of unrelated products and product
lines to an existing product mix, particularly fast-
moving items that can be sold in volume
Intent of scrambled merchandising
Convert stores into one-stop shopping centers
Generate more customer traffic
Realize higher profit margins
Increase impulse purchases
Walgreens

20

Notes

151
BRAND MANAGMENT
LESSON 23:
BRAND POSITIONING STRATEGIES
Topics Covered
Components of positioning, Consumer segmentation,
Perceptual mapping, Brand benefits and attributes, Advertising
and Branding, Repositioning, Role of agencies in Branding,
Differential Advantage and Positioning strategies, Brand
Architecture.
Objectives
The learning objective: after this lecture you should be able to
understand:
a. Brand positioning: Its meaning and scope and importance
b. Brand Positioning Strategies and how it works
After studying Service Brands and Retail Branding let us now
discuss Brand Positioning. I’m sure by now you must be
having some idea about what positioning is. You must have
also studied it in Marketing course. Let us discuss brand
positioning in detail.
Introuction
The famous ‘5 p’s’ of marketing folklore (product, place, price,
promotion & packaging) were fine tools for implementing
packaged goods brand positionings - and the basic formula still
has its role in FMCG assignments. But today we are entering
the era of customer brands where ‘company’ and ‘brand’ are
one and the same. In this scenario the company culture &
values become a crucial factor in the solution: finding and
harnessing what’s there already or setting out to create values
and practices which support and manifest the positioning.
Why is Defining the Positioning So Important?
Running a brand is like conducting an orchestra. Positioning is
the heart of competitive strategy. The messages transmitted by
everything from the advertising to phone calls with your
customer care department all need to be kept in harmony and
on-brief. Without a clear, single-minded definition of what the
brand is about the messages rapidly become discordant and
confusing. The positioning statement is therefore a focusing
device which helps brand management to keep everything sharp
and relevant.
Identifying where a specific brand is placed within the market-
place and its relationship to competitive brands, brand
positioning is determined by defining the brand’s benefits to
the consumer, opportunities for which the brand is best suited,
the brand’s target audience, and who its main competitors are.
or us to achieve the benefits of brand positioning, it is necessary
to research in-depth the market position (or lack thereof) of the
brand. Brand maps and forms are created to profile the brand
positioning, comparing the results with competitive brands.
In realizing the benefits of brand positioning, it is important to
understand that not all brands are competitors. A consumer
may be presented with six brands of one product and only
152
consider three out of the six as a purchasing choice. The
consumer may have encountered a negative experience with a
specific brand and may never consider purchasing it again, or
there may be a brand that simply does not stand out to the
consumer and it is passed up.
Position Or Perish!!!
Have you ever thought what makes Kelloggs different from
Maggi. The difference lies in positioning. Let us see how this
magical concept plays a major role in making any brand a success
or God forbid a failure!!!
The concept of positioning was introduced by Al Ries and Jack
Trout in 1969 and was elaborated in 1972.
To understand the concept of positioning we can consider the
human mind as consisting of a perceptual map with various
brands occupying different positions in it. This concept of
perceptual space forms the theoretical basis for brand position-
ing. What this leads to is the perception of the consumer, which
decides the positioning of any brand. It is important to note
that what a marketer does is to find a position for its brand in
the perceptual space of the consumer and place it at the most
lucrative point. Hence, Positioning is not what you do to the
product, it is what you do to the mind of the prospect. It is a
new approach to communication and has changed the nature of
advertising. It can be of a product, service, company or oneself.
The perception of a consumer is a function of consumer’s
values, beliefs, needs, experience and environment. Thus as per
Subroto Sengupta “the core thought behind brand positioning
-the idea that each brand (if at all noticed) occupies a particular
point or space in the individual’s mind, a point which is
determined by that consumer’s perception of the brand in
question and in its relation to other brands”.
Thus, in the perceptual map, the spatial distance between the
points on which brands are located reflects the subject’s
perception of similarity or dissimilarity between products or
brands.
The basic approach of positioning is not to create something
new and different but to manipulate what’s already up there in
the mind, to retie the connections that already exist. In commu-
nication, as in architecture, less is more. The only answer to the
problems of an over communicated society is positioning.
Positioning is an organized system for finding a window in the
mind.
The easy way to get into a person’s mind is to be first in a
particular category. If you are not the first then you have a
positioning problem.
The origin of positioning comes from two preceding
phases:
The productera:-The product features and customer benefits
were of importance. With technology being easily available, the
product was no longer the Unique Selling Proposition.
The image era: - In this phase the reputation and image of the
company became more important than the product. But the
similar companies sprung up and this advantage was no longer
a distinct one.
The positioning era: - To succeed in today’s over communi-
cated society a company must create a position in the prospect’s
mind, a position takes into consideration not only the compa-
nies own strengths and weakness, but those of competitors as
well. In the positioning era as stated earlier, you must be the
first to get into the prospect’s mind.
The ladders in the mind: - In a particular category, people have
learned to rank the products and brands in the minds e.g. In
soft drinks, we generally have Coke followed by Pepsi followed
by Thumsup. Thus if a new soft drink is to be introduced, the
company must decide upon the way it will position itself viz.
the product ladder position.
Positioning a company:- You can also apply Positioning to an
organisation in general. The companies who have a high
position in the minds of the prospect i.e. the students mind
absorb the cream of the crop from institutes. Similarly compa-
nies visit only those campus who have a high position in the
mind of the company (the company becomes the prospect in
this case.)
The whole concept now boils down to creating a perception for
your brand in the prospect’s mind so that your brand stands
apart from the competing brands and provides the consumer
with what he wants.
Thus speaking comprehensively, positioning is a function of
1. Perception it brings about in the mind of target consumer.
2. Functional and non-functional benefits associated with the
product.
3. Perception of the competing brands held by the target
consumer.
Now let us see an example of how company studies the market
left, right and centre before introducing a brand. Maggi noodles
define the strategy, which clearly shows how far can positioning
help in making a brand a success. The brand was introduced in
Delhi in 1983. The brand was a big success. Annual target for
that market was increased from 50 to 600 tons and it was no
less than a battle for Nestle.
What Did Maggi Do?
The market results show it found a
vacant, strong position and sat on it as
“good to eat, fast to cook” anytime
snack. On the other hand Kelloggs
positioned itself as a nutritional
breakfast only. Today no one even
thinks of taking Kelloggs corn flakes in
the evening.
7-Up also exhibits the importance of positioning in the success
BRAND MANAGMENT
of a brand. Originally considered as a mixer for hard drinks, it
was later positioned as an Un-Cola soft drink. The result was
that it became the third largest soft drink after Coke and Pepsi.
As Trout and Ries say
“You will not find an un-cola idea inside a 7-Up can. You find it
inside the cola drinker’s head.”
Aaker considers positioning so central and critical that it should
be considered at the level of the mission statement representing
the essence of the business.
Robin liquid also exhibits the criticality of positioning. The
brand facing stiff competition from Ujala today made a
comeback after detergent powders took Blues for a ride with
their arrival. For the manufacturer what make it special are
attributes such as “flourescer” and “ultramarine” but for a
housewife what matters is that “washing powders take away the
dirt but Robin liquid gives clothes that extra coat of white”.
So this is how we get going-
We plot not only consumer perceptions but also preferences of
a given consumer segment in a particular category or product
market. Consumers express such preferences in terms of the
benefits, whether they are getting the benefit, if it is important-
to what extent, are they missing something. These are what we
call IDEAL POINTS on a perceptual map.
Thus this gives us the idea as to how close we are to where we
should be, that is, the position of our brand on the perceptual
map vis-à-vis the ideal points. The next implication of the
mapping is that it earmarks the vacant spaces on the perceptual
map, which are nothing, but opportunities which can be
exploited for positioning. Thus identify the gaps which new or
repositioned products can fill by offering what current products
do not provide. This gives us the skeleton for making the
strategy for future.
Thus positioning is both difficult as well as simple because as
Al Ries and Jack Trout say” Most positioning programs are
nothing more or less than a search for the obvious”.
So position well —IT CAN CROWN OR DROWN YOUR
BRAND
Source: By Amar T and Vikram J of JBIMS
Prospecting for Positionings
In marketing the consumer is king - but the idea that consumers alone should
dictate brand positioning has always been
an over-simplification! Customer feedback via research is vital - but to this has to
be added analysis of the company
and its inherent capabilities, plus an sharp understanding of the competitors already
in the market - their strengths and
weak spots
Positioning key points:
Ø It is a strategic, not a tactical, activity
Ø It is aimed at developing a strategic, sustainable competitive advantage
Ø It is concerned with managing perceptions
Ø Brand image and reputation are the result of the positioning process
153
BRAND MANAGMENT
What makes a great brand
A Great Brand Invents or Reinvents an Entire Category - The common
goal you find among brands like Disney, Apple, Nike, Taj Mahal Tea, Brooke
Bond Coffee, Pepsodent toothpaste and TVS Victor, is that these companies
made it an explicit goal to be the protagonists for each of their entire
categories. Disney is the protagonist for fun family entertainment and family
values. Apple was the protagonist for the individual: anyone could be more
productive, informed, and contemporary. In these cases, the brand transcends
movies or computers. A great brand raises the bar-- it adds a greater sense of
purpose to the product or service experience.
A Great Brand Taps Into Emotion - Everyone wants their product or service
to be the best in its class. But the common ground among companies that have
built great brands is not just performance. They recognize that consumers live
in an emotional world. Emotions drive most, if not all, of our decisions. Not
many people sit around talking about the flow of language in a contract, but
they will sit around and talk about Michael Jordan's winning shot in a playoff
game. That’s what a great brand does. It reaches out with a powerful
connecting experience Case Study
Done right, branding becomes the centerpiece of a strategic
marketing plan. This allows the firm to weave the brand essence
into all facets of a marketing program including internal
communication, external communication, training, technology,
advertising, public relations, responses to proposals and
competitions, and all collateral materials. Let’s face it- branding...
it’s not just for cows anymore!
What makes a great brand
A Great Brand Is a Story That is Not Completely Told - A brand is a story that's
evolving all the time.
Great Brand Has Design Consistency - This, of course, is obvious. That
great design can bring a brand to life goes without saying.
A Great Brand is Relevant - A brand is not trendy. Trendy things fail over time.
The larger idea for a brand is to be relevant. It meets what people want; it performs
the way people want it to. For law firms, that means being in touch with clients and
constantly understanding their changing needs
Every firm that decides to move ahead with a branding process will find the
process that works best for it. Different marketing folks will have different
methods. Great brands have several characteristics in common.
Scott Bedbury, best known for creating Nikes' "Just Do It" campaign and now
a Senior VP at Starbucks, has identified eight characteristics of a great brand.
If your firm is considering creating its brand, these characteristics can serve as
a guide. Because whether your brand is sneakers or coffee, your unique
essence makes it happen
154
What makes a great brand
A Great Brand Is In It For the Long Haul - In an age of enormous choice
for both retail and commercial consumers of goods and services and growing
clutter in the business marketplace, a great brand is a necessity, not a luxury. If
you take the long-term approach, a great brand can travel worldwide,
transcend cultural barriers, speak to multiple client segments simultaneously,
and let you operate at the higher end of the positioning spectrum-- where you
can earn solid margins over the long term.
A Great Brand Knows Itself - Anyone who wants to build a great brand has
to first understand who they are. The starting point is identifying the unique
essence of the product, the company. Then that essence should be tested
against how the consuming public for that product or service perceives it, what
they like or dislike about the brand, and what they associate as the very core of
the brand concept.
Discussion Questions
1. Apply the categorization model to a product category other
than beverages. How do consumers make decisions
regarding whether or not to buy the product and how do
they arrive at their final brand decision? What are the
implications for brand equity management for the brands in
the category? How does it affect positioning for example?
The financial services category is another good category to
examine. Banks and brokerage firms offer consumers
similar services within their respective categories, but they
differ on many levels, including price, level of service,
comprehensiveness, special features, and incentives. It is
important for all financial services brands to provide trust,
dependability, and income generation as points-of-parity;
points-of-difference may be customer service, ease of use,
location, or Internet accessibility.
2. Pick a brand. Describe its breadth and depth of awareness.
Answers may vary.
3. Pick a category basically dominated by two main brands.
Evaluate the positioning of each brand. Who are their
target markets? What are their main points-of-parity and
points-of-difference? Have they defined their positioning
correctly? How might it be improved?
Some two-brand dominated categories include ready-to-
drink orange juice (Tropicana and Real), batteries (Eveready/
Energizer and Duracell), ketchup (Heinz and Kissan), and
light bulbs (Suryaand Philips).
4. Can you think of any other negatively correlated attributes
and benefits? Can you think of any other strategies to deal
with negatively correlated attributes and benefits?
Other negatively correlated attributes might include
advanced technology vs. ease of use; sophisticated vs.
generally available; elegance vs. utility; ease of maintainence
vs. complexity; stylish vs. common.
5. Think of one of your favorite brands. Can you come up
with a brand mantra to capture its positioning?
Answers may vary.
 BRAND MANAGMENT
Brand Positioning Brand Positioning

Brand Positioning
Liberty Shoes shifts positioning from ‘family brand’ to ‘fashion
brand’
December 20, 03, Jasmeen Dugal
In the Rs 1,200-crore organized footwear market in India, the
previously unassuming Rs. 300-cr Liberty Shoes is fast becom-
ing a trendsetter. Releasing over 115 designs encompassing the
latest trends in the international markets, supported by a high
decibel advertising campaign, Liberty has kick-started an
aggressive promotional campaign. The company’s sponsorship
of fashion-related activities and tie-ups with fashion institutes,
reflect Liberty’s change in positioning from a ‘family brand’ to a
‘fashion brand.’
After signing on as Associate Sponsor for LIFW 2003, Liberty is
now collaborating with Pearl Academy of Fashion for a design
talent promotion and Continuum’03 – the 10th anniversary
celebrations of the institute.

155
 Is this a focused initiative to position Liberty as an umbrella
BRAND MANAGMENT

brand that has become more fashionable in tune with the

evolving market needs? Replies Anupam Bansal, Director
(Branding & Retailing), Liberty Shoes, “Liberty has an entirely
new spectrum of products that the new generation likes to be
seen in. To help make it happen are a young and enterprising set
of designers from leading fashion institutes like Pearl Academy
who have become a part of Liberty to ensure that the focus
remains on changing lifestyles, attitudes and developments in
global fashion.”
This weekend, Pearl Academy and Liberty Shoes have organized
‘Continuum 03’ – a three-day celebration to commemorate the
10th anniversary of the fashion institute. The Continuum
features seminars on ‘Retail and Branding’ and ‘Costume
Designing for films and theatre’ respectively, and a showing of
graduating students’ collections. Additionally, Liberty Shoes has
instituted a rolling trophy at Pearl Academy to recognize the
institute’s design talent every academic year. Comments A. K. G.
Nair, Executive Director, Pearl Academy of Fashion, “Compa-
nies such as Liberty Shoes are a role model for appreciating and
utilizing the talent of the current generation of designers
produced by the Pearl Academy of Fashion.”
Notes

156
 BRAND MANAGMENT
LESSON 24:
CONSUMER SEGMENTATION

Objectives
The learning objective: after this lecture you should be able to
understand:
a. Consumer segmentation: Its basis and importance for
positioning.
After studying Brand Positioning, Consumer segmentation is
the continuing link. You cannot do effective Positioning of
your brand without understanding Consumer segmentation.
Non users are people who don’t use any product in the category
as they have some negative attitude about the category.
The Model
Having investigated the various consumer groups, it is apparent
that each of these segments reacts differently to different
consumer promotion techniques. Hence we now identify the
promotional tools that must be administered in each of these
categories.

Target Customer Segmentation

To tie the different elements together, we now introduce a AGE GROUP

framework that segments consumers into different categories. <15 15-30 >30
The basis of segmentation has been the buying behaviour for it
has been established that promotions influenced behaviour and Current Loyal 1. Reinforce behavior a) Bonus a)
Gifts
a) Continuity
Program
not attitude. 2. Increase usage b) Contest
b) b) Coupons
Let us now try and understand the buying behavior of the Bonus

segmented consumer groups. Intense Force Trials Bonus Gifts Continuity Program
Competitive
Loyal users are consumers who buy a particular brand on a Loyal

more or less consistent basis most or all of the time Value Seekers Persuade to switch to Bonus Gifts Continuity Program
better valued brand
Competitive loyals are consumers who buy a competitor’s
Habit Buyers Induce Trials Contests Bonus Coupons
products most or all of the time. These can be further divided
into Value
Switchers
Contests Sample Contests

Intense loyals – These are the competitor loyals who are Occasional Continuity Program Sample Sample
Users
convinced of a particular brand’s merits to such an extent that
for them other brands do not exist. Variety Seekers Contests Continuity Coupon
Program
Value seekers – These are competitor loyals who buy the Price Buyer Entice with low price or Contests Sample Contests
particular brand for they believe that it provides the most utility supply added value

for the cost even if it is not the best in the market. Non-users Create awareness and Contests Continuity Coupon
persuade that product is Program
Habit bound buyers – are those consumers who purchase the worth buying

brand not because they have made a conscientious study of its

perceived value and price in comparison to that of other
products, but because, it has become their habit to do so.
Switchers are the consumers who purchase a variety of brands
within a particular product category. People who switch brands
do so for a variety of reasons and hence can be categorised as
Value switchers –Value switchers are consumers who evaluate
the price-value relationship for each brand, on each shopping
trip, choosing the brand that appears to be the best buy on that
particular occasion. For instance a person might like aqua-fresh
but may buy close up instead if the price difference is more.
Occasional usage switchers – Occasional usage switchers are the
consumers who buy different brands within the same category
to fulfil discrete needs – a classic example is the beer drinker,
whose choice of a brand depends on the company he has for
enjoying the drink.
Variety switchers – These are the consumers who switch from
one brand to another simply to seek variety.
Price buyers are the consumers who consistently purchase the
lowest priced brand on the market.
In case of a current loyal a marketer would intend to reinforce
his/her behavior and reward his loyalty so that he is not lured
away by a competing brand. To achieve such an objective, any
promotion technique that enhances the brand conviction of the
consumer shall be the most effective. On the basis of our study
carried out for FMCG products and validated by the results
obtained on the brand, Polo, we propose that the most effective
promotion to reinforce the behavior of a current loyal in any
FMCG category shall be bonus packs in the age group <15, gifts
in the age group 15-30 and continuity program in the age group
>30. Interestingly, what is common to each of these promo-
tional tools is the fact that they seem to be rewarding the current
loyal for his unfailing commitment to the brand.
We have reasons to believe that this model can help the brand
manager to successfully design, develop and implement a
promotion strategy to achieve not just short term sales but also
enhance the equity of a brand. To provide a validation to this
model, we studied a promotion carried out by Godrej, to
induce first purchase of its refrigerators and to expose the

157
 product to potential customers. The scheme involved a price Target Audience
BRAND MANAGMENT

off of Rs 3200/- or a gift in the form of a cordless telephone
worth the same amount. .As per our study the promotion was
aimed at non- users in the age groups 15-30 and greater than 30.
As our matrix shows any promotion that increased the brand
would have been immensely successful. On the basis of our
model the suggested promotions would have been gifts in the
age group less than 15 and price off in the greater than 30 age
group. Interestingly these are the same promotions as used by
Godrej. And the result well an increased sales for the brand.
Limitations of the Model
The limitations of the model are:
We have not been able to provide a quantitative validation to
our finding because of non-availability of sales figures
The changes in the brand equity as measured by us capture only
a relative measure and not an absolute score.
Further, for the purpose of our study, we have categorised
consumers into three age categories namely <15,15-30 and >30
only.
However we believe that the model is only a generalised
framework and the brand manager’s need to adapt it to the
parameters as thought relevant by them.
Goal as a marketer: spark the emotional response that creates
the brand relationship and leads to sales and brand leadership
Two steps to finding the audience and what sparks the right
response:
1. Market Segmentation-Process of narrowing down a
brand’s target audience to a “bullseye” that helps make
marketing efforts more efficient
2. Defining Insight-Just as important as finding the audience
is to find the “little kernels of truth” that identify your
most important audience targets and give you the means to
begin to communicate most effectively with them
Market Segmentation
Frederick Newell, The New Rules of Marketing: How to Use
One-to-One Relationship Marketing to Be the Leader in Your
Industry
• Four major groups of segmentation variables:
1. Geographic
• Region
• County size
• Urban/suburban

Conclusion • Climate

Given the intense competition that characterizes today’s markets • Seasons

as well as media clutter, no brand can afford to ignore promos. • Zip
What is required today while designing promotions is a 2. Demographic
Strategic focus. The promotion must be in sync with the other
• Age
elements of the marketing mix. If designed and implemented
properly promotions would become yet another weapon in the • Sex
Brand manager’s armory for Brand building. • Family size
Another point that must be understood is that we cannot see • Family life cycle
Consumer promotions in complete isolation. Promotions • Income
alone cannot be used for Brand building for any reasonable
• Occupation
length of time. Towards this end this paper helps one under-
stand the ways in which the promotions affect the facets of the • Education
brand. From the brand manager’s point of view this is not a • Religion
quick fix solution. The learning from this has to be applied • Race
keeping in mind his own brand’s position in the life cycle and
• Nationality
its marketing strategy. He must first identify the areas where his
brand is lacking (say by carrying out a conjoint analysis on his 3. Behavioral
product and his brand and comparing the two), and then lay • Purchase occasion
out the objectives he wants to achieve from the promo. Once • Benefits sought
the objectives are in place he can design the promo. One more
• User status
important aspect that comes out about promotions is that
most of the promotions lack innovation. This seems to be the • Usage rate
single most important reason for the success behind any • Loyalty status
promo. Brand managers must come out of this paradigm and • Readiness stage
dare to be innovative.
• Attitude toward product
This model has been our endeavor towards developing a
• Actual purchase
relationship between consumer promotion and brand equity. it
has been an initiation of the journey of discovery for us. We 4. Psychographic
shall feel amply rewarded if this model is able to generate a • Lifestyle
thought process in the corporates towards developing a synergy • Social class
between the consumer promotions and brand equity.
• Personality

158
According to Newell
1. Behavior is the most important of the segmentation
variables
2. Segmentation is not valid without understand brand
positioning
According to Our class
• One segmentation variable cuts through to provide the
kernel of insight that can ignite your customer’s
imagination and stimulate purchase-
• Lifestyle: the style or type of approach that people take to
living their lives and associated activities and behaviors
• Evidence of the lifestyle’s value as a key segmentation
variable:
• Leisure activities are influenced by demographic or
geographic characteristics, but they are not dictated by them
• Even purchase behaviors are only influenced
Market Segmentation
In today’s economic environment, limited marketing budgets
are the rule, not the exception. One way to maximize marketing
ROI is to make sure you are targeting the right customers, with
the right products and messages, at the right time. Since
technology markets are not homogenous, market segmentation
is an effective way to divide customers into groups based on
similar needs, attitudes, or behaviors.
Let’s be practical: why waste precious marketing budget on
advertising, selling, and even developing for customer groups
that frankly are not likely to buy your products-if customer
groups that are likely to do so exist?
Before you dismiss the concept, ask yourself the following
question. When was the last time you re-visited your market
segmentation assumptions? If you segment solely by vertical
industry and company size, we’d hazard a guess and say that it
has probably been at least three years-perhaps even more.
Market Segmentation
Methodology
When discussing segmentation, the actual model can be
thought of in terms of “buckets.” In other words, customers
are divided into buckets by their common attributes-needs,
purchase plans, brand loyalties, etc. Some attributes may end up
being basis variables (the variables that assign a customer to a
bucket) and others may end up being descriptive variables (they
describe a bucket, but may not be so unique to each bucket to
be the basis of segmentation). The following table identifies
some of the variables Sage typically investigates when
developing a segmentation model.
BRAND MANAGMENT
Demographic Needs Attitudes
Company size Industry-specific trends Leading edgeness
Vertical industry Current use of complimentary technology Brand loyalty
(need for compatibility, migration path)
Customer status (current Price sensitivity Brand preference
customer, past customer,
potential customer)
Number of locations Technology requirements Channel preferences
Geographic scope Feature requirements (product-specific) Purchase process
Size (revenue or number of Competitive environment (need for specific Outsourcing propensity
employees) technology benefits)
Quantitative and Qualitative Methodologies
In some cases, Sage will recommend going straight to a
quantitative study-usually a Web survey. Sage will sometimes
recommend a telephone methodology, depending on the
universe that is being served. Occasionally, we will recommend
starting with qualitative research if neither Sage nor the client
has strong hypotheses about potential models to test.
For segmentation, the quantitative sample needs to be large.
After all, people from different types of organizations need to
be surveyed to identify meaningful differences. Ultimately, the
size of the sample will depend on the universe that is being
served. For example, do you potentially serve all businesses or
just small businesses? Do you serve businesses or consumers
(or both)? Are the companies you serve U.S. only or global
organizations? Because our clients serve a variety of markets, we
have done segmentation studies with samples as small as 300
and samples as large as 1,000 or more.
Market Segmentation
Segmentation Advice
Market segmentation is typically used for one of the purposes
listed below. For your segmentation project to be successful,
Sage recommends that you pick one as your primary focus-as
with any type of market research, lack of focus is a significant
risk factor.
1. Product-focused segmentation-to find sales targets
(“slam dunks”) for a specific product or service.
2. Company-focused segmentation-to discover customer
groups that are aligned with your company’s overall
strengths/strategic directions.
3. Customer-focused segmentation-to analyze a broad
population for the purpose of identifying new or emerging
opportunities based on needs and attitudes.
Product-focused segmentation is tactical-that’s not a bad
thing. In fact, it can be very effective for many companies. For
example, Sage once did this type of project that not only
identified customer groups that would be most likely to buy
the client’s product, but also challenged assumptions about
how widespread demand would be. In this case, it wasn’t
happy news. However, it was an important reality check that led
to more realistic forecasts and identified how to make the
product appeal to additional customer groups.
The second type of segmentation-company-focused segmen-
tation-divides a market based on the fit with your company’s
profile. Examples of this include dividing a market based on
awareness of your brand, existence of needs that align with
159
 your technical strengths, or fit with your distribution strategy. Segmentation models also lead to exciting marketing opportu-
BRAND MANAGMENT

The third type of segmentation project is more strategic. This nities in these days of e-marketing. Different customer groups
type of “needs-based” segmentation goes beyond preparing can be targeted with different Web sites or personalization
for marketing a point product. Rather, it delivers input for techniques. Some companies even develop on-line communities
aligning with broader customer needs. The output of such a to support the different customer groups they target.
project is the identification of customer segments, usually 4 to 8
Brand Contact and Target Audience
(but sometimes more). This method groups members into the
segments based on naturally occurring combinations (the Brand Contact
following table shows a simple, generalized model). This type Point of Contact: Everywhere your audience experiences your
of segmentation is used to understand with which customer brand
groups our client should be developing long-term relation-
• Examples include:
ships.
• Purchasing and using your product
• Advertisements
Segment A Segment B Segment C Segment D
• Promotions
Leading edgeness Low Low Mid High
Number of remote sites Low High Mid High • In the news
(potential demand driver)
Adoption of virtual None Low High High
• Home
organizational structure
(potential demand driver) • On the street
Product category awareness Low Low Mid Mid
• At the supermarket
Current use of potentially None Low Low High
competitive solutions • In the car, on the bus
Company size range Under 500 Under 500 2,500+ employees 500 to 2,500
employees employees employees • At the stadium
Vertical industry associations Mixed Retail Publishing Manufacturing Insurance
Education Transportation • Delivery truck
Government Professional
Financial services services
Healthcare • In the airport
• On the airplane

Ultimately, these three approaches are not mutually exclusive. • At the retail store
Still, prioritizing an approach will ensure that upon project • On the web
completion, you will have a model that meets your needs. • In a movie
Segmentation for Actionable Results • In your bill
Segmentation is a highly actionable type of research. The table
• Company’s character
below shows some specific actions that are a direct result of
segmentation analysis. • The walking brand
Product itself as a point of contact
• Major brands set themselves apart from their competitors
Findings Results in Action and give themselves “permission” to charge a premium
price
A customer group exists that values Start a targeted brand awareness campaign,
• Perceived to have an outstanding product or service
strengths you possess, but their and emphasize relevant needs proactively.
awareness and perceptions of your brand • Experience of buying, using, enjoying, even servicing the
are weak.
A customer group exists that has needs Monitor on an ongoing basis to see if product is superior
you can meet, but they are satisfied with satisfaction changes occur. This group may
their current suppliers. simply be a lower priority for now. Character vs. Image
A customer group with which you have a Get cracking on development or partnership • According to Jill Griffin, author of Customer Loyalty: How
strong presence has emerging needs you efforts. Prepare to take proactive steps to
are not currently able to address. keep loyalty/preference for the brand strong. to Earn It. How to Keep it.
A customer group exists which has Consider a longer-term effort through • Traditionally, advertisers busied themselves creating a
unmet needs you can address, but they awareness and educational campaigns.
have low/no awareness of your product Knowing that market education can be a brand’s image
category. lengthy process, make a go/no go decision
• Focus is on the message the manufacturer wants to get
about allocating resources to target this
potential, but longer-term opportunity. across-one-way communication
• Passive

Segmentation is extremely actionable data, and it can deliver a • Today, companies are seizing the opportunity to build
competitive advantage. While your competition uses a shotgun credible relationships by expressing their character
approach to sales and marketing, you can use your segmenta- • Active and involving
tion model to finely hone your product, marketing, and sales • Expresses desire to create a dialog
efforts. You can identify your near-term opportunities, as well
• Instills pride in employees
as customer groups that represent a longer-term potential.
• Unique character is difficult for competitor’s to emulate

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Walking Brand: A Retailer’s in-store Sales Force

BRAND MANAGMENT
• One of the often-missed opportunities for a brand is the
ability to leverage its in-store sales force as a living,
breathing-walking-embodiment of the brand
• Training is the key
• Brand must have a worthwhile distinction, cannot make
brand believers without having something to believe in!
• Two examples:
• Disney theme parks-Employees are called “cast members”
who are trained to make your experience of the park special
• Land Rover Dealerships-sales floor employees called “sales
guides” and are trained to drive and demonstrate their cars’
extreme off-road capabilities
Notes

161

LESSON 25:
COMPONENTS OF BRAND POSITIONING
BRAND ARCHITECTURE AND
BRAND PORTFOLIO
Objectives
BRAND MANAGMENT
The learning objective: after this lecture you should be able to
understand:
a. Brand Architecture: Its meaning, scope and importance
b. Brand Portfolio: How big companies maintain it in the
market
Introduction
Did you know that FMCG giant Hindustan Lever Ltd (HLL)
owns 110 brands with 850 types of packing for its various
products? When you go in any ordinary kirana store or in a big
super market, 8 out of 10 products you select will be HLL’s
products. An obvious question that will come in your mind,
How HLL has succeeded in building such strong brands? How
could they manage such diversed brands operating in different
market context? When HLL started operating in India, the
Prime importance was to create strong brands by developing
clear, insightful identities and brand building programs that
makes an impact on the consumer’s mind. Not only HLL but
virtually all firms have multiple brands and they manage them
as a team to work together and to help each other and to avoid
getting in each other’s way. Brand Architecture is the vehicle by
which the brand team functions as a unit to create synergy, clarity
and leverage. So if you think of each brand of a company as a
football player, Brand architecture assumes a coach’s role by
placing each player at the right position and making them
function as a team rather than a collection of players. So let’s
define Brand Architecture and understand the concept with
some examples.
‘Brand architecture is an organizing structure of brand
portfolio that specifies the brand roles and relationship
among the brands and different product market context.
It is mainly defined by the three major dimensions viz.
Portfolio roles, Product market context roles and the Portfolio
structure.
Brand portfolio: Brand architecture involves the management
of brand portfolio. Brand portfolio includes all the types of
brand viz. Brands and subbrands as well as co-brands with
other firms. for example. The brand portfolio of Hindustan
Lever Ltd. Consisting of 110 brands with 950 of different types
of packs, which are operating under different market context
like healthcare, personal care, breverages, etc. The decision
parameters are should one or more brands be added or deleted?
A brand portfolio can be strengthened by the addition of brand
keeping in view the portfolio perspective. Similarly brands can
be deleted by identifying the superfluous brands which are
contributing nothing to the brand portfolio. When Prudent
toothpaste was launched by Parle, it was not able to create
sufficient customer base in the oral care business so Parle had
dumped Prudent brand for its brand portfoilo management.
162
CHAPTER 8:
UNIT 7
Portfolio roles: -For building effective brand architecture
it is necessary to identify the portfolio roles of each brand.
It provides a tool to take more system view of the brand
portfolio and includes a strategic brand, a linchpin brand, a
silver bullet brands and a cash cow brand.
Strategic brands: A strategic brand or a megabrand is a currently
dominating brand that represents a meaningful future level of
sales and profit. For ex: Slate is a strategic brand for Levi’s,
TATA consultancy services (TCS) is a strategic brand of TATA
group of cos. because the vision of the firm is to move beyond
traditional steel and automobile business.
Linchpin brands: A linchpin brand unlike strategic brand not
necessarily represents a meaningful future level of sales and
profit but it is a leverage point of a major business area. It
indirectly influences a business by providing a basis for cus-
tomer loyalty. For ex. ‘Park Avenue’, a brand extension of
Raymond’s launched in mid-eighties.It is a linchpin brand for
Raymond’s because it has extended the Raymons’s credibility in
different businesses from ready –to- wear trousers to men’s
toileteries.
Silver bullet: A silver bullet is a brand or subbrand that
positively influence the image of another brand.it can be a
powerful force in creating, changing and maintaining a brand
image.for ex. When IBM ThinkPad was launched it has
provided a significant boast in public perception of the IBM
brand. Another ex. is the Positioning of Forhans’s Fiouride as
having branded feature of ‘being foamy’ rather than just
‘protect gums and teeth’. It has served to make credible claim
that Forhans had achieved another breakthrough in oral care
industry.
Cash cow brand: Strategic, Linchpin and Silver bullet brands
involves investments and active management for fulfilling their
strategic mission. The cash cow brands on contrast do not
require any investment because it has a significant loyal customer
base. The role of a cash cow brand is to generate marginal
resources that can be invested in other brands, which will help
for future growth and vitality of brand portfolio. For ex; Nivea
cream the core product of Nivea, a brand that has been
extended to variety of skin care and related products.
Product market context roles: -For deciding effective
brand architecture, the product market context roles of the
group of brands must be well defined and coordinated.
There are four steps of product market context roles that
work together to define a specific offering and these are:
a. Endorser and subbrands roles: An endorser brand is an
established brand that provides credibility and substance to
the offering. Endorser brands usually represents
organizations rather than products because organizational
associations such as
innovation, leadership and trust are particularly relevant in
endorsement context for ex. Nestea and Nescafe create associa-
tions with its mother brand Nestle and Mcchicken,
Mcburgers, Mctikki, etc. from Mcdonald’s. Tata has 80 different
companies operating in seven business sectors, which are
endorsed under the megabrand TATA. The subbrands on the
other hand stretches endorser brands that add associations, a
brand personality or any other quality which creates brand
identity of it for ex. Nestle’s Cerelac, Gillette’s Sensor and
Cadbury’s Bournvita. The understanding and use of endorser
brand and subbrands is a key in achieving clarity, synergy and
leverage in the brand portfolio.
b. Benefit brands: The benefit brand is a brand which offers
either features, component ingredients or services which
becomes the unique selling proposition (USP) of offering.
for ex. Gillette diversified’s oral B has a branded feature
which shows the time to replace the toothbrush, Dietcoke,
Dabur amla, and Neem & Margo soaps have branded
component and gradient and American express, Life
insurance corporation (LIC) and Taj group of hotels have
the branded services associated with their names.
c. Co-Brands: Co- branding occurs when brands from
different organizations combine to create an offering in
which each plays a driver role. The impact of cobranding can
be greater than expected when the associations of each
brand are strong and complementary. A research study of
Kodak showed that for a fictional entertainment device 20%
of the prospect said that they would buy the product under
the Kodak name and 20% would buy the device under Sony
name, but 80% would buy the product if it carries both the
names.other ex. Are TVS Suzuki, Colgate Palmolive and
Dabon (joint venture between Dabur and Bongrain
international of France).
d. Driver role: Driver role is an extent to which a brand drives
the purchase decision and defines the use experience. brand
with a driver role will have some level of loyalty. Brand
architecture involves selecting the set of brands to be
assigned a major driver role; those brands will have priority
in brand building. A driver brand is usually a masterbrand
or subbrands but endorser and second and third level sub
brands can have some driver roles.for ex. Cadbury’s has two
subbrands ‘Dairymilk’ and ‘Bournvita’, which have the
major driver roles for selling. Another ex. Is Nirma tikia and
Nirma washing powder, which is operating in the market
with value for money as its major driving role.
Brand portfolio structure: The brands in the portfolio have
a relationship with each other. Brand architecture also
involves designing a structure of all the brands, which will
provide clarity to the customer rather than complexity and
confusion. It must provide a sense of order, purpose and
direction to the organization. Three approaches can be
utilized to present the portfolio structure.
Brand groupings: A brand grouping is a logical grouping of
brands that have meaningful characteristics in common. The
groups provide logic to the brand portfolio and help its growth
overtime for ex. in case of Johnson and Johnson Ltd.,the
brand grouping can be made using following characteristics.
Segment( Infant Care and Intimate Feminine Care)
BRAND MANAGMENT
Product (Healthcare and Pharmaceuticles)
Design (Classic and Contemporary)
Brand hierarchy trees: Sometimes brand hierarchy trees can
capture the brand portfolio structure. The brand hierarchy tree
structure looks like an organization chart with both horizontal
and vertical dimensions. The horizontal dimensions reflect the
subbrands and endorsed brands that reside under a brand
umbrella. The vertical dimension captures the number of
brands and subbrands that are needed for different segments
of the market. For ex. Colgate, the hierarchy tree for the Colgate
oral care shows that Colgate name covers toothpaste, tooth-
brush, dental floss and other oral hygiene products. Again
under toothbrush it has brands like plus, precision, classic,
youth and colour change. Under Colgate plus toothbrush it has
brands like diamond head and “the wild ones”. The brand
hierarchy tree presentation provides perspective to help evaluate
the brand architecture. A successful brand architecture makes a
range of offerings both to the customers and to those inside
the organisation. Having a logical hierarchy structure among
subbrands helps generate the clarity.
Brand range: Brand architecture also involves deciding the
range of portfolio brands. It throws light on the some issues
like how far a brand (Megabrand or subbrand) should be
stretched horizontally in the brand hierarchy tree? How far
should they be stretched vertically in to the different markets?
The brand range can be described for each brand in the portfolio
that spans product classes or has the potential to do so. The
above issues must be analyzed by organizations by distinguish-
ing between the brands in its role as an endorser and master
brand and recognize that subbrands and co- brands can play a
key role in leveraging brands.
So in nutshell, for any firm the objectives behind designing and
maintaining an effective brand architecture are:
• Create effective and powerful brands.
• Understand the portfolio roles of each brand (strategic,
silverbullet, linchpin and cashcow) and allocate the brand
building resources in that manner.
• Create synergy between brands by enhancing visibility,
creating and reinforcing associations and cost efficiencies.
• Advance clarity of product offering to the customers and
organization.
• Leveraging the brand equity by proper brand and line
extensions exercise.
• Provide a platform for future growth option to the
organisation.
Source: By Santosh S. Bhavsar of J.B.I.M.S.
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BRAND MANAGMENT

Brand Hierarchy Pyramid vs

Product Level Types of Brands
Very meaningful in
Potential Product differentiating our Brand but
very difficult to deliver • Family brand: brand name that
consistently to our
Augmented Product Beliefs & consumers identifies several related products
Core
Values (Heinz 57 or the RAID insect sprays, or
Expected Product Campbell’s)
Benefits
• Individual brand: unique brand name
Generic Product
Easy to deliver and explain
that identifies a specific offering within
Features &
Attributes
to consumers but also easy to a firm’s product line and that is not
imitate
CORE BENEFIT grouped under a family brand

Types of Brands PRODUCT IDENTIFICATION

• Generic product: item characterized • Brand name: part of a brand consisting of
by plain label, with no advertising and words or letters that form a means to
identify and distinguish a firm’s offering
no brand name
• Brand mark: symbol or pictorial design
• Manufacturers’ brand: brand name that identifies a product
owned by a manufacturer or other • Generic name: branded name that has
producer (Dr. Pepper or IBC Root Beer) become a generically descriptive term for a
class of products (e.g., nylon, aspirin,
kerosene, and zipper)

Types of Brands PRODUCT IDENTIFICATION

• Private brands: brand name placed on
• Trade mark: brand to which the owner
products marketed by wholesalers and legally claims exclusive access
retailers (Sam’s Choice beverage (Wal- • Trademark protection confers the exclusive
Mart) or ACE brand tools)
right to user brand name, trade mark, and
• Captive brands: national brands that any slogan or product name abbreviation
are sold exclusively by a retail chain

Exercises and Assignments

1. Identify brands with the greatest number of line
extensions. Discuss the implications of such proliferation
for the company, consumers, the trade, and the brand’s
competitive position. Prepare a Brand Portfolio chart for the
same.

164
 Ariel, Surf, Pampers diapers are examples of brands with
numerous line extensions.
2. Do #1 above, but look at category extensions instead.
3. Pick two competing brands (preferably two that have not
introduced category extensions) and poll consumers
regarding possible extensions for each. Analyze the
differences and the reasons for them.
4. Pick a brand marketed in more than one country. Assess the
extent to which the brand is marketed on a standardized vs.
customized basis.
5. How aware are you of the country of origin of different
products you own? Which products do you care about their
country of origin? Why? For those imported brands that
you view positively, find out and critique how they are
marketed in their home country.
6. Pick a product category. Consider the strategies of market
leaders in different countries. How are they the same and
how are they different?
7. Pick a product category. How are different leading brands
targeting different demographic market segments?
Case Study
The ‘Coca-Cola’ Brand and Sponsorship
If ‘Coca-Cola’ were the name of a person, how would you
describe that person? How does that person make you feel?
Consumers often prefer products that have a strong, positive
image. An important ingredient of this image will be the
associations that are evoked in the mind of the consumer. The
‘brand personality’ is what people think and feel, consciously
and subconsciously, about a company identity or product and is
described the same way as you would a person.
It is necessary to create the right image i.e. one that closely
matches consumers’ feelings and expectations of what the
product should be like. Marketing managers try to build on
associations between products and other aspects of life.
Sponsorship is one way of building these brand associations.
Sponsorship involves providing financial support, creative
input, media support, and experience to an important event or
activity organised by another party. In return, the company
receives a public opportunity to be seen to support and be
associated with an event, activity or person. Sponsorship is a
crucial part of a public relations strategy because it is possible to
reach a target audience with a specific message.
‘Coca-Cola’ Sports Sponsorship
‘Coca-Cola’ is one of the top global sponsors of sport. The
rationale for sponsoring international and local sporting events
is that it is “a natural fit”. By matching the brand with world
standard events ‘Coca-Cola’ benefits from the exposure and the
BRAND MANAGMENT
associations made between it and the event being sponsored.
Equally by ensuring that local events are sponsored the brand is
exposed exclusively to a local market and will thus be seen as a
local brand. By devising innovative and tailored marketing
programmes based on local consumer insights, sales can be
increased in the ready-to-drink nonalcoholic beverage market.
Local offices around the world ensure that the company
participates and supports local communities. ‘Coca-Cola’ is
aware of what is relevant in the lives of its target market such as
sport, music and fashion. Life experiences are created around
these interests. By getting involved in these daily experiences
‘Coca-Cola’ meets its sponsorship objectives.
By capturing the pace and vitality of the ‘Coca-Cola’ brand and
by referring to the refreshing nature of the drink, a strong
message is sent to the consumer about how the product is
being positioned in the market place. Attributes of the product
suitable to sports sponsorship are highlighted. By positioning
‘Coca-Cola’ as an icon and leading brand that mentally and
physically boosts consumers, associations with major sporting
events are reinforced.
Brand Positioning
‘Coca-Cola’s’ brand personality reflects the positioning of its
brand. The process of positioning a brand or product is a
complex managerial task and must be done over time using all
the elements of the marketing mix. Positioning is in the mind
of the consumer and can be described as how the product is
considered by that consumer. When researching the positioning
of a product, consumers are often asked how they would
describe that product if it were a person. The purpose of this is
to develop a character statement. This can ensure that
consumers have a clear view of the brand values that make up
the brand personality, just like the values and beliefs that make
up a person. Many people see ‘Coca-Cola’ as a part of their daily
life. This affinity between the brand and the consumer leads to a
high degree of loyalty and makes the purchasing decision easier.
Brand positioning guides ‘what’ will be communicated in the
company’s advertising, while the character statement guides
‘how’ a message should be delivered or put across.
Sponsorship and the Marketing Mix
The Marketing Mix is the name placed on the ‘4Ps’ of
marketing: Product, Place, Price, and Promotion. It is this
fourth element, Promotion, which is focused on in this case
study. This involves communicating the benefits of a product
to increase sales and ultimately profits. There are four main
methods of promoting the benefits of a brand.
• Advertising
• Personal Selling
• Public Relations & Sponsorship (PR)
• Sales Promotion
The combination of these four methods constitutes the
Promotion Mix. Public Relations is about communicating
with the media to create good publicity for a firm or its
products. The media then communicate these activities to the
public.
Public Relations
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 One of the marketing department’s functions is to manage
BRAND MANAGMENT
public relations and maintain a positive and beneficial image of
the firm’s policies and products. The aims of the Public
Relations Manager liaising with the marketing function are to:
• Make the public aware of the existence of the firm and
maintain the good name and image of ‘Coca-Cola’ by
issuing press releases, organising news conferences and
informing the public about the firm’s activities.
• Maintain goodwill amongst the public for the company.
Goodwill is the likelihood that the existing customer will
return and can be equated with brand loyalty. Brand loyalty
occurs when customers repeat-purchase a particular branded
product on a regular basis. ‘Coca-Cola’ has a high level of
brand loyalty. When you want a drink do you automatically
pick up a bottle of ‘Coca-Cola’?
International Sponsorship
Coca-Cola’s’ powerful brand personality has become a vehicle
for promotion in its own right, sponsoring many events both
on a global and local level. The company has long been
associated with global events such as The Olympic Games, The
FIFA World Cup, Rugby World Cup and Special Olympics.
Coke has also been linked to world fairs and national exhibi-
tions since 1905. With the Olympics blossoming in popularity
and complex-
ity, increased
attention has
been turned to
serving the
growing
crowds and to
supplying the
needs of the
athletes and organising committees. In many countries where
Olympic associations lack full government sponsorship local
bottlers of ‘Coca-Cola’ donate funds to aid potential Olympi-
ans as the partnership of ‘Coca-Cola’ and the Olympics
continues to grow.
‘Coca-Cola’ was the official sponsor of the Olympics 2000
Games held in Sydney maintaining an unbroken presence at the
games since 1928. The company has already contracted to
sponsor both the Summer and Winter Games through to 2008.
‘Coca-Cola’ will be the official global sponsor of the Special
Olympics to be held in Ireland in 2003 (this is the first time the
games will be hosted outside the US). As the Olympic
Movement’s longest-standing corporate partner, ‘Coca-Cola’ has
aided the evolution of games together with more than 190
National Olympic Committees assisting thousands of athletes
in their training.
Football
Coca-Cola’ also sets out to support football at every level of the
sport. On a global basis ‘Coca-Cola’ has been a sponsor of the
World Cup since the 1978 tournament in Argentina through to
France in 1998
and into the new
millennium. In
Europe, ‘Coca-
Cola’ is involved
166
with the European Championship and plays a prominent part
in making the event such a success. The global popularity of
football makes it an ideal sport for ‘Coca-Cola’ to build on the
life experiences of their target group. At these events ‘Coca-Cola’
has exclusive product availability in the non-alcoholic beverage
category. To support ‘Coca-Cola’ ’s association with football,
‘Coca-Cola’ created the very successful ‘Eat football, sleep
football, drink ‘Coca-Cola’ campaign and the ‘World Cup for
fans’ campaign. These campaigns highlight the natural link
between having a ‘Coca-Cola’ and enjoying the experience of
watching a football game.
Rugby
Coca-Cola’ has also become the long-term sports sponsor of
the Rugby World Cup. The Company has been a sponsor since
1995. This is the first time for a sponsor to commit to more
than one Rugby World Cup. The Company wants to
communicate that ‘Coca-Cola’ is the refreshment that stimulates
and revitalises rugby fans, and enhances the group experience
and enjoyment of watching the game.
National Sports Sponshorship
In addition to sponsoring sporting events, their involvement
extends to many community and education programmes in
Ireland.‘Coca-Cola’ is a local business as much as a global one.
It takes its responsibilities as a supporter of local community
events seriously.
Football
As football is about fun, excitement, passion, pride and shared
enjoyment ‘Coca-Cola’ tries to match this feeling within its
brand. The company supports local football because it matches
its customers’ interests. This market driven approach involves
listening to what people say and giving them what they need
and want.
‘Coca-Cola’ is also the official soft drink sponsor of GAA
providing strong support for the International Rules football
series. The Association President Joe McDonagh stressed the
importance of this sponsorship as it ensured a successful series.
Locally ‘Coca-Cola’ supports and is present at all the national
hurling and football games. The brand is also present at GAA
schools level matches i.e. Leinster Secondary Schools Hurling
and Football Championships, Feile na nGeal, Feile Peile and
under 14 Hurling and Football.
Form and Fusion Design Awards
Life experiences are created for customers around interests. By
getting involved in the daily experiences and by being aware of
what is relevant in the lives of local target markets, such as
music and fashion, ‘Coca-Cola’ can build on these brand
associations. The ‘Coca-Cola’ ‘Form
and Fusion Design Awards’ is a
cutting edge, visually exciting and
highly educational competition
developed for students in transition
or senior year in secondary schools
in Ireland.
Students are encouraged to work in
groups, using their own skills and
imagination, to design and create
futuristic costumes created solely from recycled materials . On Coverage included exposure on the Late Late Show, Nationwide

BRAND MANAGMENT
completion the students organise a fashion show where six and TV3 News.
outstanding designs make their debut. The ‘Coca-Cola’ Form
Conclusion
and Fusion design awards is a unique opportunity that allows
It is necessary to create the right brand image that closely
‘Coca-Cola’ to enhance and provide teens with an opportunity
matches consumers’ life experiences and feelings. Sponsorship
to express and learn about their own artistic skills. The
is one way of building these associations. Through events such
competition provides a platform for learning through fun and
as ‘Coca-Cola’s’ Form and Fusion Design Awards and sporting
enhancing interpersonal skills. The potential for the
events a brand manager can ensure that its product image is
competition to
made relevant to the target audience.
grow and sub-
divide into a Tasks and Activities
variety of 1. Define Brand Personality, Brand Associations, Sponsorship
educational and Public Relations.
disciplines is
2. Explain the following terms Promotion Mix, Positioning
enormous.
and Brand Loyalty.
The competition
began at a local 3. ‘The Coca-Cola Company sponsors events and activities on
level in 1998 when a global and local level’. Discuss.
Aidine O’Reilly a 4. How would you describe ‘Coca-Cola’ if it were a person?
schoolteacher in Ballincollig Community School in Co Cork, Compare your description with other soft drink brands.
wanted to set up an exciting challenge for her transition year 5. In the following diagram where would you place the ‘Coca-
students. In 1999, Aidine, with the support of the ‘Art Teachers Cola’ brand? Compare the positioning with the other
Association of Ireland’ brought the competition to Munster drinks discussed in question 4. What conclusions can you
where 9 schools made 38 costumes and the competition draw?
received both national and regional media coverage.
In 2000,‘Coca-Cola’ Ireland came on board as ‘sole’ sponsors
of the event having identified a unique opportunity to connect
with Irish teenagers in a way that creates fun and excitement in
schools and on the ground. With
‘Coca-Cola’s’ involvement, the
competition took off and 1,700
students participated from 88
different schools across the
country. Three preliminary heats
were hosted in Dublin, Cork and
Ballina with the final event in Sourcehttp://www.business2000.ie/
Ballincollig Community School Notes
in Cork on Friday March 31 2000. Each of the 33 shortlisted
costumes was showcased in a two-minute performance in front
of a 700 strong audience. Then Minister for Education, Micheál
Martin opened the event.
In 2001 the competition more than doubled in size with 192
schools participating. This number represented 2,400 students
making a total of 365 designs. The final event was hosted in
Millstreet in Cork, which was the venue for the 1993 Eurovision
Contest (Munster’s largest venue) to an audience of 2,500
people. ‘Coca-Cola’ Ireland is delighted to be involved with this
unique competition for the second year running.
”The originality of the concepts, the enthusiasm of the
students and the way in which the event has captured the
imagination of the entire country have all combined to create
something truly memorable in addition to the long-term
educational value. We are privileged to be associated with this
competition which is endorsed by several curriculum support
services within the Department of Education and Science”.
Brian Keating, Senior Brand Manger, ‘Coca-Cola’ Ireland.
This event was visually spectacular. ‘Coca-Cola’ achieving huge
press and television coverage all over the Republic of Ireland.

167
BRAND MANAGMENT

LESSON 26:
PERCEPTUAL MAPPING

Objectives Market Description and Segmentation

The learning objective: after this lecture you should be able to Product maps identify which products, companies or services
understand: compete in a market. Maps provide a clear description of the
structure of a market and suggest possible segmentation
a. Perceptual Mapping: Its techniques and importance to
strategies.
Branding
1. Identifying Product Weaknesses
Perceptual Mapping
Maps show how products are viewed or rated on specific
When marketers and advertising professionals began to display
attributes or dimensions. Analysis of maps can identify
their interest in the perceptions of target consumer segments,
weaknesses on attributes and suggest new advertising and/
the next natural step was to measure those perceptions. This
or positioning strategies.
constituted an open invitation to mathematical psychologists to
move in which they did. Today, you cannot play the positioning 2. Concept Development and Evaluation
game without ‘perceptual mapping’. Proposed new product concepts can be developed and
What perceptual mapping does is to represent consumer evaluated by examining how they stack up against existing
perceptions-in (usually) two-dimensional space so that the products.
manager can readily see where his own brand is positioned in 3. Tracking Consumer Perceptions
the mind of his prospect and in relation to other brands. The Product mapping is an ideal way to track shifts in consumer
concept of the consumer’s perceptual space forms the theoretical perceptions of products or services over time.
basis of positioning. It is this concept, which distinguishes
4. Identifying Differences Among Groups
positioning and sets it apart as a major contribution to
marketing theory and practice. Perceptual mapping helps to You may want to determine whether distinct groups of
make this concept operational. people (ie. users vs. non users, men vs. women) perceive
your products differently. Product mapping is an excellent
Perceptual mapping is a graphics technique used by marketers
way to determine if differences exist between the
that attempts to visually display the perceptions of customers
perceptions of distinct groups.
or potential customers. Typically the position of a product,
product line, brand, or company is displayed relative to their Perceptual maps represent the positions of products on a set of
competition. evaluative dimensions.
We can say that Perceptual maps can have any number of Perceptual maps and positioning studies do not tell us:
dimensions but the most common is two dimensions. Any • how to obtain a certain position; or
more is a challenge to draw and confusing to interpret. • possible new attributes not currently available in existing
Product or perceptual mapping refers to methods to analyze brands.
and understand consumer perceptions of products. The Sample Perceptual Map for Local Grocery Stores
products can be almost any identifiable object, including
consumer products (toothpaste, cars, over-the-counter drugs),
Web sites, industrial products (computers, tools), institutions
(corporations, hospitals, magazine publishers), activities
(vacation spots, movies) or people (entertainers, political
candidates).
Product mapping produces a picture or map of a market. The
map shows how products are perceived on specific features or
attributes such as reputation, price, quality etc.
Product maps show which products compete in the consumer’s
mind and suggests how a product can be positioned to
maximize preference and sales.
Marketing Applications of Product Mapping
Product maps provide valuable insights for a number of
marketing decisions. Some major applications include:

168
Snake-plot Perceptual Map
Perceptual Map – soaps
Perceptual mapping involves mapping how
• consumers perceive the similarity and dissimilarity between
a set of competing brands or products.
• The closer two brands are in a perceptual map, the more
they are perceived to be similar. The farther away any two
brands are in the map, the more dissimilar they are perceived
to be.
• The dimensions of the perceptual map are used to
understand the attributes consumers use to compare
brands.
The first perceptual map below shows consumer perceptions of
various automobiles on the two dimensions of sportiness/
conservative and classy/affordable. This sample of consumers
felt Porsche was the sportiest and classiest of the cars in the
BRAND MANAGMENT
study (top right corner). They felt Plymouth was most practical
and conservative (bottom left corner).
Perceptual Map of Competing Products
Cars that are positioned close to each other are seen as similar
on the relevant dimensions by the consumer. For example
consumers see Buick, Chrysler, and Oldsmobile as similar. They
are close competitors and form a competitive grouping. A
company considering the introduction of a new model will
look for an area on the map free from competitors. Some
perceptual maps use different size circles to indicate the sales
volume or market share of the various competing products.
Displaying consumers’ perceptions of related products is only
half the story. Many perceptual maps also display consumers’
ideal points. These points reflect ideal combinations of the two
dimensions as seen by a consumer.
A company considering introducing a new product will look for
areas with a high density of ideal points. They will also look for
areas without competitive rivals. This is best done by placing
both the ideal points and the competing products on the same
map.
Some maps plot ideal vectors in stead of ideal points. The map
below, displays various aspirin products as seen on the dimen-
sions of effectiveness and gentleness. It also shows two ideal
vectors. The slope of the ideal vector indicates the prefered ratio
of the two dimensions by those consumers within that
segment. This study indicates there is one segment that is more
concerned with effectiveness than harshness, and another
segment that is more interested in gentleness than strength.
169
 than two. Potential customers are asked to compare pairs of
BRAND MANAGMENT

products and make judgements about their similarity. Whereas

other techniques (such as factor analysis, discriminant analysis,
and conjoint analysis) obtain underlying dimensions from
responses to product attributes identified by the researcher,
MDS obtains the underlying dimensions from respondents’
judgements about the similarity of products. This is an
important advantage. It does not depend on researchers’
judgments. It does not require a list of attributes to be shown
to the respondents. The underlying dimensions come from
respondents’ judgements about pairs of products. Because of
these advantages, MDS is the most common technique used in
perceptual mapping.
• The aim of multidimensional scaling (MDS) is to reproduce
the perceived similarity between a number of objects in low
dimensional space.
• Technically, the objects are pushed back and forth in low
dimensional space until their distances in this space
reasonably reproduce the input similarity data (wherever
Perceptual Map of Competing Products with Ideal Vectors
those come from).
Perceptual maps need not come from a detailed study. There are
• The dimensions in MDS are often interpreted in the same
also intuitive maps (also called judgmental maps or consensus
way as factors in factor analysis. This is not quite correct:
maps) that are created by marketers based on their understand-
whereas factor analysis explains co variation between
ing of their industry. Management uses its best judgement. It is
variables, MDS reproduces distances between objects.
questionable how valuable this type of map is. Often they just
give the appearance of credibility to management’s preconcep-
tions.
When detailed marketing research studies are done method- An Example:
ological problems can arise, but at least the information is Using a Perceptual Map for Competitor Analysis
coming directly from the consumer. There is an assortment of
statistical procedures that can be used to convert the raw data
A touch of class / a car to be proud to own
collected in a survey into a perceptual map. Preference regression •Porsche
• Lincoln
will produce ideal vectors. Multi dimensional scaling will • Cadillac
•Mercedes •BMW
produce either ideal points or competitor positions. Factor
Conservative
analysis, discriminant analysis, cluster analysis, and logit analysis looking /
•Chrysler
•Buick
Fun to drive
•Pontiac / sporty look
can also be used. Some techniques are constructed from appeals to • Oldsmobile / appeals to
older people younger
perceived differences between products, others are constructed •Ford people
•Chevrolet
from perceived similarities. Still others are constructed from •Dodge •Nissan
cross price elasticity of demand data from electronic scanners. •Toyota

Perceptual mapping techniques identify the underlying dimen- •Plymouth

•VW
sions that differentiate consumer perceptions of products and Practical / Dalrymple
affordable / good gas mileage
& Parsons/Marketing 4
the posit ions of existing products on the dimensions Management 7th edition: Chapter 5

Consumers are asked to rate a set of brands along given

attributes or benefits or they may be asked merely to judge, by
pairs, how similar or dissimilar the brands are.
Perceptual Mapping Techniques
1. Non-attribute methods–MDS (multi-dimensional
scaling)
asks for individuals’ perceptions of similarity between objects
(e.g., soap brands) and preferences among these objects in order
to infer which characteristics were used to form the perceptions.
Multi dimensional Scaling (MDS) is a statistical technique used
primarily in marketing and the social sciences. It is a procedure
for taking the preferences and perceptions of respondents and
representing them on a visual grid. These grids, called perceptual
maps are usually two dimensional, but they can represent more
Important Issues in using MDS
1. Similarity and dissimilarity data (“product/brand space”)
2. Preference data (“ideal points/segments”)
3. Number of dimensions (factors) for the map
4. How one labels the dimensions
5. What gaps in the perceptual map mean
2. Attribute Methods
I. Cluster analysis- Cluster analysis is a class of statistical
techniques that can be applied to data that exhibits
“natural” groupings. Cluster analysis sorts through the
raw data and groups them into clusters. A cluster is a
group of relatively homogeneous cases or observations.

170
 Objects in a cluster are similar to each other. They are also
dissimilar to objects outside the cluster, particularly
objects in other clusters.
The diagram below illustrates the results of a survey that
studied drinkers’ perceptions of spirits (alcohol). Each point
represents the results from one respondent. The research
indicates there are four clusters in this market.
The diagram shows a study of consumers’ ideal points in the
alcohol/spirits product space. Each dot represents one respon-
dents ideal combination of the two dimensions. Areas where
there is a cluster of ideal points (such as A) indicates a market
segment.
Areas without ideal points are sometimes referred to as demand
voids.
Perceptual Map of Ideal Points and Clusters
Another example is the vacation travel market. Recent research
has identified three clusters or market segments. They are the: 1)
The demanders - they want exceptional service and expect to be
pampered; 2) The escapists - they want to get away and just
relax; 3) The educationalist - they want to see new things, go to
museums, go on a safari, or experience new cultures.
Cluster analysis, like factor analysis and multi dimensional
scaling, is an interdependence technique : it makes no distinction
between dependent and independent variables. The entire set
of interdependent relationships is examined. It is similar to
multi dimensional scaling in that both examine inter-object
similarity by examining the complete set of interdependent
relationships. The difference is that multi dimensional scaling
identifies underlying dimensions, while cluster analysis identi-
fies clusters. Cluster analysis is the obverse of factor analysis.
Whereas factor analysis reduces the number of variables by
grouping them into a smaller set of factors, cluster analysis
reduces the number of observations or cases by grouping them
into a smaller set of clusters.
In marketing, cluster analysis is used for:
• Segmenting the market and determining target markets
• Product positioning and New Product Development
• Selecting test markets (see : experimental techniques)
II. Factor analysis - Factor analysis is a statistical approach that
BRAND MANAGMENT
can be used to analyze interrelationships among a large
number of variables and to explain these variables in terms
of their common underlying dimensions (factors).
The statistical approach involving finding a way of condensing
the information contained in a number of original variables
into a smaller set of dimensions
(factors) with a minimum loss of information
Factor analysis is a statistical technique that originated in
mathematical psychology. It is used in the social sciences and in
marketing, product management, operation research, and other
applied sciences that deal with large quantities of data. The
objective is to discover patterns among variations in the values
of multiple variables. This is done by generating artificial
dimensions (called factors) that correlate highly with the real
variables. The basic steps are:
• Identify the salient attributes consumers use to evaluate
products in this category.
• Use quantitative marketing research techniques (such as
surveys) to collect data from a sample of potential
customers concerning their ratings of all the product
attributes.
• Input the data into a statistical program and run the factor
analysis procedure. The computer will yield a set of
underlying attributes (or factors).
• Use these factors to construct perceptual maps and other
product positioning devices.
III. Discriminant analysis - Discriminant analysis is a statistical
technique used in marketing and the social sciences. It is
applicable when there is only one dependent variable but
multiple independent variables (similar to ANOVA and
regression). But unlike ANOVA and regression analysis, the
dependent variable must be categorical. It is similar to factor
analysis in that both look for underlying dimensions in
responses given to questions about product attributes. But
it differs from factor analysis in that it builds these
underlying dimensions based on differences rather than
similarities. Discriminant analysis is also different from
factor analysis in that it is not an interdependence technique
: a distinction between independent variables and
dependent variables ( also called criterion variables) must be
made.
Brand Attributes and Benefits
The physical existence of a brand is no assurance that it has a
position in the target consumer’s mind. To enter that coveted
territory-the consumer’s perceptual space-and to secure a
‘position’ there, the brand must satisfy his question: “What’s in
it for me?” It must offer a benefit, which is of importance to
him. This is elementary. So, when we talk of brand attributes,
we must remember that these are the manufacturer’s views of
the brand. The consumer’s frame of reference requires that
those manufacturer’s claims or brand attributes be translated
into consumer benefits in order to map consumer perceptions.
Thus, when we talk of positioning a brand with reference to an
attribute or when we ask a consumer to rate a brand along an
171
 attribute, we must reinterpret that attribute as a meaningful
BRAND MANAGMENT
consumer benefit.
Product attributes and features are tangible and are expected to
lead to benefits to the customers. Marketers might choose to
highlight their attribute or benefit. For example, Fair Glow
cream has Oxy-G which leads to benefit of fairness. What
should it highlight? According to me, the benefit because that is
what matters. Without the benefit the attribute has no cus-
tomer utility. At the same time Ayurvedic Concepts have natural
ingredients, and its benefits depend on the product concerned
like moisturizer, antiseptic, shampoo, foot-care cream, etc.
What should it highlight? Note that it competes with cosmetics
and personal care products. Unless there is a significantly
different benefit which can be felt and hence started, the
differentiating opportunity lies in the contents, the attribute.
Hence it should in the absence of differentiated benefits,
highlight its ayurvedic attribute which is differentiating. Else,
they should conduct research so as to explore, create, and
communicate credible benefit differentiation for the brand. And
only then focus on it.
While on the point of tangible attributes(e.g. Sweetex has less
calories, Dhara milk contains added vitamins A and D, Fair
Glow has Oxy-G, Krack cream cures cracks on feet, Dettol is
antiseptic, and Savlon does not burn) one needs to understand
that each of these can be copied by existing brands or through
new ones with economy pricing unless patented. Fortunately,
intangibles are safe from this. They summarize more subjective
attributes, e.g. perceived quality, high technology, healthier oil. It
is easier to attack specific content of vitamins and carbohydrates
in a health food than nutrition per se. One may recall here that
Bournvita has minerals, vitamins and carbohydrates whereas
Complan is a complete planned food. Which one shall be easier
to copy based on attributes?
It is strongly advised that all brands should have a strong
intangible association as these do not have a fear of becoming a
‘me too’ and benefits and attributes are all about avoiding ‘me
too’ feeling eventually.
Where We Are - Where We Should Be
It is not enough that we plot the existing positions of brands
along certain dimensions - brand attributes and benefits. This,
by itself, is a passive act. It tells us where we are but not where
we should be and neither can we judge whether we are where we
should be.
For this we need to plot not only consumer perceptions but
also the preferences of a given consumer segment in a particular
category or product market. Consumers can express such
preferences only in terms of benefits: to what degree they are
obtaining a specific benefit from existing brands; how impor-
tant this benefit is to them; whether there is some benefit which
they are missing; whether they would prefer to obtain a specific
benefit in greater or lesser measure. Such preferences are also
termed ‘ideal points’ when plotted on a perceptual map.
Preference Mapping
The brand manager for Margo bath soap has a defined
consumer segment in mind: a consumer in the middle-income
group, who values a bath soap for the good things it does for
172
his skin, much more than its cosmetic properties or fragrance.
Such a consumer is also thought to value traditional herbal
ingredients which have proven goodness like Neem. (Exhibit 2-
5 brings out the essential character of Margo as seen by this
consumer -”Pretty ugly? Pretty good.”) If the preferred or ideal
position ‘I’ of this segment is superimposed on the map of
premium toilet soaps as in Figure 2-9,) the brand manager can
judge if his marketing efforts have brought the perceived
position of Margo closer to the preferred or ideal position of
his target segment. In this case, what actions should he
consider? How would you evaluate his positioning strategy for
Margo as seen in the new campaign he has released, presenting
it to the ‘consumer as the ‘skin-friendly soap’ (Exhibit 2-6), and
the face-lift he has given to his product with rounded edges and
a brighter green wrapper (Exhibit 2-7(Plate 2)?
You can see how valuable as an action guideline such an exercise
can be. This is the first purpose of ‘preference mapping’ -to
measure the gap, if any, between the position of the brand as
actually perceived and the preferred or ideal position of its target
segment.
Looking for ‘Holes’
The second purpose for which we track such preferred positions
is to discover ‘holes’ or vacant positions in the market structure
because they represent opportunities for new products. To
illustrate this we will use an excellent example from the book by
Urban et aI., with reference to the analgesic market in the
USA.1_
Figure 2-10 shows a perceptual map of pain relievers which
represents where the existing brands were positioned by
consumers at that point of time. Even visually, certain gaps are
apparent, e.g. in the upper-right quadrant. Through consumer
probing, the relative importance of ‘gentleness’ and ‘effective-
ness’ can be obtained from users of the product category and
the output might indicate that there is, indeed, a vacant position
which represents the preferred weights given by some consum-
ers to ‘gentleness’ vis-a-vis ‘effectiveness’.
The ‘preferred’ or ‘ideal’ position of a single consumer would
appear as a particular point on the map. If several consumers
have a similar preferred position, they would form a cluster.
And if we continue the process, we may discover more than
one cluster, each gravitating around a preferred position, which
represents the respective weights
It is possible through such analysis to identify the ‘gaps’ which
new or repositioned products can hope to fill by offering that
combination of benefits which existing products do not have.
Enough of pain-relievers! Let us look at the fascinating case of
the ‘happy pickle’. Having regaled us with an account of how
Pearce’s Pickles found themselves in a pickle, Stefflre unfolds for
us the adventures of the happy pickle in quest of a ‘preferred
position’.
The context is entirely business-like: attempting to build new
products to match preferred descriptions. It is this basic
methodology which has been improved and developed to
provide preference maps such as we saw earlier. Let us follow
his somewhat fanciful but entirely relevant example.
Suppose that a survey among pickle users shows a sizeable
response to a description such as ‘the happy tasting pickle’. We
might then ask the respondents to list the ‘happiest tasting
things’ they could remember and a predominant answer may be
‘a birthday cake’. So we tackle the problem of making a pickle
that is perceived as more similar to birthday cakes than any other
pickle. We take our ‘happy pickle l’ to consumers to taste and
ask them to rate it versus other pickles on the scale of ‘very
happy’ to ‘not at all happy’. If some competitor’s pickle is
‘happier’, we examine how it is different from our own ‘sadder’
pickle. By the time we have tested ‘happy pickle 7’, consumers
would have discovered the happiest tasting pickle of all!
Strategy Decisions
The strategy decisions, which follow such preference mapping,
are the following:
a. When we know the ‘ideal point’ or preferred position of
our target segment, as revealed through such mapping, we
can judge whether the perceived position of our brand
needs to be brought closer to that ideal point. This may
involve some change in its advertising to create a revised
perception of the brand more in line with that ideal point.
It may also involve some corresponding changes in the
physical features of the brand. (The easiest to change is the
pack design.)
b. On the other hand, we may decide to change the preferred
position or ideal point of our target segment and bring that
ideal point closer to the perceived position of our brand.
This is admittedly more difficult. In the lower-priced
transistor radio category it was found, at one time, that
consumers preferred models, which offered high volume of
sound. The marketer in’ question decided to change the
preference of this target segment or degree of importance
attached to the two benefits by that group or segment of
consumers.
This can be portrayed on a map, which also indicates the
characteristics of each cluster or segment. The illustration is
portrayed in figure 2-11.
It is evident that cluster 1 places more importance on
BRAND MANAGMENT
‘gentleness’ and cluster 2 on ‘effectiveness’. If these two
segments can provide adequate sales volume and profit, we
have two new product opportunities: one brand would be
very gentle but less effective and the other, very effective but
not so gentle.
You will note that such techniques of preference mapping
can also superimpose on the map various consumer
characteristics through advertising to increase the salience of
tonal quality over mere volume and thus get a closer match
with the existing position of his brand, which was
perceived to have a lower volume of sound.
c. Thirdly, as we have seen, we may decide to launch a new
brand altogether - or perhaps, reposition an existing brand -
to get a closer fit with a preferred position, which represents
a consumer need unfulfilled by existing brands.
Summary
Positioning has come a long way from the late sixties when it
first caught the attention of practitioners and academics. The
concept itself has become somewhat better understood and
more widely accepted for its theoretical as well as practical value.
Positioning has four components.
The first component is the product class or product category in
which the brand is to operate. To give a specific name to such a
category is not always easy since the boundaries are fluid, e.g. a
moisturizing lotion may decide to position itself in the cold
cream market. .
173
 The second component is consumer segmentation. It is The consumer insight obtained through research was that the
BRAND MANAGMENT

impossible to think of a position for a brand without, at the heavy beer drinker does not say:
same time, considering the segment for which it offers benefits One third less calories, therefore less fattening’
that other brands do not. Positioning and segmentation are like
He says:
two sides of a coin, inseparable and integrated.
‘One third less calories? That means three beers instead of two’
The third component is perceptual mapping, an essential tool
to measure where brands are located in the perceptual space of This showed the marketing opportunity, provided the taste of
the target consumer. Multidimensional scaling is a widely used such a light beer was improved, unlike Gablinger which had a
method for such mapping, but there are others. poor taste.
Brand benefits and attributes make up the fourth component Thus came the positioning strategy for Miller Lite when it was
of positioning. A consumer can allot a position in her mind launched in 1975:
only to a brand whose benefits are meaningful to her. She a. It was to be positioned for the heavy beer drinker with a
compares and places brands in relation to these desirable strong masculine image;
benefits. b. The heavy drinker likes his beer; therefore, Miller Lite must
Similarly, the search for vacant positions in the market must be be positioned as the ‘less filling’ beer so that he can drink
conducted with reference to the preferred benefits and the more of it.
preferred importance of such benefits. These preferences can This strategy leap from ‘less fattening’ to ‘less filling’ and the
also be portrayed in the form of preference maps. . targeting of the heavy drinker with a masculine appeal made the
The strategy decisions, which follow, are: all-important difference.
a. When we know the ideal point or preferred position of our Notes
target segment, we can judge whether our brand needs to be
brought closer to the ideal point.
b. Alternatively, we may decide to change our target consumer’s
perceptions of such an ideal point and bring it closer to the
position of our brand.
c. Third, we may decide to launch a new brand to match that
preferred position or ideal point.
Case Study
The Strategy Leap of Miller Lite
No discussion of positioning is complete without a reference to
Miller Lite beer, hailed as ‘the most successful new beer
introduced in the United States since 1900’. The following
account is based on a videocassette produced by the Centre for
Advertising Services of the Interpublic Group in the USA.
Miller Lite was not the first light beer in the USA. Two earlier
attempts to introduce a light beer had been made. In 1968,
Gablinger was introduced as a ‘diet beer’ but failed. In 1970
Meister Brau Lite was introduced as a diet beer and met the
same fate.
When Miller decided to launch a light beer they first analyzed,
with the help of the Interpublic Group’s Research organization,
why the other light beers had failed. The ads of those brands
seemed to be aimed at women and some, in fact, showed a slim
woman drinking the beer.
Mr Van Bortel of the Interpublic Group found a very signifi-
cant fact. Despite the ‘sissy’ looking advertising, Gablinger light
beer had high initial trial among ‘real’ beer drinks, the 30% who
consumed 80% of the beer. For any beer to succeed it had to
appeal to the heavy user; that was the only way to attain enough
volumes to win shelf space and earn profit.
The heavy beer drinker was not a weight watcher, he was not
interested in the low-calorie appeal-so why did he try Gablinger
in such large numbers? What was he looking for?

174

LESSON 27:
BRAND BENEFITS AND ATTRIBUTES
Objectives
Upon completion of this Lesson, you should be able to
understand:
a. The benefits of branding
b. Strategic relevance of branding.
c. What is an attribute and how is it related to USP?
d. Can rational benefits be combined with psychological
benefits?
You have studied the components of positioning and con-
sumer segmentation along with perceptual mapping, lets know
more on benefits of branding and brand attributes in this class
today.
What’s the Benefit of Branding Anyway?
The main benefit of a properly devised and implemented
branding effort is that it creates and cements customer loyalty
and retention.
These days, customer satisfaction is simply not enough. To
quote W. Edwards Deming, “...it will not suffice to have
customers that are merely satisfied. Satisfied customers switch,
for no good reason, just to try something else. Profit and
growth come from customers that can boast about your
product or service-the loyal customer. He requires no advertis-
ing or other persuasion, and he brings a friend along with
him.”
Or, branding + loyalty = profits.
Branding allows a company to differentiate themselves from the
competition and, in the process, to bond with their customers
to create loyalty. So a position is created in the marketplace that
is much more difficult for the competition to poach. A satisfied
customer may leave. But a loyal one is much less likely to.
Branding creates many benefits for a company: it allows for price
premiums, offers the ability to block out competition, lower
customer churn, have greater margins, lower marketing costs,
realize higher-than-industry average transactions and visit
frequency, reduce sales volatility, offers the ability to attract and
keep better customers and employees, creates opportunities for
brand extensions, and opens the possibility of co-branding
opportunities with like-minded products or services.
The bottom-line benefits of branding for a company is that,
properly managed, branding can create customers for life, offer
long-term profitable growth, and increase shareholder value and
stakeholder worth.
For a customer, branding also offers benefits: it simplifies
choice, brand personality (through the brand’s “halo” effect),
can enhance the customer’s self-image and esteem, save time
and effort for the customer, reduces uncertainty and risk, creates
trust, and reinforces a sense of community. Clearly, branding is
BRAND MANAGMENT
a win-win situation for both companies and customers in the
global marketplace.
When branding, it is also important to make sure the bond
created is truly between brand and customer; not between brand
deals and customers.
Branding and relationship marketing help ensure the right
bond is created. Discounting is the antithesis of the branding
process. Discounting weakens the brand, thereby weakening the
bond that engenders loyalty and retention.
Much research has borne out the point that price is not as
important to a brand as service and quality. Therefore, to
discount is to inherently weaken the brand, and weaken a
company’s market position and capitalization. For well-known
and loved brands, discounting has a negative effect on the
brand in the consumers’ mind.
Quality and the price of a brand are not separate concepts in the
consumers mind; they are interrelated. Research has shown that
deep discounts do cause the consumer to believe something is
wrong. The goal of the branding process is to create a relation-
ship with the consumer that also establishes a high-quality,
high-value and high-price relationship.
Customer loyalty is created when the brand experience and
quality is consistently excellent and meets and exceeds the
customer’s expectations.
How Does That Play Out?
When you call a catalog’s 800-number to place an order, and the
interaction of the call center matches the company’s brand
image, loyalty is reinforced.
When a customer receives a package in the mail of the ordered
items that is keeping in look and tone with the overall brand
personality and message, loyalty is reinforced.
When the product or service fulfills on the promise, loyalty is
reinforced.
When a customer calls or writes with a legitimate complaint,
and the company responds by standing behind their product or
service, loyalty is reinforced.
When a customer identifies with a product, loyalty has grown
and affinity is created. This loyalty becomes a bulwark against
competitors, and the customer is an excellent candidate to enter
into a relationship marketing effort. They trust and identify
with the brand, and favor the brand over any other, which is the
ultimate goal of the branding effort.
Benefits of a Successful Brand
Once a brand has achieved “brand equity,” an organization
experiences many benefits. Some of which are the following:
• Leveraging power
• Cooperative marketing/promotional ventures with desired
partners
175
 • Loyalty drives repeat business (repeat byway travelers)
BRAND MANAGMENT
• Strong brands allow for greater shareholder and stakeholder
return (economic impact for byway communities)
• Brand-based price premiums allow for higher margins
(packaging your byway experience)
• Strong brands lend immediate credibility to new product
introductions (new designations)
• Strong brands embody a clear, valued and sustainable point
of differentiation relative to the competition (travelers will
always choose America’s Byways and not other packaged
routes)
• The more loyal the customer base and stronger the brand,
the more likely customers forgive the company in the event
of a mistake (bad byway experience such as high incidents
of road construction during their travels)
• Brand strength is a lever for attracting the best new byways
• 70% of customers want to use a brand to guide their
purchase decision.
Benefits of Building a Brand
As we studied in the previous lesson Brand facilitates
consumers to ease decision-making and uncertainty because it
encapsulates its identity, origin, specificity, guarantee and
difference. In turbulent markets where choice is constantly
evolving, brand provides a haven of stability, ensures an
identity and promises of quality or guarantee.
Though products may change, the spirit of the brand remains
the same. The brand owner is able to earn an easy recognition
and image compared to owners of unbranded products. Thus,
the value of creating a brand has been accepted in principle. And
it is of late given a status of an intangible asset. Thus, there is
not much dispute that a brand has a value, the problem lies in
how to create such a brand.
Brand building begins with a consistent, integrated vision. Its
central concept is brand identity or brand image. The identity
must be defined and managed. It is the heart of brand
management. It calls for innovative thoughts and continuous
efforts.
Strategic Relevance of Branding
We can now say that Brand is much more than name per se or
the creation of external indication that the product or service
has received an organization’s imprint or its mark. Exhibit 38.1
outlines the strategic relevance and logic of branding.
Exhibit 38.1 Strategic Relevance and logic of Branding
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A Brand
1. Aims to segment the market
2. Starts with a big idea
3. Has an enduring value
4. Tries to protect your innovation
5. Is a living memory
6. Shall sustain though the product may die
A Brand Aims to Segment the Market
Brand building is part of a strategy aimed at differentiating the
offering companies try to better fulfill the expectations of
specific groups of customers. They do so by consistently and
repeatedly providing combination of attributes – tangible,
practical and symbolic, visible and invisible value – under
conditions that are economically viable for the company. The
company wants to leave its mark on a given field, and sets its
imprint on the particular offering.
A Brand Starts with a Big Idea
The first task in brand building is defining just what the brand
infuses into the product or service. Branding, however, is not
based on what goes on, but what goes in. The result is an
augmented product or service, which must be indicated in one
way or other if it is to be noticed by your potential buyers, and
if the you are to reap the fruits of its efforts before it is copied
by others.
A Brand has an Enduring Value
If a brand were merely a label, then such product would lose its
value as soon as it loses its sign of brand identification. Instead,
it continues to incarnate the brand, the brand’s passing presence
has transformed the product. This explains the value of Lux
soap when it carries the HLL label for the past 75 years, similarly
Adidas shoes, stripped of its name, will hardly see much
consumer pull. They are worth more than counterfeit imitations
because the brand image is present even when it cannot be seen.
In contrast, though the brand level may appear on an imitation,
it will actually miss the undercurrent of consumer’s personal
attachment with the offering.
A Brand Tries to Protect Your Innovation
Brands become known through the products they create and
bring on to the market. Whenever a brand innovates, it
generates ‘me-too-ism’. Any progress made quickly becomes the
standard to which buyers become accustoms to. Competing
brands most often follow through and at times bring out
improved versions, as they do not want to fall beneath the
market expectations. For a short time, an innovative brand
enjoys monopoly, but it will be a fragile one unless the
innovation is patented or patentable. In other words, the role
of brand name is to protect the innovation – it creates a
‘mental’ patent. This is nothing other than the just reward for
innovation, making an effort, and taking risks. A snapshot of a
given market will often show similar products. A dynamic
vision, however reveals given market will often show similar
products. A dynamic vision, however, reveals who has
innovated and pulled the competition along in the wake of its
success.
A Product May Die but The Brand will Sustain
A brand protects the innovator, granting momentary
exclusiveness and rewarding the willingness to take risks.
Brands cannot be reduced to a symbol or a product or a merely
graphic and cosmetic exercise. A Brand is the signature on a
constantly, renewed, creative process. Products are introduced,
they live and disappear but the inner or core value of the
original brand endures. This consistency of creative action is
what gives the brand it’s meaning, its contents and its character.
Creating a brand requires time to build up that identity.
A Brand is a Living Memory
The spirit of the brand can only be inferred through its
products and its advertising .The content of the brand grows
out of the cumulative memory of various acts provided they
are governed by a set of unifying ideas or guidelines. The
importance of memory in encompassing a brand explains why
its image can vary structurally from generation to generation.
Consumers are human beings. They know brands, express
about brands, think about brands, feel about brands, compare
brands, compare brands, choose brands, recommend brands,
reject brands, buy brands, and do not buy brands through a
combination of:
• Brand name
• Brand associations
• Brand attitude
• Brand looks
• Brand personality
All these are not just a matter of semantics. These are specific
manageable concepts, born and brought up in the minds and
hearts of the consumers, linked to each other in more ways
than one. These, if ‘added’ to a product, lead to creation of a
brand. These form part of the suggested process of Branding,
and together lead to Brand Relationship, the output of the
process of branding.
The fig 38.2links up all these and forms the model, which is
labeled as Branding.
BRAND MANAGMENT
BRAND
Brand Relationship = Brand Image + Attitude
1. As per the Branding Model, which in a way is a branding process:
Brand Image = Brand Associations + Brand Personality
Brand Associations = Link up in memory with brand’s attributes, benefits and looks
Brand Looks = Brand Symbol + Brand Name
Brand Symbol = Brand Character + Brand Logo
PRODUCT
As per the Branding Model, which in a way is a branding
process:
• Brand Relationship is the ultimate achievement-need of
branding. All other aspects (e.g. Brand Positioning) might
happen but if this does not happen the job is not
complete. Brand Relationship happens if ‘image’ and
‘attitude’ for a brand exist. It is the resultant effect of these
two aspects of a brand.
• Brand Attitude defines what the brand thinks about the
consumer, as per the consumer. A brand may have ‘attitude’
on one or more aspects.
• Brand Image includes two aspects of a brand– its
associations and its personality. A brand may have image on
one or more aspects.
• Brand Associations include all that is linked up in memory
about the brand. It could be specific to attributes, features,
benefits or looks of the brand. A brand may have a range
of associations. But the one association that stands out in
memory and differentiates it becomes the ‘position’ of the
brand. A brand may have one or more associations but no
‘position’.
• For a brand to have brand relationship, it should have
‘image’. And for ‘image’ a brand should have ‘association’.
If among its ‘associations’, a brand has a ‘position’ it is a
great advantage. But if a brand does not have a ‘brand
position’ it doest not mean that it would have a brand
image or brand relationship. In other words, ‘brand
position’ is not a sufficient condition for brand relationship,
but a ‘highly desirable’ condition.
• Brand Looks, which have a role to play in forming/
reinforcing brand association a are facilitated by two key
properties of a brand – its name and its symbol. While
brand name is a necessary condition for existence of brand
relationship, the same is true for brand symbol. However, if
the latter exists it helps the process of brand relationship
and reinforces it.
• Brand Symbol includes two visual signals of a brand- its
character (e.g. Amul girl, Pillsbury doughboy) and its logo.
• ‘Necessary’ aspects for brand relationship to exist are:
a. Brand Name
b. Brand Associations
c. Brand Attitude
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 • ‘Highly desirable’ aspects for brand relationship to exist are
BRAND MANAGMENT
(excluding the ‘necessary’ aspects):
a. Brand position and
b. Brand symbol
The model is a process. It has linked up steps. It is dynamic. It
never ends. And it is all to do about managing the minds of
the people and aspects about a product, thus creating brand
relationship, and defining a brand.
Attributes, Proposition and Brands
Proliferation of products and brands in almost all categories
(both durables and non-durables) have brought marketers
underpressure to differentiate their offering. The continuum of
differentiation ranges from rational attributes I benefits to
psychological benefits (which include symbolic appeals).
Attributes and USP
An attribute is a characteristic of a brand. (Though attributes are
associated with products, as the competition being discussed is
at the brand level, it could be associated with a specific brand.)
The electronic fuel injection system is an attribute; insulation in
a refrigerator is an attribute; enzyme in a detergent is an
attribute. An attribute is a brand characteristic which usually
could be explained as a benefit from the view point of
consumer perception. In order to explain brand positioning
;based on attributes, there is a need to discuss the concept of
unique selling proposition (USP). The concept of USP was
advocated by Bates advertising (by ‘es) agency a few decades
back. Philip Kotler, the marketing guru, in an interview
referred to the value proposition concept which in his opinion,
is replacing USP. But USP has to offer a clear-cut benefit to the
consumer and as far as possible make an attempt to
differentiate the brand from competitive offerings. In a broader
spectrum, the attribute benefit could also be a psychological
benefit.
Attribute
Rational Psychological Combination of rational
Benefits benefits and psychological
benefits
USP
Fig: 38.3 USP with attributes and benefits
Attributes play a vital role in communicating the USP of a
brand. Analysing about the burning sensation and odours,
Dettol started positioning itself on the psychological benefit of
caring along with its original benefit of protection.
Positioning on Attributes
Most brands make use of attribute positioning in some way or
the other. It may be worthwhile to analyse under what
situations marketers may benefit by positioning brands on
attributes. In order to have clarity in the discussion, rational
benefits could be initially considered. In a number of categories
(toothpastes, tea, softdrinks, television, refrigerators and cars to
name a few), consumers get used to a single benefit during the
introductory stage of the product life cycle (there are only a few
178
brands at the initial stages). Over a period of time as the
category develops and consumers become familiar with the
product, new attributes and benefits are used by brands for
purposes of differentiation. Technology also is used to generate
some of the benefits. A few examples would be useful to
illustrate the development of attribute competition in specific
categories.
Television is a category, which has been around in the country
for the last three decades. It was only after the early eighties, the
category started getting diffused in the country (with the
infrastructure created for transmission). Remote control was a
new attribute during the mid-eighties; today it is almost a pre-
requisite in the CTV sub-category. No brand today positions
itself on the “remote” attribute. Competition has shifted to a
number of attributes. Samsung highlights “extra space”
viewing and picture clarity; LG’s proposition is golden eye;
BPL’s is Quadra Focus; Onida’s KY Rock has the audio
proposition. In the category of washing machines, there are
propositions like warm wash, high pressure cleaning and
pulsator movements and water economy. In the refrigerator
category, propositions range from nutrition preservation, quick
ice, quick curds, independent temperature zones and multiple
doors and capacities.
Can Attribute Positioning Work in Durables?
• Consumers will have to be clear about the benefits offered
by specific attributes. Remote control was a clear
proposition (TV). Can consumers appreciate the “clarity”
benefit of a brand, which is advertised as the one built on
digital technology? If a brand is able to demonstrate this
aspect, it could be a winning attribute proposition. A brand
of TV in the eighties mentioned “3-D viewing” as the
proposition. If consumers do not experience the tangibility
of a benefit, they could perceive a “product puffery” in the
proposition of the brand. In certain categories,
demonstration at the retail outlet can enable the brand to
get diffused if it conveys the value of the benefit (acceptance
of Sumeet mixers in urban cities where the benefits of time
saving, convenience and reasonable quality of the mixer was
conveyed through demonstration at retail outlets).
• Benefits and the value of the benefits are best accepted if
consumers perceive a strong need for the product at a
particular point in time. HeroHonda’s economy benefit was
well accepted at a time when the price of petrol was on the
rise; convenience of automatic washing machine in nuclear
families where both the husband and wife are employed the
value of Alfa model from VIP at a time when the
unorganized sector was offering inferior quality moulded
luggage are a few examples.
Durables are high-involvement, high-investment products and
hence there, has to be a specific need for a benefit. Given the low
penetration levels for dishwashing machines, electric chimneys
and cameras, it would be difficult to make an impact on
consumers with attribute positioning. There is a need for
concept selling in these categories. Quartz watches too went
through this phase about two decades back but currently
attribute positioning is being pursued by brands.
There is one more situation in which attribute positioning
could work. Consumers may be familiar with the product but
specific attributes may not have been highlighted by brands
during the initial stages of marketing. Godrej’s Pure of
positioning; is an example of this kind. Even in a context of
this kind it may be better to highlight the benefit associated
with the attribute. This is essential because technical features
may not alone work in durables.
A vital aspect of attribute competition is the “need offering”
match, which is to be formulated for various segments of
consumers. There may be a host of attributes in a refrigerator
but different models in the product line (with different
attributes) will have to be marketed in accordance with the needs
of the specific segment. A middle-class consumer for example
may not require the ‘no-frost’ facility of a model if it is going to
be priced at a substantial price point over the “no-frill” model.
Marketers cannot assume that all attributes are required by all
consumers. A
brand of water purifier offers a musical feature when the
purified water flows (consumer has also the option to switch it
off). The brand can also offer consumers the option of not
having the feature if it is going to result in a lower price.
Multiple doors in a fridge is another example where the same
approach may be followed.
Consumables (pens, coffee, tea, detergents, soaps, etc) are low-
involvement products and, inspite of being loyal to a brand,
consumers may try out new brands and hence attribute/benefit
competition is almost a dynamic feature in most categories
(generally introduced in the form of variants). Even in
consumables, rational benefits could change the buying
behavior of consumers. Reynolds provided smooth writing in
a market when most brands did not have the basic benefit.
Polypackaging in tea (freshness benefit), liquid version of
Dettol soap along with its ‘germ-killer’ proposition, ready-to-
use fast foods, self-adhesive notepads (3M), chemical-free soaps
(Hamam, Vrinda), light and non-sticky hair oil (parachute Lite)
and the purity of Rome Sweet sugar are examples of attribute
positioning in consumables. Attribute competition could take a
brand into several variants. CloseUp, which started off with the
gel attribute, has the ultra-white version with granules for
whitening teeth. Colgate has Double Action, Shakthi, sensitive
care, gel version and Calciguard variants to appeal to distinctive
segments. (The impact of variants on the product-line profit-
ability is a different issue,) Detergent brands like Rin, Surf and
Ariel have several variants with specific attributes. It is impor-
tant to note
that an attribute has to be communicated as a rational or a
psychological benefit proposition. Ariel has introduced a variant
for the front-loading washing machine (Front-o-mat). This
positioning may be effective if consumers relate to it in a
rational manner (the benefit differentiation between a front
loading and a top loading washing machine itself may not be
very clear to prospective consumers). The company has also
come out with Ariel Power, which has the attribute Smart Eye
which can detect, attack and remove stains. Sunsilk has a range
of variants with a clear attribute positioning for different types
of hair. In certain categories, there may be a limited set of
benefits, and brands using attribute positioning may have to try
BRAND MANAGMENT
a “non -attribute” strategy. The category of malted drinks
(Bournvita, Boost, Horlicks, Milo and Complan) has two kinds
of benefits-energy and nutrients. Brands have been positioning
themselves on these benefits and some brands are also bringing
out sales promotion schemes. The objective may be to trigger
trials as the differentiation plane has become a narrow one with
testimonials and endorsements pointing towards the primary
benefits.
A combi.nation of rational and psychological benefits
Onida was one of the earliest brands (in durable category) to
make use of the symbolic appeal (psychological benefit) with a
good product. In durables and consumables, a combination of
rational and psychological benefits could offer a brand a
sustainable advantage. In Onida’s case, a few innovations (in
TV, VCR and washing machine categories) during the initial
stages of product category growth would have supplemented
its symbolic appeal. Titan with its sub-brands projecting a
combination of benefits is a good example for this approach.
LML Vespa captured a significant chunk of the scooter market
using this approach. Maruti 800 is currently using the
aspirational appeals after consumers have developed a strong
“economy” association with the brand.
Symbolic appeals are being extensively used in consumables.
Certain categories like soft-drinks and chocolates seem to be
driven by symbolic appeals. 5-Star’s energy proposition, Clinic’s
anti-dandruff proposition and Organic’s recent proposition of
reduced hair breakage are examples of rational benefits being
added to glamour or psychological appeals. Cigarette_ which are
driven by psychological beneflts (life-style appeals) offer scope
for bringing in rational appeals (like low-tar proposition).
Fragrance and taste being a sensual aspect, it could be classified
under psychological benefits (soaps, coffee, perfumes). .
Triggering, timing and sustaining attribute competition could
be a challenging marketing strategy.
Private Banking Brands Matter More
By Kate Willis
Branding on The Agenda
Branding is now an issue very much on the private banking
management agenda in a way that was unheard of five years
ago. Then, the concept of brand development in the UK wealth
management industry was largely of secondary importance in
business planning and only entertained by a limited few
institutions.
Now, the real commercial value of the brand is unfolding when
tackling the high-net-worth client community with all of its
inherent complex issues. First, for private clients, one of their
core interactions with financial institutions is associated with the
brand, particularly among the newly wealthy that are entering
the private banking arena for the first time.
Second, for the industry, the pressures of uncertain markets is
leading to reviews on strategy and in certain cases a decision to
either buy or merge for additional market share, or sell out
entirely. In either case, the value of the brand, and its goodwill,
is a vital component for which potential buyers are considering
when placing a value on any wealth management institution.
179
 Crucially, therefore, brands matter to anyone responsible for the
BRAND MANAGMENT
strategic direction of private client asset management business,
and across the global industry. Indeed, brands are an essential
management tool that affects the core of strategy. Ignore them
at your peril: brands are here to stay and must be understood,
identified and used for leverage in this competitive and latterly
difficult marketplace.
There are two major benefits to such thinking:
• A strong three-dimensional brand achieves positive
differentiation
• A strong brand confirms the clear focus of the management
team
A Strong Three-Dimensional Brand Achieves Positive
Differentiation
Among a business’s primary market, developing a strong, three-
dimensional brand achieves positive differentiation from
competitors in a marketplace, where product differentiation can
often be minimal. Competitive advantage can be gained from
adjusting the dimensions of the brand for a range of distinct
client segments at different times, enabling clients to choose a
brand they believe suits their needs.
Brands consist of a number of different facets, some of which
are more important to communicate than others, because the
former help differentiate the brand and attract the target
audience. In order of importance from the top, these are:
• Brand essence
• Brand values
• Brand personality
• Emotional benefits accrued to user
• Functional benefits accrued to user
• Service attributes
The higher up the list of these brand communications bullet
points, the stronger and more differentiated the brand, and the
more involved the consumer/ client is with the brand. Thus, a
brand that is successful at the level of identity/ brand essence
will be more successful than a brand that communicates at the
lower level of brand capabilities (functional benefits, service
attributes).
It is important to also note that in the business sector, many
brands communicate at a level that is purely functional and
where pragmatic rationale justifies the strategy behind a brand’s
positioning. This is easily done, since we all like to think we
operate rationally in our business lives!
However, such strategies do not consistently lead to positive
brand differentiation. Given the highly personalised nature of
managing individual wealth, and the competitive state of the
market, much clearer and more motivating brand arguments are
needed. In our opinion, it is vital to ensure that the positioning
of a corporate brand is at the forefront of a private client target
audience’s decision-making process. Today, private banking
management in the UK is beginning to come to grips with this
factor.
To achieve this branding ‘poll position’, in-depth client research
can help enormously, by examining each brand facet of a private
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bank in relation to its competitors and customer motivations.
Such research uses the tools of systematic qualitative research
developed for brands in other major consumer markets where
brand is at the fulcrum of commercial strategic thinking.
Through this process, the true value of the brand can be
discovered and, like a multi-faceted diamond, if lacking in
worth, the brand can be re-cut to achieve the best value possible.
A Strong Brand Confirms the Clear Focus of The
Management Team
A strong brand provides an indicator to the world outside that
the company’s management team has a clear focus on the task in
hand. In today’s climate, it is also essential that the external face
of the company, the brand, as presented to investors, opinion
leaders, commentators and clients alike, is consonant with the
expressed internal culture of the company (vision, mission,
management emphasis).
For example, an investment brand that communicates externally
that it values its clients and services them exceptionally, is not
credible, if its relationship managers are under-resourced,
underpaid and struggling to keep in touch with their overlarge
client portfolio. Thus, internal philosophy and practice must
match the external persona of the brand. If not, then the
credibility of the brand and the institution can break instantly
and, significantly, it can take a very long time to recover from
this.
What can Research Do to Help?
Independent in-depth research can help to ensure these values
exist in the minds of the target audience and the intermediaries
who introduce such business to wealth management
operations. Indeed, research among clients and intermediaries is
often successfully employed to evaluate wealth management
brands and develop their optimum identity in the competitive
context. Yet, this research cannot inform the strategic and
creative development of that brand if, internally, the
management focus is stacked against research’s outcome. It is
thus important to research both sides of the interface, both the
internal and external audience, to ensure the company and its
infrastructure can deliver consistently the competitive edge
promised by the brand’s external marketing.
Creative development research can go on to evaluate the extent
to which such thinking (represented by carefully designed
stimulus material) motivates the target audience; and whether
the strategy on which such material is based has validity. It can
also inform the translation of the researched marketing and
advertising ideas into final marketing literature and advertise-
ments.
Kate Willis is a director of Maslinski & Co Ltd . Maslinski & Co.
was founded in 1995 by Michael Maslinski, formerly Marketing
Director of Coutts, with 22 years of practical experience of
Private Banking. Maslinski & Co have advised numerous
financial institutions and family offices on the development of
their wealth management services, both directly and through
Maslinski Lawrence, a joint venture with Lawrence Somerset.

LESSON 28:
ADVERTISING AND BRANDING
Objectives
Upon completion of this Lesson, you should be able to:
a. Understand the importance of advertising in branding.
b. Explain how advertising works.Creating brands through
advertising, branding Vs small business advertisements
We shall today understand the importance of advertising in
branding and analyze whether advertisement is actually a means
to brand success. Think about a brand you like the most. If
Allen solly shirts is what you fancy wearing it for occasions then
think for a while whether you would still go for the shirt if
there was no advertisement of it? Do then associate yourself
with that man with an aura of success all over him? No !
Creating a Brand Through Advertising
With thousands of ‘me too ‘ products, all competing for the
same pool of customers and prospects, differentiation is one
of the most important ways to gain recognition and build
brand awareness. Communicating your firm’s unique
characteristics, expertise, strengths and successes to a large
number of prospects can be achieved through advertising.
Advertising is not about selling the skill of your firm, but
about promoting the qualities that differentiate your firm from
so many others. Differentiation is your brand, and advertising is
about positioning that brand by promoting and communicat-
ing your firm’s differentiators to a targeted mass audience.
Without marketing, public relations and a strong business
development strategy, few clients or prospects would know
about the product and why it is unique, resulting in fewer
opportunities for new customers. Advertising is just one tool
in a successful marketing and business development program
that can help create new opportunities.
The goal of advertising is to focus attention on what sets your
firm apart from others. Branding, through repeated, frequent
advertising, is the most effective way to accomplish that goal.
Advertising means generating opportunities, and good
advertising is generating thousands of potential opportunities
every day.
The only way to be heard is to speak, and the only way to be
remembered is to repeat over and over a very simple, compel-
ling, single-minded message. Consider that the public is faced
with roughly 700 ads and brands per day. To stand out, you
must not merely speak, but yell, breaking through the clutter
and getting the attention of the prospect with the use of strong
creative and a quick, easy-to-retain message.
Advertising broadcasts your differentiators to a targeted
audience of mass proportions. It delivers your message to a
broader audience and at a faster rate than any other marketing
tool. Repetition and frequency are key components of a
successful advertising initiative. Once you establish your brand
message, you must drive that message into the minds of
BRAND MANAGMENT
clients, prospects, and even staff members. The most effective
and efficient way to do so is through frequent, repeated
advertising in the same publications or airwaves reaching the
same industry or targeted audience.
A successful advertising campaign brings many other benefits
that manufactrers never seem to address. Some are extremely
important when building a brand or positioning your product
within the marketplace. When weighing the value of an
advertising campaign and whether advertising is right for your
oproduct, you should consider these other benefits.
• Advertising communicates success. The mere fact that your
Co is advertising communicates success to customers,
potential customers and competitors.
• Advertising reminds customers of the quality service that
your Co has provided and offers assurances that your Co
will remain viable and successful well into the future.
• Advertising is publicity, focusing attention on your Co. If
you are seeking publicity but an editor has never heard of
your firm, that editor is most likely to doubt the
importance of the information and not run it. Advertising
can eliminate that doubt.
• Advertising is movement and growth. Advertising breathes
life into a firm, carrying it to new areas, new markets, and
new industries. A firm that keeps moving grows and
thrives, while dormant ones tend to stagnate.
• Advertising “spreads the word” about a firm, and the more
people who are familiar with a Co. - and with the brand -
the greater the its market power. Familiarity wields the
power of persuasion creating an avenue for others to pass
on your information with confidence.
• Advertising boosts morale. An important, empowering
element of advertising is pride. Advertising is a source of
pride for clients who have chosen the firm as well as for
staff who enjoy the excitement generated by an ad
campaign.
• Advertising stimulates conversation about brands, among
customers, potential customers and competing brands.
When a prospective or existing customer tells a member of
your Company, “I saw your ad today,” you have just been
handed an opportunity to build a relationship. Relationship
building is vital, as success in the service industry is based
on strong relationships.
• Advertising can eliminate branding confusion, which causes
an identity crisis both within and without your firm.
Properly positioning the brand through advertising will
communicate to everyone what your firm is about,
removing all assumptions.
Advertising is an investment in growth, generating opportuni-
ties, positioning a brand and reaching thousands of potential
181
 clients. If the industry is based on successful relationships, then
BRAND MANAGMENT

Before as After 6 months After 12

your next goal should be to learn to recognize and capitalize on campaign months
the new opportunities brought to you through advertising. Awareness (have 38% 46% 52%
heard of Co.)
Advertising Must Position the Brand Image (Luxury, all- 9% 17% 24%
What is the role of advertising in the context of positioning? A jet overseas service)
landmark of advertising was developed for the Association of Preference (Would 13% 15% 21%
seriously consider
National Advertisers of the USA by Russel H. Colley. It bought for next trip)
a greater degree of clarity to management thinking on
advertising decisions. It emphasized that advertising pulls a
Brand Positioning Through
consumer towards purchasing action through changes in his or
her knowledge and responses. It laid the foundation for a Advertisements
practical and widely used model: DAGMAR or Defining
Advertising Goals for Measured Advertising Results.
Colleys’s defination is :
Advertising is a mass ,paid communication, the ultimate
purpose of which is to impart information,develop attitude
and induce action beneficial to the advertiser – generally the sale
of a product or service.
This is a comprehensive definition. But we could attempt
another definition that is more operational, that specifically
takes into account a competitive marketplace and that recognizes
the increasing difficulty of creating distinct brand identities.
“Advertising is the discovery and Communication of a
Persuasive difference for a brand to the target audience.”
There are three critical elements here. Advertising must commu-
nicate a difference for the brand. It must be competitive and
persuasive difference. Such a difference may not fall into the
communicator’s lap in the form of a readymade USP. In the
absence of strong functional superiority or distinction, he must
search and discover where such persuasive differentiation lies.
We could rightly say that the entire marketing mix should be
geared up to serve our brand’s positioning objective. Advertis-
ing , however has to carry the major burden in packaged –
goods marketing with decreasing product differences. A truly
successful advertisement has to be strongly associated with its
Branding vs. Action Compelling Advertising
brand, be memorable and be influential enough to affect the
Small businesses should understand that they are not big
final position of its brand.
businesses. Not yet anyway. Therefore, their advertising must be
Setting Objectives, Measuring Results different. Coca Cola, the world’s leader in soft drinks, can run
Advertising objectives are usually set, at present, in terms of ads anywhere and just mention a Coke and consumers will
awareness, knowledge or comprehension of benefit and the already know what the product is and where to buy it.
degree of conviction or buying intention for th ebrand. This is If you are a small business, chances are that people do not yet
basically the DAGMAR model. Colley gives several hypothetical know who you are and therefore are not as inspired to buy
examples. To take one; from you. The Coca Cola example was advertising aimed at
One of the smaller overseas airlines, based in the USA, set itself maintaining their brand image. Small business, you must focus
the target of increasing passenger loadings by 10% . To this on immediate results, which means sales!
end, the advertising goal was defined as communicating the Here’s the specific difference between a well known, large
image of a luxury airline to an additional 20% of target corporation and small business:
prospects in one year.
The large corporation runs advertising at the masses and is
Benchmark and post-campaign surveys revealed the following: confident that enough people already know who they are and
become motivated to buy. Large corporations can talk about
themselves in their advertising . Small business cannot. It focus
on its customers’ needs or else it will not get their attention.
Following the example that large corporations give, many small
businesses focus on “themselves” in their advertising. This
approach does not work well for an unknown company. Take

182
for example, newspaper advertising. The reader is skimming
through for whatever catches his or her interest. That’s it! That
means articles and ads that deliver what this potential buyer
wants and needs.
What’s a Better Theme for Your Ad?
A. XYZ company has been in business for 65 years. We are the
best at ______ and can help you improve your ________.
B. (As a bold headline): Are you looking to have (whatever
benefit your service provides)? Then focus the rest of the ad on
the problems your customer faces and then introduce how your
service is the solution.
Example A is probably ignored to begin with. If it is read, it
comes off as “Blah, blah, blah. What’s in it for me?”
Example B gets attention because it focuses exactly on what the
customer wants.
If you doubt that this is the correct way to advertise, the author
understands. You are probably used to seeing ads like in
example A. You may feel it is important to “show off ” who
you are to look good, be better than the competition, or one of
your other vague concepts.
Bottom line: Do you want to increase sales or do you want an
ad in the paper that makes you feel good?
Customers will buy when you focus on what they need, not
when you try to make yourself look good.
Brands R Us: How Advertising Works
Hyundai tells us that their cars make sense, Apple Computer
offers us the power to be our best, and most of us don’t
believe a word of it. The fact is, when all is said and done, most
people don’t believe, don’t remember, don’t even notice, most
advertising. This has always been so and always will be so. The
vast majority of advertising is ineffective and inefficient.
And yet, there is a direct connection between a society’s (or
individual’s) levels of exposure to advertising and the levels of
consumption. How can this be? If advertising is inefficient, if
90 percent of all advertising is neither seen nor remembered by
most people (according to surveys), if two minutes after being
exposed to a particular message or brand I can no longer
remember either the brand or the message, then where’s the
connection? How does something so banal and benign impact
my consumption patterns and habits?
The message cited above for Hyundai automobiles (“Cars That
Make Sense”) has little or no effect either upon our personal
lives or even Hyundai’s sales overall. And we could say the same
thing about thousands of other individual and isolated
advertiser efforts. But the Hyundai advertising, combined with
Apple Computer’s advertising, combined with advertising for
Tide detergent and Chivas Regal and RCA and Johnson’s Floor
Wax and the limited -time specials at your local department
store or supermarket, has a very powerful collective effect
indeed: it instructs us to Buy!
And it gives us, via lighthearted entertainment, permission to
ignore the long-term consequences of our purchasing decisions
by suggesting to us that we should not take any of this too
seriously. (We shouldn’t take a spilled glass of water too
seriously, either. But a flood is a totally different matter.)
Advertising’s real message, to buy and to buy ever more, to
BRAND MANAGMENT
replace what we have rather than repair what we have, at one
time served us well. When we were smaller in numbers, when
we were still growing, still searching for a collective identity,
when personal prosperity was touted as the primary reason for
being alive, private property the only form of wealth, and when
we were naive enough to believe it all, consumption and the
ability to consume (choosing our livelihoods on the basis of
whether or not it provided us with that ability!) was not only a
way of life, it was a respectable one at that.
But we are no longer small in numbers. And we are no longer
that naive. We can plainly see that advertising’s collective power
and our collective response to it has had, and continues to have,
a profound and adverse effect upon our personal lives and
upon the planet we share.
But pointing a finger at the advertising industry will change
nothing. Wishing and hoping that the advertising industry will
lose its innocence and suddenly leap into modern times in
recognition of the situation we are all in is futile. And while the
advertising industry is part and parcel of an industrial civiliza-
tion now in decline, this doesn’t mean we should expect the
number of advertising messages and collective power of those
messages to also decline in the very near future. If anything, it
means we can expect an increase in the number of those
messages. For the advertising industry, along with the main
body of industrial society, is struggling for survival. It may be
drowning, but it has not yet sunk. And in a last-ditch effort to
save itself, it will flail about more wildly and make more noise
than ever, as we might expect from any drowning individual.
No, what must change is us. What must change is how we see
advertising in the context of the modern moment. We must
recognize that its influence upon our lives and our well-being is
in direct proportion to the amount of exposure in our lives,
and that this exposure is an event unto itself, an experience
separate from whether or not we respond to or believe indi-
vidual messages.
High consumption has far more impact upon our environment
than type of consumption. Buying much less and driving much
less is better than just switching from plastic to paper or from
“normal” unleaded to “super” unleaded. One of the first steps
we must take towards consuming fewer goods is to consume
less advertising.
Accelerate Brand Momemtum
Effective brand advertising makes all other marketing activities
work better.Over time brand advertising builds brand equity - a
strategic and financial asset.
Brand advertising can help rapidly growing firms dominate a
niche. Established firms that are well liked but not well known
can spark growth through a brand building campaign. Domi-
nant players can use a campaign to defend a market position.
Advertising can also be used tactically to support a trade show,
announce a new product, or attract channel partners.
The first step is to find a point of difference that is meaningful
to prospects. This insight leads to the position, which needs to
be integrated into a media plan and the creative product.
183
 dditionally, the campaign must be interwoven throughout
BRAND MANAGMENT
other marketing activities.
For example, in a restaurant that caters to a business clientele,
sales in one of the locations had not grown in three years, and it
needed to reinvigorate its business. Using an innovative research
technique, it was determined that the primary reason people
went to the restaurant was to affirm their place in society. Based
on this insight, it developed the position, and a cohesive ad
campaign ran in business publications, on city buses, and
internally on promotional signage. The campaign succeeded:
sales rose in a market marked by increasing competition.
Advertising and Brand Development
Branding, the deliberate and careful process of developing and
maintaining a unique position with a clear set of associations,
expectations and benefits for a particular company, product or
service is a proven concept that has been successfully and widely
applied by industry leaders, from athletic shoes to zoos.
By translating those same techniques to the field of social
messages, we are able to create distinctive and effective commu-
nications campaigns of our causes, issues, products and
services.
Advertising plays an important role in branding strategies for
social messages. In fact, the challenge posed in marketing
various social issues requires the creation of advertising
messages and images that are powerful enough to overcome
competing or conflicting ones. As with corporate brand
strategies, advertising can play a critical role in sustaining the
position of a brand in the mind of the consumer and protect-
ing against lost momentum.
Product Positioning as a Marketing Strategy
The Decision Tree
In consumer theory, we assume that products can be divided
infinitesimally. We now consider the case where this assumption
does not hold. Purchases of durable consumer goods such as
cars and refrigerators are good examples since they are bought as
units.
It can be argued that when consumers buy a durable good, they
are purchasing the flow of services the goods provide (trans-
portation, refrigeration). The model developed earlier can be
adapted to this situation by linking the consumption with the
flow of services. If prices fall, consumers will consume more of
these services per period. It has become common practice to
lease cars, which is basically purchasing the services without
buying the product. A reduction of lease prices would encour-
age, according to our theory, drivers to lease more cars and more
expensive cars.
Still, many consumer durables are purchased outright and the
fortunes of the companies that produce these goods depend
on the purchase decisions made by their customers (as automo-
bile companies often find to their sorrow). Therefore, it is
desirable to have a model that permits us to examine the
decision to purchase durable goods like cars or houses. The
decision tree assumes that, instead of considering all of the
choices in a consumption possibility set at once, the consumer
first considers a few broad categories and then narrows to sub-
categories until a final decision is made on a product.
184
For example, consider a consumer making a decision to
purchase a car. She must first decide whether she should make
the purchase now or not; the first decision point where she
makes the decision is represented by the black dot in Figure 1,
and is called the initial node, and the two choices she has at this
point are represented by the two branches emanating from it. If
the decision is to buy a car, she moves along the upper branch,
and reaches another node where she must now decide whether
to purchase a foreign or a domestic car. At the next node she
chooses between a new or used car. Finally, at the terminal node,
she makes a decision on the model.
In this case, where the consumer has perfect information about
all the choices available at
various nodes, can recollect what decisions she made at previous
nodes, and where the
number of nodes is limited (mathematically speaking, finite),
we can apply simple induction to decide on the best choice. If
she makes a decision at the second node to go for a foreign car,
then the possible utilities she can achieve are one of the four
numbers, U1 to U4.
Suppose the highest utility among these is for a new Model 2
car. But, by choosing the other branch at the second node
(domestic car), she can attain U8, which we will assume to be
the highest of the eight attainable levels of utility. Given this
information, she will only choose the lower branch (domestic
car) at node 2 and new car at Mode 3 and Model 4 at terminal
node. We have started our discussion of the decision tree with a
very simple case, and in this particular case, the use of the
decision tree is a trivial example of backward induction since we
started at the terminal node with the highest utility and argued
backwards.
Now suppose that the car model that gives you highest utility is
U8, but your ability to get that model is affected production
disruptions which blocks import of foreign cars. Then your
choice would depend on “chance” and the analysis ceases to be
so obvious. Difficulty also arises in cases where decisions are
made by different individuals at alternate nodes such as in a
game of chess where the first move is by the white side and the
next by the black side. Similarly, in a game of poker each player
does not know what choices the other players have, and so there
is an element of chance as well as strategy. These advanced
models of decision tree are very useful in analyzing business
strategy.
We will apply this model to two situations. In the first we apply
characteristic approach to examine the impact of new types of
vehicles on the market and on the firms that produce them.
In the second case, we ask what products compete in a market
when products are not homogeneous as in the case of perfect
competition. For this we combine characteristic
approach with decision tree and analyze a court decision on
what products compete with each other.
Learning Outcomes
• In situations where purchase decisions of a consumer is a
multi-stage one when he or she first begins with broad
categories and then chooses narrower categories until finally
a product is chosen, then a decision tree is a useful tool to
analyze the process. Such an approach is common in buying
durable goods.
• If decision of all parties can be observed and if all the
previous decisions can be recalled, then the use of backward
induction allows us to determine the choices at each node.
• The decision tree can be generalized to situations where
decisions at alternate nodes
are made by different players and where there the choices may be
deliberately random.
Brand Management: Is Advertising
Dead? (Part 1)
William J. McEwen
November 2002
Companies around the globe spend enormous sums of money
on advertising. They have done so for well over a century, and
even in today’s tighter economy, their spending continues.
Advertising has always been expensive, and there’s no sign that
BRAND MANAGMENT
it’s getting any cheaper. According to Advertising Age, the cost
to air a 30-second TV commercial just once in prime time now
tops $115,000. The cost for a single commercial on Friends
jumped 29% during the past year.
A quick look at just one industry reveals that the five major
automobile brands spent a total of about $4 billion on
advertising last year - that works out to more than $350 for each
car sold. And Ford recently announced that it would double its
already sizeable ad budget in 2003. Clearly, companies such as
Ford, Chevrolet, Dodge, Toyota, and Honda believe in the
power of advertising.
Companies allocate millions of dollars to advertising in the
hopes of building formidable brands. They’re also convinced
that the equity they build through advertising will yield returns
far greater than the cost of the ads.
Accordingly, advertising expenditures have traditionally been
positioned and reported as investments in brand building. Few
marketers question this role, and few industry observers
question the millions of dollars that major advertisers spend
each year on media campaigns designed to spread their message
to consumers.
The consensus has always been that properly targeted and
effectively executed advertising represents a key ingredient in
brand marketing. Noted marketing thinkers agree. Berkeley’s
David Aaker says, “The best brand strategists may be [advertis-
ing] agency personnel,” while Northwestern’s Philip Kotler also
contends that advertising is a “potent tool” for building brand
awareness, brand image, and even brand preference.
And so, advertising’s purported contribution to brand strength
has remained largely unchallenged. Statements from John
Hancock’s chairman, David D’Alessandro - “a brand has to be
given a voice through its advertising”- and marketing strategist
John Mariotti - “memorable ad campaigns can establish a
brand” - underscore the accepted importance of well-executed
mass advertising campaigns in building brand equities. What’s
more, the proof of this power can supposedly be found in
dominant brands ranging from Milky Way to McDonald’s, from
Coca-Cola to Kodak, and from American Express to Absolut.
Bang for the Buck?
Two recent books, however, allege that the awesome power of
advertising has been greatly exaggerated. In fact, some observers
have gone so far as to suggest that advertising no longer has
much of a role in brand building - if, indeed, it ever did.
Consultants Al and Laura Ries, in their provocatively titled
book, The Fall of Advertising and the Rise of PR, contend that
“[t]he purpose of advertising is not to build a brand, but to
defend a brand once the brand has been built by other means.”
Furthermore, while many companies may think of advertising
as a key marketing weapon for creating better brand perceptions,
the father-and-daughter Ries team reviews the evidence and
concludes that this simply isn’t true.
Another noted consultant, the former Coca-Cola marketing
head Sergio Zyman, has issued his own critique of advertising
and its inability to build brands and enhance brand relation-
ships. Unlike the Ries team, who maintains that advertising
185
 cannot establish brand relationships because it is neither
BRAND MANAGMENT

companies such as Starbucks and In-N-Out Burger that “spend

believed nor trusted, Zyman espouses that advertising fails practically nothing on marketing.”
simply because it ignores or neglects its major purpose, which is
Advertising’s well-publicized woes don’t appear to be ending
not to create brand or ad awareness, but to convey a clear and
with the threat of budget shifts from advertising to promo-
compelling sales message.
tions. Witness the continuing disappearance of once-proud
As Zyman states in his book, The End of Advertising as We multinational ad agencies, such as 96-year-old D’Arcy, which was
Know It, “advertisers are basically being stripped bare by ad absorbed into the Publicis Groupe. For additional testimony,
agencies whose ads aren’t doing what they’re supposed to do: review the recent hammering that ad agency holding companies
Sell more stuff to more people more often and for more have been suffering on Wall Street. Advertising giant Interpublic
money.” has seen its stock dive more than 70% in the past few years, and
D’Alessandro is equally direct, stating in Brand Warfare: 10 other traditional agency powerhouses are experiencing precipi-
Rules for Building the Killer Brand that “one of the biggest tous market cap slides as well.
mistakes you can make as a brand builder is to assume that Whistling in the Dark
advertising agencies want to help you build your brand and sell Some observers see these trends as temporary aberrations. But
your products.” regardless of whether the prognosis is temporary or terminal,
This clarion call has been issued before, although without a it’s clear that the news for advertising departments and agencies
great deal of impact. The late David Ogilvy, ad agency founder has not been good.
and member of the Advertising Hall of Fame, stated un- Is there a solution to these problems? Or does advertising’s
equivocally, “[t]he advertising business is going down the drain. future inevitably lie in the unrelenting erosion of its apparent
It is being pulled down by the people who create it, who don’t role and image as an essential contributor to brand building?
know how to sell anything, who have never sold anything in We’ll tackle these vexing questions next month.
their lives.” William J. McEwen, Ph.D. is a Global Practice Leader for
Are these merely the ruminations of a few curmudgeonly critics, Gallup’s Brand Performance management practice.
who are really only interested in selling more books with their Notes
controversial and contentious arguments? Apparently not.
How far the Mighty have Fallen
A survey by the American Advertising Foundation (AAF), a
trade organization of major company advertising spenders,
finds that ad departments (and their agency partners) are not
regarded as cornerstones of a company’s success; only 10% of
the business executives surveyed agreed that ad departments are
essential contributors to the company’s business performance.
That places advertising at a rather distant sixth among company
departments, well below product development (29%) and
strategic planning (27%), and even below the often-maligned
public relations department (16%).
So regardless of statements by leading academics that ad
agencies can provide strategic insights, it appears that most
companies don’t consider advertising a crucial resource for
achieving their growth goals. And as Gallup consultants have
noted, there are reasons that company leaders are becoming
increasingly disenchanted with advertising.
In addition, in spite of projections that total advertising
spending may increase 2.9% this year, there is mounting
evidence that leading companies may be questioning the role of
advertising and the amounts they have been spending on it.
Mega-advertiser Philip Morris recently announced that, rather
than increase its advertising budget, it would greatly increase its
promotional expenditures in the fourth quarter of this year,
adding $600-650 million on top of an already announced $350
million targeted for price promotions.
Procter & Gamble, long noted for its marketing and advertising
leadership, describes its new brand manager training program as
one that now spends “relatively little class time with conven-
tional media advertising” and trumpets the performance of

186

LESSON 29:
SUCCESSFUL REPOSITIONING
Objectives
Upon completion of this Lesson, you should be able to:
• Explain the benefits of successful brand repositioning.
• Discuss Aspirational Vs Achievable strategies.
• Identify various types of brand repositioning.
This lesson requires you to use all the knowledge you have
gathered in brand positioning. We shall learn about how can we
successfully reposition our brands. Repositioning is a strategy
wherein you create a slightly different image of your brand not
going away too far from the brand’s core values.
Successful Brand Repositioning
Aspirational vs. Achievable Strategies
Overview
Many marketers are rethinking their brand’s positioning because
competitive pressures, new channels, and changing customer
needs have eroded their brands’ positions of strength.
However, increased marketing expenditures to reposition
brands often fail to produce any improvements in either overall
image or market share. Our experience has shown that
companies should focus on achievable rather than aspirational
positioning, and that three steps can help ensure success:
1. Ensure relevance to a customer’s frame of reference.
• Be fully aware of the brand’s “frame of reference” so that
a repositioning strategy will resonate with customers.
• Look at a combination of customers’ attitudes and the
situations in which the brand is used to obtain the most
powerful customer insights.
2. Secure the customer’s “permission” for the positioning.
• Recognize that permission amounts to a reasonable and
logical extension of the brand in the customer’s eyes.
• Leverage a brand’s unique emotional benets to carry
customers from their current brand perception to the
intended one.
3. Deliver on the brand’s new promise.
• Identify the pathway of performance “signals” that will
convince customers of the new brand positioning.
• Develop product/service programs to ensure consistent
performance on these signals.
• Track and assess performance against customer signals
prior to launching the new positioning.
• Adopt an “interim positioning” to establish brand
credibility and performance.
An array of factors is requiring marketers today to rethink their
brand positioning. Changing customer needs are often eroding
the brand’s established position. At the same time, increasing
competitive pressures created by new entrants and product
innovations, and the proliferation of new channels and
BRAND MANAGMENT
promotional campaigns, are driving marketers back to the
drawing board.
Many CEOs and CMOs, however, nd themselves displeased
with the results of their repositioning efforts. Increased
marketing expenditures devoted to repositioning brands in the
minds of consumers often fail to produce any improvements
in either overall image or market share.
Why do these well-intentioned efforts turn into marketing
failures? While there are many causes, companies often fail to
focus on achievable brand positioning rather than aspirational
brand positioning. Too often, their efforts target an ambitious
goal that outstrips the actual ability of the brand to deliver on
what it has promised to customers. Or the goal is too far from
customers’ current brand perception to be a realistic brand
objective. For example:
• In the late 1980s Oldsmobile wanted to revitalize its brand
and gear it to a younger audience. Thus marketers at General
Motors launched a creative campaign around the tagline,
“Not your father’s Oldsmobile,” highlighting the car’s
improved styling and new features. But for many younger
consumers, this was too much of a stretch for the brand.
The product modications did not go far enough to meet
the needs and expectations of the new customer set they
were targeting. As a result, Oldsmobile recognized the need
to shift its campaign. Eventually, GM closed its Oldsmobile
division.
• More recently, United Airlines’ Rising campaign attempted
to position the brand as the most passenger-centric airline,
with a clear understanding of customer problems and the
solutions needed to x them. The campaign had the effect of
raising expectations, which were quickly deated, however, by
the brand’s inability to deliver against the promises made as
part of its bold new positioning platform. Consequently,
United was forced to change its central brand message – no
longer emphasizing Rising.
• Many high-tech businesses have recently repositioned
themselves as e-business brands. However, little effort was
made by these brands to clearly differentiate themselves
from one another, despite the millions of dollars spent on
elaborate marketing programs. The net effect, according to
our research, has been to sow confusion in the minds of
customers, rather than to forge strong brand identities.
These examples underscore the imperative to pursue a brand
positioning that is eminently achievable, not just attractive.
Based on our experience, three steps can help ensure that they
make this distinction: 1) ensuring relevance to a customer’s
frame of reference; 2) securing the customer’s “permission” for
the positioning; and 3) making sure that the brand delivers on
its promise.
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 Be Relevant to the Customer’s Frame of Reference aspires. Because that permission amounts to a reasonable and
BRAND MANAGMENT

When repositioning a brand, it’s essential for marketers to logical extension of the brand in the eyes of the customer, it
capture not just the emotional and physical needs of the requires building a “bridge” that can carry customers from
customer, but the dynamics of the situation in which those where they perceive your brand to be today to where you want
needs occur. We refer to this as the customer’s “frame of to take it in the future. Thus, for the Celestial Seasonings brand,
reference.” For example, while Rasna and Tang are thirst- the bridge leverages customers’ perceptions of the brand as
quenching drinks, consumers tend to think of them in the “organic, natural, and healthy” to allow the brand to extend
broader context of sports, exercise, and physical activity. from its core product offering of teas into herb-based and
Importantly, the frame of reference sets the parameters for “alternative” vitamin and mineral supplements. Similarly,
customers’ consideration set – the brands they will choose Marriott uses customers’ perceptions of the brand as a leader in
from. hotels and “living-care” to extend the brand into assisted living
Indeed, most customers have a very specic denition of what the for senior citizens.
brand is and what it can be relative to their frame of reference. Table 2 Brand Equity Elements: Luxury Automobile Brand
Repositioning a brand too far from this frame of reference Example
creates customer confusion that makes a positioning unsuccess-
Intangibles
ful.
Being fully aware of the frame of reference for a brand can help
ensure that its repositioning strategy will resonate with custom-
ers. But the frame of reference is usually a combination of both
customers’ attitudes and the situations in which the brand is
used. As a result, we typically nd the most powerful customer
insights and segmentation come from looking at a combination
of these factors.
• In some categories, customers’ broader attitudes are the
dominant factor. How customers think about pet-related
brands, for example, can be seen in the context of how they
treat their own pets – whether they view them as family
members, best friends/companions, or in a less personal
way. If customers view pets as family members, the optimal
message for the brand will appeal to such human qualities
as nurturing and pampering. This “family member”
orientation or frame of reference may help support a brand
extension to a full range of pet services, such as grooming
Emotional brand beneûts can provide the most powerful
and accessories.
source of brand permission. If a brand is currently meeting the
• Other customer needs are not as consistent, but better customer’s emotional needs, then extension of that brand into
understood within the context of specic situations or sub- an allied product/service arena becomes much more plausible
categories. In the eld of airline travel, for example, the and acceptable – the extension is likely to be granted customer
customer’s frame of reference may be a function of the type permission. For example, the strong emotional benets
of trip they are taking. The customer who is used to associated with the Hallmark brand in greeting cards allowed for
traveling within the U.S. in cramped coach-class conditions, the extension of the brand into wrapping papers, ornaments,
for example, will have a much different set of needs and and other products with emotional ties to celebration and
expectations than the traveler who is used to ying to commemoration.
international destinations with all the comforts of rst-class
A strong brand identity can also help marketers secure the
service.
desired permission from consumers. Because Victoria’s Secret
• As a result, in most instances the frame of reference is built owns or is associated with the notion of intimate moments,
upon a combination of both of the above attitudinal and for example, it would be easier for that brand to get permission
situational forces. For example, while consumers may to introduce a new line of lingerie or perfume with a sensual
generally have a health-conscious attitude about the foods connotation than it would be to launch a line of jeans or
they eat, on certain “special” occasions they may allow handbags.
themselves to become more indulgent, creating what we call
In repositioning, marketers must embrace the idea that they are
a “need state.”
brand “stewards,” while customers dene their relationship with
Securing the Customer’s “Permission” the brand and determine the basis for the relationship. A
Establishing the frame of reference does not automatically steward must spend more time deeply understanding what
translate into successful brand repositioning. To reach that end customers really think about the brand and where potential
point, marketers must rst ensure they have the customer’s “bridges” to growth and new positionings exist.
“permission” to claim the new ground to which the brand

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Make Sure What You Say is What You Do
After the brand position has been developed, marketers must
ensure the brand performance is able to live up to its new
promise. While “do what you say” has always been Rule No. 1
for building brand equity, following that rule can be a signicant
challenge for many companies. This is particularly true in service
industries, given the need for tremendous organizational
change, and industries that require long lead times for
organizational or infrastructure changes. Such changes occur at
the same time customers are being presented with the new
brand position. Three important steps can help win customer
acceptance:
• Identify the pathway of performance “signals” that will
convince customers of the new brand positioning so
that what you say is in fact what you are able to do. We
have found that you can quantify which brand elements are
more important for creating the desired impact on the
customer’s overall brand image and how these elements
impact each other in the process (see Table 41.1).
Table 41.1 Quantitatively Linking Brand Performance
“Signals” to Desired Customer “Take-Aways”
Overall positioning essence
Technology brand
pathway example “Humanizing technology
for everyday people”
Personality signals
Service signals
Product Signals
0.40 = pathway coefficient
= Optimum brand signal pathway
Marketers should not attempt to cover the waterfront here, but
instead focus on the relevant interrelated “hot buttons” that
will clearly convey the message. For example, in the case of a
technology brand positioning itself as “humanizing technology
for everyday people,” the strongest set of pathways to the
positioning came from product signals such as customized
hardware and specic application platforms (e.g., games, house-
hold management) rather than from equipment with the latest
features and innovative design. The pathway modeling also
indicated the strong signal value of the brand’s customer service
representatives having an understanding of an individual cus-
tomer’s needs. This important service signal led to the broader
BRAND MANAGMENT
customer perception of the brand as caring – an important
personality signal for the brand to deliver on its positioning.
Additionally, the marketer learned that having technicians follow
through with customers to issue resolution was a critical service
signal that led to the broader personality signal of the brand
being professional – another key for the brand to live up to its
positioning. With these insights, the marketer could allocate
resources accordingly, ensuring that the more important signals
were being appropriately supported.
• Develop necessary product/service programs to ensure
consistent performance on these signals to the
customer. For example, if the brand positioning is built
around superior customer satisfaction, but frontline sales
people are measured on revenue rather than satisfaction, it is
unlikely that consistent performance will be achieved. So, if
airline gate agents are the rst and most important contact
point for customers, they should be empowered to solve
customers’ issues instead of redirecting them to customer
service personnel. In the technology brand example, given
the importance of the customer service representatives and
service technicians, there should be a greater emphasis on
the quality of the service delivered rather than on the
number of customers that can be serviced over a given time
period.
• Make sure approaches are in place to track and assess
your performance against these customer signals prior
to the formal launching of the new positioning.
Applying rigorous quality assurance procedures to key
elements of the new brand experience will often ensure that
customers are not disappointed, or fail to have their
expectations met. Current data-collection methods allow for
rapid response and can be leveraged to determine whether
the launch programs are having their desired effect on brand
perceptions.
Due to the complexities of brand positioning, many marketers
are correctly choosing to move to an “interim positioning.” This
interim positioning is designed to establish brand credibility
and performance on the road to fully achieving the longer-term
aspirational positioning. Such a positioning focuses on those
aspects of the brand on which the organization is currently able
to deliver. Interim positioning is often essential when a brand
stakes out new territory considered “up market,” addresses an
important or long-standing deciency, or is attempting to redene
its competitive set. As the brand evolves (based on customers’
changing perceptions), additional components of the new
platform can be put into place and condently communicated to
consumers. Target Stores successfully employed an interim
positioning as it evolved the brand up market from a position
as a discount retailer of national brands to a contemporary
“urban chic” retail brand providing good value. The interim
positioning emphasized value without sacricing style and
involved specic merchandising efforts such as stylized color
blocking and associations with name designers (e.g., Frank
Gehry). As the brand evolved to its current positioning, it
further emphasized the “designer” theme in its advertising,
often having models wearing various housewares as high
189
 fashion. By focusing on achievable instead of aspirational brand
BRAND MANAGMENT
positioning, companies can help ensure meaningful market
share results while enhancing their brand image. This requires,
however, that the new brand position ts comfortably within the
customer’s frame of reference, and that it not attempt to
overreach. Marketers must also secure the customer’s permis-
sion to extend the brand by building a bridge of relevant benets
to carry customers from the current to the intended brand
position. Implementing the performance delivery systems to
ensure the brand is able to live up to its new promise is the nal
critical step in building and executing a successful brand
positioning program.
Positioning – A Primer
Positioning is the art of creating a distinct image for a product
in the minds of the customers. A simple example would
suffice. The first thing that comes to one’s mind when some-
body says ‘ATM’ is Automated Teller Machine. This is the
product. But the customer’s question would be “What does
ATM mean to me?” The answer is Any-Time-Money. That
makes sense to him or her because it means instant cash. The
concept neatly rolls up the benefit of ready cash and puts it in
the mind of the customer. Thus Automated Teller Machine
(ATM) is the ‘product’, Any-Time-Money (ATM) is the
‘positioning.’
Repositioning is changing the positioning of a brand. A
particular positioning statement may not work with a brand.
For instance, Dettol toilet soap was positioned as a beauty soap
initially. This was not in line with its core values. Dettol, the
parent brand (anti-septic liquid) was known for its ability to heal
cuts . The extension’s “beauty” positioning was not in tune
with the parent’s “germ-kill” positioning. The soap, therefore,
had to be repositioned as a “germ-kill” soap (“bath for grimy
occassions”) and it fared extremely, well after repositioning.
Here, the soap had to be repositioned for image mismatch.
There are several other reasons for repositioning. Often falling
or stagnant sales is responsible for repositioning exercises.
After examining the repositioning of several brands from the
Indian market, the following 9 types of repositioning have
been identified. These are:
• Increasing relevance to the consumer
• Increasing occasions for use
• Search for a viable position
• Making the brand serious
• Falling sales
• Bringing in new customers
• Making the brand contemporary
• Differentiate from other brands
• Changed market conditions.
It is not always that these nine categories are mutually exclusive.
Often one reason leads to the other and a brand is repositioned
sometimes for a multiplicity of reasons. Illustrations of the
above types of repositioning are listed below.
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Note: Some of these repositioning statements have been
changed again. That need not make them less relevant as
illustrations.
Increasinc Relevance to Consumer
A brand that has been existent in the market for, sometime may
lose touch with consumers because the consumer’s needs may
have changed. Thus, it is possible that a brand is fundamentally
sound and yet is not in sympathy with the consumer’s current
concerns. Such a situation calls for a change in positioning. The
following examples illustrate this concept.
Lipton Yellow Label Tea
Lipton Yellow Label Tea was initially
positioned as a delicious, sophisticated and
premium tea for the global citizen. The
advertisements also echoed this theme. For
instance, all the props and participants in
the advertisements were foreign. It is
possible that this approach did not find
favour with the customers. The
repositioning specifically addressed the
Indian consumer through an Indian idiom.
Exotic & Foreign Exotic & Indian
Visa Card
Visa Card had to change its positioning to make itself relevant
to customers under changed circumstances. Initially it asked the
customer to “pay the way the world does” (1981). This is to
give its card an aura of global reach. But as more and more cards
were launched on the same theme, to put itself in a different
league, it positioned itself as the “world’s most preferred card”
(1993). To highlight the services it provided, it shifted to the
platform of “Visa Power” (1995). This focus on explaining the
range of services available with the card continues till date
(“Visa Power, go get it”). .
Pay of Way World’s Most VISA
The World Does Preferred Card Power
(1981) ( 1993) (1995)
Cadbury’s Bournvita
Bournvita is a case of how a brand changes its positioning in
keeping with the changing needs of customers. Initially, the
emphasis was on its good taste (“taste additive to milk”). Then
as the customers became more demanding, the pitch was
modified to include the nutritive aspect as well (“extra nutrition,
extra taste”). Later, to make itself more attractive it claimed to
give sharpness of mind (“nutrition, mental stimulation).
Taste Additive to Milk
Extra Nutrition, Extra Taste
Nutrition, Mental Stimulation
Increasinc Occasions For Use
Sometimes the positioning chosen becomes too narrow. This
might lead to a situation of having too few customers. Such a
small franchise may make the brand commercially unviable. One
of the methods of increasing use is by increasing the usage rate.
This is done by increasing the number of occasions available for
use.
Cadbury’s Drinking Chocolate
Cadbury’s Drinking Chocolate initially called itself “good night
cap” signifying the time of consumption. The user base
possibly proved to be small. In an effort to increase the
numbers, it positioned itself as a drink for the “happiest time
of the day.” This was an effort to get the brand consumed
during any time of the day thereby increasing the occasions for
use.
Good Night Cap Happiest Time of
(Night) the Day ( Anytime)
Monaco
Monaco biscuits were initially positioned as the “perfect salted”
biscuits. To increase the occasions for use, it pitched itself as
“Excellent plain, terrific with toppings.” What was essentially a
plain, salted biscuit turned itself into a biscuit that can be
consumed as it is or with toppings, thereby increasing its
occasions for use.
Perfect Excellent Plain, Terrific with
Salted Toppings (Plain & Topping)
Dettol Liquid
Dettol-the antiseptic liquid is basically used to prevent cuts and
gashes from developing sepsis. To increase the occasions for its
use, it shows several other avenues. These are i) for the shaving
mug ii) for washing babies’ clothes iii) for use during illness for
washing and swabbing. These uses are listed on the Dettol
bottle itself.
Odomos
Odomos cream was one of the first mosquito repellants in the
market. It was essentially pitched as an indoor mosquito
remedy. For sometime it was very popular. Later, as mosquito
mats entered the market, creams became less popular as they
were seen as sticky. One way of combating the mats was to fight
them outdoors. Since outdoor locations normally have no
power supply, cream was positioned for “indoor as well as
outdoor” use. This broadened the competitive space besides
increasing the occasions for use.
Vicks Vaporub
Vicks Vaporub was initially and child’s cold rub. Later in an
attempt to increase uses as well as users, it was positioned as an
“adult cold rub for anytime during the
BRAND MANAGMENT
Child’s Cold Adult Cold Rub anytime
Rub at Night During Day
Search For A Viable Position
Complan
Complan had at various times positioned itself as “food for
the convalescing”, “against Horlicks,” “for the family” (fussy
child, busy executive, tired housewife). This is possibly because
it was trying to get a viable positioning statement. Finally, it
seems to have found one in the positioning line “for growing
children2.”
Food for Sick
Against Horlicks
_
For Family
For Growing Children
Milkfood’s Yoghurt
was initially positioned as “anytime snack.” This did not seem
to have worked. So the pitch was changed to “It is not just
curd.” This could be hinting at both the fun value and the
nutritive value of Yoghurt. Eventually, this positioning also did
not work. Positioning it as “mishti-doi” (sweet curd) for the
East and North Eastern parts of India would have possibly
given it a better opportunity for success.
Making The Brand Serious
Cadbury’s 5-Star
Most Cadbury’s brands went in for a change in positioning due
to stagnation in the consumption of chocolate. Cadbury’s 5-star
was originally the “togetherness bar.” As markets changed, a
need was felt for making the brand more serious. Thus the
positioning was changed as “energiser for the young achievers.”
One of the first advertisements to echo this idea showed how a
ballet dancer was inspired to perform better after consuming 5-
star. The advertisements have changed since, but the
positioning retains the “energy-giving” pitch.
Energiser for Young
Togetherness Bar
Achievers
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 Saffola packaging was made more attractive and the communication
BRAND MANAGMENT

Saffola was positioned as the edible oil “good for heart.” To
make the positioning more serious, the pitch “Heart is not safe
without Saffola” was adopted. This put Saffola in a different
league as compared to the other oils making it the most health-
conscious brand in the market. In fact, Saffola stands out in a
category cluttered with me-too brands.
Fallinc Sales
Ambassador
The Ambassador was positioned as the “rugged road master.”
This positioning was in line with product perceptions because
Ambassador is seen as a tougher vehicle than Maruti. However,
Maruti proved to be sleeker, more fuel efficient and initially even
cheaper. Thus the positioning was changed to “a member of
the family.” In other words, falling sales forced Ambassador to
move from a rational pitch to an emotional pitch. (Even this
positioning was later changed by Ambassador. But none of the
positioning changes helped it because the product itself was
seen as dated.)
Red Label
BrookeBond’s Red Label is a typical example of how falling
sales can precipitate repositioning. Red Label is an age-old brand
with a franchise of its own. How ever, over a period of time it
might have lost some of its relevance. Its traditional
positioning was that Red Label was one of its kind (“piyo-to-
jano”-drink it and you will know the difference”). When this
was seen as dated, a new positioning statement involving
patriotism was configured (“Desh-ka-pyaala”-India’s tea”). This
did not bring the expected volumes. Then the strength pitch
was tried (“100% strong”). Finally, the current positioning is
something that invites the old generation as well as the new
generation to consume Red Label ( “jiyo-mere-Iaal” - “long live
my son”, there is a pun on the word ‘laal’ which means son as
well as red ). Several attempts of repositioning had to be made
because of falling sales.
Piyo to Jano
Desh ka Pyaala
100% Strong
was tailored to draw the attention of the youth. (The
advertisement shows a young woman visiting her
grandmother. She tells the old lady that since she uses Margo,
she does not need neem leaves. The implication is that even
young people use Margo.) There was, thus, a subtle change in
positioning from” neem benefit” to “neem benefit for youth
also.” This slight repositioning helped Margo win young
customers without losing old ones.
No More Tears Shampoo
Johnson & Johnson launched a baby shampoo by name “No
more tears.” Sales were not encouraging. This forced J&J to
look out for new users. If the shampoo can be used for babies,
it was reasoned, it will be extrasoft. So this extra-soft shampoo
will be good for users who use shampoo often. Thus a baby
shampoo was stretched to include “heavy users.”
Those who wash
Babies
regularly
J and J Baby Oil
In baby oils also, J&J stretched what was essentially a baby
product to a new user, namely the mother. The argument was
that what was good for babies was good for mothers too.
Essentially, since the oil is soft on skin being a baby oil, it
attempted to attract mothers also as users.
Cinthol
Cinthol repositioned itself several times. In one of its initial
attempts at repositioning, it moved from being a “deodorant
soap” to “soap for macho men.” The appeal of a deodorant
soap was limited. Thus due to market changes as well as for
attracting new customers the positioning was modified to
include “male” connotation without sacrificing the deodorant
platform.

Jiyo Mere Laal Deodorant Soap for

Soap Macho Men

Bringinc In New Customers Freshness

Margo
Margo is an old soap popular in the East which sells on the
Cad burry’s Diary Milk
“health” platform. It has neem
It was found that most adults wanted to eat Diary Milk but
as an ingredient to deliver this
restrained themselves because it was supposed to be consumed
benefit. Margo’s positioning
by children. Thus, a repositioning campaign was launched
traditionally attracted middle-
which showed adults doing unconventional things (like a lady
aged buyers like Forhans. Margo
breaking into a jig in the middle of an overflowing cricket
wanted to attract new customers
stadium) driving home the message that chocolates could be
like the youth and made several
enjoyed by adults as well.
changes to the product. The

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Makinc The Brand Contemporary political magazine though it covered other topics as well. Finally,

BRAND MANAGMENT
it became a broadsheet to save on costs and eventually exited.
Dabur Chyawanprash
This shows how changed market conditions could force
Dabur Chyawanprash basically had the positioning of being
repositioning though the repositioning itself may not save. the
good for health and digestion. To make the brand more
brand.
attractive to the consumer, the nutritional element was added to
its positioning. Milkmaid
A classic illustration of repositioning is Nestle’s Milkmaid. It
Keo Karpin Hair Oil
started as a whitener for tea and coffee. Again like Horlicks,
Keo Karpin was positioned as a hair oil that assisted “styling”
when the milk scarcity eased, it changed its positioning to
the hair. It was hence endorsed by celebrities But in the recent
“topping for cakes and puddings and use in dessert recipes2.”
years, hair oil came to be seen as some thing that makes the hair
sticky. To make it more a acceptable in the changed
circumstances, Keo Karpin was repositioned as “the non-sticky
hair oil.” Whitener for Tea,
Onida TV Coffee
Onida was the first indigenous premium TV brand in India. Its
unique advertising gave it a special status among well-to-do
consumers. The hugely successful “devil” campaign proclaimed Maker of the
“Neighbour’s Envy, Owner’s Pride.” In the mid-nineties, Tastiest Milk
however, there was tough competition unleashed by MNC
brands like Sony, Samsung and LG. Thus the positioning had
to be made contemporary. It was then changed to “World’s
Envy, India’s Pride” to signal that Onida was as good as the Topping for Cakes,
foreign brands. Puddings
Differentiatino Brands From Competitors
Mint – 0
Mint-O’s position in 1990 was “adult candy.” This was to Use in Dessert
enthuse grown-ups to consume peppermint. This may not Recipes
have helped the brand to stand out. In 1995, a position that
directly aimed at competition (Nestle’s Polo) was configured.
Polo positioned itself as “the mint with the Hole.” Mint-O
To sum up, repositioning is done with the intention of
positioned itself as “All Mint, NoHole.” One of the
attracting customers back into the fold. A study of the above
advertisements even argued, “If your head doesn’t have a hole,
types of repositioning reveal that it is more often done to
why should your mint.” Positioning the brand head-on with
increase either the users or the number of uses. A limitation of
Polo gave it a distinct focus.
the list of above illustrations, of course, is that it contains few
durables or services. However, it has a fairly representative list
Adult All Mint, of consumer softs. Thus, if we consider the FMCG .category in
Candy No Hole India, most repositioning exercises seem to be broadening the
position rather than altering it. As mentioned earlier, some of
Changed Market Conditions these repositioning statements have been changed again. But
Horlicks that does not detract from their merit as illustrations.
Horlicks was initially both a substitute and an additive to milk.
This positioning served it well till the scarcity of milk was
overcome in several parts of the country. Horlicks then shifted
its positioning to “energy giver and health provider.”

Milk Additive Nutrition

Illustrated Weekly
Illustrated Weekly was a leading family magazine targeting the
households in the ’70s. This position was taken over in the
eighties by India Today. Thus, Weekly predominantly became a

193
BRAND MANAGMENT
LESSON 30:
DIFFERENTIAL ADVANTAGE AND POSITIONING
Objectives
Upon completion of this Lesson, you should be able to
explain:
a. What is differentiation ?
b. What role differential advantage plays in branding?
c. How can we develop a sustainable competitive advantage?
You have studied brand positioning in quite a detail by now
but there is one more important aspect - the differential
advantage, which influences the brand positioning strategies.
This lesson will give you insights as to the role of brand
positioning with regards to competitive aadvantage.
Differentiation: How To Compete
Your challenge is to determine not just how you’re going to
play the game, but also how you’re going to win. In other
words, how to differentiate your Brand and create an important
and meaningful point of difference.
• Start by identifying the Tangible Differences between your Brand and the
competition; i.e., the conscious, rational benefits you can focus on. For
example:
Service (Nordstrom); Performance (Nike);
Price (Costco); Contemporary home fashion (IKEA);
Selection (Toys ‘R’ Us); Great Price (Payless Shoes).
• Now move on to the Intangible Benefits - those emotional, sub-conscious
benefits you want your Brand to own. This includes things like status (Tiffany)
or badge value (Virgin). It is these intangible benefits that are becoming the
most important leverage for Brand dominance.
1. Your Brand must be perceived to be unique.
To create a substantial differential advantage in your Brand,
you must first create a point of difference in the way
customers perceive your Brand - one that is so successfully
unique in the minds of your customers that no other brand
can substitute for it.
Uniqueness does not in itself necessarily motivate traffic,
sales or repeat visits. Nevertheless, it must be perceived as
being unique, before any other values can be attached to it.
2. Your Brand must be important to your core customers.
Many retailers assume that the most important benefit is
Price. This is true for some customers, but for many others,
Price is only the beginning and for most, it is an
unsustainable competitive advantage.
Competitive prices are the ‘greens fee’ that allows you to
play in the game; but to win, you need much more, e.g.
product mix, service, look, and marketing, all important
options you need to re-examine to help determine where
you want to dominate.
3. Your Brand’s point of difference must be delivered and
sustained with style and substance.
194
Together, these three factors will help you to achieve a
compelling, competitive advantage that delivers a superior
customer benefit and can only be challenged by the
competition over a long period of time and at great cost.
Some Options for Brand Differentiation:
• Lowest prices • Full-service
• Biggest selection • Newest, hottest, with it, in
• Best overall total experience • Status
• Most convenient, easiest • Badge value
• Quick service • Best overall value
(www.customfitonline.com)
The Differential Advantage and Branding
Only few products are unique. Often the challenge lays in
finding a way to differentiate your products from a rival’s near-
identical offerings. The basic question says: “How can I get an
advantage over the competition?” When your products are
better than those of your competitors, and when customers
recognize this superiority, you have a real advantage. Few
organizations are in this position. Most find that there is a little
or nothing to distinguish their own products from
competitor’s.
To gain competitive advantage, uncover not just differences but
also attributes that customer’s value. Make sure the differences
are meaningful to customers, so that your product is preferable
to the others available. Often it is the little things that count.
Customers may choose your product over a competitor’s
identical product because they prefer your information or
because you give them coffee while delivery of the information.
Pay attention to details that could make a difference. A genuine
customer-centric approach will differentiate you from competi-
tors. Show your commitment to customers and ensure that
staffs are emphatic. Review company systems and processes to
make them more customers focused.
Lets do a small exercise and see how differentiation helps.
Answering the following questions, try to identify the differen-
tial advantage of between two brands of your choice.
1. Why do you buy brand A rather than buying brand B?
2. What makes A different from B?
3. How is A better than our B?
4. What strengths do A have that we can effectively capitalize
on?
Branding as the Foundation of Sustainable
Competitive Advantage
The discipline of branding has a major problem. Depending on
who’s talking, branding can be a logo package (according to
graphic designers who’ve picked up on the branding “trend”), a
logo package with a unique selling proposition tag line and an
institutional advertising campaign (per those advertising
agencies that call themselves branding agencies), an internal
communications program (re: public relations firms), or it can
go as far as being explained as promotion of the differential
nature of the company and its products in the competitive
environment .
What is “Branding?”
The general description of branding as “delivering all the
promises and perceptions that the organization wants its
constituents to hold” is widely accepted among those who teach
and practice the art and science. Yet, as all-encompassing as that
definition is, it is inadequate, overly subjective, and, importantly,
is a difficult “sell” when dealing with business executives
bearing finance, manufacturing, research or engineering
backgrounds. It may communicate effectively to the marketing
or sales-trained executive, but is too “soft” for technically or
scientifically trained executives, and too immeasurable for
financial executives.
A New Definition of Branding
In isolating the true function of branding, a more directed,
measurable, and sellable definition emerges: “Branding is
identifying or creating, and then exploiting, sustainable
competitive advantage.”
Every word of that new definition is instrumental to the
concept as a whole. Likewise, the entire phrase is the singular
foundation of business success. It explains what branding
does, but it also clarifies the result of branding. It’s a process
that executives from any business background can conceptualize
and embrace.
Sustainable Competitive Advantage is the
Foundation of a Viable Brand
Ask business executives to define their company’s sustainable
competitive advantage, and often you’ll hear “our employees,”
“our products,” or “our technology,” among the most frequent
of the myriad of possible answers. In reality, none are prima
fascia sustainable competitive advantages (“advantages” for the
sake of brevity). “Advantage” falls into only two categories,
something that you own that is a barrier to competition, or
something that you do very well that effectively bars
competitors.
For the first category of “advantage,” something that you own
(exclusively, such as a patent or an unreasonably duplicatable
process), the task is more of an advertising/public relations/
sales process, rather than branding. This is so by definition, as it
already is a sustainable competitive advantage.
When Branding Becomes the strategic Advantage
Drawing from strategy analysis work by Harvard Management
Professor Michael Porter, branding becomes the “advantage”
when it identifies and exploits operational excellence, customer
intimacy or product leadership in the experiential lens of the
consumer. Each category has general requirements that are
required of a strong brand and overlap between groupings, but
the brand differentiators are categorically based.
The brand “advantage” differentiators for operational excellence
are product and service attributes, such as price, time, quality
and selection. The result of successful exploitation of this
brand “advantage” is the consumers viewing themselves as
BRAND MANAGMENT
“smart shoppers.”
There are general requirements for brand “advantage” differen-
tiation for the customer intimacy category, where product and
service attributes are necessary, but the brand differentiator is
service and customer relation. The consumer views the result as
a “trusted brand.”
To attain branding sustainable competitive advantage in the
product leadership category, it is required to provide product
and service attributes, as well as a solid relationship, but the
differential “advantage” is found in product functionality or
time. The consumer views this brand as “best in class.”
Research-driven Brand Analysis and Strategic
Branding
“It’s not what you don’t know that hurts you. It’s what you
know that ain’t so.” -
Will Rogers, Jr.
Determining the sustainable competitive advantage is a function
of branding research into the market needs, company’s
strengths and competitors’ weaknesses. Where they overlap, the
“sweet spot,” is where the company has a strategic and sustain-
able competitive advantage. This study is detailed and inclusive
of internal culture analysis, as well as traditional marketing
research. Nothing is surer to prevent successful brand exploita-
tion than a toxic corporate culture that cannot deliver a
consistent brand promise.
“Capitalizing” Converts Sustainable Competitive
Advantage to Branding
The role of strategic branding is to exploit the sustainable
competitive advantage. It is the brand manager’s role to develop
programs to capitalize on the firm’s advantage, however,
finding the “advantage” inherent in the organization is often a
monumental task. It is even more instrumental to the success
of the company if the brand analysis finds the “silver bullet”
advantage in the marketplace, but determines that it is not a
characteristic inherent of the company, requiring a long-term
strategic management and marketing evolution.
If you don’t have It, Create It
The salience is that branding is the function of identifying and
capitalizing on sustainable competitive advantage. For
companies that don’t have a sustainable competitive advantage,
it is incumbent on them to create one according to “what the
company can offer, that the market wants and is the
competition’s weakness.” Firms that do not offer a competitive
advantage languish in the backwashes of mediocrity if, in fact,
they can survive over the long-run.
While causing a company to create a sustainable competitive
advantage from the manufacturing side (product leadership)
may be so monumental as to be virtually impossible, opera-
tional excellence and customer intimacy are attainable. The
creation of “advantage” from these perspectives is
quintessentially strategic, long-term and can entail great re-
sources allocation, but they are certainly more achievable than
“building a better mousetrap.”
Importantly, customer intimacy and operational excellence are
goals of most enterprises, as seen by the vast penetration of
195
 CRM and TQM, but are rarely executed with “sustainable
BRAND MANAGMENT
competitive advantage in mind.” The important point is that as
goals, they can be long-term and the brand strength can be built
over time. As branding consultants, it is vital that the discipline
establish a clear definition of the of brand, least it be further
diluted by those who don’t know what it is, but do know how
to sell businesses on buzz words and trends. The branding
discipline has a large and growing body of knowledge, yet that
good work will be for naught if consensus isn’t reached as to a
viable definition and process that is recognized and understood
by more than the most sophisticated companies.
Strategy or Tactic? Project or Process?
Just as information technology-related productivity has
transformed the economy in irreversible and immensely
valuable ways, branding is approaching “break through” as a
transformational strategic process. Recognition of the branding
processes’ seminal nature in engineering organizational success
will be resultant of a clearer understanding of the process goal,
than of identifying, creating and exploiting strategic competitive
advantage.
http://www.brandchannel.com/
http://www.spark.auckland.ac.nz
Developing A Sustainable Competitive
Advantage
Marketing Efforts Must be Sustainable
Marketing is a dynamic process of ensuring a close fit between
the capabilities of an organisation and the demands placed
upon it by its external environment. It follows that the
marketing mix will need to continually evolve over time in order
to meet changes in a company’s internal objectives and in its
business environment. It is not good enough for a company to
develop a marketing mix strategy that works for a short period,
but then fails to make good long-term profits for the company.
History is full of marketing plans that looked too good to be
true, and haven’t been sustainable. It is not difficult to develop
short-term marketing strategies which at first appearhighly
successful when judged by sales levels. It is much more difficult
to develop a marketing strategy that is sustainable over the
longer-term by producing adequate levels of continuing profits.
196
In the UK, companies such as Next, Amstrad, Laura Ashley
and British and Commonwealth have all risen rapidly and
gained many “Business of the Year” type of awards on the way.
But each of these examples ended up in serious financial
difficulties just a short while later. Very few of the so-called
“excellent” companies identified by Peters and Waterman in
their book “In Search of Excellence” were considered to be
excellent 15 years later.
Who are the Competitors?
Any plan to develop a competitive advantage must be based on
a sound analysis of just who a company’s competitors are. At
first, it may seem obvious who the competitors are, but as
Theodore Levitt pointed out, a myopic view may focus on the
immediate and direct competitors while overlooking the more
serious threat posed by indirect and less obvious sources of
competition.
Direct competitors are generally similar in form and satisfy
customers’ needs in a similar way. Indirect competitors may
appear different in form, but satisfy a fundamentally similar
need. A sound analysis of the direct and indirect competitors
for a firm is crucial in defining the business mission of an
organization.
Discussion Topic: What Business is the Parker Pen
Company in? Probably not the Pen Business, or Even
the Writing Implement Business, But Rather the Gift
Business. on This Basis, Who are Its Competitors?
A useful framework for analysing the competition facing a
company has been provided by Michael Porter. His model
illustrates the relationship between existing competitors and
potential competitors in a market and identifies five forces
requiring evaluation:
• the threat of new entrants
• the threat of substitute products
• the intensity of rivalry between competing firms
• the power of suppliers
• the power of buyers
Developing A Sustainable Competitive
Advantage
Comprehensive, longitudinal studies of the factors
contributing to marketing success are relatively few and far
between. However, a major study undertaken by the Chartered
Institute of Marketing and Cranfield School of Management
identified ten guidelines for “world-classmarketing”:
• Develop a true marketing orientation
• Develop a differentiated product offer
• Monitor changes in the marketing environment
• Understand your competitors
• Market segmentation is crucial
• Understand your Strengths and Weaknesses
• Understand the dynamics of product/market evolution
• Pay attention to portfolio management
• Identify strategic priorities
• Develop professional management skills
Creating a Strategy for Differential Advantage of products in their lifecycles. Risk spreading is an important

BRAND MANAGMENT
There have been many prescriptions for marketing strategies element of portfolio planning which goes beyond marketing
that give a firm a long-term competitive advantage. A planning.
framework that has received much attention is based on the Some companies deliberately provide a range of products which
work of Michael Porter (Porter 1980). The basis of his analysis - quite apart from their potential for cross selling - act in
is that firms identify those activities for which they have a contrasting manners during the business cycle. For a company
competitive advantage over their competitors. to put all of its efforts into supplying a very limited range of
Competitive advantage based strategies can be divided into products to a narrow market segment is potentially dangerous.
three generic types: Over reliance on this one segment can make the survival of the
• Overall Cost Leadership - To achieve competitive advantage organisation dependent upon the fortunes of this one segment
in such markets, a company needs to put a lot of effort into and its liking for its product. (This has already been discussed in
lowering its production and distribution costs so that it can detail in lesson 37: Brand Architecture and Brand portfolio)
charge lower prices than its competitors Portfolio Position Analysis
• Differentiation - In order to try and reduce their dependence Organisations seek to match their own internal strengths with
on market forces, many firms have sought to differentiate the opportunities available in their environment. A number of
their products. They seek to achieve superior performance attempts have been made to show in the form of a portfolio
by adding value to the product which is reflected in the position map the mix of products within a company’s
higher price that customers are prepared to pay. portfolio. Such position maps can facilitate management
• Focus - A focus strategy involves an organisation becoming thinking in the development of balanced portfolios and the
familiar with the needs of specific market segments and allocation of strategic priorities.
gaining competitive advantage by cost leadership or
differentiation within its chosen segments, or both.
For firms pursuing a similar strategy aimed at similar market
segments, Porter contends that the one which pursues its
strategy most effectively will meet its objectives most effectively.
Positioning Strategy
Positioning strategy is used by a company to distinguish its
products from those of its
competitors in order to give it a competitive advantage within a
market. Positioning is more than merely advertising and
promotion but involves the management of the whole
marketing mix. Essentially, the mix must be managed in a way
that is internally coherent and sustainable over the long-term.
Selecting a product position involves three basic steps :
• Undertake a marketing audit to analyze the position
opportunities relative to the Company’s strengths.
• Evaluate the position possibilities and select the most
As a basis for strategy formulation, the grid focuses attention
appropriate: on finding strategies which match an organisation’s internal
• Use the marketing mix to develop and communicate a strengths and weaknesses with the opportunities and threats
position presented by its operating environment.
Repositioning It must not be forgotten that market attractiveness is a dynamic
Markets are dynamic and what was once an appropriate position measure and for planning purposes, the prime consideration is
for a company may eventually cease to be so. A company’s how attractive a market will appear at the time when a proposed
environmental monitoring should identify any factors that may strategy is implemented.
call for a repositioning. Repositioning could become necessary
for a number of reasons, e.g. false assumptions a bout the
market; an over-estimation of the company’s advantages; and a
desire to “trade up” to a new market position.
Any attempt at repositioning must ensure that it doesn’t
alienate a large and profitable group of core customers.
Developing a Portfolio of Products / Markets
Managing a portfolio of products is a key factor in creating a
sustainable competitive advantage. Portfolio planning can be
applied to the types of products / markets served and the stage

197

BRAND MANAGMENT
Planning for Growth
Most private sector organizations pursue growth in one form
or another, whether this is an explicit aim or merely an implicit
aim of its managers. Growth is often associated with increasing
returns to shareholders and greater career opportunities for
managers. Growth may be vital in order to reach a critical size at
which economies of scale in production, distribution and
promotion can be achieved, thereby contributing to a company’s
sustainable competitive advantage. It is useful to consider the
options open for growth and the levels of risk and
sustainability inherent in each of these.
Market / Product Expansion Choices
These dimensions form the basis of the Product/ Market
Expansion Grid proposed by Ansoff (1957). Four growth
options were identified:
• Market penetration strategy
• Market development strategy
• Product development strategy
• Diversification strategy
The four growth options are associated with differing sets of
problems and opportunities for a company. These relate to the
resources required to implement a particular strategy, and the
level of risk associated with each. It follows therefore, that what
might be a feasible growth strategy for one organization may
not be for another.
Organic Growth v Growth by Acquisition
The manner in which an organisation grows can affect the
sustainability of that growth. There are two basic means by
which an organisation can grow:
• Organic growth - growth is dependent upon previous
success. It is a more “natural” pattern of growth, but limits
the scope of a company.
• Growth by acquisition - thus may be attractive to
organizations where opportunities for organic growth are
low. It is sometimes almost essential in order to achieve a
critical mass which is necessary in order to gain a
competitive cost advantage.
http://www.oup.co.uk/
198
Conclusion
The Differential Advantage and Branding
Strong, well-known products provide companies with a real
competitive advantage. Use the power of branding to imbue
your products with personality and meaning, ensuring they
achieve a prominent position in the marketplace.
The right name helps to sell products and service. It bestows
individuality and personality, enabling customers to identify
with your offerings and to get to know them. It makes
products and services tangible and real. Choose name that
enhance your company image and that are appropriate for the
products and its positioning in the marketplace.
Establish trust in your brand and customers will remain loyal.
Branding means developing unique attributes so that your
products are instantly recognisable, memorable, and evoke
positive association. Some brands have a solid and reliable
personality, others are youthful and fun. Choose your company
and product name, corporate colours, logo, design and promo-
tional activity to help convey a personality and build a brand.
Customers should be able to look at one of your products and
assimilate all that you stand for in a second by recalling the
brand values. But remember: A strong brand is not a substitute
for quality but an enhancement to it.
The service attributes are e.g. friendless, creativity, courtesy,
helpfulness and knowledgeability. The creation of a corporate
identity is a vital element of branding. Present an integrated,
strong, instantly recognisable, individual image that is regarded
in a positive way by your customers, and seize every opportu-
nity to strengthen your corporate identity. It is important to
maintain corporate identity consistently by issuing written
guidelines for staff.
Role of Agencies in Branding
A branding agency is an agency that specializes in helping you
market your product in a way that will allow present and
potential customers to associate your product uniquely with
your company. This is called product branding and it’s the key
to setting yourself apart from your competition. Anything else
is just surviving and in today’s market, who knows how long
you can do that for?
So, you know what to do, but how do you do it? Unfortu-
nately, working that out is the hard part. But that’s what
branding agencies are there for.
A Good Branding Agency Is Good To Find
If branding is done properly, it can elevate your business to a
place it’s never been before. This is why you need to find a
strong and smart branding agency to explore and find the right
branding ideas for you, your product and your company. The
other hard part is picking a branding agency.
Your ad agency needs to be your partner in building brand
equity. They need to be your partner in building brand unique-
ness.
Agencies help you communicate brand values to consumers
over time. To do this, your agency needs to be the voice of the
consumer in brand development. They must deliver effective
brand-building ideas, and must be strong advocates for
consistent, long-term brand-building strategies. Agencies has a
process in place to help its clients define the uniqueness of their
brand and develop dramatic ways to communicate this unique-
ness.
Advertising is a means to an end. The end is brand equity
defined as: consumer loyalty based on a healthy respect for
quality, value and uniqueness of that brand leading to repeat
purchases and willingness to pay a reasonable premium price.
While it is unreal to expect advertising to make up for a lack of
real brand differences, it is important for building brand equity.
More than anything it is effective advertising of unique brand
benefit that builds that brand franchise.
A word about creativity.
Advertising campaigns that have an equity-building impact
universally are built on relevant differences related to a consumer
need.
There is no brand equity impact when the advertising presenta-
tion is not linked to relevant purchase decision criteria. Thus,
creativity in advertising should underscore the uniqueness in the
product or service. “Creative” must be defined as equity
building - not as award winning. Although awards are nice, too.
In Depth: Advertising and Marketing
Branding: Agencies Help Clients Find Identity
Mark Hilpert
Contributing Writer
At the turn of the last century, when someone talked about
“branding,” they usually meant putting a scalding iron to their
cattle. But branding is still a hot topic as companies seek a more
modern means of tagging their products with a unique identity.
Area public relations agencies are responding by developing
their own brand-name marketing products, reinventing long-
offered services into new packages. Although the names may
differ, the goal is common: help clients with the mission of
many a wayward soul - finding themselves.
One such firm is Silver Spring’s Boscobel Marketing Communi-
cations. Owner Joyce Bosc, who started the 18-person firm 21
years ago, has taken her experience helping clients identify their
mission and given it a name. Boscobel’s Brand Destination
Workshops have catered to a half-dozen clients since their July
rollout.
Bosc’s goal is to take participants out of standard operating
procedures and into a creative process that will unlock serious
thought on what sort of organization they want to be.
“The overall purpose is to help a company define an image - to
project [its] desired brand one year from now,” said Boscobel
spokesperson Susan Fenley.
Workshops usually take place at an appropriately visionary
location: the Tower Club, high atop a Vienna office building.
Bosc asks such “personality-mapping” questions as “If your
organization were an animal, what would it be?”
“Talk about their organization in the third person than directly,”
she said. “The underlying goal is to answer fundamental
questions: `Who are we? What do we want to be? And how do
we get there?’ “ she said.
Results are compiled in a report to the client who can execute
BRAND MANAGMENT
the plan itself or have Boscobel or a third party walk it through
the oftentimes lengthy process.
Reston’s Audiopoint, a mobile, voice-activated Web serviceof
just five employees, looked to the workshop to take a look at
itself.
President and CEO Nick Unger and his company answered such
questions as “What words do you identify with your company,
and what words do you think your competitors identify with
you?”
“They helped us break down the different parts of our image
so we could prioritize and identify to our customers what we
think is most important,” he said.
Boscobel isn’t alone in the branding game. Other area PR firms
have rolled out newly named and repackaged branding services
in recent months.
Some, like Fairfax’s Borenstein Group, are focusing on technol-
ogy companies, which need help establishing an identity in a
marketplace of a million whiz-bang products clamoring for
attention.
“Branding a company is becoming more of a challenge because
we’re surrounded by so many cliches,” said firm founder Gal
Borenstein. “Every company has its own personality, and
bringing that out requires unconventional communications
methods to get the true personality of the brand and company
out. It can’t be done in the boardroom, it has to be done in a
place where people feel comfortable to create.”
Another marketing firm with its mind on technology is
Reston’s Solven.com which seeks to differentiate itself by
specializing in helping clients establish their brand on the
Internet.
Like Boscobel, Solven debuted a workshop in July called “The
Solven Session.”
Exercises involve questioning the participant’s clients, ex-clients,
salespeople and key executives on what the company is doing
right and what it’s not.
“This isn’t rocket science,” said Ronnie Taylor, managing
partner of the 12-person firm. “But it’s what companies have
walked away from and need to get back to.”
Another firm that reinvented its branding effort is Besthesda’s
Earle Palmer Brown.
The stated mission of its “Future Focus” service, which began
this summer, is to look at all aspects of an organization’s
outreach - direct mail, media coverage, sales - and uncover
growth strategies.
“A lot of companies these days are coming out with an
outrageous positioning that doesn’t tell the customer the
benefits the brand offers them,” said Mike Carberry, partner and
general manager of the firm’s Washington office. “Brands need
to build an enduring relationship with their customers over
time. It’s not a short-term proposition.”
Assignment
Many organizations do not fully appreciate the importance of
the fourth ‘P’
199
 of place in achieving a competitive advantage. How would you
BRAND MANAGMENT

convince them otherwise? Three Approaches to Developing

(This question is about creating a differential advantage and may
be answered using a course model of the alternative perspective
Competitive Advantage
of the marketing mix. The discussion will lead to the creation
n Cost-
Cost- or price-
price-based advantage.
of a differential advantage with special emphasis on customer
service. A good answer will introduce the supply chain aspects
of ‘place’ and the role of logistics. It will consider improvement
of co-operation within the supply chain and also the benefits
n Quality-
Quality-based or differentiation
of joint planning activities.) advantage.

n Perceived quality or brand-

brand-based
advantage.
The Core Strategy: Competitive or
Differential Advantage
n One of the most important strategic
decisions:
n If not low cost producer the firm must be
able to differentiate--
differentiate--but
but must have the
following 3 characteristics.
• It should generate customer value (difference
must matter-
matter-red computer).
• The increased value must be perceived by the
customer (intell
(intell inside).
• The advantage should be difficult to copy.

Cost- or Price-Based Competitive

Advantage
n Cost-
Cost-based is difficult because:
• You need to know the competitors’
costs.
• Improvements in technology make it
possible to be leapfrogged.
• Only one supplier can be the low-
low-cost
competitor in the market.
n If not low cost then firm must choose
some other differentiation variable.

200
 BRAND MANAGMENT
Quality-Based Differentiation Perceptual Differential Advantages
Some firms do a better job of giving the
n Develop an observable difference that is n
customer the perception that their product is
valued by target customers-
customers-where better.
customer is willing to pay more.
n Research shows a strong positive n Perceptual differentiation is often used when
actual product differences are:
relationship between perceived quality and • Small.
return on sales and return on investment. • Hard to achieve.
• Difficult to sustain.
n Differentiate through real difference.
• Do not get caught in the middle (not low cost n Some h-t firms differentiate base on the use of
and no perceived quality difference) the latest technology

The Value Chain

n Differentiation can be obtained
throughout the value chain. For
instance:
• Differentiate through inbound logistics.
n Purchase highest quality component parts.
• Differentiate through outbound logistics.
n Time and speed of delivery

201

LESSON :31
BRAND AS STRATEGIC DEVICES
HOW TO ACHIEVE LEADERSHIP
Topics Covered
BRAND MANAGMENT
Diverse ways of positioning and sustaining brands against
competitors, Cost-driven and Value added Brands, Brands as
competitive advantage, Characteristics of winning brands,
Adding value through customer participationTrademark
registration, Legal Perspectives in Branding, Brand evaluation,
Online Branding and Business to Business branding.
Objectives
After the completion of the lesson, you should be able to:
a. Understand Strategic relevance of brands
b. Use brands as a strategic devices
Overview
Firms have a variety of options available to them with respect
to branding strategy, which refers to the nature and number of
common and distinctive branding elements that can be applied
to the products and services sold. Branding strategy is
important as a means of enabling consumers to understand
and connect with the brand, since it can help consumers
organize a company’s products and services in their minds. This
chapter introduces the concepts of the brand-product matrix
and the brand hierarchy, two tools that can help a company
make decisions regarding branding strategy.
The brand-product matrix is a graphical representation of all the
products sold by a firm. Each row of the matrix is labeled with
a brand name, while each column represents a product. Thus,
the rows of the matrix correspond to brand lines (all the
products sold under a particular brand name) while the
columns correspond to product lines, a.k.a. brand portfolios,
(all the brands marketed in particular product categories). A
firm’s branding strategy can be characterized according to its
breadth, which refers to the number and nature of products
that bear the same brand name, and its depth, which refers to
the number and nature of brands in the same product category.
Marketers can use the brand-product matrix to determine
whether and where to make connections across products and
brands.
A brand hierarchy visually illustrates the possible relationships
that can be formed among the firm’s products through the
selection of common and distinctive brand elements. The levels
of the hierarchy might include the corporate or company brand
at the top, followed by a family brand used in more than one
product category, an individual brand that typically is restricted
to one product category, and a modifier that designates a specific
item or model. Because a company’s marketing activity may
result in different types of associations becoming linked to the
brand names at various levels of the hierarchy, each name has
the potential to impact the equity of brands at levels above and
below it.
202
UNIT III
VLEADERSHIP IN BRAND
UNIT 89
CHAPTER
The choice of branding strategy depends upon a number of
different factors, including corporate objectives and capabilities,
consumer behavior, and competitive approaches. Consequently,
strategies differ significantly between firms and even across
products within firms. In addition to designating the optimal
hierarchy, a company must also design marketing support
programs that create the desired awareness and associations at
each level. In general, associations for a higher-level brand
should be relevant to as many brands below it as possible,
while brands at the same level should be as differentiated as
possible.
Brand Focus discusses cause marketing. Cause marketing
provides the following benefits to corporations: building brand
awareness, enhancing brand image, establishing brand credibil-
ity, evoking brand feelings, creating a sense of brand
community, and eliciting brand engagement. The Brand Focus
discusses several charitable campaigns in detail, including the
Avon Breast Cancer Crusade and the Liz Claiborne Women’s
Work campaign against domestic violence, as well as environ-
mental or “green” marketing.
Discussion Questions
1. Pick a company. As completely as possible, characterize its
brand portfolio and brand hierarchy. How would you
improve the company’s branding strategies?
Answers will vary.
2. Do you think the Nestle corporate image campaign
described in the chapter was successful? Why or why not?
What do you see as key success factors for a corporate image
campaign?
Nestle’s revenues, profits, and stock price have risen steadily
since the advent of its corporate image campaign. The
question for students will be to determine to what extent
this success is due to the campaign versus other business-
related factors.
3. Contrast the branding strategies and brand portfolios of
market leaders in two different industries. For example,
contrast the approach by Anheuser Busch and its Budweiser
brand with that of Kellogg in the ready-to eat cereal
category.
Anheuser-Busch employs its umbrella brand in corporate
image advertisements, but its individual beverage brands
retain their own identity distinct from the umbrella brand;
however, Anheuser-Busch does reinforce the link between
many of its individual brands and the umbrella in
advertising and packaging. Kellogg’s pursues an
endorsement strategy with its brands, keeping a more
obvious link between its cereals and the parent brand.
4. What are some of the product strategies and
communication strategies that General Motors could use to
 further enhance the level of perceived differentiation vision based on a strategic imperative that will not get funded.

BRAND MANAGMENT
between its divisions? An empty brand promise is worse than no promise at all.
As far as product strategies go, GM could minimize overlap Higher in the Organization
between its divisions by eliminating models with similar In the classic brand management system, the brand manager
positionings within different divisions. Also, GM could was too often a relatively inexperienced person who rarely stayed
alter up its product line to keep the divisional positionings in the job more than two to three years. The strategic
distinct from one another. For example, many have perspective calls for the brand manager to be higher in the
criticized the Cadillac Escalade in spite of its success because organization, with a longer-term job horizon; in the brand
Cadillac has traditionally stood for luxury cars, not trucks. leadership model, he or she is often the top marketing
From a communications standpoint, GM might avoid professional in the organization. For organizations where there
running umbrella advertising campaigns that emphasize the is marketing talent at the top, the brand manager can be and
GM name, using divisional and individual product ads often is the CEO
exclusively.
Focus on Brand Equity as the Conceptual Model
Brand Leadership-the New Imperative The emerging model can be captured in part by juxtaposing
The classic brand management system has worked well for brand image and brand equity. Brand image is tactical-an
many decades for P&G and a host of imitators. It manages the element that drives short-term results and can be comfortably
brand and makes things happen by harnessing the work of left to advertising and promotion specialists. Brand equity, in
many. However, it can fall short in dealing with emerging contrast, is strategic asset that can be the basis of competitive
market complexities, competitive pressures, channel dynamics, advantage and long-term profitability and thus needs to be
global forces, and business environments with multiple brands, monitored closely by the top management of an organization.
aggressive brand extensions, and complex sub brand structures. The goal of brand leadership is to build brand equities rather
As a result, a new model is gradually replacing the classic brand than simply manage brand images.
management system at P&G and many other firms. The Brand Equity Measures
emerging paradigm, which we term the brand leadership The brand leadership model encourages the development of
model, is very different. As the Figure summarizes, it empha- brand equity measures to supplement short-term sales and
sizes strategy as well as tactics, its scope is broader, and it is profit figures. These measures, commonly tracked over time,
driven by brand identity as well as sales. should reflect major brand equity dimensions such as
Brand Leadership – The Evolving Paradigm awareness, loyalty, perceived quality, and associations.
Identifying brand identity elements that differentiate and drive
customer-brand relationship is a first step toward creating a set
The Classic Brand The Brand Leadership Model
Management Model of brand equity measures.
From Tactical to Strategic Management
Perspective
Brand Manager Status
Tactical and Reactive
Less Experienced, shorter time
Strategic and Visionary
Higher in the organization, longer time
From A Limited To A Broad Focus
horizon horizon In the classic P& G model, the scope of the brand manager was
Conceptual Model Brand Image Brand Equity
Focus Short-term financials Brand Equity measures limited to not only a single brand but also one product and one
From a Limited To Broad Focus
Product market scope Single products and markets Multiple products and markets market. In addition, the communication effort tended to be
Brand Structures
Number of brands
Simple
Focus on single brands
Complex Brand Architectures
Category Focus-multiple brands
more focused(with fewer options available), and internal brand
Country Scope Single Country Global Perspective communication was usually ignored. In the brand leadership
Brand manager’s Coordinator of limited options Team leader of multiple
communication role communication options model, the challenges and contexts are very different, and the
Communication Focus External/customer Internal as well as external
From Sales to Brand Identity as Driver of Strategy task has been expanded.
Driver of Strategy Sales and share Brand Identity
Multiple Products and Markets
In the brand leadership model, because a brand can cover
From Tactical to Strategic Management multiple products and markets, determining the brand’s
The manager in the brand leadership model is strategic and product and market scope becomes a key management issue.
visionary rather than tactical and reactive. He or she takes control
of the brand strategically, setting forth what it should stand for
in the eyes of the customer and relevant others and
communicating that identity consistently, efficiently, and
effectively.
Product scope involves the management of brand extensions
To fill this role, the brand manager must be involved in creating and licensing programs. To which products should the brand
the business strategy as well as implementing it. The brand be attached? Which products exceed the brand’s current and
strategy should be influenced by the business strategy and target domains? Some brands, such as Sony, gain visibility and
should reflect the same strategic vision and corporate culture. In energy from being extended widely; customers know there will
addition, the brand identity should not promise what the always be something new and exciting under the Sony brand.
strategy cannot or will not deliver. There is nothing more Other brands are very protective of a strong set of associations.
wasteful and damaging than developing a brand identity or Kingsford Charcoal, for instance, has stuck to charcoal and
products directly related to charcoal cooking.

203

BRAND MANAGMENT
Market scope refers to the stretch of the brand across markets.
This stretch can be horizontal (as with 3M in the consumer and
industrial markets) or vertical (3M participating in both value
and premium markets). Some brands, such as IBM, Coke and
Pringles, use the same identity across a broad set of markets.
Other situations, though, require multiple brand identities or
multiple brands. For example, the GE brand needs different
associations in the context of jet engines than it does in the
context of appliances.
The challenge in managing a brand’s product and market scope
is to allow enough flexibility to succeed in diverse product
markets while still capturing cross-market and cross-product
synergies. A rigid, lockstep brand strategy across product
markets risks handicapping a brand facing vigorous, less-
fettered competitors. On the other hand, brand anarchy will
create inefficient and ineffective marketing efforts.
Complex Brand Architecture
Whereas the classic brand manager rarely dealt with extensions
and sub brands, a brand leadership manager requires the
flexibility of complex brand architectures. The need to stretch
brands and fully leverage their strength has led to the
introduction of endorsed brands(such as Post-its by 3M,
Hamburger Helper by Betty Crocker, and Courtyard by
Marriott) and sub brands(such as Campbell’s Chunky, Wells
Fargo Express, and the Hewlett-Packard’s Laser Jet) to represent
different product markets, and sometimes an organizational
brand as well.
Category Focus
The classic P&G brand management system encouraged the
existence of competing brands within categories-such as
Pantene, Head & Shoulders, Pert and Vidal Sassoon in hair care-
204
because different market segments were covered and
competition within the organization was thought to be healthy.
Two forces, however, have convinced many firms to consider
managing product categories (that is, groupings of brands)
instead of a portfolio of individual brands.
First, because retailers of consumer products have harnessed
information technology and databases to manage categories as
their unit of analysis, they expect their suppliers to also bring a
category perspective to the table. In fact, some multi continent
retailers are demanding one single, worldwide contact person
for a category, believing that a country representative cannot see
enough of the big picture to help the retailer capture the
synergies across countries.
Second, in the face of an increasingly cluttered market, sister
brands within a category find it difficult to remain distinct, with
market confusion, cannibalization, and inefficient communica-
tion as the all-too-common results. Witness the confused
positioning overlap that now exists in the General Motors
family of brands. When categories of brands are managed,
clarity and efficiency are easier to attain. In addition, important
resource-allocation decisions involving communication budgets
and product innovations can be made more dispassionately and
strategically, because the profit-generating brand no longer
automatically controls the resources.
Under the new model, the brand manager’s focus expands from
a single brand to a product category. The goal is to make the
brands within a category or business unit work together to
provide the most collective impact and the strongest synergies.
Thus, printer brands at Hp, cereal brands at General Mills, or
hair care brands at P&G need to be managed as a team to
maximize operational efficiency and marketing effectiveness.
Category or business unit brand management can improve
profitability and strategic health by addressing some cross-brand
issues. What brand identities and positions will result in the
most coherent and least redundant brand system? Is there a
broader vision driven by consumer and- channel needs that can
provide a breakthrough opportunity? Are there sourcing and
logistical opportunities within the set of brands involved in the
category? How can R&D successes be best used across the
brands in the category?
Global Perspective
Multinational brand management in the classic model meant an
autonomous brand manager in each country. As the task of
competing successfully in the global marketplace has changed,
this perspective has increasingly shown itself to be inadequate.
As a result, more firms are experimenting with organizational
structures that support cohesive global business strategies,
which involve sourcing, manufacturing, and R&D as well as
branding.
The brand leadership paradigm has a global perspective. Thus a
key goal is to manage the brand across markets and countries in
order to gain synergies, efficiencies, and strategic coherence.
These perspective adds another level of complexity-Which
elements of the brand strategy are to be common globally and
which are to be adapted to local markets? Implementing the
strategy involves coordination across more people and organiza-
tions. Moreover, developing the capability to gain insights and
build best practices throughout the world can be difficult.
Communication Team Leader
The classic brand manager often just acted as the coordinator
and scheduler of tactical communication programs. Further, the
programs were simpler to manage because mass media could be
employed. Peter Sealey; an adjunct professor at DC Berkeley,
‘has noted that in 1965 a P&G product manager could reach 80
percent of eighteen- to forty-nine-year-old women with three
60-second commercials. Today; that manager would require
ninety-seven prime-time commercials to achieve the same result.
Media and market fragmentation has made the communication
task very different
In the brand leadership model, the brand manager needs to be
a strategist and communications team leader directing the use
of a wide assortment of vehicles, including sponsorships, the
Web, direct marketing, publicity, and promotions. This array of
options raises two challenges: how to break out of the box to
access effective media options, and how to coordinate messages
across media that are managed by different organizations and
individuals (each with separate perspectives and goals). Address-
ing both challenges involves generating effective brand identities
and creating organizations that are suited to brand management
in a complex environment
Furthermore, rather than delegating strategy, the brand manager
must be the owner of the strategy-guiding the total communi-
cation effort in order to achieve the strategic objectives of the
brand. Like an orchestra conductor, the brand manager needs to
stimulate brilliance while keeping the communication compo-
nents disciplined and playing from the same sheet of music.
Internal as Well as Eexternal Communication
Communication in the new paradigm is likely to have an
internal focus as well as the usual external focus on influencing
the customer. Unless the brand strategy _can communicate with
and inspire the brand partners both inside and outside the
organization, it will not be effective. Brand strategy should be
owned by all the brand partners.
From Sales to Brand Identity as the Driver of
Strategy
In the brand leadership model, strategy is guided not only by
short term performance measures such as sales and profits but
also by the brand identity, which clearly specifies what the brand
aspires to stand for. With the identity in place, the execution can
be managed so that it is on target and effective
The development of a brand identity relies on a thorough
understanding of the firm’s customers, competitors, and
business strategy. Customers ultimately drive brand value, and a
brand strategy thus needs to be based on a powerful, disci-
BRAND MANAGMENT
plined segmentation strategy, as well as an in-depth knowledge
of customer motivations. Competitor analysis is another key
because the brand identity needs to have points of differentia-
tion that are sustainable over time. Finally, the brand identity, as
already noted, needs to reflect the business strategy and the
firm’s willingness to invest in the programs needed for the
brand to live up to its promise to customers
Strategic Relevance of Branding
A brand is much more than the name per se or the creation of
an external indication that the product or service has received an
organization’s imprint or its mark.
A Brand Aims to Segment the Market
Brand building is part of a strategy aimed at differentiating the
offering companies try to better fulfill the expectations of
specific groups of customers. They do so by consistently and
repeatedly providing combination of attributes-both tangible,
practical and symbolic, visible and invisible value-under
conditions that are economically viable for the company. The
company wants to leave its mark on a given field, and sets its
imprint on the particular offering.
A Brand starts with a Big Idea
The first task in branding: defining just what the brand infuses
into the product or service. Branding, however, is not based on
what goes on, but what goes in. the result is an augmented
product or service which must be indicated in one way or the
other if it is to be noticed by potential buyers, and if the
company is to reap the fruits of its efforts before it is copied by
others.
A Brand has an Enduring Value
If a brand is merely a label, then such a product would lose its
value as soon as it loses its sign of brand identification. Instead,
it continues to incarnate the brand: the brand’s passing presence
has transformed the product. This explains the value of Lux
soap when it carries HLL label for the past 75 years; similarly,
Adidas shoes, stripped of its name, will hardly see much
consumer pull. They are worth more than counterfeit imitations
because the brand image is present even when it cannot be seen.
In contrast, though the brand level may appear on an imitation,
it will actually miss the undercurrent of consumer’s personal
attachment with the offering.
A Brand tries to Protect Your Innovation
Brands become known through the products they create and
bring on to the market. Whenever a brand innovates, it
generates ‘me-too-ism’. Any progress made quickly becomes the
standard to which buyers become accustomed to. Competing
brands most often follow through and at times bring out
improved versions as they do not want to fall beneath the
market expectations. For a short time, an innovative brand
enjoys monopoly, but it will be a fragile one unless the
innovation is patented or patentable. In other words, the role
of brand name is to protect the innovation-it creates a “mental”
patent. This is nothing other than the just reward for
205
 innovation, making an effort, and taking risks. A snapshot of a
BRAND MANAGMENT
given market will often show similar products. A dynamic
vision, however, reveals who has innovated and pulled the
competition along in the wake of its success.
A Product may Die But the Brand will Sustain
A brand protects the innovator, granting momentary
exclusiveness and rewarding the willingness to take risks.
Brands cannot be reduced to a symbol or a product or a merely
graphic and cosmetic exercise. A brand is the signature on a
constantly renewed, creative process. Products are introduced,
they live and disappear, but the inner or core value of the
original brand endures. This consistency of creative action is
what gives the brand its meaning, its content and its character.
Creating a brand requires time to build up that identity.
A Brand is a Living Memory
The spirit of the brand can only be inferred through its
products and its advertising. The content of the brand grows
out of the cumulative memory of various acts, provided they
are governed by a set of unifying ideas or guidelines. The
importance of memory in encompassing a brand explains why
its image can vary structurally from generation to generation.
The Strategic Plan
A strategy gives business a defined route to follow and a clear
destination. Build a marketing strategy and you will ensure that
marketing is a long-term way of working, not a one-off activity.
A marketing strategy provides organisation with shared vision
of the future. All too often, an organisation will perform a
marketing task, such a direct mail shot, then sit back and see
what happens. A strategic approach will ensure that you
maximise returns on your marketing spending and boost the
profits of your organisation.
A Strategic marketing manager has a clear picture of the
future, anticipates changes in the market and works towards
clear long/term goals
A Non-strategic marketing manager lives day to day without
planning, reacts to changes in the market and has only short-
term objectives
During the creating of the marketing strategy the marketing
manager should proceed as follows:
1. Create the team
2. Review current situation
3. Set objectives
4. Plan action
5. Implement strategy
6. Review strategy
1 Create Your Team
The first steps during preparation of the marketing strategy are
the hardest part. It is important to bring together a strong team
to help to prepare the marketing plan. The strategic elements
must be understood by every member of team in order to
assure the marketing success.
It is important to involve the people whose function touches
on marketing, and those whose job involves considerable
customer contact. Before embarking on your marketing strategy,
206
establish common ground by agreeing definitions and purpose.
Build the team unity; perhaps by organizing an away day at a
pleasant venue to discuss shared marketing issues and concerns.
Show that you recognise the contribution each team member
can offer.
2. Review Current Situation
- perform a SWOT analysis
SWOT (Strengths, Weaknesses, Opportunities and Threats)
Analysis of these four factors provides information on how to
shape your marketing strategy. Devise objectives aimed at
strengthening weak areas, exploiting strengths, seizing opportu-
nities, and anticipating threats.
Team Assignment – Marketing SWOT Analysis
Identify your 4 strengths, weaknesses, opportunities and threats
answering the questions below:
• Do you suit your strengths to full advantage? Could you do
more to capitalise on them?
• Are there current or future opportunities you could exploit?
Are new markets emerging or are there existing, untapped
customer groups?
• What threats do your competitors pose? What threats exist
in wider marketplace?
• What lets you down? What are you not good at? What do
your competitors do better?
3. Setting Objectives
Draw up your objectives carefully, because your entire marketing
strategy will be structured around them, and ensure that they are
measurable so that you can evaluate their success.
Short-term objective can be staging posts on the way towards
fulfilling long-term goals. Analyse your situation and then ask:
“What if we do nothing?” Will products become out of date?
Will your competitors grow more powerful? Spend time asking
“what if ?” to help you realize the effects of not keeping up
with customer needs and competitor activities. It can serve to
spur action.
If you have devised a set of objectives around which to build
your marketing strategy, seek agreement for them across the
organisation. Marketing is a discipline that cuts through many
departmental boundaries. Marketing activity will have a knock-
on effect in various parts of the operation so, for it to be
effective, you will need the support of colleagues. Ensure they
understand the need for these objectives and the impact they
may have on their work.
4. Plan Action
Investigate constraints, such as time and money, and then create
a timetable of activity to give you a working marketing plan.
The activities on your marketing timetable should be manage-
able and workable. The costs of not undertaking certain
marketing activities, both in missed opportunities and the effect
on your reputation, should be taken into consideration.
Look at your marketing ideas and work out the costs of each.
Remember that marketing involves meeting customer need at a
profit. To be justified, marketing activity should have a positive
impact on the balance sheet. Examine not only the costs but
also the benefit. An advertising company may cost a lot of
money, but if it reaps profit amounting to several times its
costs, is it cheap.
5. Implementing Strategy
Some organisations invest considerable effort in developing a
strategy but enthusiasm and energy wane when it comes to
implementation. Ensure that your marketing strategy is put
into the action, not let to gather dust on a shelf. Assign each
task or activity due for implementation within the next 12
months to a named person.
6. Review Strategy
The world is not static. Things within your organisation or
within your market are likely to change over the time. If they do,
you might need to redefine your objectives. Review your
objectives six-monthly or annually to check that you are till on
track.
Answering the following questions will help you evaluate the
success of your marketing strategy:
• Have profits increased since the strategy was implemented?
• Have we seen an increase in our customer base?
• Have we attracted a greater number of orders, or larger
individual orders?
• Has the number of product/service enquiries risen?
• Has awareness of our organisation and its products or
services increased?
The Strategic Marketing Plan : ACTIVITY
One of the main objectives of strategic brand management is
to help you understand how to create niche for your product in
the market among existing competitors. By now you should
have a fairly good notion of the main ingredients of a strategic
marketing plan. Now it’s time to pull it all together and
culminate The Marketing Game with a professional-style
strategic marketing plan.
Perhaps a good way of approaching this is to imagine that your
marketing team is being replaced (you’ve done such a good job
that you and your marketing team have executed your stock
options and plan to immediately retire to pasture in Vermont)
and that one of your last functions is to present a written
formal strategic marketing plan to the new, incoming marketing
team. So sit back and take a good look at your progression
through the past decision periods and come up with a brilliant
BRAND MANAGMENT
strategic marketing plan that will cover the next decision period
for the incoming marketing team.
Be concise. You have 10 double-spaced pages maximum of
text, plus any number of graphs and exhibits that are necessary.
I will not determine your grade by weighing your reports, so
don’t just add dozens of exhibits for the sake of adding stuff
to your report. I expect that most reports will be about eight to
ten pages. I don’t think you need more than ten pages to do
this report, but I think it will be difficult to do it in, say, five
pages or less.
Be precise. {Quanitification for Clarification} Be specific
when making claims and statements. For example, “we sold
more in period 6 than in period 7” is too vague. How much
more? One unit? 500 units? 60% more? Give some real
numbers to clarify your statements. Or, “our brand awareness
was high” is another example of a phrase that needs some
quantification for clarification. How high? Even the highest
brand awareness in the industry might be “low.” Or, “our sales
increased by 2% from period 2 to period 7” is too vague
because it doesn’t specify what kind of sales, e.g., gross sales?
retail sales in rupees? Retail sales in units? It is critically
important to be precise.
Be coherent. Don’t just piece together a bunch of paragraphs
different people wrote without making them a coherent whole.
If I can’t understand what you wrote, I can only assume that
you didn’t understand it either when you wrote it. This is a
very important part of packaging your “product.” You and I
may have some brilliant thoughts and ideas, but if they are not
presented coherently, who will ever know how brilliant our
ideas are? When a graph is placed in a section of the paper, be
sure to discuss it. Graphs and exhibits that are not discussed in
the text of the paper will be absolutely ignored or considered an
annoyance.
Be logical. Your conclusions, summaries, recommendations
and so forth should all follow logically from your data and
arguments. And, don’t make up stuff that didn’t happen, e.g.,
don’t say you’ve been targeting the student segment if the
historical data shows you weren’t. What you did and didn’t do
has already happened. You can’t change history, but you can use
it to build on the future of your firm.
Be creative. Since you have wide creative latitude in your
exhibits, graphs and tables, you should be able to dazzle us
with your brilliance. You have lots of data to make tables and
graphs that help you tell your story. Please label (number and
title) the exhibits very carefully and precisely. Don’t just stick
exhibits and graphs in the paper for the heck of it. If you put
an exhibit in the paper, you must use it and refer to it in the text
of your paper. That’s part of being concise. So, be creative, but
not at the expense of being concise. Most of you are already
very good at using Word, Excel, Power point.
Be proud of this report. Your name is on this paper, so make
sure it reflects positively on you. This is a report you may want
to keep in your portfolio for those job interviewers who ask
you have ever written a business plan.
207
 Polaris Case
BRAND MANAGMENT
Brand Strategy
Polaris partners with companies, consultants and advertising
agencies to more effectively support brand strategy in each phase
of development. Consumers, businesses, and the market
appreciate and reward brand strategy leaders that project quality,
competence, value, and reliability. Now, more than ever, strong
branding strategies are the key to a company’s successful
marketing plans.
Branding Strategies Provide Footholds to Successful
Competition.
Polaris supports strong branding strategies by providing the
quantitative research information and data platform needed to
work through key brand identity, positioning and strategy
decisions. We collect the information through one of our in-
house data collection methods (out-bound telephone calls,
Internet surveys, or Interactive Voice Response Interviewing).
We design program according to customers segments
(commercial, industrial, or residential) and customize it
according to specified parameters (e.g., profitability segments,
demographic or marketing groups). We typically conduct
enough surveys to be able to project our findings out onto the
entire population or target market. After the results from the
brand strategy research are collected, we develop a detailed
summary of findings, issues and opportunities for use in
creating branding strategies as well as determining what the
brand is perceived to be today and help you plan for tomorrow.
An Article
Brand is the Best Growth Strategy
Making coffee the other day, it occurred to me that too many
New Zealand companies were playing the role of the beans.
They were being ground down to dust in a desperate search to
extract the last drop of value.
This leads me to believe that the expectations of shareholders
and markets have a lot to answer for. Right now, too many of
them are hindering our public companies. And that’s because
everybody it seems, is working in the short term. This quarter.
The next six months. And they’re pressurising senior decision
makers to constantly deliver to that timeframe.
The easiest and most visible way to do that of course is to
focus on efficiency and cut costs. If you’re only as good as your
last quarter, then every decision has a three month imperative.
Problem : that’s not a sustainable solution and it doesn’t grow
value. Efficiency-hunting contributes to a better, leaner, faster-
to-market organisation. It adds to the bottom line because it
subtracts cost. But to fund it, companies are only playing the
short game and milking their cash cows dry.
The intriguing thing about this approach is that companies get
to look “busy”. They appear to be doing things. Shareholders
feel like things are happening. It’s good stuff to read about over
the morning newspaper and a latte. But this approach doesn’t
create value so it can’t grow the business.
Sure, KPIs will be hit, bonuses will be paid and dividends will
go out in the post. All thanks to being more lean and efficient.
But longer term, these measures don’t differentiate any
208
company from the competition. Two reasons: because they’re
largely invisible to your customers (or they should be); and
because everyone else is trying to do exactly the same. That can
only go on for so long before the underlying fundamentals will
be affected.
Actions rarely work in isolation, and efficiency-hunting alone is a
cop-out. It’s relatively easy to continue to find fault, to churn
people, to chop away at expenditure. Negativity is something
anyone can become good at, with practice. It has to be done –
but it can’t be all that is done.
Companies need more balance, spending less time thinking
about what they can rationalise, less money on the consultants
they pay to “lose weight” and more time thinking about
growing businesses that actually appeal to customers. Being
recognised is one thing - being valued and consistently chosen is
another. The best way to deliver value to shareholders is to
generate it.
I’m not saying that’s easy. It’s not. Growth is hard. Growth
demands affirmative actions. It requires companies to recognise
what they’re good at, where they need to go and what they will
need to be good at in the future. It’s a long-term strategy for a
short-term world. It isn’t something you can outsource. But it
is something you can brand.
Brand is an effective growth strategy because brand is the only
stand-out strategy directed at the people who matter – the
people who work for you and those who buy from you and
continue to choose you. Strong branding is how every great
organisation defines its purpose, is known and remembered. It
delivers top of mind and emotional connection. In fact, great
branding does something that defies logic. It gives you
personality.
It pushes them to commit to you long-term because they
understand you, can relate to you, even like you. Not merely
because you communicate and act relevantly, but because you
deliver them what they’re actually looking for and have been
asking for.
No other growth strategy does this. No other aspect of
business forges this level of relationship, recognition, under-
standing successfully. Embedding brand within an organisation
requires multiple integrated actions, not merely a veneer of
image to do this. You must constantly work to close the gap
between reality and your staff and customers’ needs and
aspirations. To do this, brand must be a central mechanism to
focus and drive forward your organisation on the power of its
relationships.
Dismiss marketing as fluff if you want to, but in coffee terms,
branding is the difference between a cappuccino and a flaccid
white. Which would your staff and customers rather stomach?
Branding Brief 11-9cleaning Up The Philip Morris
Image
Philip Morris, a company best known for its tobacco brands
such as Marlboro and Virginia Slims, drew a significant amount
of negative publicity during the state lawsuits against tobacco
companies in the 1990s. In response to the publicity crisis, the
company initiated an image campaign in 1999 using ads that
detailed the company’s commitment to one of four issues:
hunger, disaster relief, underage tobacco use, and domestic 2. Designing a brand strategy involves decisions regarding the

BRAND MANAGMENT
violence. Philip Morris has donated $60 million a year to number of levels to use, how brand elements at different
support these causes, and its annual $100 image campaign levels will be combined for a given product, and how brand
advertises its involvement using the tagline “Working to make a elements will be linked to multiple products.
difference. The people of Philip Morris.” The ads also 3. Each successive level in a brand hierarchy allows the firm to
emphasize the humanitarian efforts of two other companies communicate additional, specific information about
owned by Philip Morris – Kraft and Miller Brewing. With the products.
campaign, the company hoped to communicate to consumers
4. In general, associations for a higher-level brand should be
that it is more than a tobacco company
relevant to as many brands below it as possible, while
In a separate program, Philip Morris spent $100 million on its brands at the same level should be as differentiated as
“Think, Don’t Smoke” campaign against youth smoking. possible.
Philip Morris also developed a website (www.philipmorris.com)
that provided information on the links between smoking and Notes
health problems like cancer and heart disease. The site con-
tained links to U.S. Surgeon General’s reports, the World Health
Organization, and the American Cancer Society. “This is going
to go on for a long time,” said, Victor Han, vice president,
corporate communications at Philip Morris. He added, “We
expect people to be skeptical.” Indeed, some critics were
skeptical. Martyn Straw, president of Interbrand said, “There’s a
difference between doing something and telling people you’re
doing something.”
In 2001, Philip Morris announced plans to change its name to
Altria. A new logo, a multicolored square resembling a mosaic
with the word Altria imprinted on it, was to replace the old
Philip Morris crest. The name Altria, a coined name derived
from the Latin altus, or “higher,” was seen by many as a
calculated move by Philip Morris to distance itself from its
heritage as a tobacco firm. A marketing executive with
Interbrand applauded the move, saying “its about time.”
Another expert cautioned that the company would face the
challenge of convincing people “that their new brand is
meaningful.”
Exercises and Assignments
1. Have students select a brand with a multiple-level brand
hierarchy and analyze the supporting marketing
communications program to determine how the upper- and
lower-level names are linked and differentiated.
For example, what benefits do Kellogg’s Eggo Country
Sunshine Waffles receive from each level of the brand hierarchy?
How are these benefits communicated in advertising and
promotion? How do the waffles product relate to other
products that share brand names in the hierarchy?
2. Assign students the task of identifying pairs of competing
brands with different branding strategies (for example,
Kraft salad dressing and Wishbone, Arm & Hammer
deodorant and Dry Idea, Hershey’s chocolate bar and Baby
Ruth). What conclusions, if any, can be drawn from
comparing and contrasting the types of associations
consumers have for each brand in the pair?
Key Take-Away Points
1. Branding strategy is important as a means of enabling
consumers to understand and connect with the brand, since
it can help consumers organize a company’s products and
services in their minds.

209
BRAND MANAGMENT
LESSON 32:
BRAND EVALUATION AND PLANNING
Upon completion of the lesson, you should be able to
understand the following:
1. Issues related to brand planning.
2. Brand dimensions
3. Managing brand over their life cycles
4. Commercial evaluation of Brand Equity
5. Calculation of brand equity
Maintaining The Brand’s Core Value
In previous chapters, we stressed the point that brands succeed
because marketers have a good appreciation of the assets
constituting their brands. By recognizing which aspects of their
brands are particularly valued by consumers, marketers have
invested and protected these attributes, sustaining their value
and maintaining consumer loyalty. Any pressures from
accountants or factory managers to cut support for these core
values have been strenuously resisted.
Over time consumers learn to appreciate the core values of
brands and remain loyal to their favourite brands since they
represent bastions of stability, enabling consumers confidently
to anticipate their performance. It therefore behoves companies
to have a statement of their brand’s values which is given to any
manager working on the brand, whether internal or external to
the firm, in addition to all of the most senior management
team. There needs to be a mechanism in place whereby any
marketing plans for the brand are carefully considered against
the statement of core values to ensure that none of the core
values are adversely affected by any planned activity.
Having a statement of core brand values ensures that changes in
advertising agencies, aimed at breathing new creative life into the
brand, will be in a direction consistent with the brand’s heritage.
It can also act as a ‘go-no-go’ decision gate when managers are
faced with the need to respond to an increasingly hostile
commercial environment. In the first half of the 1990s Lever’s
brand of washing powder, Persil, faced increasing challenges
from Procter & Gamble’s brands, such as Ariel. Little innova-
tion was evident until Lever’s research laboratory developed a
revised formulation for Persil with manganese accelerator. Up
until this innovation, one of Persil’s values was that of a caring
brand, caring about whiteness, skin, washing machines and
mothers’ reputations. One might question whether this
technological enhancement reinforced the caring value, but faced
with an aggressive competitor Lever decided to change Persil’s
formulation. To get Persil Power to market as quickly as
possible, only very limited field trials were undertaken. Alas,
problems were discovered with Persil Power, which Ariel used
to their advantage. Lever pulled back from Persil Power and
210
with New Generation Persil it returned to its core values. Clearly
managers have to respond to short term threats, but referring
back to the statement of brand values should help identify
strategies which build, rather than diminish the brand’s core
values.
A further advantage of having a statement of brand values is
that it enables managers to check their interpretation of the
brand against the agreed view. By so doing they can then
evaluate the appropriateness of their planned actions. Managers
wisely concentrate on matching their target market’s needs and
are rightly concerned about not letting their brand fall against
competitive actions or changing consumer needs. However,
what is often overlooked is the question do all of the brand’s
team have the same views about the brand’s values?’ Brands
don’t just die because of the external environment their life can
be shortened by a lack of consistent views amongst a brand’s
team. In a study amongst the senior management firms
operating in financial services markets de Chernatony and Took
found that amongst the twelve firms interviewed, while there
were many managers in each team sharing similar views about
the nature of their brand, in all of the firms there were manag-
ers had idiosyncratic views about particular aspects of their
brand. Bearing in mind that these interviews were undertaken
with senior managers responsible for staff and significant
resources, idiosyncratic views could result in different depart-
ments almost pulling against each other as they separately enact
the brand’s strategy. Not only is it worth having a widely
circulated statement of brand values, but on an annual basis,
when brand plans are being prepared, an independent party
should audit all members of the brand team about their
interpretation of their brand’s values. Where individuals have
diverse views about aspects of the brand, these should be
pointed out and through discussions any issues resolved.
Any plans to cut back on investments affecting the core values
of the brand should be strenuously opposed by strong-willed
marketers. By ensuring that everyone
working on a particular brand is regularly reminded of the
brand’s values, an integrated, committed approach can be
adopted, so that the correct balance of resources is consistently
applied. Checks need to be undertaken to ensure that any frills
which do not support the brand’ values are eliminated and that
regular consumer value analysis exercises, rather than naive cost-
cutting programmes, are undertaken to ensure the brand’s
values are being correctly delivered to consumers.
Bridging the Brand’s Values
There is danger that, when guarding the consistency of their
brand’s core values over time, managers become too focused on
considering their brand in terms of its individuals values.
Whilst this is an important part of brand analysis, it should be
recognized that brands are holistic entities whereby the
individual values are integrated into a whole whose strength
comes from interlinking parts. Managers therefore need to
consider how their brand’s component values are synergistically
integrated to form a more powerful whole. A branding
consultancy, Brand Positioning Services, has developed a
technique which enables managers to appreciate how bridging
between these parts makes the brand stronger and enables it to
attain the optimal positioning.
Brand Positioning Services conceptualize the brand as being
composed of three components. The functional component
characterizes what the product or service does. The psychological
component describes which of the user’s motivational,
situational or role needs the product or service meets and the
evaluative component considers how the brand can be judged.
The brand as the figure shows, can then be considered as the
integration of these three components
Evaluative
Functional Psychological
The Integrated Brand
Consumers do not consider any of these three components in
isolation. When a brand of soft drink is described as being
functionally full of energy, consumers’ perceptions of the brand
may evoke thoughts of a healthy lifestyle. Thus the functiona1
component of the brand is assessed within the perspective of
its psychological associations. For an integrated brand both the
functional and psychological components need to work
together. When this is the case they are regarded as bridged and
a single word should describe the benefit both these
components satisfy.
When developing a brand of toothpaste, there are many
functional needs it could satisfy, such as the desire for white
teeth or to fight bacteria. Colgate Palmolive decided that their
brand, Colgate Toothpaste, would focus on fighting bacteria,
thereby reducing likelihood of problems such as cavities,
plaque, tartar and bad breath. Psychologically, some consumers
are worried by the prospect of regular visits to dentists and the
social embarrassment of bad breath. Analysis indicated that
Colgate Toothpaste could be positioned in terms of protection,
since this word bridged the functional and psychological needs,
leading to an integrated brand. Likewise Comfort Fabric
conditioner is about softness, which bridges the functional and
psychological components.
BRAND MANAGMENT
Several competing brands may be able to meet consumers’
needs in a particular category. To give the firm’s brand a lead
over competition managers need to suggest to consumers how
to judge competing brands and encourage evaluation along a
dimension their brand excels on. This is the third component
of the brand, the evaluator. It was decided that Colgate
Toothpaste should be about trusted protection and that
Comfort Fabric Conditioner should about loving softness.
A unique two-word statement for each brand - the evaluator
plus the bridged need - not only defines the brand’s positioning
but also enables managers to consider their brand as a holistic
entity. While it is laudable to understand the core values
constituting essence of the brand so that they can be protected
over time, these need to be integrated to produce a holistic
brand. The procedure that Brand Positioning Services have
developed is a helpful way of getting managers to think beyond
the component parts to arrive at integrated whole.
Since a brand is the totality of thoughts, feelings and sensa-
tions evoked in consumers’ minds, resources can only be
effectively employed once an audit has been taken of the
dimensions that define it in the consumer’s mind. To appreciate
this planned use of resources, it is therefore necessary to
consider the dimensions that consume use to assess brands.
Defining Brand Dimensions
When people choose brands, they are not solely concerned with
one single characteristic, nor do they have the mental agility to
evaluate a multitude of brand attributes. Instead, only a few key
issues guide choice.
In some of the early classic brands’ papers, our attention is
drawn to people buying brands to satisfy functional and
emotional needs. One has only to consider everyday purchasing
to appreciate this. For example, there is little difference between
the physical characteristics of bottled mineral water. Yet, due to
the way advertising has reinforced particular positionings, Perrier
is bought more for its ‘designer label’ appeal which enables
consumers to express something about their upwardly mobile
lifestyles. By contrast, some may buy Evian more from a
consideration of its healthy connotations. If consumers solely
evaluated brands on their functional capabilities, then the
Halifax and Abbey National, with interest rates remarkably
similar to other competitors, would not have such notable
market shares in the deposit savings sector. Yet the different
personalities represented by these financial institutions influence
brand evaluation.
This idea of brands being characterized by two dimensions, the
rational function and the emotionally symbolic, is encapsulated
211
 in the model of brand choice shown in Figure. When consum-
BRAND MANAGMENT
ers choose between brands, they rationally consider practical
issues about brands’ functional capabilities. At the same time,
they evaluate different brands’ personalities, forming a view
about them which fits the image they wish to be associated
with. As many writers have noted, consumers are not just
functionally orientated; their behaviour is affected by their
interpretation of brand symbolism. When two competing
brands are perceived as being equally similar in terms of their
physical capabilities, the brand that comes closest to matching
and enhancing the consumer’s self concept will be chosen.
Rational Overt Emotional Covert
Reasoning Reasoning
Functionalism Symbolism
Brand Selection
Components of Brand Choice
Interms of the functional aspects of brand evaluation and
choice consumers assess the rational benefits they perceive from
particular brand, along with preconceptions about efficacy, value
for money, and availability. One of the components of
functionalism is quality. For brands that are predominantly
product-based Garvin’s work has shown that when consumers,
rather than managers, assess quality they consider issues such as:
• Performance, for example the top speed of a car;
• Features-does the car come with a CD stereo system as a
standard fitting;
• Reliability-will the car start first time every day it’s used;
• Conformance to specification- if the car is quoted to have a
particular petrol consumption when driving around town
consumers expect this to be easily achieved;
• Durability, which is an issue Volvo majored on showing the
long lifetime of its cars;
• Serviceability-whether the car can go 12 months between
services;
• Aesthetics which Ford’s KA majored upon in its launch;
• Reputation-consumers’ impressions of a particular car
manufacturer.
At a more emotional level, the symbolic value of the brand is
considered. Here, consumers are concerned with the brand’s
ability to help make a statement about themselves, to help
them imterpret the people they meet, to reinforce membership
of a particular social group, to communicate how they feel and
to say something privately to themselves. They evaluate brands
in terms of intuitive likes and dislikes and continually seek
reassurances from the advertising and design that the chosen
brand is the ‘right’ one for them.
212
Managers Brands Over Their Life Cycles
So far, this lesson has focused on clarifying what combination
of marketing resources best supports a particular type of brand,
given point in time. It needs to be appreciated, however, that
the returns from brands depend on where they are in their life
cycle.
Different types of marketing activities are needed according to
whether the brand is new to the market, or is a mature player in
the market. In this section, we go through the main stages in
brands’ life, cycles and consider some of the implications for
marketing activity.
Developing and Launching New Brands
Traditional marketing theory, particularly that practiced by large
fast moving consumer goods companies, argues for a well-
researched new product development process. When new
brands are launched, they arrive in a naked form, without a clear
personality to act point of differentiation. Some brands are
born being able to capitalize on the firm’s umbrella name, but
even then they have to fight to establish their own unique
personality. As such, in their early days, brands are more likely to
succeed if they have a genuine functional advantage; there is no
inherent goodwill, or strong brand personality, to act as a point
of differentiation.
New brand launches are very risky commercial propositions. To
reduce the chances of a new brand not meeting its goals, many
firms rightly undertake marketing research studies to evaluate
each stage of the brand’s development amongst the target
market. Sometimes, however, very sophisticated techniques are
employed, lengthening the time before the new brand is
launched. While such procedures reduce the chances of failures,
they introduce delays, which may not be financially justified. It is
particularly important that delays in the development
programmes for technological brands are kept to a minimum.
For example, it was calculated that if a new generation of laser
printers has a life cycle of five years, assuming a market growth
rate of 20 per cent per annum, with prices falling 12 percent per
annum, delaying the launch of the new brand by only six
months would reduce the new brand’s cumulative profits by a
third.
Marketers launching new technological brands need to adopt a
are more practical approach, balancing the risk from only doing
pragmatic, essential marketing research against the financial
penalties of like laying a launch. The Japanese are masters at
reducing risks with new technology launches with their so called
‘second fast strategy’ hey are only too aware of the cost of
delays and once a competitor has a new brand on the market, if
it is thought to have potential, they will rapidly develop a
comparable brand.
New product failures should not be seen as a hunt for a scap
goat. Instead, analysis is needed to learn from the failures and
these results rapidly fed back to improve the next generation of
products. Just as the archer’s arrow rarely hits the centre of the
target the first time, but does so on the second trial, so the
analogy of using learning to further refine new brand concepts
needs adopting
There are several benefits from being first to launch a new brand
in a new sector. Brands which are pioneers have the opportunity
to gain greater understanding of the technology by moving up
the learning curve faster than competitors. When competitors
launch ‘me-too’ versions, the innovative leader should be
thinking about launching next generation technology. Being
first with a new brand that proves successful also presents
opportunities to reduce costs due to economies of scale and the
experience effect.
One of the nagging doubts marketers have when launching a
new brand is that of the sustainability of the competitive
advantage inherent in the new brand. The ‘fast-follower’ may
quickly emulate the new brand and reduce its profitability by
launching a lower-priced brand. In the very early days of the
new brand the ways in which competitors might copy it are
through:
• Design issues, such as color, shape, size;
• Physical performace issues, such as quality, reliability,
durability;
• Product service issues, such as guarantees, installation,
aftersales service;
• Pricing;
• Avalilability through different channels;
• Promotions;
• Image of the producer.
If the new brand is the result of the firm’s commitment to
functional superiority, the design and performance characteristics
, probably give the brand a clear differential advantage, but this
will soon be surpassed. In areas like consumer electronics, a
competitive lead of a few months is not unusual. Product
service issues can sometimes be a more effective barrier. For
example, BMW installed a software chip in their engines that
senses, according to the individual’s driving style, when the car
needs servicing. Only BMW garages have the ability to reset the
service indicator on their cars’ dashboards. Price can be easy to
copy, particularly if the follower is a large company with a range
of brands that they can use to support a short-term loss from
pricing low. Unless the manufacturer has particularly good
relationships with distributors that only stock their brand,
which is not that common, distribution does not present a
barrier to imitators.
Managing Brands During The Growth Phase
Once a firm has developed a new brand, it needs to ensure that
it hall a view about how the brand’s image will be managed over
time. The’ brand image is the consumers’ perceptions of who
BRAND MANAGMENT
the brand is and what it stands for, i.e. it reflects the extent to
which it satisfies consumers’ functional and representational
needs.
At the launch, there must be a clear statement about the
extension to which the brand will satisfy functional and
representational needs. For example, Lego building bricks,
when originally launched in 1960, were positioned as an
unbreakable, safe toy, enabling children to enjoy creativity in
designing and building
As sales rise, the brand’s image needs to be protected against
inferior, competitive, look-alikes. The functional component of
the brand can now be reinforced, either through a problem-
solving specialization strategy, or a problem-solving
generalization strategy. If the specialization strategy were to have
been followed, Lego would have been positioned solely for
educational purposes. It would hay been targeted at infant and
primary school teachers. The problem with this strategy is that
in the long term competitors may develop a brand that meets a
much broader variety of needs. By following a product-solving
generalization strategy, the brand is positioned to be effective
across a variety of usage situations. This was the route that
Lego actually followed.
The original approach to supporting the representational
component of the brand needs to be maintained as sales rise.
For example for those brands that are bought predominantly to
enable consumers to say something about themselves, it is
important to maintain the self-concept and group membership
associations. By communicating the brands positioning to both
the target and non-target segments, but selectively working with
distributors to make it diff! cult for the non-targeted segment
to buy the brand, its positioning will be strengthened:
Managing Brands During The Maturity Phase
In the maturity part of the life cycle, the brand will be under
considerable pressure. Numerous competitors will all be trying
to win greater consumer loyalty and more trade interest. One
option is to extend the brand’s meaning to new products. A
single image is then used to unite all the individual brand
images.
Where the brand primarily satisfies consumers’ functional
needs, these functional requirements should be identified and
any further brand extension evaluated against this list to see if
there is any similarity between the needs that the new brands
will meet and those being satisfied by an existing brand. Where
there is a link between the needs being satisfied by the existing
brand and the new needs fulfilled by a new product., this
represents an appropriate brand extension.
213
 Managing Brands During The Decline Phase
BRAND MANAGMENT
As brand sales begin to decline, firms need to evaluate carefully
the two main strategic options of recycling their brand or
coping with decline.
When the brand is recycled the marketer needs to find new use
for the brand, either through the functional dimension, or the
representational dimension. A good example of functional
brand recycling is the Boeing 727 aircraft. In the late 1960s, rising
oil prices made this) aircraft less attractive to airline companies
and sales fell. Boeing refused to let this brand die and rede-
signed the 727, making it moral economical on fuel. Sales of the
brand recovered between 1971 and 1979with this functional
improvement. Guinness is a classic example of how a brand
was repositioned to capitalize on demographic change, with
marketing activity focusing on representational. Spearheaded by
a novel promotional campaign, Guinness was sure Successfully
repositioned in the 1980s away from an ageing consumer group
to younger drinkers.
Should the firm feel there is little scope for functional or
representational brand changes, it still needs to manage its
brands in the decline stage. If the firm is committed to frequent
new brand launches, it does not want distributors rejecting new
brands because part of the firm’s portfolio is selling too slowly.
A decision needs to be taken about whether the brand should
be quickly withdrawn, for example by cutting prices, or whether
it should be allowed to die, gradually enabling the firm to reap
higher profits through cutting marketing support.
A Systematic Procedure for Revitalizing Brands
When looking to revitalize old brands, one way of progressing
is to follow the procedure shown in the figure below
Acceptable, relevant quality and image?
Understand Brand’s Core values
Manage relationship with consumers
Presence of unique idiosyncrasy?
Check for coordination in brand
presentation
Eventful brand relaunch
Stages in Rejuvenating Brands
A considerable amount of data has been collected by the
Strategic Planning Institute (Buzzell and Gale 1987), looking at
those factors that are strongly related to profitability. One of the
214
key findings was that superior quality goes hand-in-hand with
high profitability. But, it is not quality as defined from an
internal perspective but from consumers’ perspectives relative to
the other brands they use. The slamming of a car door and the
resultant ‘thud’, says more to many consumers about a car’s
quality than does a brochure full of technical data. The first
stage in any revitalization programme should, therefore,
investigate what consumers think and feel about the brand.
This can be done using a minimum of ten depth interviews,
where consumers are presented with the firm’s and competitors’
brands and their perceptions of relative strengths and
weaknesses explored. It is particularly important that this be
done using qualitative research techniques, since this identifies
the attributes that are particularly relevant to consumers. The
findings can then be assessed with more confidence by
interviewing a much larger sample of consumers with a
questionnaire incorporating the attributes found in the depth
interviews.
The qualitative market research findings will broadly indicate the
physical characteristics of the brand are perceived, such as
product formulation, packaging, pricing, availability, etc. They
should also provide guidance about emotional aspects of the
brand, such as the type of personality that the brand represents.
The sorts of issues here may lead to questions such as, is it old
fashioned? is it ‘fuzzy’? is it relevant? is it too closely linked to
an infrequently undertaken activity? Also by investigating
changes in demography, social activities, competitive activity and
distribution channels, the marketer should then be able to
identify what changes might be needed for the brand’s position-
ing.
With ideas beginning to evolve about positioning and person-
ality changes, the marketer needs to consider how these would
affect what the brand has always stood for. Managers need to be
clear about their brand’s core values. Any changes from the first
part of the process need to be considered against the brand’s
core values. Marlboro stands for dominance, self-esteem, status,
self-reliance and freedom. , As it faces an increasingly hostile
environment, any changes to make it more acceptable should
not go against these core values.
The marketer needs to consider what type of relationship their
brand has had with consumers and whether this is still relevant.
For example, it may well have adopted an authority figure’
relationship, treating the consumer almost as an inexperienced
child. Without sufficient knowledge of the product field, the
consumer may well be content to abdicate responsibility to the
brand since it offers an al most paternalistic reassurance.
However, as buyers become more’ experienced they will be
looking for a ‘husband-wife’ type relation ship, where they are
treated as an equal, and with some respect. If the marketer has
not allowed the brand to recognize the more mature nature of
the consumer the wrong type of relationship may impede
brand sales.
Brands succeed because people recognize and value their
personalities. But, just as people are not perfect, so brands need
to have some idiosyncratic element to make them more human.
If the brand needs revitalizing, one way to bring it more alive, is
to add an idiosyncratic element. Examples of this are the
Hathaway man with the eye-patch advertising shirts. Once a
view has been adopted about possible changes, these must be
carefully coordinated to ensure that each element of the
marketing mix supports the new proposition. What is then
required, is a promotional launch that rapidly gets the message
across about the rejuvenated brand.
Brand Evaluation
Growing Brand Equity
The previous chapters we have considered how resources can
best be employed to develop and sustain powerful brands.
Once managers have been successful in using these resources
for branding purposes, they will need to monitor the health of
their brand. In order to be able to sustain their brands’
strengths they reequip method of regularly monitoring
performance. Managers are particularly interested in measuring
the equity that has been built up by their brand. Delving deeper
into this issue of measuring brand unity reveals that it is a
multi-dimensional concept.
Commercial Models of Brand Equity Growth
Models, have also been developed by commercial organizations.
Young & Rubicam: have their own interpretation of the brand
equity growth process. According to their model, brand equity
growth is achieved by building on four brand elements:
differentiation; relevance; esteem; and familiarity.
Differentiation represents the starting point of the growth
process, as the brand cannot exist in the long run unless
consumers can distinguish it from others. To attract and retain
consumers, the brand needs to convince them that it is
relevant to their individual needs. As competition increases,
marketers wisely protect their brand and show consumers that it
delivers what has been promised. The next challenge for
managers is to ensure that consumers have regard and esteem
for the brand’s capabilities. If the brand has established itself as
distinctive, appropriate and highly-regarded, its ultimate success
will depend on familiarity, that is whether the brand is truly
well known and is part of consumers’ everyday lives. Familiarity
does not solely depend on advertising, albeit this is a notable
contributor, but also results from consumers recognizing that
the brand provides more value than other brands.
Young & Rubicam’s empirical analysis indicates that scores on
relevance and differentiation provide an assessment of the
brand’s potential for growth, and they refer to this as ‘brand
BRAND MANAGMENT
vitality’. Furthermore, scores on esteem and familiarity measure
the brand’s current strength, its ‘brand stature’. By plotting
these values on the matrix, shown in Figure, it is possible to
consider the equity the brand has achieved and identify appro-
priate strategies for its future growth
The Strategic Direction of Brand Strength
Initially a brand begins its life in quadrant A with low ,scores on
all attributes. For the brand to move upwards into quadrant
Band gain more vitality, managers need to invest in attaining
higher levels of differentiation and relevance. Once brands have
reached a higher level of ‘vitality’, brand owners have two
options - maintenance by establishing them as niche brands, or
investing in building the brand’s esteem and encouraging
growth into quadrant C. The top right-hand quadrant is home
to strong brands which have achieved remarkable brand equity
growth, though they still may have potential for further growth.
By maintaining the brand’s stature and creatively managing its
vitality, managers can look forward to the brand having a long
lifetime. However, without sufficient maintenance of the
brand’s vitality, its differentiation and relevance fall, resulting in
the brand increasingly selling on price promotions and declining
to quadrant D. In such a situation, the brand becomes
vulnerable to price wars. As firms lose confidence in a brand’s
future, they cut marketing support, resulting in familiarity and
esteem falling. Consequently brand equity falls as the brand slips
back to quadrant A.
The framework by Young and Rubicam helps managers to
understand the concept of brand equity and highlights which
aspects of the brand (differentiation, relevance, familiarity and
esteem) need attention over the short and long term. Moreover,
by comparing the position of the company’s brands with that
of competitors’ brands, the model suggests appropriate
strategies to increase brand equity and protect it against competi-
tion.
Millward Brown International have devised a helpful diagnostic
tool which, like the Young and Rubicam approach, enables
managers to appreciate the basis for their brand’s ‘equity
compared with competing brands. Their Brand Dynamics TM
215
 pyramid model is shown in Figure 11.3, portraying the way
BRAND MANAGMENT
consumers’ value of a brand grows from a distant to a closely-
bonded relationship.
The Criteria to Assess The Strength of A Brand
To be considered for purchasing a brand must have a presence,
both physically in terms of availability and psychologically in
terms of awareness: Should people find the promise inherent
in the brand to be relevant to their particular needs, they are
more likely to progress to trying the brand, forming a view
about its performance. Evaluation of the brand’s functional
and emotional performance capabilities, relative to other brands,
leads consumers to a view about its relative advantages. If these
advantages are particularly strong they are likely to continue
buying the brand and over time a bonded relationship results.
The benefit of this diagnostic is that by interviewing consumers
about competing brands in a market, their profiles can be
assessed on the pyramids. Through comparing these profiles,
strengths and weaknesses can be identified, enabling appropri-
ate strategies to be devised.
Measuring Brand Equity
Brands are complex concepts which can be characterized by
several dimensions. Therefore, evaluating the health of a brand
by measuring its brand equity necessitates taking several
different measures along several different dimensions.
Our interpretation of brand equity is heavily influenced by
Fieldwork’s insightful review (1996) of the literature on brand
equity along with the work of Aaker (1996) and Keller (1993).
We have adapted Feldwick’s model and regard brand equity as
‘the differential attributes underpinning a brand which give
increased value to the firm’s balance sheet’. An important word
in this definition is differential, since consumers usually evaluate
a brand relative to the brands they perceive it competing against.
The definition can be understood in terms of the causal model
shown in Figure
Brand Attributes
• Awareness
• Image
Brand Strength
• Perceived
• Leadership
Quality
• Price premium Brand Value
• Perceived Value
• Loyalty
• Personality
• Market share
• Organizational
and
associations
distribution
216
The Causal Nature of Brand Equity
In essence, the relative attributes of brand will affect its strength
and this in turn will be reflected in the financial value of the
brand. Measuring brand equity should therefore involve an
investigation of these three components. Drawing on the
published literature about the different types of measures,
managers are able to choose from the following ways of
evaluating each of the linkages.
Brand attributes The response by a consumer to a brand will,
as Keller (1993) so cogently argued (1993), depend on their
favourable or unfavorable knowledge about it. Their brand
knowledge results from their level of awareness and the images
they have about the’ brand. Thus, these two core components
are at the heart of any brand attributes.
Brand awareness reflects the salience of a brand and facilitates
consumers’abilities to identify the brand with a specific product
category. Aspects of brand awareness can be measured through
the following ways:
Brand recognition - This refers to the consumer’s ability to recall
previous exposure or experience with the brand. for example,
‘Have you seen this brand before, or not?
Brand recall- This refers to the consumer’s ability to retrieve the
brand from memory when given the product category as a cue.
For example, ‘What brands of lager are you aware of?’. Brand
dominance - This identifies the most important brand in a
specific product category. For example ‘Which brand of lager do
you drink most often?
Brand knowledge - This evaluates the consumer’s interpretation
of the values linked to a brand. For example ‘To what extent do
you agree or disagree that the following cars have high accelera-
tions?’.
Brand image reflects consumers’ perceptions of a brand’s
characteristics and can be gauged by the associations they hold in
their memory. The different types of brand associations can be
grouped according to: their level of abstraction; the amount of
information held; whether they are product-related or non-
product-related; and whether they refer to attributes considered
essential by consumers. There are different tools to measure the
brand image:
Projective techniques are helpful when consumers are unable or
unwilling to express their feelings. These techniques include:
sentence completion - ‘When I buy a personal computer, I look
for...’; brand personality descriptors - ‘The typical driver of a
Ford Fiesta is ...’; and picture interpretation - there may be a
picture of a man driving his new BMW into a golf club’s car
park and two golf players are looking on - what would they say
to each other about the driver?
• Qualitative techniques, such as free association, are used to
explore possible associations along with further
investigation during group discussions or depth interviews.
Ratings of evaluations and beliefs are suitable to capture
consumers’ views on key attributes and the strength of their
associations with particular brands.
Comparison of brand associations with those of competitors
identifies the relative strengths and weaknesses of the brand.
For example, ‘Of the fruit juice brands that you identified
earlier, which one do you believe to be the best? Why is it better
than the other brands? What don’t you like about it compared
with the other brands?’.
Aaker’s work (1996) enables us to delve deeper into measuring a
brand’s attributes and its strength as we explore. Perceived
quality is an important brand attribute and can be measured by
comparing the brand with its competitors, using scales such as:
• Above average, average and below average
• Consistent quality and inconsistent quality
To measure perceived quality, consumers should first be asked
which category they perceive the brand to be in and against
whom it competes. Without asking this, there is a danger that
managers, which are not relevant to consumers, might specify
inappropriate competitors might be specified by manager which
are not relevant to consumers.
Perceived value indicates the extent to which the brand meets
performance expectations, given its price. It can be measured by
considering value for money and the reasons for purchase, for
example:
‘Do you think that the Toyota Corolla represents good value for
money?’
‘Why did you buy the Toyota Corolla rather than another car
brand ?’
The brand’s personality is a useful metaphor to appreciate the
brand’s values and this shows the brand’s emotional and self-
expressive capabilities. This is particularly useful for brands,
which have only minor physical variations and are conspicuously
consumed, for example brandy. In these instances, very few
consumers can distinguish between the taste of different
brands and the brand is used to make a statement about the
user. The brand’s personality can be identified through ques-
tions such as:
‘If brand X came to life, what sort of person would it be?’
‘If brand X were to die, what would be written on its tomb
stone?’
‘What type of person do you think would use this brand?’
‘If brand X were a famous person, who do you think it would
be?’
Organizational associations refer to the perceptions of a
brand that consumers derive from its parent organization. This
dimension is appropriate when the organization is particularly
visible (as in a service business), or a corporate branding strategy
is being used, such as Ford. Positive associations provide a
valuable basis for differentiation. Measurements focus on how
consumers consider the organization, for example:
‘Do you trust this brand, knowing it comes from...?’
‘How do you feel about this organization?’
‘How would you describe the people that work for this
organization?’
Brand Strength
As a consequence of its attributes, the strength of the brand can
be gauged. Another set of measures needs to be used to assess
brand strength.
Leadership not only identifies the most successful brand, but
BRAND MANAGMENT
also whether it is technologically or socially innovative within its
category. This dimension can be measured, besides using
market audit data, with questions such as:
Do you regard brand X as being a leading, ‘rather than follow-
ing brand?’
‘Is brand X the first to break with tradition?’
‘Does brand X offer you the latest technological development?’
‘Is brand X a fashion leader in its category?’
The price premium reflects the brand’s ability to command a
higher price or to be less price sensitive than its competitors.
This measure needs to be defined relative to those brands
consumers consider as substitutes. A brand’s price premium can
be identified by informing consumers of the price of competi-
tors’ brands, then asking consumers how much more, or less,
they would pay for the brand. A more involved, albeit some
argue a more reliable method, is to use trade-off analysis. A
simpler way of assessing the price premium of the brand is
employed by Intel who regularly interview potential customers,
asking how much discount they would require before they
would accept a PC without ‘Intel Inside’. .
Price premium is not a suitable measure in markets with legal
restrictions which prevent companies from charging a premium
price. Also, it is not appropriate for strong brands,
such as Swatch, that intentionally charge lower prices to keep
competitors out of the market, or for brands such as Mars Bars,
that have no direct substitutes for their products.
There are numerous measures of loyalty, for example measur-
ing actual purchasing behaviour over time which reflects the
degree of satisfaction, existing customers have with the brand.
Loyalty can also be gauged asking questions such as:
‘Next time you buy this product category, would you buy this
brand again?’
‘Thinking about the few
brands of this product
category that you often
buy, is this brand one
of your more frequently
bought brands?’
‘If someone were thinking of buying this product, which
brand would you recommend?’
Managers should be aware that the responses to these questions
may reflect past ‘behavior rather than intended future behavior
and that the favorableness of replies may be more a reflection
of brand size than loyalty.
Another method of measuring loyalty is provided by the
concept of ‘Share of Category Requirement’ (SCR). The SCR
for, Ski yogurts volume expressed as a share of all yogurt
bought by consumers who purchase Ski yogurt during a
defined period, such as a year. An alternative is to define loyalty
by considering consumers’ purchasing patterns over time and
estimating the probability of their buying the brand on the next
purchasing occasion. However, this analysis should also include
data on price
217
 variations, as most patterns are strongly influenced by promo-
BRAND MANAGMENT
tions.
Market share and distribution data indicates brand strength
without recourse to consumer surveys. To obtain realistic
results, however, marketers need to define the market and the
competitor set from consumers’ perspectives and recognize that
market share indicators are often distorted by short-term price
and promotional activities.
The Financial Value of Brands
Debate still continues about whether brands can be included in
the balance sheet and views are split on financially accounting for
brands. Does the balance sheet with an inclusion of the value
of brands represent a subjective appreciation of the brand’s real
value or should the balance sheet reflect a more objective
assessment including completed financial transactions only
when brands are bought?
To be acceptable in financial accounting terms, any brand
valuation method should apply to both acquired and internally-
created brands. One of the problems is that there are different
perspectives on the value of a brand at anyone time. For
example, prior to market bids Rowntree was worth around £1
bn to its shareholders, yet a few months later was worth £2.4
bn to Nestle. Although the value of a brand becomes much
more apparent at the time it is acquired by another company,
there remains uncertainty about the firm’s annual valuation of
its brands and consequently it has been rare up to now to
include the value of created brands in published accounts. In
the absence of a generally accepted standard for brand valuation,
the internally calculated value is subject to various interpreta-
tions.
At the acquisition stage, the brand’s value depends very much
on the purchaser, who will probably value it more if the
acquisition is expected to bring synergy to the company, as was
clearly the case with Nestlé’s purchase of Rowntree. The issue of
reparability of the brand is best illustrated by the words of
John Stuart, former Chairman of Quaker Oats Ltd: ‘If this
business were to be split up, I would be glad to take the brands,
trademarks, and goodwill, and you could have all the bricks and
mortars. And I would fare better than you.’ He is certainly right!
However, a brand’s value is not automatical1y transferable and
the purchase of the brand could negatively affect its value.
When the acquired brand becomes part of a new firm, it is
divorced from the previous firm’s management, culture and
system and, without the flair and networks the previous owners
had, it may lose its consumer base. Any sales are’ strongly
influenced by promotions and shelf visibility, but more
importantly there is also the goodwill from the corporation. In
new hands, with a different corporate halo, the brand might not
be as strong. Brands with unique functional qualities may not
be manufactured in the same way by the purchaser of the
brand. For example, a new company could not easily offer to
consumers of BMW cars the same guarantee of engineering
excellence and reliability without the BMW support.
Valuing brands is fraught with different assumptions. For ex
ample, the valuation of a marketing consultancy at 8 in the
morning when few staff are there is different from its valuation
at 11 in the morning. How do you account for a consultant
218
working out his notice who was particularly successful at
winning new business? In view of the difficulties in valuing
what are essentially clusters of mental associations recognizable
through a name, some companies question the usefulness of
valuing brands for balance sheet purposes. Nevertheless, the
overall trend shows that more companies believe there are
benefits in valuing their brands and have accepted this challenge.
It has been argued that valuing brands is a worthwhile exercise
because it draws attention to the long-term implications of
brand strategies. By including brand values in the company
accounts, managers are forced to identify the long-term effects
of their marketing decisions. Moreover, being forced to
consider long-term effects counterbalances the pressure that
usually drives managers who focus on policies to achieve short-
term profits, but which pay lip service to brand building. Brand
valuation therefore encourages managers to think more about
building brands than market share. Where managers’ perfor-
mance is evaluated on an annual basis by changes in their
brand’s equity, they are more likely to emphasize decisions that
are beneficial to the long-term growth of their brand and are
less inclined to accept quick-fix solutions, such as price-off
promotions, or brand extensions which become too remote
from the core brand and may undermine the value of the
parent brand. The brand represents a major marketing invest-
ment which it would be unwise not to evaluate, despite the fact
that the assumptions underpinning the brand valuation process
affect the resulting figure.
The value of the brand also differs according to whose perspec-
tive is considered. From a firm’s point of view, a brand’s value
is derived from the incremental cash flow resulting from
associating the brand with a product. For example, in a
television factory once jointly owned by Hitachi and General
Electric, Hitachi was able to sell the same product as GE but
labeled Hitachi with a £50 premium, and at twice the volume. A
brand brings three competitive advantages to the firm: it
provides a platform from which to launch new products and
licenses; it builds resilience in times of crisis as seen by the quick
sales recovery following the incident when Tylenol was tam-
pered with; and it creates a barrier to entry, for instance,
formidable barriers are present through names such as Nike,
Rolls-Royce and Chanel. From a trader’s perspective, the value
of a brand lies in its ability to attract consumers into their
stores. From a consumer’s point of view, the brand has value
since it distinguishes the offering, reduces their perceptions of
risk and reduces their effort in making a choice.
To manufacturers, retailers’ and consumers’ brands have value
and therefore it IS night that some attempt be made to quantify
this. While one might argue whether Marlboro’s 1996 valuation
of $44.6 bn is precisely correct, the issue really is that this is a
multi-billion dollar asset and regular tracking is needed to assess
how different branding activities are affecting its value.
The debacle at Saatchi & Saatchi illustrates how the value of a
brand is heavily dependent on the intangible goodwill inherent
in the brand’s associations, which can fluctuate over time. In
1994 Maurice Saatchi was ousted as chairman of this famous
advertising agency after the share price had fallen from £50 in
1987 to £1.50. At the time of his departure the company re-
branded itself as Cordiant. As a direct result of his leaving the
company, it lost business worth £50 m and during the follow-
ing six months its market value decreased by another third.
However, the Saatchi brand came to life again in the new
company founded by Maurice Saatchi, called M&C Saatchi,
which benefited from ‘Saatchi’ intangible assets such as their
creative employees and the clients he had taken with him.
Methods of Measuring the Financial Value of a
Brand
We will now review five methods used to measure the value of
a brand.
The first approach aims to calculate the brand’s value on the
basis of its historic costs. These are the aggregated investment
costs, such as marketing, advertising and R&D expenditure,
devoted to the brand since its birth. However, an assumption is
being made that none of these costs were ineffective. By virtue
of little more that its heritage, a 10O-year old brand is more
likely to have had more investment than a 20-year old brand.
The management team needs to agree how the historical costs
should be adjusted for past inflation. Since several years have to
pass before it is evident whether the brand is successful, when
should a company start to include the brand value in its balance
sheet? Another drawback of this method is that it ignores
qualitative factors such as the creativity of advertising support.
The value of a brand also depends on unquantifiable elements,
such as management’s expertise and the firm’s culture. Finally,
there is also the question of financially accounting for the many
failed brands that had substantial sums spent on them, out of
which experience the successful brand arose. Overall this
approach to brand valuation raises many questions and without
well-grounded assumptions could be problematic.
Another approach is that of comparing the premium price of a
branded product over a non-branded product: the difference
between the two prices multiplied by the volume of sale of the
branded product represents the brand’s value. However, it is
sometimes difficult to find a comparable generic product. For
example, what is the unbranded counterpart of a Mars Bar?
This method also assumes that all brands pursue a price-
premium strategy. It is clear that the brand value of Swatch or
Daewoo for example could not be assessed on this basis when
equivalent competitive brands are sold at a higher price.
The valuation of a brand based on its market value assumes
the existence of a market in which brands, like houses, are
frequently sold and can be compared. However, since such’ a
market does not yet exist there is no means of estimating a
market price other than putting the brand up for sale on the
market. Moreover, while the seller usually sets the price of a
house, the price actually paid for a brand is determined by the
strategy of the buyer, who may plan for the brand to playa very
different role from its existing one. For example, Unlived paid
BRAND MANAGMENT
£70 m for Boursin just to gain shelf-space for its expansion
plans for other parts of its brand portfolio.
Some have proposed valuing brands on the basis of various
consumer-related factors, such as recognition, esteem and
awareness. These are all important elements of brands and high
scores on these are indicative of strong brands. However, it is
very difficult to derive a relationship from an amalgam of these
factors to arrive at an objective valuation. For example, most
consumers are aware that Rolls-Royce is a famous brand, but
what value should be placed on it? Worst of all, however, is the
fact that there are many famous brands, such as Co-op, with
very little value attached to them.
Yet another way of valuing a brand is to assess its future
earnings discounted to present-day values. The problem,
however, with this method is that it assumes buoyant historical
earnings levels, even though a brand may be being ‘milked’ by
its owners. One of the most widely accepted ways of assessing
the brand value is provided by Interbred (Birkin 1994). In order
to determine brand value, a company must calculate the benefits
of future ownership, i.e. current and future cash flows of the
brand, and discount them to take inflation and risk into
account. The Interbrand approach is based on the assumption
that the discount rate is given by a ‘brand multiple’, representa-
tive of the brand strength. For example, a high multiple
characterizes a brand in which the firm is confident of a
continuing stream of future earnings and consequently
represents low risk for the company. This also translates into a
low discount rate.
The Interbrand method is similar to deriving a company’s
market value through its price I earnings (P IE) ratio. This
provides a link between the share capital and the company’s net
profits and thus the brand multiple can be applied to a single
brand within the company to calculate its value’. Just as the P/E
ratio equals the market value of the company divided by its
after-tax profit, likewise the brand multiple equals the value of
the brand divided by the profit generated by this brand, i.e.
P/E = Market value of equity/Profit
Brand Multiple = Brand Equity/Brand Profit
To calculate the brand value, we multiply the brand profit by the
brand multiple:
Brand profit x Brand multiple = Brand equity
When calculating the brand profit several issues need to be
considered. A historical statement of the brand’s profit is first
required since as a good approximation tomorrow’s profits are
likely to be similar to today’s, provided there is no change in
brand strategy. The brand profit should be the post-tax profit
after deducting central overhead costs. There may be instances
where the same production line is used for both the
manufacturer’s brand and several own labels. Where this is the
case, any profits arising from shared own label production need
to be subtracted.
The next stage in arriving at a realistic assessment of the brand’s
profit is to deduct the earning that do not relate to brand
strength. For example, a firm may market two brands of bread.
One competes through major grocery stores against other
219
 branded breads, and the other may be sold to a few distributors Internationality - Brands which have been developed to appeal
BRAND MANAGMENT

who sell this with related products through door-to-door
delivery. Both brands may show similar brand profits, yet the
profit of the first brand is heavily influenced by the strength of
branding, while the profit of the second brand is much more
dependent on the few distributors with their distribution
systems. To eliminate the earnings which do not relate to
branding the most common approach is charging the capital
tied up in the production of the. brand with the return
expected from producing a generic equivalent.
When looking at historical profits, to reduce the effect from any
unusual year’s performance the previous three year profits are
averaged. Following the logic of other forecasting systems, the
more recent profits are likely to be more indicative of future
profits. Therefore, a three-year weighted average is used,
applying a weighting of three to the current year, two to the
previous year and one to the year before that. These aggregated
profits are then divided by the sum of the weighting factors, i.e.
six in this case. If though a change in strategy for the brand is
envisaged these weightings need to be reconsidered. Finally, each
year’s profits should be adjusted for inflation.
Having calculated the brand’s profit, the brand multiple then
needs to be calculated. This is found through evaluating the
brand strength since this determines the reliability of the
brand’s future earnings. lnterbrand argue that a brand’s strength
can be found from evaluating the brand against seven factors:
Maximum scores for the seven strength factors (after
Interbrand, Birkin 1994)
Strength factor Maximum score
Strength factor Maximum Score
Leadership 25
Stability 15
Market 10
Internationally 25
. Trend 10
Support 10
Protection 5
Total Score 100
to consumers internationally are more valuable than national or
regional brands because of their greater volumes of sales and
the investment to make them less susceptible to competitive
attacks.
Trend - The overall long-term trend of the brand shows its
ability to remain contemporary and relevant to consumers, and
therefore is an indication of its value.
Support. The amount, as well as the quality, of consistent
investments and support are indicators of strong brands.
Protection - A registered trademark protects the brand from
competition and any activities to protect the brand against
imitators augers well for the future of the brand.
The brand is audited against these seven factors, with the
maximum scores for each factor shown in the table. By
aggregating these seven scores, the brand strength can be
calculated.
The higher the brand strength score the greater its multiple
score.
Interbrand argues that a new brand grows slowly in the early
stages, then it increases exponentially as it moves from national
to international recognition and then slows down as it
progresses to global brand status. However, experimental
analysis shows that the development of a brand is susceptible
to threshold effects. It gradually acquires strength with consum-
ers and retailers in different stages, but beyond a certain point its
rate of growth is much greater. Research has found that brands
achieve respectable spontaneous awareness scores only after a
high level of prompted awareness has been achieved. Therefore,
the relationship between brand strength and brand multiple
may be better represented by a less regular pattern.
Despite these limitations, the Interbrand method is a popular
method amongst firms valuing their brands and is being
adopted by more companies as a practical way to determine the
value of their brands. Furthermore, firms have growing
historical brand valuation databases enabling managers to assess
which strategies are particularly effective at growing their brands.

Leadership - There is well-documented evidence showing a

strong link between market share and profitability, thus leading
brands are more valuable than followers. A brand leader can
strongly influence the market, set prices ,and command
distribution, thus these criteria must be met to score well on
leadership.
Stability - Well-established brands, which have a notable
historical presence, are strong assets.
Market - Marketers with brands in non-volatile markets, for
example foods, are better able to anticipate future trends and
therefore confidently devise brand strategies than marketers
operating in markets subject to technological or fashion
changes. Thus part of the brand’s strength comes from the
market it operates in.

220

LESSON 33:
PROTECTING BRANDS THROUGH
CONTEMPORARY ISSUES IN BRANDING
TRADEMARKS
Objectives
On completion of this lesson you should know:
a. How to protect brands through trademark registration and
its importance
b. Challenges to Brands
Why Registering Trademarks Matters
TRADEMARKS allow customers to visually distinguish a
company’s products from those of its competitors. One
routinely deals with trademarks while deciding on which brand
of soap (Pears, Lux, Hamam, Camay?) or car (Esteem, Ikon or
Civic?) to buy or which restaurant (Woodlands, Saravana
Bhavan, Pizza Hut?) to go to. Even a symbol, a distinctive look
or a unique decor of a restaurant can serve as a trademark.
Nike’s swoosh trademark, for instance, has enormous worth.
The constant interplay of brands in the public’s mind makes
them valuable tools for a company to speak to its customers.
Brands quietly weave themselves into our lives and influence the
choices we make.
Thus, a company’s trademarks identify the source of the
products or services and enable customers to locate and buy a
particular product, creating important brand loyalty. In the
world of trademarks, therefore, a rose by any other name
simply does not smell just as sweet.
A product’s brand name can be used as a trademark. However, a
trademark can provide much more than a brand name; that is, it
can be a word, a symbol, a design, a slogan, a combination of
any of these, and even a particular sound or smell that serves
the purpose of identifying the source of a company’s products
or services. A trademark helps a customer identify and select the
product or service. In this sense, trademarks provide factual
information about a product, an assurance of known quality,
consistency of standards, and an overall sense of value that the
customer is buying in the purchase of that product.
However, trademarks convey a lot more than mere information
to the public. They beckon with catchy names and slogans,
assuring not just quality but often, a sense of style or pizzazz
that the customer has come to expect, and promise to maintain
the same aura and satisfaction in exchange for customer loyalty.
Trademarks are, therefore, vital to a company’s presentation to
its public, often serving as an introduction of the company to
the customer, as well as to its continuing marketing strategies,
over time defining the “experience” of using a particular brand
for the customer. Simply put, they say a lot without saying it all.
Trademarks are valuable symbols of a company’s goodwill and
reputation. Goodwill accrues with length of use, advertising
and sales of the products and services. With long-term use,
some trademarks can become well-known. Proper use and
policing of one’s trademarks are important to ensure their
continued goodwill and fame. Why is this necessary? There is
always the risk that others will adopt a similar, successful
UNIT IV
CURRENT ISSUES
UNIT 9
CHAPTER 10:
trademark. This may cause confusion as to source of the goods
in the marketplace; and the successful trademark runs the risk of
BRAND MANAGMENT
being diluted in strength, eroding valuable goodwill as well as
losing product sales to the newcomer. Many national trademark
laws protect against such buyer confusion by granting expanded
legal protection to trademarks that are registered. Further, using
brand names to market goods assures not only higher quality to
the purchaser but also translates into higher sales prices for the
company. Unbranded goods are generally sold at significantly
lower prices, lack customer loyalty and face difficulties in being
marketed abroad.
Protection of trademarks through registration makes sense not
just nationally but internationally as well. Trademark rights have
been territorial thus far. A national registration stops at the
border and does not give rights to the owner of the trademark
outside the country in which it is registered. However, today’s
global markets have spilled beyond national boundaries
through sales abroad and through licensing/franchising or
other such arrangements in foreign countries.
Protecting brands in the export markets is, therefore, crucial in
order to reap the benefits of one’s trademarks abroad. The
Internet knows no national boundaries and is providing a
powerful marketplace opportunity.
When considering whether to register a trademark in other
countries, Indian companies should strategically assess how
their markets may realistically expand over the next five years,
where similar products or services are being manufactured or
offered by others, where piracy may be a major concern and
where the company may have manufacturers or other business
affiliations.
For example, if expansion into the European market is a
distinct probability, then that company may wish to seek a
Community Trade Mark (CTM) registration which provides
trademark protection throughout all the countries in the
European Union (EU). This often represents a “best buy”
because the CTM registration covers 15 countries (and counting)
and this can be accomplished with the filing of a single
application. Often, international registration can add up in costs
to a growing company. Accordingly, a tiered approach might be
considered where registration in the different countries of
interest is done in a staggered way over time. The focus should
be on growing the product market in conjunction with
protecting the mark in those new markets.
The value of a trademark depends to a great extent on the level
of commercial activity associated with the mark. Today, for
Indian companies, the US represents the biggest export market.
Therefore, registering the company’s mark in the US strengthens
its ability to compete in the international marketplace effectively
and provides a good starting place for international registration.
Often, Indian companies are constrained by costs of registra-
221
 tion abroad. This is especially true because currently there is no
BRAND MANAGMENT
international trademark registration system available and, the
EU aside, it is necessary to file applications in each country in
which protection is being sought. That being said, filing in the
US still represents a significant step forward for Indian compa-
nies that are launching internationally.
Here are some advantages of filing in the US as a starting point
for an international strategy:
• Registration in the US is still a good deal. The filing fee is
$335 per mark, per class in a application. Prosecution of an
application can be uncomplicated if some thought is given
to the nature of the mark and a search done of existing
marks at the time of application. Although there may be
attorney costs associated with this process upfront, this may
likely assure a clean prosecution or at least one with very few
hurdles. Even if the prosecution of an application costs
$1,500-2,000 (at the high end), this cost amortized over the
registration term of 10 years is only a fraction of the
investment in the mark.
• Application for a trademark can be done based on use of a
mark or an intention to use the mark. So a company can
have an application in place even before it launches use of
its mark for the product or service.
Further, under the Paris Convention for the Protection of
Industrial Property, Indian companies can also apply to
register in the US based on an Indian registration or an
Indian application with a right of priority (that is, the
applicants will get the same filing date for the US application
if made within six months of the Indian application).
• Registration confers prima facie evidence of the validity of
the registered mark, the registrant’s ownership of the mark
and its exclusive rights to use the mark anywhere in the US
(except where challenged by a party’s earlier common law
use).
• Registration offers constructive notice to third parties of the
registrant’s ownership of the mark.
• Making an application with the US Patent and Trademark
Office (PTO) allows the applicant to block later-filed
applications for similar marks from proceeding to
registration. Here the PTO, through its team of examining
attorneys, does all the work in preventing other marks from
being registered, all for the filing fee of $335.
• Federal registrations can be deposited with the US Customs
Service, which will bar the importation of infringing goods
bearing the registered trademark.
It can be a severe financial liability to invest in one’s own brand,
promote it in the domestic market, then find that the brand
cannot be registered and/or used internationally and have to
ultimately abandon that investment. The benefits of registering
a brand can be measured by considering the consequences and
costs of being forced to change one’s mark midstream if the
rights in the mark are not established and maintained carefully
at the outset. Another approach is to compute the value of
one’s right (or the lack of it) to stop competitors from using a
similar mark on the same or related goods. Thus, the benefits
of international registration and protection of one’s trademark
222
clearly outweigh the costs of such registration. An Indian
company that has registered trademarks in the US will find it
easier to market its products in US markets at a competitive
price.
It may also be favorably situated to find a distributor, licensee
or partner in the US or anywhere in the world, because the
registration symbol is likely to provide a basis for the valuation
of the product and the opportunity for the distributor/
licensee/partner.
Once a brand is well recognized, there are likely to be attempts
by others to ride on the goodwill of the company and benefit
from the accrued goodwill, that is, infringe on the trademark.
As mentioned, a trademark registration allows certain presump-
tions to operate in favor of the registrant.
Therefore, enforcement of one’s rights in the mark is enhanced.
A registrant can bring a suit in a US federal court and be eligible
for statutory remedies such as mandatory treble damages and
even criminal penalties in counterfeit cases. Clearly, an Indian
company with a US registration is in an infinitely stronger
position to enforce its valuable rights in its trademarks. Indian
businesses indeed are heading in this direction of international
trademark protection.
Even a regional celebrity such as Nalli Chinnasami Chetty, well
known for its silk saris from Kancheepuram, has taken its name
beyond the borders of Tamil Nadu and India. It has registered
its Nalli mark, both the word mark and the stylised representa-
tion with the PTO, strategically placing itself to tap the
expanding markets for its products abroad.
This registration provides a good platform for Nalli to consoli-
date its brand in the US, avail itself of all the benefits discussed
and to begin to expand its products worldwide. Thus, protec-
tion of one’s trademarks with an international viewpoint in
mind is necessary and vital to being able to fully compete and
succeed in this increasingly global marketplace.
Protecting Brands Through Trademark Registration
By blending all of the assets constituting brands, marketers are
able to develop brands, which build goodwill between the
brand producer and the consumer. As one advertising executive
at Saatchi & Saatchi commented, ‘Powerful brands are just like
families. They persist through thick and thin’. The goodwill
that Coca-Cola has built up over the years is such a valuable
asset that if all its production facilities were destroyed it could
get adequate funds to rebuild them-using the goodwill from
the brand name as security. Likewise, even though Mars
Confectionery does not own property, hires its distribution
vehicles and leases its machinery, it would cost any potential
acquirer hundreds of millions of pounds-to buy this firm,
since what is being brought is not the tangible assets, but the
goodwill and reputation from the Mars name.
Unfortunately, the success of some brands has driven certain
competitors to respond by developing counterfeits, that is to
say, illegally-produced look-alikes, which take advantage of the
inherent goodwill in brand names. It has been estimated by the
Counterfeiting Intelligence Bureau that in 1995 fakes accounted
for 5 per cent of world trade, and they have cost brand manu-
facturers in Europe approximately 100 000 jobs. Some markets
are particularly prone to illegal imitators. For example, 60 per
cent of software in Western Europe, 35 per cent of videocas-
settes in Asia and 25 per cent of audiotapes worldwide are
unauthorized copies.
Some counterfeiters have invested heavily in production
facilities. When Yves Saint Laurent unearthed one illegal copier
and destroyed £11 m of fake perfumes, they found production
machinery valued at £33 m. Unfortunately, with such large sums
to be made from counterfeiting, more sophisticated production
facilities are being built. Glaxo, for example, once seized a
consignment-of 6000 counterfeit packets of Zantac and were
dismayed to discover that the packaging was so professionally
copied that only under microscopes could any differences be
noticed.
To reduce the scope for counterfeiters, marketers can register
their trademarks, employ firms to track down copiers and devise
more sophisticated packaging and batch-numbering processes.
All of these enable brand owners to halt counterfeiters legally -
until they find another way of circumventing the obstacles.
Marketers in the UK can protect their brands under the
Trademarks Act (1994), which follows the EC Trademark
Directive intended to harmonize trademark laws throughout
the European Union. The Act makes it easier for trademark
owners to register and protect their marks more efficiently. It
also ensures that trademarks have the same rights and test for
validity everywhere in the Single Market. Moreover, the Act
broadens the scope for what can be registered as a trademark.
Previously only words, logos, symbols and labels were eligible.
Now potentially any sign may be registered that can be repro-
duced in some graphic form or appears distinctive, as well as
music, jingles, smells, and three-dimensional shapes such as the
traditional Coca-Cola bottle. If the registration process is
followed, greater legal protection is offered.
Trademark registration can be professionally expedited using
trademark agents. They would first check if anyone else has
registered particular trademark, avoiding expensive and embar-
rassing litigation.
Anyone in the UK can submit an application for the registration
of a trademark or a service mark. These applications are,
examined in the Trademarks Registry of the Patent Office to see
whether the goods and services proposed are eligible for
registration. There are a variety of reasons why some brand
names cannot be registered. For example, it is prohibited to
register brand names that are descriptive of the character or
quality of the goods and which other traders or businesses may
legitimately wish to use in relation to their own goods or
services. Furthermore, names that are generic, deceptive,
disparaging, confusing or conflicting with others, cannot be
registered. When evaluating new brand names, legal advice has
to be balanced against marketing needs. For example, lawyers
argue that firms’ existing trademarks are the most protectable
legal option, When IBM first entered the personal computer
market, it did not develop a new brand name. Instead, it
launched the ‘IBM PC’: Not only did it have sound legal
protection, but also it deliberately wanted to take advantage of
its image as being the most dependable computer manufac-
turer. In IBM’s case, there was little danger of the brand’s equity
BRAND MANAGMENT
being diluted.
A balance also needs to be struck between the distinctiveness of
the name and the extent to which it describes the goods that the
brand name stands for. The more it describes the goods, the
more difficult it is to register it. Paper Mate is a good example
of a company getting; the balance right between the brand
name’s communicability and its suitability for registration. Late
in the 1970s it launched an erasable ballpoint pen in Europe,
branded Replay. This was felt not to be able so descriptive of
the product, and it was protectable.
Once the trademark has been successfully registered, it should
be used as soon as possible and implemented with care. If
sufficient attention is not paid to promotional details, there is a
danger of the brand name lapsing into a non-protectable
generic term, In its ad. advertising copy, the Otis Elevator
Company did not insert the line, ‘Escalator is a registered
trademark of the Otis Elevator Company did not insert the line
‘Escalator is a registered trademark of the Otis elevator Com-
pany’ and in a subsequent court case the registration of its
‘Escalator’ trademark was cancelled.
To ensure that the brand name is not being infringed, some
firms employ their staff to monitor retail activities. For
example, Coca-Cola employees visit outlets that do not stock
Coca-Cola and, without identifying themselves, ask for a Coca-
Cola. If they are served a drink, which is clearly not Coca-Cola
without any comment, a sample is sent for chemical analysis,
and if it is not the actual brand, the outlet is asked to refrain
from this action. Failure to comply results in legal action. .
An alternative way of policing the brand is to use private
investigators, such as Carratu International. Particularly when
there is evidence of a very sophisticated channel being used by
counterfeiters, as was the case with Caterpillar parts, this is a very
effective way if blocking imitators. Some firms are now so
concerned about brand infringements, that detectives and legal
costs are a significant expenditure. For example, 0.5 per cent of
Givenchy’s turnover is spent on this.
Some firms are trying to make the copying of their brands
much harder. Glaxo started printing holograms on its packets
of Zantac drugs to deter copiers, but it is only a matter of time
before counterfeiters become more sophisticated. In some
markets, such as car parts, it is much more difficult to apply an
inexpensive security device.
While the Internet offers new opportunities for brands it can
also create legal problems. The geographical and jurisdictional
boundaries that limited the legal concept of trademarks do not
apply to the global communication system of the Internet,
facilitating communication among millions of independent
users. These users rely entirely on their unique Internet name,
i.e. their domain name, for registration and identification.
Currently a user can choose any domain name, provided it has
not yet been registered, almost regardless of the fact that this
might be an existing brand name. A check is done to ensure
that the domain name is unique but no check is done as to
whether the user is entitled to use the same. For example.
Harrods sued opportunists who had registered the domain :
‘harrods com’ to profit from this famous brand. Fortunately
223
 the course applied existing legal rules to the Internet and
BRAND MANAGMENT
ordered the user to hand over the domain name. However,
companies should not merely rely on time-consuming legal
measures with often unpredictable outcomes, but should
proactively register their corporate and brand names as Internet
addresses.
Whilst counterfeiting is likely to pose a continuing threat to
manufacturers, it is only one of the many challenges that face
marketers, who must continually devise added-value strategies
to succeed.
The Challenges to Brands
In order to develop the right sort of brand added values,
marketers need to be aware of some of the factors which can
affect their future. Some of these are:
The Shift From Strategy to Tactics
With the increasing pressure to generate ever-improving
profitability, it is often considered a luxury for managers to
develop long-term strategic plans. This is further exacerbated by
short-term goal setting, which is frequently designed primarily
for the convenience G; the financial community.
A consequence of this is that organizations adopt a ‘crisis
management’ attitude. This short-sightedness is dangerous,
since successful brands have evolved through long-term
commitments to brand support. Furthermore, it illustrates a
rather naive managerial style which is incapable of responding
appropriately to crises.
Developing and Protecting Your Brand
Customers in today’s market are increasingly bombarded with
brands. As markets mature and consumers become savvier, it is
increasingly important for companies to seek ways to
differentiate their brands. Yet as companies spend more on
branding, not many protect this investment at the outset. A
company may only look to protect its investment at a later stage
when problems arise.
Banks, lenders and other financial services companies have
similarities with many other businesses in that they will own
and use brands, which are important to protect, maintain and
exploit.
Avoiding Infringing Others’ Rights
The key to developing a brand is knowing your market: you
should consider whether, deliberately or not, you might have
‘borrowed’ other companies’ indicia (language, logos or
pictures) in developing your new brand. Other people have also
spent time and money developing their brand - it is a small
world and inspiration is often sought from other companies
branding.
One way of ensuring you are not infringing others’ rights is to
undertake a clearance search on your proposed brand. Profes-
sional advice should be sought for this, as trademarks are
registered in classes, and infringements can arise if you use a
trademark in a sector that is similar, but not the same as, a
sector in which it is registered.
Searches should be carried out according to where you are going
to use your brand - if you have a European presence, you
should carry out the search for the European countries in which
224
you trade. Remember that registered trademarks are territorial,
and therefore a competing company’s brand may be registered
in one country but not in another.
Protect Your Investment
Creating a brand can cost a significant sum of money - that
money is investment in the future goodwill of the business
and needs protecting. There are a couple of ways of protecting a
new brand:
• Registering a trade mark (most common)
• Registering a design.
If the brand is unregistered, whether by default or by choice, the
only way a company will be able to protect its brand is through
the law of ‘passing off’. This is a right to seek redress through
the courts where competitors are using the same or similar
brand, giving rise to confusion in the minds of customers. This
confusion can be difficult to establish, so it is usually worth-
while registering the trademark.
Registered Trade Mark
Words, logos and pictures can be registered as trademarks. A
company can make a trademark application if its chosen brand
is:
• Distinctive for the goods or services for which the company
is applying to register it
• Not illegal or immoral
• Not similar or identical to any earlier marks for the same or
similar goods or services.
Trademarks have a great advantage compared to other intellec-
tual property rights, because as long as you keep paying renewal
fees (payable every ten years), they last forever.
Registered Design
A registered design is a registered right for the appearance of a
product (its shape, colours, materials or any ornamentation
applied). Examples include a particular font, the design of a
web page or a logo.
Registered design rights can also protect what are commonly
trademarks. For example, a logo can be registered both as a
design and as a trademark. It is useful to bear this in mind
because if a brand does not meet the requirements for trade-
mark registration, a design registration may be possible.
Furthermore, if you are looking to protect the appearance of
website pages, a trademark cannot help but a registered design
can.
There are two main requirements for design registration. It
must:
• Be novel (for instance not have been in the public domain
for more than 12 months)
• Have individual character.
A registered design right lasts for a maximum of 25 years as
long as the owner keeps
paying renewal fees (payable every 5 years).
Licensing Your Brand
Third-party administrators are often given the right to use the
brands of their principals when providing services on their
behalf. Similarly, strategic alliances are becoming more common,
as can happen when a lender collaborates with an energy
company for it to provide services to the lender’s customers.
Both of these arrangements will commonly include a licence
from the brand owner to the administrator or the strategic
partner (the licensee).
In any licensing situation, whether as a result of outsourcing or
otherwise, the arrangements should include proper trademark-
licensing provisions such as:
• Provisions explaining how the brand can be used - in what
format or colour
• The brand owner’s (the lender’s) ability to check how the
brand is being used by the licensee (the third-party
administrator)
• A prohibition on the licensee to register the brand, or
anything similar, as a trade mark
• A statement confirming that the goodwill in the brand will
still be owned by the brand owner
Obligations on the licensee to inform the brand owner if it
becomes aware that any other person is using the brand
without the owner’s permission, and conversely, if the licensee
becomes aware that the brand infringes any third-party rights
Tips and Traps
• Many companies labour under the misunderstanding that
when you have registered your company name, you do not
need to do anything more to protect your brand. This is
not true, as a company name only gives you the right to
prevent another company registering precisely the same
name - it does not prevent another company trading using
that name or using that name as a product name.
• Trademark or registered design? Registered design rights are
relatively new, and there have been no infringement cases
under the new law. Furthermore, a slight variation in a
design may mean that the registered design right is not
infringed; as a result, the owner would not have sufficient
protection. On balance, trademarks When your trade mark is
registered, let the world know. Use the ® symbol on
brochures and other appropriate written materials.
However, don’t get confused with the copyright © symbol
and trademarks - copyright is designed to protect original
literary artistic and written works (as well as films, music
etc.) and is a different and separate right from trademark
rights.
• When you have your trademark or design rights, this is not
the end of the story. It is important to maintain an audit of
what brands you own, monitor their usage and learn how
to identify infringement and take swift action.
You may see TM - but what does this actually mean? Although
it is often used, it is ‘Totally Meaningless’ in this country and
provides no protection in itself. It is just a name or symbol
used to show that a product is made by a particular company
and legally registered so that no other manufacturer can use it.
The Challenges to Brands
BRAND MANAGMENT
In order to develop the right sort of brand added values,
marketers need to be aware of some of the factors, which can
affect their future Some of these are:
The shift from Strategy to Tactics
With the increasing pressure to generate ever-improving
profitability, it is often considered a luxury for managers to
develop long-term strategic plans. This is further exacerbated by
short-term goal setting, which is frequently designed primarily
for the convenience of the financial community.
A consequence of this is that organizations adopt a ‘crisis
management’ attitude. This shortsightedness is dangerous,
since successful brands have evolved through long-term
commitment to brand support. Furthermore, it illustrates a
rather naive managerial style which is incapable of responding
appropriately to crises.
The Shift from Advertising to Promotions
As a consequence of the increasing pressure on brand managers
to (achieve short-term goals, there is a temptation to cut back
on advertising support, since it is viewed as a long-term brand-
building investment, in favour of promotions which generate
much quicker short-term results. This can be problematic, as is
best summarized by Broad bent’s analogy: If a pilot cuts his
plane’s engines, believing it could cruise adequately without
them (as indeed it would, for a while), one would question his
sanity. When the plane subsequently goes into freefall and the
engines are switched on, and then off again several seconds later
because they were not making that much difference, he would
be regarded as a suicidal maniac. Broad bent’s analogy
exemplifies the accepted view that advertising builds up a stock’
of brand goodwill in consumers’ minds. This takes time,
however. If advertising is subsequently stopped, there may be
only a small reduction in sales for several months while the
stock of goodwill is depleting, but then there will be a rapid fall
in sales. Furthermore, a is proportionately large spend is
needed to raise a fallen brand back its original position.
With such high advertising costs encountered in the launch of
new brands, many brand marketers are questioning whether
they have fully exploited the potential of their old brands
before embarking on risky new brand development. There is
increasing caution out new brand development. This can be
appreciated from an analysis Tesco did of their top 100 lines.
Only twelve of these were, launched in the past ten years. Only
eighteen were launched in the only twenty years. Horlicks, which
was launched in 1883, is a good example of old brand develop-
ment. It was originally promoted as a warming food drink to
help elderly people to sleep. In the 1970s a marked reduction in
sales was noted due to demographic changes, warmer homes
and later eating. Rather than withdrawing the brand and
following an expensive strategy of launching a new brand,
horlicks was successfully repositioned in the late 1970s to a
much broader target market as the natural way to relax. Some of
the many examples of successful old brand development are
Equitable Life, with their focus on Personal Pensions, and
Lucozade, repositioned from being a health tonic for the sick to
a refreshing energizer.
225
 On-line Shopping
BRAND MANAGMENT
Current research predicts that at least 20 per cent of all trade
transactions will be on-line by 2006. On-line shopping is
different from traditional mail order because:
1. Brands are available all the time and from all over the world;
2. information and interactions are in real-time;
3. consumers can choose between brands which meet their
criteria, as a result of selecting information which is in a
much more convenient format for them, rather than the
standard catalogue format.
This poses threats to brands, since some components of added
value, such as the agent or the retail outlet, which originally
added value by matching consumers with suppliers, may well be
eliminated. The brand’s values will be exposed more explicitly.
However, brand will still have a key role, regardless of how
much on-line shopping will grow. In any kind of remote
purchasing they can offer customer a guarantee of quality and
service and will act as a powerful way of facilitating choice in a
world of ever-increasing data.
Brand Advertising on the Internet
Marketers face new challenges as they attempt to leverage the
opportunities offered by the Internet. The web encompasses a
new sale channel as well as a new form of advertising and
allows new forms of customer relationship and sponsorship.
Many brand owners believe in the advertising opportunities
available on the Internet.
Why should consumers want to access the advertising messages
on on the Web and why should they access the Web in the
first place? Using the Web is different from watching television
or reading a newpaper people use it in the same way as they
decide to ‘go places’ or visit a new town. These tourists-
consumers choose to stay, shop, look around or entertain
themselves according to how they feel or how much time they
have. As such in ‘WebTown’ commercial on-line shops need to
offer distinctive advantages, such as a wider produnct range or
more entertainment than traditional competitors, if they want
to become popular ‘sightseeing’ sites.
Retailers’ Names as Brands
An examination of advertisers in 1995 reveals that Procter &
Gamble was the top advertiser, with over £100 m media
support for its numerous brands, all of which have different
brand names. By contrast sainsbury, though the twelfth biggest
advertiser, promoted its name with just over £40 m. The
challenge many brands face, particularly when not strongly
associated with their parent corporation, is that while they
receive advertising support, this does not match the significance
sums major retailers spend developing a clear proposition their
stores and their own brands. With over three-quarters of
packaged grocery sales going through multiple retailers, the
challenge to manufacturers from powerful retailers’ own brands
is indeed daunting. Furthermore, retailers such as Boots, Laura
Ashley, Marks& Spencer and Sainsbury have a particularly
innovative policy of developing new products under their own
names.
226
The Challenges of the Single Market
Pan-European buying groups are becoming more common
with retailers forming alliances to exploit opportunities jointly.
This has resulted in buying groups with considerable power.
The Single Market currently consists of a community speaking
nine different languages with strong nationalistic preferences.
Eventually, there will be a more homogeneous community, as
consumers recognize the advantages of powerful Euro-brands
such as Kellogg and Nescafe. More emphasis on visual
identifiers will help overcome linguistic differences within the
Single Market. It is more likely that brands will be developed at
the outset to appearance consumers in many different countries.
For example, cheese flavored snack from PepsiCo was devel-
oped and tested in the USA and subsequently extended to
fifteen other countries will little change. Strong brands have
richly complex personalities, enabling to adapt and appeal to
consumers in different countries by, for sample, sharing the
same language or adhering to a country’s culture norm. Yet at
the same time successful international brands have a core set of
values which remain constant across countries. International
brands, which remain true to their core values, but have these
enacted in different ways in different countries, are admired,
Since they show respect for their host countries. The well-
travelled consumer appreciates international brands, which
remain true to their core values, since in a foreign land these
brands act as havens of reassurance about guaranteed consis-
tency - albeit presented slightly differently.
Opportunities from Technology
Band marketers are now more able to take advantage of
technology to gain a competitive advantage through time.
Technology is already reducing the lead-time needed to respond
rapidly to changing customer needs and minimizing any delays
in the supply chain. General Motors in the USA, for example,
implemented a computer controlled system, ‘Saturn’, which
significantly reduced the order-delivery time. Furthermore, as a
result of the dealer inputting customers’ requirements for
colour, trim and other accessories, the system is able to ensure
not only that cars are tailored to customers’ needs, but also that
they are delivered more promptly. Another example is the way
homebuilders in Japan use rapid response to customer needs to
differentiate themselves. Potential home buyers visit estate
agents and describe their ideal home. Equipped with a unique
CAD-CAM program, the agent sketches a design on a computer
screen in front of the prospective purchaser. The program
instantly tells the cost of building the new home, and if this is
too high, it enables the home dimensions to be scaled down
until an acceptable price is reached. If the purchaser then wishes
to buy the new home, the agent confirms is in the computer
program and the builder usually offers completion six weeks
later.
To succeed, marketers are going to have to use technology to
way ahead of competitors.
More Sophisticated Buyers
In business to business marketing, there is already an emphasis
on bringing together individuals from different departments to
evaluate suppliers new brands. As inter-departmental barriers
break down even more, sellers are going to face increasingly
sophisticated buyers who are served by better information
systems enabling them lo playoff brand suppliers against each
other.
Consumers themselves are also becoming more confident and
sophisticated. They expect higher standards from brands and
appreciate brands that deliver real values. But the values being
sought are not just functional ones. In fact, in an ever-changing
and increasingly turbulent environment, they seem to prefer
consistent brand personalities, which provide some stability and
help them better understand their social environments.
Consumers are becoming much more marketing literate and
increasingly critical of advertising. Nonetheless, the danger for
some brands is that advertisers make assumptions about
consumers involvement with advertisements and exceedingly’
clever’ approaches are developed. Polo mints used the Perrier
approach in the ‘Refreshing Poleau’ advertisement, using the
slogan, ‘The mint with the hauled’, while Canon adopted the
slogan ‘Some things in life are as reliable as a Volkswagen’.
There is a danger that, without a good appreciation of consum-
ers’ perceptions, weaker brands may well lose out with these
clever approaches.
The Growth of Corporate Branding
With media costs inhibiting individual brand advertising, there
is a trend towards firms putting more emphasis on corporate
branding, stressing the company as the brand through
corporate identity programmers. In this way functional aspects
of individual brands in the firm’s portfolio can be augmented,
enabling consumers to select’ brands through an assessment of
the values of competing firms.
Corporate branding is based on a well-devised corporate
identity program which provides a clear vision about how the
firm’s brands are going to make the world a better place, has a
well-thought set of core values, is communicate to staff and
which gives them a better feeling of involvement and belong-
ing. Well-devised programmes endanger pride amongst staff
who become even more committed to working hard in order to
play their role in delivering brand benefits. Once a firm has
undertaken an audit to understand how it is perceived by its
different stake holder groups and has clarified its values and its
vision for a better world, it can then start to consider the most
appropriate brand architecture.
Helping Yourself Protect Your Brand
Author: by David E. Stoll
February 01, 2003
This article outlines self-help practices that you can quickly and
easily use to maximize protection of your brand and minimize
potential conflicts with someone else’s brand.
Introduction
It does not matter how big or small you are. These self-help
practices can be utilized by anyone from a sole proprietor with a
single brand to large corporations with a portfolio of brands.
By following these practices, you will save much time, money,
and frustration in developing your wine brands.
Protecting any given brand often boils down to the following:
you can either spend a couple thousand dollars early in the
process to adequately protect your brand, or risk spending
BRAND MANAGMENT
several times that amount in both time and money to deal with
a conflict in the future. Worse yet, the future conflict may result
in the loss of your brand.
1. The Most Common Problem - Conflict with Someone
Else’s Brand
The most common problem encountered with a wine
brand is a conflict with someone else’s brand.
New wine brands often run into conflict with established
brands. The converse is also true; owners of established
wine brands often encounter others trying to develop or
make use of similar brands. In either event, these brand
conflicts can be expensive, time consuming, and distract
from other aspects of the business.
Because of this, brand owners should do all they can to
minimize the possibility of a conflict with someone else’s
brand, both while they are in the process of deciding on a
new brand, as well as throughout the use and exploitation
of the brand.
2. Avoid Adopting Potentially Troublesome Brands
Clients are often emotionally attached to the potential brand
names they provide to their attorneys for search and
clearance. Even when potential conflicts arise in the search or
clearance process, clients often still want to pursue the
proposed brands. This is more often than not a costly
mistake.
Pursuing a brand with potential conflict or protection
problems associated with it from the outset rarely produces
the desired consequences. Clients will typically spend much
time and money either attempting to work out a conflict
with someone else’s mark or trying, often in vain, to protect
the brand through trademark registration, only to ultimately
find they cannot do so.
If you have not yet begun using a brand and potential
conflicts are discovered in the clearance process, you are most
likely better served choosing another brand. If you have
already adopted and are using a brand when a potential
conflict arises, the considerations are different as you
obviously do not want to change your recognized brand
unless you absolutely have to.
However, if you have not yet begun use of your brand and
a potential conflict arises, you have to ask yourself how
difficult or damaging it really would be to pick a new brand
given that you have not yet invested a significant amount of
time and money in developing the brand.
Though it takes time and money to come up with potential
brand names, the investment is well worth the cost if it
allows you to avoid brand conflicts down the road. Brands
that are free of potential conflicts from the start are easier to
protect and allow you to focus your time and money on
building brand awareness rather than defending
troublesome brands or spinning your wheels trying to
obtain trademark registrations for such brands.
If you spend the necessary time and money to adequately
protect your brand from the outset, you do not have to do
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 it over and over again in the future. As stated before; you
BRAND MANAGMENT
can either spend a little now or risk spending a lot later.
3. Perform Your Own Initial Searching
Before you invest time and money in a brand, or even in
lawyers to help you clear a brand, you can easily and quickly
perform some of your own initial clearance searching on
your proposed wine brand.
By performing these initial searches you can often quickly
eliminate potentially troublesome names and avoid delays
and costs associated with having lawyers perform the initial
searching for you.
Most of these initial screening searches can be performed
for free on the Internet. Internet sites that are helpful for
searching include:
• The USPTO Trademark Database
• The TTB Online COLA Database
• Basic Search Engines
• Wine-Specific Search Engines
a. The United States Patent & Trademark Office (USPTO)
Trademark Database
The USPTO maintains a free searchable trademark
database for all federal trademark registrations and
pending trademark applications. You can easily enter
your proposed brand names into this database and check
to see whether anyone else has filed for protection of the
same name or a similar name for wine. You should also
conduct this search among other related goods or
services that the PTO considers confusingly similar to
c. Search Engines (e.g., Google.com)
wine, such as other alcoholic beverages (e.g., “beer” or
“whiskey”) or related services such as “restaurant
services.”
If someone has filed a trademark application on a brand
name, that application or registration is a fairly good
indicator that they believe the brand is worth protecting.
It is also a good indication that your brand could have
potential conflicts. Thus, you should think long and
hard before pursuing a name someone else has protected
or is trying to protect as a trademark.
Once you become familiar with the USPTO Trademark
Database, you can further refine or tailor your search to
suit your specific needs. For example, you can perform a
broad search of all filed trademarks across all goods and
services, or you can tailor your search to look for only
trademarks that have key words such as “wine” in their
goods or services descriptions, or for trademarks that fall
within International Class 33, the class in which all wine
and spirits marks are registered.
b. Alcohol and Tobacco Tax & Trade Bureau (TTB)’s
Online COLA Database
Another very helpful free online database is the TTB’s
online Certificate of Label Approval (COLA) database.
The TTB was recently spun out of ATF which is why
many know of and still refer to this database as the
ATF’s COLA database.
228
This database contains records of all COLAs granted by
the federal government since 1996. The database is by no
means comprehensive of all existing COLAs, but it does
provide an easy first step to check whether someone else
is already using your proposed name as a brand for wine.
Searching the COLA database is easy. In the online form,
you simply fill in the blanks for the categories on which
you want to search. The most useful search category for
clearing proposed brand names is the “Inclusive Name
Search”. The Inclusive Search will pull up any matching
records whether the name is part of the brand, the
winery or the COLA registrant (e.g., the bottling winery).
The COLA database can be misleading as to who is
using what brands. COLAs list the name of the bottling
winery as the COLA “Applicant”, which is often not the
actual owner of the brand. However, the usefulness of
the COLA database lies in finding matching records, not
necessarily determining who actually owns the brand.
Matching records indicate a brand with a potential
conflict.
The database does, however, provide other useful and
specific information, such as the “Class/Type Code” that
tells you whether the COLA is for beer (class 901),
whiskey (class 100), table red and rose wine (class 80),
and so on. If you become familiar with these codes, you
can often gain valuable additional information about
other’s use of potentially conflicting brands, such as
whether someone is using a brand for beer or for wine
or for something else.
Although you can rarely, if ever, rely on completeness of
results produced from any Internet search engine, it is
very easy to perform a search of your proposed brands
(or existing brands) and see whether any wine-related
“hits” are found.
To minimize matches with completely unrelated
industries (computer companies, clothing manufacturers,
and whatever else may be on the web that has nothing to
do with wine) you can tailor your search to look, for
example, for your brand used in connection with
common wine brand suffixes such as “… Cellars”, “…
Winery”, “… Wines” or “… Vineyard.”
To better focus the search, put quotation marks around
your brand and the suffix of choice, e.g., “Your Brand
Cellars.” For most Internet search engines, this will limit
the search to only those results that use the quoted
phrase together. Otherwise, for example, every website
containing simply “Cellars” can result.
There is a wealth of information readily and freely
available on the Internet. Often times, when I am
looking for a potential conflicting brand on behalf of a
client, I easily stumble upon an entire website describing
everything I could ever want to know about their wines,
their winery, their family history, the names of their pets,
and so on. To not take advantage of this extraordinary
resource is to do your business a disservice.
 d. Wine-Related Website Databases (e.g., Wine-
Searcher.com)
In addition to using generic search engines to help clear
proposed brands, online wine-specific databases can be
of assistance, especially if you are trying to locate a brand
that you think may already exist.
WineSearcher.com is an example of such an online wine-
specific database. This website is a worldwide database
of where wines are available for sale. For instance, you
can search for all places (in the database) where a
particular brand in a particular year is sold in the United
States. Again, like many other Internet databases,
especially free Internet databases, the results are by no
means comprehensive. Although this database is most
useful for locating a wine brand that you know or think
already exists, it is also useful a useful tool for clearing
proposed names.
Although many wine brands are protected as registered
trademarks (and therefore will show up in trademark
searches), a majority of existing wine brands are not
protected as registered trademarks and therefore will not
show up in trademark searches.
Despite the fact an existing wine brand is not registered
as a trademark, the brand has trademark rights on
account of the brand’s use in commerce. Rights in a
trademark come from use of the trademark in com-
merce, not registration.
Generally speaking, a wine brand that is used but not
registered will establish trademark rights to the brand
that are geographically limited to the area where the
brand has actually been used. On the other hard, a wine
brand registered as a federal trademark will establish
trademark rights to the brand throughout the entire
country.
Thus, you must search non-trademark databases, such as
the COLA database and general and wine-specific search
engines when clearing proposed brands because, again, a
majority of wine brands currently in use are not
protected as registered trademarks.
Importantly, these initial screen searches are not a
substitute for professional search services that your
trademark attorney can provide. Even after you have
made these initial inquiries for your brand, you should
still contact an experienced trademark attorney who can
order a comprehensive “full search” from a reputable
search company (such as Thomson & Thomson) that
searches trademark and non-trademark databases. A full
search is especially highly recommended for proposed
brands that are not yet in use.
4. Seek Registration of Your Brand As A Trademark
If you propose to use or are using a wine brand for
commercial sale, you should consider trademark registration
for the brand.
The principal advantages of federal trademark registration
are nationwide priority and notice to third parties. One of
the main reasons you register your brand as a trademark is
to let the world know you are using that trademark as a
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brand for wine. In doing so, others will be less likely to
adopt the same or similar trademark, especially in the
United States where the law presumes that everyone has
knowledge of existing federal trademark registrations. This
is known as “constructive knowledge.”
The concept of constructive knowledge in U.S. trademark
law imposes a duty on third parties to perform a search of
the U.S. federal trademark database before adopting a new
brand. If your brand is already registered or even pending, it
is much more likely third parties will choose a different
brand.
If third parties do not perform a trademark search and
adopt a confusingly similar brand after your registration has
issued, you are presumed by law to have prior rights. Once
you notify the third party of your prior rights, the third
party will be much more likely to abandon use of the
conflicting brand and choose a new one, than if your brand
was not registered as a trademark.
The goal is to avoid or quickly defuse potential conflicts
with your brand. Having a trademark registration, or even a
pending trademark application for your brand, greatly helps
accomplish this. Trademark registrations last forever so long
as you continue to use the mark and you pay your renewal
fees every five to ten years.
While it is true that trademark rights only come from use,
not from registration, obtaining a trademark registration for
your brand enhances those rights and, again, significantly
helps in avoiding conflicts concerning your brand or quickly
defusing conflicts that do arise with your brand.
No matter how long you have used your brand, or how
many cases you have sold, or how broad you have
distributed your wine, if you do not have a trademark
registration for your brand it is much more difficult to
avoid disputes or to resolve disputes when they occur.
Without a trademark registration, you will carry the full
burden of convincing the other party that you have
established rights to the brand. The smaller a producer you
are, or the smaller your distribution, the more difficult a
time you will have convincing the other party that you have
established sufficient rights to the brand that they should
abandon their conflicting brand.
In such cases, without a registration you will have to resort
to business records, invoices, and federal and state permit
records, such as COLAs, fictitious business name
statements and Basic Permits, to show the other party when
you began using your unregistered brand. This can be a
frustrating, time consuming, distracting, and expensive
process that can often be avoided if your brand is registered
as a trademark.
There are many reasons why your brand may not be capable
of registration as a trademark. The point is to consider as
early as possible whether your brand is capable of
registration, and if so, to register it. Even if, for whatever
reason, your brand is not capable of registration, by
examining the prospect of registration you will better
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 understand the limits of your brand protection and will
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likely be in as protected a position as possible if and when
conflicts do arise.
5. Maintain Brand Protection Files
Every brand owner should maintain a brand protection file
for each and every brand it uses or proposes to use. The
brand protection file is often an extension of a winery’s
permitting file. However, it is preferable to keep brand
protection materials together even if kept with a winery’s
existing permit files.
The purpose of the brand protection file is to maintain a
quickly accessible record of brand usage, scope and quantity
sold. Records to keep in your brand protection file include:
• COLAs
• Basic Permit (listing trade names)
• Fictitious business name statements
• Invoices (compiled/summarized if many)
• Sample label specimens (at least five of every vintage/
design)
• Copies of trademark registrations, applications, etc., and
• Any other materials (such as marketing materials, cellar
notes, etc.) that make use of the brand, describe the brand,
or that evidence sales information for the brand.
Maintenance of brand protection files will all but eliminate
time consuming searches for information and paperwork if
a conflict ever arises concerning the brand. This is especially
true if, for whatever reason, your brand is not registered as a
trademark. The existence or non-existence of the above
materials can often determine whether you will avoid an
expensive dispute or potentially lose your brand.
At a minimum, maintaining brand protection files for all
your wine brands will keep your legal costs down and keep
you focused on your wine business, rather than trying to
locate or construct long lost records in the face of a brewing
brand conflict.
6. Logos and Other Designs As Brands
First and foremost, all brands should be protected, if
possible, as registered trademarks. A trademark by
definition is anything that identifies the source of a product
or service. Brands are principally source identifiers and as
such should principally be protected as trademarks.
However, if your brand incorporates a logo or other design,
you should also consider copyright registration for the logo
or design.
Any original creative expression can be protected and
registered as a copyright. Logos and other designs are
considered creative, so if they are original expression, that is,
not copied from somewhere else, they enjoy copyright
protection and can be registered as copyrights.
Copyright protection provides the owner the sole and
exclusive right to use the design protected by the copyright
for any commercial purpose, subject to fair use by third
parties, which generally means non-commercial use.
Copyright registration, like trademark registration, does not
230
produce the rights, but greatly enhances them. For instance,
you cannot sue to enforce a copyright until you have
registered the copyright at issue with the Library of
Congress.
Copyright issues are especially important to consider if you
commissioned an artist or designer to design your label, or
if your label incorporates someone’s existing artwork.
If you hire someone to design a label for you, or to
produce a logo or design to be used on a label or packaging,
you should make sure to obtain an assignment of rights to
the design in exchange for the payment.
If such person is an employee of your company, then the
company is presumed to own the fruits of the employee’s
labor and the assignment is not technically necessary.
However if you hire a consultant or other non-employee
independent contractor to do the work, you need to have
the independent contractor execute a written assignment
specifically transferring to the company all rights to the work
product. If you do not obtain a written assignment of
rights from the contractor you hired to develop the design
for you, that contractor may retain the underlying rights to
the work product and you risk not being able to use that
design in the future (e.g., on future vintages, different labels,
etc.).
If you use plan to use someone’s existing artwork as part
of your label design, or otherwise in your marketing
materials or merchandise, you probably cannot expect the
artist to assign all rights to the artwork to you, but you
should make sure to obtain written permission (a license)
from the artist (or whoever owns rights to the artwork) to
use the artwork for whatever purposes you envision (such
as multiple vintages, posters or otherwise).
7. Think about Future Plans for Brand
Whenever you are in the process of selecting a new wine
brand, you should factor any possible future use of the
brand into the selection equation. For example, if your
plans include exporting the wine brand to a foreign market,
you should think about clearing and protecting the brand in
those export markets, in addition to seeking protection in
the United States.
Trademark rights are specific to each country, so your right
to a trademark in the United States does not automatically
provide you any rights to that mark in a different country.
For a nominal fee, you or your attorney can order a
screening search of any country to see if your brand is
already protected or being used in that country. Your
attorney can also advise you whether seeking registration in
such foreign countries is advisable.
Conclusion
Conflicts over brands can be expensive, time consuming and
distracting. They can also be minimized or even avoided much
of the time by making use of the self-help practices discussed
above.
David E. Stoll is an attorney at Farella Braun + Martel and is
active in the firm’s Wine Industry practice, where he represents
wineries and vineyard owners. Mr. Stoll works with wine clients
 BRAND MANAGMENT
in connection with grape contracts, mergers and acquisitions,
consulting arrangements as well as providing advice regarding
the use and protection of wine-related trademarks and
tradenames; including the names of wineries, their wine brands,
and the increasingly common use of proprietary and vineyard Brand Name Protection Trademark Infringement
designated names.
This article is published as a service to our clients and friends. It ä Legal registration ä Sounds alike
should be viewed only as an overview of the law, and not as a - Sasson vs. Sason vs. Sassoon
ä Guard against
- Squirt vs. Quirst
substitute for legal consultation. generic use
- Lexis vs. Lexus (1989)
ä Protect against
ä Stimulates the same
counterfeiting mental reaction
- Mr. Stain vs. Mr. Clean
ä Duplicates a competitors’
overall marketing strategy

Trademark
Trademark or
or Generic
Generic Name?
Name?

ä A trademark is considered a generic name

when the public uses it to describe a class of
products such as aspirin rather than identify
a particular brand
•Examples:
•Nylon . . . . Kerosene . . .
•Escalator . . .. Formica . .Cellophane . .
.

231
BRAND MANAGMENT
LESSON 34:
LEGAL PERSPECTIVES IN BRANDING
Objectives
On completion of this lesson you should know
a. Legal Issues in Branding
b. LegalTips on Brand Management
Naming Tips
Below are some fifteen naming tips in no particular order. They
are mostly insights and shortcuts to generate multiple name
candidates. All are not relevant for each naming project, but if
you do enough naming, you’ll find each has some merit.
• Instead of naming a company Strategic Innovations, reverse
the words and call it Innovations Strategic. Medical Insights
becomes Insights Medical. Proactive Solutions - Solutions
Proactive. Legal Perspectives - Perspectives Legal.
• Use of alliteration (Signature Strategies, Peak Paths) or
rhyming (Compliance Alliance, Rare Care) helps make a
name memorable.
• Utilizing a verb in the name connotes action and promotes
action (Skills Abounding, Hooked on Phonics).Turning
Point Consulting is more action-oriented than Turning
Point Consultants.
• Naming a company and then promptly using its initials to
identify it is, excuse me, dumb. To customers, and especially
prospects with no history with the firm, initials do not
differentiate, are not memorable, get confused with other
initial-named companies. The only way to effectively use
initials as a name is if those initials already possess positive
connotations (MVP, HQ, MD), otherwise it’s just alphabet
soup.
• Possessive names (Victoria’s Secret, Bob’s Vital Signs) are
more personal and somehow connote a more responsive
organization.
• A strong “K”or”C”in the middle of a name sounds good
and strong, is easy to pronounce and spell: Dakota, Wakota,
Dakona, Takona, Dakola, Nakola, Dekopa, Rekopa, Vokita
Fokoda, Latoka, Ritoka, Wolika, Doloko, Rimiko, Pamoko,
Tanaka, Prekoda, Drokima, Teloka, Parkita, Lacoba, Bocono,
Socimo, Quico, Veconi, Vicudo, Barico, Licita, Jacida, Lanica,
Bracle, Zacera
• Truncate (pack): Take two words, preferably that describe the
subject being named, and combine them into one.
Webolution, Byerlympics, Champale
• Spell descriptive words phonically or alternatively: “Names”
becomes “Knames”, Gnames”, “Naims”, “Naymes”,
Naimz”. Sigh becomes Psy, Psigh, Sy, Cy. Homonyms:
words pronounced the same way but spelled differently.
(feet, feat, fete)
232
• Add an appropriate but unexpected suffix to a descriptive
root word: Ideatrics, Visioneering, Profitivity, Webolution,
Travelocity
• Consider numbers as part of the name (3D, A-1, 4-
star)...also number-related words/symbols such as prime,
pi, square, plus... includes ranking (1st), greek alpha,etc.,
...bi, tri, quad...degrees (360 or 32F)...roman numerals
• Take the idea of western brands but change the descriptor
to a non-traditional brand word. Instead of lazy-8, H bar G
or circle X, use hi-tech descriptors: Star-4, A-slash-B, Mach-2,
Arc-8.
• Single letter names: mostly associated with single words. A-
One, Double-D, Factor-X, AAA... Combine with number
(A-1, 4-F)...
• Old reliables...animal, bird, fish, flower, fabrics, tree, weather
condition, historical/mythical personality most closely
associated with product attributes. Often nouns can become
adjectives to describe product (Silk Skein, Rain Rinse, Pine
Scent, Eagle Claw)
• Look to geographic place names (recommended by founder
of Haverhill) that have good sound, and connotation. This
can extend to foreign places, ancient places, mythic places.
Use an atlas
• Use rhyming and alliteration Use two initials and word to
form name...ie: I.C.Ewe...F.Y.Eye...R.U.Dunn...
• Use the first part of two-part proper names (ie: Mc, Mac,
O’, Van, von, D’, Di, De, Del, Bel, San, La, L’) and hook
them up with positive last names like McNuggets, O’Cedar,
MacFrugal. Incorporate suffixes and prefixes into names
that are derived from common, pronounceable
abbreviations: Innov-inc Ban-co Didd-ibid Rig-etal
Fica-fast Fifo-sist
• Make names stand out by such visual devices as hyphens,
common symbols (+,!), all lower case, words run together,
underline word parts, combine UPPERlower case,
CapsINmiddle, color, pronunciation marks (Jels’-ema), two
Differentfonts
• Substitute “a”, “i”,“o”or “u” for a word-ending silent “e”,
esp. for verbs (hope, arise, groove)
• Deliberately misspell words to create a new, trademarkable
name: Qwest, Ikon, Duque.
Legal Tips on Brand Management
for Marketers
By Lynette Stanton
Paper delivered at the Strategic Branding 2002 Conference
13-14 May 2002 Marketing and trade mark law most often come
into conflict over the question of what brands can be protected
and how. But in reality, there shouldn’t really be any conflict.
What marketers are trying to do and what lawyers are trying to
do ought to be complementary. What’s the point of a brand?
Why do you brand? You want your product to stand out and
to be remembered. And you want to be able to stop other
people from piggybacking on your success. And you don’t want
to be the department that leads your company into court. Well
that’s what the lawyers are for. Not leading you into Court, but
keeping you out.
Protecting Your Brand
One of the main legal ways of protecting a brand is by trade
mark registration. But not everything you might think of using
as a brand is registrable as a trade mark.
The requirements of the current Trade Marks Act 1953 mean
that in the right circumstances the shapes of packaging, colours,
sounds even smells as well as the more conventional words and
logos may be registered as trade marks. This amounts to
recognition by the legal system of something you probably
knew already - that all of these things can function as brands.
But the crucial thing to remember is, the more unusual, the
more - in the jargon - distinctive your brand is, the easier it is to
legally protect.
But at this point my next question is, why register? What is
registration? How does that protect your branding efforts?
Registering a trade mark means going through the formal
procedures which result in your trade mark being officially
recorded as belonging to your business. Registration gives you
the exclusive right to use that mark and to sue someone else
who uses that same mark or something similar to it on the
same products or similar products.
And yes, I’ll readily admit that that word “similar” and the
question of “what is or is not similar” are what keep the lawyers
in business.
But ultimately, trade mark registration is a public legally
protected version of what your branding efforts are all about -
recognition and exclusivity. You want a brand which is
recognised, and exclusively linked with your product. Legal
protection - including through registration, helps you achieve
that.
Legal Points
There are legal points to be considered at two different stages in
the brand management process. The first stage is in the process
of creation of a new brand, the second is the management of
existing brands, especially during company transformations.
From a legal point of view, there are two main questions to ask
when a new brand is being created and defined –
1. Can you use it safely?
2. Can you protect it?
These questions are, or should be, central to any brand develop-
ment. Yet it is surprising how often they seem to get
overlooked, especially in the rush of enthusiasm for some new
concept.
“Can you use” can be rephrased as “are we going to step on
anyone else’s toes with this new brand, angle, packaging line,
strategy?” This question in itself can rise in two rather different
ways: the branding task when you are truly attempting to create
a unique, distinctive brand to do what brands are supposed to
BRAND MANAGMENT
do, ie. make your product stand out and create a clear position
in the market the somewhat different issue when your aim is in
fact to latch on to someone else’s success.Naturally, from a legal
point of view, the second objective is the more risky.
Brand Vision
When selecting a new brand for yourself, the key word is vision.
What is your vision for the brand? Flagship brand or subsidiary
category? Wide product range or specific? Local, national,
regional or global? And what is the brand anyway - is it a word?
Is it a shape? Is it a colour, a smell, a sound, a picture or a
combination of one or more of these things? Will you use it
always in one particular version or in many variations?
The more clearly that you communicate your future vision for
the brand to your legal advisors, the better job we can do for
you in answering that first key question - can you use it?
The marketplace and the Trade Marks Register are full of other
people’s attempts to obtain exclusivity in all kinds of brands
and aspects of brands. Because of this, one job that has to be
done as part of the brand creation and definition process is
searching - seeing what else is protected and making sure you’re
not too close to it. Because the definition of exclusivity
embraces not only identical marks but similar marks and not
just the same goods and services but similar ones and because a
mark can be registered or at least applied for and yet not be on
the market, searching of official records is crucial - and for those
of you looking beyond these shores, international searching will
be crucial. Incidentally, one useful spin-off of searching the
Trade Marks Register will be to give you a handle on what your
competitors are doing, or perhaps planning.
Protecting Your Brand Investment
If you’ve done all your checking and you’re as confident as you
can be that you’re not going to be sued the first week your
product hits the market, the next question has to be:
Can you put yourself in a position to protect that investment
that you’re going to put into the brand? Or, what can you do to
stop your competitors from ripping off the look, the sound,
the smell, the colour, the theme or the language of your
branding strategy.
Broadly speaking, you get rights in your brand, that is, the
power to use the law to stop someone else from getting too
close to it, in two main ways.
One is by using it to such an extent that you can convince a
court that the bad guy will cause significant confusion, especially
amongst consumers.
Two, by registration under the Trade Marks Act 1953. The
common theme though is that if you hang your hat on a brand
which is too commonplace, too descriptive, too much like other
brands already in the market, a court is much less likely to listen
to an argument from your business that someone else should
be stopped from using the same kind of words, picture or
package.
Much marketing effort goes into identifying branding strategies
which will engage your potential customers on an emotional
level, gain their sense of identity with the product, gain their
loyalty and so on. But all that will be wasted if the brand
233
 features that you have hung all that engagement on, do not
BRAND MANAGMENT
stand out from the crowd. If your brand is not sufficiently
“distinctive” in a trade mark sense, you can’t prevent everyone
else going along for the ride.
So my message on legal aspects of creating and defining a new
brand are really issues which should concern any marketer. Can
you use it? Can you stop other people from using it? It pays to
check and get advice before that big launch.
Managing Exisiting Brands
One particular issue which arises time and time again in brand
portfolios where we are dealing with older brands is the issue
of ownership. Whose is this brand?
From a marketing point of view, the focus is on connecting the
brand with the business in the marketplace. I want to go one
step further than that and alert you to the need to make sure
that what you are doing, at the sharp end of presenting the
product and its proposition to the customer, does not become
divorced from the legal background.
Some of the times when this can happen are in nostalgia-based
campaigns which hark back to older brands, when somebody
comes back with a bright idea from overseas they think they can
borrow, when companies form alliances through licences,
distribution agreements or franchises, and when companies
break up and companies merge. In the following paragraphs I
will discuss an example of the latter.
Patience and Nicholson Case
This case goes back a long way. The original company, Patience
& Nicholson, was established in Australia in 1924. It
established a wholly-owned New Zealand subsidiary in 1961.
The business was cutting tools. Initially, the two companies
made the same products with the same manufacturing
techniques, but over time they diverged. The New Zealand
company introduced new manufacturing techniques. Both
businesses used the brand P&N.
In 1961, at the same time as the New Zealand subsidiary was
established, the Australian parent company registered the trade
mark P&N in New Zealand.
In 1982, both of the Patience & Nicholson companies were
taken over by another group, McPhersons. The New Zealand
company continued to use P&N under an agreement.
In 1987, McPhersons sold the business and assets of Patience &
Nicholson Australia into an Australian group, Boral Cyclone.
Patience & Nicholson New Zealand was not sold, and neither
was the New Zealand registered trade mark.
As well as diversifying its products and its manufacturing, the
New Zealand company diversified its branding, introducing a
new brand, EVACUT, but continuing to sell old stocks with
the P&N brand and using the old company name and livery.
So the situation was that P&N Australia was operating in
Australia with P&N, and the New Zealand company was
operating in New Zealand with a new brand and some
historical attachment to P&N.
With 20/20 hindsight, the eventual conflict looks inevitable.
The New Zealand business was sold on to yet another group
of companies, Sutton, who turned out to be the main competi-
234
tor for the Australian owner of the Australian P&N business.
In the course of all this, whatever assumptions were made, the
New Zealand P&N trade mark was not legally transferred.
Probably as a result, no one renewed the trade mark registration,
which was not being currently used to any great extent, and it
lapsed.
The Australian owners of Patience & Nicholson jumped in,
applied for registration and began using P&N in New Zealand.
Inevitably, Patience & Nicholson in New Zealand sued, relying
on the common law of passing off and the Fair Trading Act.
The judge concluded that the Australian company could not
come into New Zealand under the P&N brand.
What the case illustrates for marketers is the way in which
marketing strategies, particularly those which rely on history, can
come badly unstuck when no firm attention is paid to the legal
ownership issues. Especially when, as in this case, the trade
mark registration itself was not maintained, there are consider-
able difficulties in controlling the ownership of the rights which
remain in the trade mark, loosely described as “goodwill”,
through such a series of mergers, sales, acquisitions and changes
in trading activities.
More attention to legal aspects would have saved all the
companies a lot of legal fees and time in Court and at the end
of the day, communication between marketing and lawyers will
get each of you what you want - a powerful defendable brand.
Identify Your Branding and Corporate Identity
Issues: are They Strategic, Tactical or Practical?
Don’t fix what is not broken. Many companies think a new
name and logo will enhance awareness and reputation instead
of examining why there current identity and/or brand
languishes in obscurity. There are good reasons for changing a
company’s name - merger, expansion, new business strategy -
but starting from “zero” will always be more difficult and more
costly than making the most of what you have. That’s why you
should begin to identify your company’s identity and branding
issues in answering first the questions dealing with the practical
before moving on to the tactical and strategic issues.
What are Your Practical Issues?
1. There is no understanding of the legal aspects of identity
(lack of trademark search and protection).
2. There is no understanding of the financial aspects of
identity (no licensing contracts).
3. There are no policies and no guidelines for applying the
identity.
4. The identity guidelines we have are theoretical and
impractical.
5. The identity guidelines we have are being ignored.
6. The identity guidelines are only in the hands of a few
“experts” instead of instantly available to anybody
7. The suppliers are unaware of any guidelines concerning the
identity (sign makers, advertisers)
8. No central repository of visual and verbal assets. (symbol,
logo, company stock images, photographs, mission
statement, vision statement, tag lines, etc.)
What are Your Tactical Issues?

BRAND MANAGMENT
1. Company messages are created with a narrowly defined
purpose independent of the corporate identity.
2. There is no relationship between company names and
product names.
3. Product brand names are created in a fashion unrelated to
the company as a whole.
4. Employees are being inappropriately “creative” (expressing
themselves) with company messages.
5. Identity and Customer Relationship Management systems
(CRM) are on a separate track.
6. Thousands of customers and potential customers a day get
the wrong impression because technical personnel (IT) are
put in charge of communication because they are the only
ones who know how the technology works (websites, e-
mail, voice mail, CRM, phone menus, telemarketing
computer messaging).
7. Company identity does not flow through the suppliers and
distributors. Others do not represent you like you would
represent yourself.
8. Training is expensive and has little effect.
9. Identity is defined as: “The logo”
What are Your Strategic Issues?
1. The perceived (by customers and employees) identity is not
aligned with the strategic direction.
2. Our customers don’t understand what we do, why and
how.
3. Employees complain about not getting direction from the
corner office.
4. There is no shared understanding among employees.
5. Employees don’t work congruently toward the same goals
6. Employees say they can’t perform to their potential
7. Employees aren’t performing to their potential
Notes

235
BRAND MANAGMENT
LESSON 35:
ONLINE BRANDING
Objectives
On completion of this lesson you should know:
a. What is online Branding
b. Increasing importance and acceptability of Online branding
Branding should be a key aspect of every business Web site,
according to IBM Global Services Innovation Center senior
manager Anthony Farah, who will speak at the IBM e-fair 2002
this month in Malaysia.
Successful online branding means drawing in customers
through value-added features, such as recipes on an online
grocery site, Farah says. Instead of just listing grocery items, the
site could allow customers to order all the items necessary on
the recipe once they print it out. The aim is convenience,
bolstering brand equity, and earning customer loyalty. Farah also
stresses the need for a consolidated branding strategy that
crosses all media channels. A transportation company whose
message is speed of delivery should not have a pokey Web site,
for example.
“Have a single brand guardian who reviews all channels against
a corporate brand strategy. Ensure these channels and their
associated technologies can deliver your brand strategy,” he says.
Businesses should focus on their Web site design and imple-
mentation, and ensure able to meet every visitor’s needs,
whether it be accessing specific product information, learning
about the company, or processing a transaction. “Once users’
interaction with your site is quick, effective, and satisfying, they
will be able to appreciate brand messages being presented,”
Farah noted. A common mistake is to separate traditional
marketing departments from the design and execution of a
Web site, or to focus on visual appeal, rather than ensuring fluid
transactions and Web functions.
The Unsung Hero of Internet Marketing
As the Internet emerged as a marketing platform in the late
’90s, it offered a distinct advantage to marketers. Unlike other
media forms, the Internet enabled advertisers to trace the entire
customer acquisition chain from impression to click to purchase.
This allowed marketers to pinpoint the strengths and
weaknesses of their media, creative, and product offers and
optimize accordingly.
However, the high degree of focus on the direct response value
of Internet media has led many advertisers to ignore online’s
efficacy as a branding and offline sales driver. According to
Jupiter Research, only 15 percent of marketers conduct formal
online branding measurement-a fact that suggests marketers are
underestimating the Internet’s full potential.1
While the Internet’s capacity to establish and reinforce key brand
perceptions in the minds of consumers has always existed,
historically our ability to evaluate its effectiveness has been
limited. However, an arsenal of recent studies demonstrates
236
that the Internet is, in fact, a powerful branding medium. The
following information highlights some of the available research
and proven tactics advertisers can deploy to successfully market
their products and services online.
Is Online Branding Effective?
Results of brand effectiveness studies illustrate how online
media can effectively embed a product’s message into the minds
of consumers. Following is a small sample of the many
available studies proving that the online medium can produce
positive shifts in consumers’ brand perceptions and purchase
intent.
• IRI and Procter and Gamble generated a study-based on
surveys and actual buying patterns of consumers-showing
that banner advertising bolstered sales for a Procter and
Gamble snack food brand by 19 percent.2
• In October 2000, Volvo chose to bypass traditional
broadcast media and launched their sporty S60 on AOL.
The S60 promotion-the first new car model launch to rely
exclusively on online media-increased awareness among
“next 30 day” car buyers by 64 percent (pre- vs post-
campaign measurement) and drove 45,000 sales leads to
Volvo retailers.
• The breakthrough Dove Nutrium Bar Case Study
conducted by Unilever, IAB, ARF, and MSN shows that
online, coupled with traditional media, lifts key brand
metrics more than any single medium can on its own. The
Dove study not only affirms the Internet’s power to
reinforce messages delivered by traditional media, but also
suggests that online is a more cost effective medium than
TV and magazines. The case shows, according to Forrester
Research, that “spending 15 percent of the online budget
would provide a 24-percent lift in branding metrics,
compared with a 19-percent lift for a plan with the same
total budget, which spent only 2 percent online.”4
• In May 2001, Dynamic Logic paired up with eBrands@dlkw
to demonstrate online’s impact on brand awareness and
trial generation. Their research tracked results for a
promotion of YesSirNoSir, a personal concierge service.
The two-week campaign, promoted exclusively online,
showed a 175 percent lift in awareness for the group
exposed to the ad (measured against the control group).5
Online Branding Tactics
Besides presenting an engaging consumer offer, what tactical
steps can marketers take to increase the effectiveness of online
branding campaigns?
1. Leverage large, interactive ad formats. Several studies
sponsored by various organizations (including the IAB,
Dynamic Logic, and DoubleClick) all conclude that larger ad
sizes can significantly enhance online branding effectiveness.
 The new 468X60 ad banners, for example, increased key
branding metrics by an average of 40% across three different
studies.6 The Dynamic Logic Study, conducted on behalf of
the IAB, found that skyscraper and large rectangular ads
were three to six times more effective in increasing brand
awareness and message association than standard banners.
Also, DoubleClick research confirmed that interactive rich
media improves branding effectiveness. DoubleClick’s study
tested various rich media formats, revealing that Flash was
the most effective in boosting brand measures (71% lift),
followed by Audio (14%), video (9%), and finally GIF ad
formats (4%).8
2. Develop clean, uncluttered creative with large logos. A
study, conducted jointly by Dynamic Logic, 24-7 Media, and
AdRelevence, sheds some light on the specific creative
attributes that contribute to an effective branding campaign.
Too many creative elements in a banner, the study
concludes, detract from the overall awareness and recall
potential of ads. Designers should include no more than 15
different creative elements in a given banner and develop
short, straightforward messaging. The study also suggests
that including large logos (at least 14 percent of the banner
size) and human faces in the creative positively influences
online branding.
Additionally, it has proven successful to extend the look
and feel of offline creative to online campaigns-an example
being Lipton’s highly-regarded campaign on AOL. This is
particularly important for programs seeking to leverage the
Internet to reinforce messages delivered offline.
3. Ensure sufficient ad frequency. Several studies also show
that increased ad exposure generates a higher impact on key
brand metrics. While the optimal number of exposures for
any given campaign vary with the creative, ad format, and
type of product offered, it’s clear that more than one
exposure is beneficial. The Dynamic Logic/24-7 Media/
AdRelevence study concludes that marketers can double
brand awareness by increasing the number of exposures per
consumer from one to four or more. Similarly, Lipton’s
AOL campaign logged dramatic improvements in purchase
intent with increased ad frequency. 7 While consumers’ intent
to purchase Lipton rose by only .07 percent with 1.6
exposures per user, it shifted by a remarkable 8.6 percent
when the average exposure per user increased to 6.7.
4. Incorporate consumer behavior trends into marketing
strategy. Popsicle’s campaign on AOL demonstrates the
importance of synchronizing marketing tactics with the
goals and motivations consumers have for spending time
online. Popsicle played off of children’s desire to have fun
online, by running colorful banners in the AOL Kids Only
channel and promoting online games, contests, and
scavenger hunts. The result was a 423 percent increase in site
traffic and a 42 percent increase in purchase intent among
the core audience (kids 6-11).
Packaged Online Branding Solutions
Sponsored by Hoover’s Online BY Jeffrey Graham | April 3,
2002
Many brand advertisers are telling publishers (as I wrote in my
BRAND MANAGMENT
last column), “Give me marketing solutions, not just impres-
sions.” Impressions don’t build brands, good campaigns do.
Smart publishers are rising to the challenge: packaging ads,
technology, and audiences in ways that address the branding
objectives of their clients.
The creation of branding products is one of the most impor-
tant recent advances in the online advertising industry. More and
more, it seems successful publishers package their products in
ways that are compelling to brand advertisers. Here are some
approaches that seem to be working.
Audience packaging. When making a large investment on a
site, you don’t want your impressions dumped in the wee
hours of the night or piled onto a small number of heavy site
users. Frequency caps can help regulate ad rotation, but often
they can run counter to branding objectives. Some publishers
are finding success in packaging their audiences in ways that
better address advertisers’ needs.
One good example that’s been received well by advertisers is the
surround session, created by the New York Times. Surround
sessions offer advertisers the chance to deliver ads to subscribers
on four consecutive pages within one visit. Surround sessions
aren’t rocket science, technically speaking, but they do allow
advertisers the ability to test a new way of delivering messages
online and ensure branding ads get noticed.
Time-of-day packaging. The Online Publishers Association
recently released a report showing the Internet is the primary
medium for millions during working hours. People use the
Internet differently at different parts of the day and week. Why
not offer different solutions for advertisers at different
dayparts?
Some sites do. In one of the longest-running engagements of
this type, Budweiser takes over CBS MarketWatch on Friday
afternoons, when many visitors start to hanker for a beer. Bud’s
“After Hours” campaign runs during periods when people are
more likely to drink beer.
Rich media. Rich media has become a core part of many
branding solutions. It’s more engaging, and multiple studies
show it is more effective at online branding. That’s why many
publishers, even those whose paying audience makes them
change averse (such as The Wall Street Journal), are adopting
rich media as a way to reach out to brand advertisers.
If you visited The Wall Street Journal last Monday, you
probably noticed an expandable, rich media ad for Oracle,
designed by Beyond Interactive in San Francisco. Oracle road-
blocked the Journal’s home page for the day, using the
publication’s new, proprietary product, the “Brand Launch
Unit.” The unit is a large rectangle users can expand and shrink
with a click, making it a good branding vehicle without being
overly intrusive.
Sponsorships and targeted content. A study released last
month showed ads are more effective for branding when
targeted to specific content rather than when targeted as run-of-
site or -network. This makes sense. The more relevant
advertising is, the better it works.
237
 One site offering interesting branding sponsorships is ESPN. Campaign Results
BRAND MANAGMENT

Sponsorships such as an ad resembling a stadium billboard, AOL maximized Lipton’s limited budget, extended Lipton’s
running on the baseball scoreboard section of the site, is a good selling season in major markets, and drove key advertising
example of execution creatively integrated into content. For metrics in the off-season:
advertisers who want their brands associated with a lifestyle, • “Purchase intent” increased nine percent in heavy online
these types of sponsorships make good sense. advertising markets, while decreasing one percent in no
Cross media. Marketers don’t want to build their brands online advertising markets
online. They want to build their brands, period. The Internet is • “Aided Lipton online recall” increased 81 percent in heavy
just one media channel to accomplish that goal. Online online advertising markets, while only nine percent in no
publishers are working to integrate ad solutions with the overall online advertising markets
media strategies of their clients.
• “Unaided brand association” increased 207 percent in heavy
MSN led the way early this year when it released a study online advertising markets, while decreasing 61 percent in
showing how online advertising can work synergistically with no online advertising markets
print and broadcast. The smart publishers are working with
affiliate offline media to create integrated advertising packages,
or at least provide a way for advertisers to reinforce and build
offline advertising messaging. Brand advertising will ultimately
need to blur the line between offline and online media.
These ad products are building blocks for customized solutions
Campaign Methodology
that meet specific needs of brand advertisers. The best cam-
The three surveys were conducted by DMS in the following
paigns happen when the advertiser, agency, and publisher work
markets:
together to create a unique approach. No matter what your role
in the process, it’s clear publishers who offer branding products 1. No online advertising – Cincinnati, Cleveland, Houston,
have more to bring to the table than those offering merely a and North New Jersey
bunch of impressions. 2. Light online advertising – Denver, Phoenix, Pittsburgh, and
Washington, D.C.
When Online Branding Works
Online advertising can boost brand impact at 60% less cost than 3. Heavy online advertising – Boston, Detroit, Indianapolis,
piling on more offline ads - under the right conditions. and San Diego
Marketers should use new technologies to plan an online/ Based on Media Metrix numbers, DMS conducted the surveys
offline mix to increase brand impact. among a sample similar in gender and age composition to that
of the AOL member base: 1,000 adults 18+ with 473 males
Case Study
and 527 females.
Lipton - Stirring Summer Sales
Keys to Success
Campaign Overview J. Walter Thompson maximized the impact of the campaign by
Lipton approached AOL to help extend the advertising season successfully extending the look and feel of the offline creative
and reach of its iced tea campaign in top markets during its off- online. Additionally, a targeted media plan followed Lipton’s
season, on a limited budget of under $250K. The AOL offline summer campaign on AOL Local to increase reach.
solution included an online banner ad and sweepstakes
campaign, which ran exclusively on AOL with no additional
advertising online or offline. The campaign’s effectiveness was
tested by three degrees of online advertising weight in top
markets. Conducted by Digital Marketing Services (DMS) via
survey, the results were then measured against each other:
1. No online advertising
2. Light online advertising
3. Heavy online advertising

238

Market Overview
Online ads alone can boost brand awareness by 6%.
Integrating online ads can increase brand metrics
by 14%.
Analysis
New tools overcome online ad buying hurdles.
A new metric -- impact points -- will allow
marketers to compare cross-media branding
effectiveness.
BRAND MANAGMENT
Background
• Clickthrough rates are seen by many advertisers as
the key success metric for online campaigns
• With clickthrough rates declining, advertisers are
questioning the brand building value of internet
advertising

Action • eBrands@DLKW and Dynamic Logic have set

out to provide unequivocal proof that online
Use online frequency controls with third-party ad advertising builds brands
servers.

How Did We Go About It?

• Create a new brand

Does Online Advertising • Launch it with online ads exclusively
Build Brands? • Measure the impact on:
- Brand Awareness
- Message Association

239
BRAND MANAGMENT

It Worked! Campaign Details

428%
change in 20%
in Brand 18% 19%
Awareness 16%
between 14% • The campaign launched on May 1, 2001 and ran
those 12%
unexposed 10%
for 6 weeks
11%
(control) 8%
• Multiple formats and multiple copies were run
and the 6%
4% • A total of 1.5 million impressions were served
target 4%
2%
audience
who were
0% • The campaign generated a 0.4% CTR and more
Control All Respondents Target Audience
exposed to Exposed Age 18-49 HHI than 534 highly qualified leads (534 people
£75K+
the ads registered at www.yessirnosir.net)

Sample of the Creative Units

• The creatives used in the campaign
• YesSirNoSir is a personal concierge service created
by eBrands@DLKW included animated standard size
• A campaign was created to build awareness and banners, skyscrapers and buttons
generate trial
– ‘we do things so you don’t have to’
• iVillage used a standard banner and
• Inventory was donated by: button
– www.ivillage.co.uk
• The campaign was ROS on iVillage
• DynamicLogic’s AdIndex was used to measure the
branding impact of the online advertising campaign

240
 BRAND MANAGMENT
AdIndex Methodology Overall Campaign Results
AdIndex uses a control-exposed methodology that measures the
branding value of online ad campaigns as they run across a site
or set of sites. The two groups below are simultaneously • Both test and control groups were favourable to
sampled and their responses compared. Do the results the brand/concept
Did they see the
campaign? indicate a
difference?
• Awareness jumped from 4% (noise) among the
Exposed* Yes Yes non exposed group to 11% among the exposed
Both groups are Since the only
statistical
group - a lift of 175% Control Difference
Exposed Lift
surveyed about Brand Awareness 11% 4% +7% 175%*
their attitudes difference •Brand
Those exposed 51%
to the messages were also able2%to
between groups Favorability 50% +1%
toward the
Control* No brand in the A and B is the link Intent
Purchase the messages 40%to the brand
40% 0% 1%
creative at the presence of the Message 20% 15% +5% 34%*
SAME time creative, we can •Association
Lift/Impact
Sample Size = (Exposed-Control)/Control
473 200
attribute the lift
*Statistically significant difference between control and exposed group at a 90% confidence level
to the creative

Recruiting Methodology -
Exposed Brand Awareness by
Demographic
High lift
Popup inviting Men 18-49 HHI 26%
amongst
429%
user to £75K+ 5%
affluent
participate in young to
our survey Women 18-49 5%
66%
middle aged
HHI £75+ 3% men

Age 18-49 HHI 19%

£75K+ 4% 428%
Exposed
Control
11%
All Respondents 175%
4%

0 5 10 15 20 25 30

*Statistically significant difference between control and exposed group at a 90% confidence level

241
BRAND MANAGMENT

Message Association by
Conclusions
Demographics
Men 18-49 HHI 24% 59% • Online advertising builds brands!
<£75K 15%

– This campaign was able to increase Brand Awareness

20% Message for YesSirNoSir, a fictitious brand, from virtually 0 to
Women 18-49 HHI 18%
<£75 17% Association
resonated
11% in just 6 weeks
well
Age 18-49 HHI 22% 33% amongst the
<£75K 16% targeted
Exposed
audience
Control
20% • Click-Through alone sells online advertising short
All Respondents 34%
15%
- way short!
0 5 10 15 20 25 – Brand Awareness 175%
– Message Association 34%
*Statistically significant difference between control and exposed group at a 90% confidence level

Brand Awareness by Frequency Conclusions

Exposing
consumers
16% 95% Lift* to the ads
• Among the primary target audience of professionals aged
14% three times 18-49, Brand Awareness lift was 428%
14% or more
12% 72% Lift* optimised – Among affluent men in this group, the lift in Brand
the impact Awareness is an impressive 429%*
10%
10% of the
8% brand

6%
• Outside the target, Brand Awareness increased 140%* and
4% Message Association 65%* among women aged 18-49
4%
2% earning less than £40,000. This suggests that the product
0% advertised had broader appeal
Control Exposed 1-3x Exposed 3x+

*Statistically significant difference between control and exposed group at a 90% confidence level
*Statistically significant difference between control and exposed group at a 90% confidence level

242
 BRAND MANAGMENT
Conclusions Contacts
Simon Andrews
• Strong relationship between frequency of exposure and
eBrands@DLKW
brand metrics
– Brand Awareness shows a significant lift of 95%* for +44 207 438 4176
those exposed 3 or more times to an ad sandrews@dlkw.co.uk
– Message Association is also influenced by the
frequency of ads. Those who were exposed more than 3
times showed a lift of 44%*
• The message, “we do things, so you don’t have to”,
resonates more, in general, with men
Bob Ivins
• Skyscrapers proved to be more effective than standard Dynamic Logic (Europe)
banners +44 208 433 6626
*Statistically significant difference between control and exposed group at a 90% confidence level
bob@dynamiclogic.com

CASE STUDY
E-Commerce in Action
Introduction
The adoption of the Internet can be beneficial for businesses
Definition of AdIndex Metrics that are ready to invest. However, many companies have failed
to adapt to this new
opportunity and have
• Brand Awareness - Measures the level of
familiarity respondents have with the YesSirNoSir suffered as a result. Others
brand have risen to the challenge of
harnessing the Internet to
• Brand Favourability - Measures the extent to achieve business objectives
which respondents have a positive or favourable and have prospered. One
opinion of the YesSirNoSir brand
such company is Amway
• Purchase Intent - Measures the likelihood of UK, who, since 1999, has
respondents to subscribe to the YesSirNoSir fully exploited the potential
service in the future of the Internet by creating an e-commerce presence. It has seen
over 30% of sales move from off-line to on-line ordering over
• Message Association - Measures the extent to
which respondents can match the copy or the past two years.
messages in the creative to the YesSirNoSir brand

243
 E-Business, the Internet and Project Management
BRAND MANAGMENT
The Internet is revolutionising
global communications.
Business has benefited
significantly from this
revolution. Business conducted
via the Internet, known as e-
business, enables companies to
conduct their activities more
efficiently. It has also allowed
them to customise and
personalise customer offerings.
A subset of e-business, known
as e-commerce, enables the transaction and selling of products
and services online. There are four main models of e-
commerce. These are:
B2C
Business to Customer. This means a business sells a product
or service directly to a customer via the Internet, for example
Ryanair.com.
B2B
Business to Business. Businesses trading directly with one
another via the Internet.This is used extensively by multination-
als for dealing with their customers.
C2C
Customer to Customer. In this model, individuals arrange to
buy and sell products and services with other individuals. The
popular website eBay.com is an example of C2C.
C2B
Customer to Business. This model allows individuals to
interact with business by offering personal information in
return for services or product discounts.
P2P
Person to Person. This is very like C2C however individuals
interact with each other in commercial as well as non-commercial
ways.
As will be shown, Amway has developed a successful B2B
website.
E-Business can be Risky Business
Over 75% percent of all Internet users want to buy something.
This offers significant growth potential for any company
wishing to go online. Therefore, before embarking on an e-
commerce strategy, significant resources and project
management must be invested into research, planning and
marketing.
Amway and Direct Selling
Founded in 1959, Amway is one of the world’s largest direct
sales companies. It employs more than 6,000 people and has
over 3.6 million Independent Business Owners spread over 80
countries. Over 23,000 people have their own Amway
businesses within the UK, Ireland and the Channel Islands.
Amway manufactures and markets own brand health and
beauty products, including Artistry brand, one of the world’s
five largest-selling prestige brands of facial skin care and colour
cosmetics* Others in the distingushed group include Clinique,
244
Lancome, Estee Lauder and Sofinia. It also markets products
from other manufacturers such as Phillips and Bosch.
*Based on a 2000 Euromonitor International study of global
retail sales.
Direct Selling is based on person-to-person (P2P) relationships.
The Amway business owner approaches the consumer in order
to sell his/her goods rather than the consumer going to a shop.
Being a Direct Sales company, Amway does not use the
conventional distribution channels employed by traditional
manufacturers. The term ‘distribution channel’ describes the
sequence of ownership as a product goes from the
manufacturer to the consumer.
In Amway the distributors are known as Independent Business
Owners, as they own the distribution business through which
they sell the goods. Independent Business Owners earn their
income by making a profit on the goods they sell (a margin).
They can supplement this income by receiving a commission
from Amway based on both the sales they make and those
made by their distributor network. Their distributor network is
the group of people they introduce to Amway and with whom
they work to help them build their own independent busi-
nesses. The working conditions for Amway’s Independent
Business Owners are very flexible. They can work full-time or
part-time and can determine their own working hours. In fact,
many have other jobs and use Amway to supplement their
main income.
The Internet and Amway
In 2001, market research demonstrated that Internet usage
among Amway’s Independent Business Owners in the UK and
Ireland was very high. It was decided that the time was right to
introduce an e-commerce or e-business strategy which would
offer a flexible 24-7 service to customers. Amway had already
established a successful e-commerce strategy in the US with the
development of the Quixtar website, so it already had best
practice to follow. Best practice is defined as the development of
performance standards based upon the most efficient practices
within an industry and is also know as benchmarking.
The Right Time for Change?
Since 1959, Amway had used the traditional modes of
communication with its customers – mail, telephone and more
recently, the fax. These had proved very successful, so why rock
the boat? Where was the justification for enhancing the Amway
business model in order to incorporate e-commerce?
Let us compare the old and new modes of communication
under the following criteria:
Speed of communication: how long it takes the information
to reach its destination?
Accuracy of information: is there a possibility that informa-
tion may be misunderstood?
Flexibility: can the data be accessed at any time?
Geographical spread: can the data be accessed anywhere e.g.
when on holiday?
Cost: what was the cost of sending the information?
Under these criteria it is clear that the adoption of an e-
commerce strategy would be beneficial to Amway.
The only concern for Amway in implementing an e-commerce
strategy was to enhance the relationship it had fostered with its
Independent Business Owners. This was the key to Amway’s
success. Therefore during implementation, Amway had to focus
on the customer’s total experience, including the personalised
nature of the service.
Development of the Website
Amway wanted to create a website that would help its
Independent Business Owners manage their businesses more
efficiently. To ensure this website was implemented in a
coherent and efficient manner, Amway engaged in extensive
project research and planning prior to commencing site
construction. A project is defined as a temporary effort
undertaken to create a unique product or service. At this stage
Amway was working towards an e-commerce service for
Independent Business Owners. Therefore, in order to better
understand the design requirements, market research had to be
conducted amongst potential users. Market research is defined
as the systematic design, collection, analysis, and reporting of
data and findings relevant to the specific marketing situation
facing a company.
Through the market research process the company will:
1. Define the problem and research objectives
BRAND MANAGMENT
2. Develop the research plan
3. Collect the information
4. Analyse that information
5. Present the findings
6. Make the decision
The market researchers ran focus groups with Independent
Business Owners in Germany, Spain, Italy and the UK. A focus
group consists of typical consumers who are asked to provide
feedback about a new product or service. From these groups, a
better understanding of the required functionality of the
website emerged.
The marketers listened to Independent Business Owners and
produced a report specifying the layout and design requirements
of the website. This report was handed to the Internet team
who had to design the website to meet their current and future
requirements. Other criteria for this process included:
Technical feasibility study.
This assessed the functionality of the website and verified if it
could be achieved within current technology guidelines.
Budget
This outlined the amount of money that could be spent on the
website. It also included procedures to ensure the website did
not end up costing more than expected. Budgets are often
planned on an annual basis or, as in this case, on a project basis.
Schedule
This determined when the work of building the website could
begin and when it should end. It also highlighted who was
responsible for doing the work during each phase of the
project. Scheduling is most common in the manufacturing
industry, though the same techniques are now used in many
other areas
245
 Conclusion
BRAND MANAGMENT

The advent of a new technology will always present a challenge

to business. Success depends on an enterprise’s ability to turn
this technological challenge into an opportunity for growth.
Many enterprises could not rise to the challenge of the Internet
and became casualties of the dot.com era. The success of
Amway in turning the Internet challenge into an e-commerce
opportunity was due to its extensive research, marketing and
planning.
Tasks and Activities
1. he use of new technologies allows companies to attract
At this stage, with the research and planning complete, the site
customers in different ways. In your opinion, what is the
design was handed over to the web-designers, who were
importance of e-business?
commissioned to encode the site and run rigorous testing to
How has it helped Amway attract new customers and attain
ensure its stability.
Leadership in the market?
Branding of the Website 2. Explain the following terms;
Research also had to be conducted into the branding of the a. Business-to-Business
website. A brand is a name, term, sign, symbol or design that is b. Project Management
intended to identify the goods or services of a seller, and to c. Direct Selling
differentiate them from those of competitors. Because the d. Distribution Channel
website was intended for Amway’s Independent Business e. Market Research Process
Owners across Europe, the website’s brand had to be pan- f. IBO
European so that it would be acceptable to everyone. Added to
3. Outline the steps you should go through when conducting
this, the brand also had to be a unique Internet domain name
market research.
so that it wouldn’t infringe on any copyright. Copyright is
defined as legal protection for authors, composers and artists 4. Before you start designing a website, what issues would you
from having their work copied or reproduced without consider when trying to target the correct audience?
permission. 5. What issues would you consider when designing an
After much research Amway came up with the brand Amivo. effective website?
The ‘Ami’ signifies ‘friendship’ and the ‘vo’, taken from ‘vivo’, 6. Why is it important for a company to be aware of new
signifies ‘life’. technologies?
Amway could now provide its Independent Business Owners How does a new technology impact on issues such as
with an e-commerce resource that would help them manage managing change?
their businesses on a 24-7 basis. The website would help them
to find products, place orders, repeat previous orders and check Notes
all the information about their businesses, such as income level
and bonus status.
Going Online- The Launch
The launch of a website can expose a company to positive
publicity. A user that clicks on a poor website may not make a
repeat visit. Therefore, everything has to be right first time. In
order to minimise the exposure to any potential problems,
Amway opted to do a soft launch of the Amivo website. A soft
launch is a rolling launch of a product to selected groups of
customers. It is a form of test marketing. In this case the
selected group of customers were the longer established
Independent Business Owners. This soft launch provided
valuable feedback to the website designers in preparation for a
full or ‘hard’ launch.
In order to ensure high uptake of the website by the
Independent Business Owners, Amway offered a number of
small launch promotions and additional bonuses to encourage
them to come online. Each Independant Business Owner
received a password, log-on details, navigation details via direct
mailings, as well as training and support.

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LESSON 36:
BUSINESS TO BUSINESS BRANDING
Objectives
On completion of this lesson you should know:
a. What is B 2 B Branding
b. How it works and its importance
Business to business branding is for when you offer services or
products to other businesses. The branding part comes in with
the same role as it does in regular product or business branding.
The idea is for you to get other businesses to think of your
company first, before they turn to anyone else.
In a sense, this is easier, because your target market will
probably be somewhat smaller. But that’s not always the case.
Of course, it really depends on your product or service.
Business To Business Branding - Ideal For Your Business
When Done Correctly
To make sure you’re able to have business-to-business branding
that is as effective as possible, you may want to consider
branding consultants. It’s the job of a branding consultant to
get to know your company and your product and/or service
well, in order to determine how to best help you. From there,
they can help you create solid business to business branding.
The important thing is that you do concern yourself with it.
You don’t want to sit around and just wait for your advertising
to take effect. You have to get out there and make sure your
customers know you are the best place to go for your product.
Business Branding
Business branding is just part of the entire branding process,
but an important one, nonetheless. Branding in general is when
you get your customers to connect your product with your
company instead of any other company that might also
produce your product. But what if you have many products?
What then?
That’s where business branding comes in. If you’ve got many
products, like say, Amazon.com does, you need to concentrate
on creating an identity for your business over all. This isn’t
always a more difficult task than simply product branding. But
it can be depending on your product.
For Business Branding, Get A Branding Agency
The best way to assure that you can be certain your company
ends up with strong business branding is by hiring a branding
consultant or agency. It’s their job to get to know you and your
product so they can help you help your potential customers get
to know you and your products and services better. You can try
doing it on your own, but it is their specialty.
Clearly, it’s important for people to know your company for
more than just the products you provide. Business branding
will help your customers, potential and otherwise, understand
who your company is for it’s other qualities. It’s history, it’s
customer service, it’s identity.
BRAND MANAGMENT
B-to-B Branding: Building the Brand Powerhouse
For many business-to-business organizations, branding
historically has been an uncomfortable subject. Such firms
traditionally have been managed on the basis of the four “P’s”
of marketing: product, price, place, and promotion.
Organizations felt that if they built superior products at a low
cost, managed the sales and distribution channel well, and
promoted the product line, they would achieve marketplace
success. Indeed, this has been the hallmark of marketing
management for nearly 50 years. Senior management in
business-to-business organizations apparently believed that all
business purchasing decisions are rationally based. They feared
that brand building was a topic suitable only for makers of
toothpaste, automobiles, or luxury apparel; it was too emo-
tional, too soft, or too squishy for products that sold through a
buying process considered rational.
In recent years, however, a number of factors have contributed
to changing this traditional point of view. Firms find it difficult
to stand out among a crowded field of companies offering
similar and increasingly commodified products and services. In
many cases, the four “P’s” are no longer the key to sustainable
competitive advantage. In fact, they now are simply the table
stakes every company must leverage to simply stay in business.
Furthermore, the advent of interaction and the Internet
encourage a recognized name that is linked to specific capabili-
ties, values, and competencies. And there has been considerable
interest in how brand strength translates into increased
shareholder value through enhanced cash flows, reduced costs,
increased customer retention, and enhanced asset value.
Focus Areas
This study sought to examine five key areas of business-to-
business branding.
1. Brand architecture-how best-practice organizations
balance and manage corporate,
divisional, and product brands and leverage brand equities
across the organization
2. Cobranding-how business-to-business organizations
build brand value through
initiatives such as ingredient branding, licensing, composite
branding, and sponsorships
3. Development of the brand-value proposition or brand
promise-how business-to-business firms use tools and
processes to distill the brand to its essential values and
articulate a memorable and compelling brand promise to
external and internal audiences
4. Integrated brand communication-how leading
practitioners plan, budget, and execute brand
communication programs across the full spectrum of
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 communication venues to customers, prospects, employees,
BRAND MANAGMENT
investors, and other relevant stakeholders
5. Measuring success-how organizations monitor brand
equity and determine the return on investment of their
branding activities
Overview of B 2B Branding
Business-to-business organizations face a variety of challenges
that distinguish their marketing activities from those of their
consumer counterparts. They often face long buy-in periods and
complex buying processes in which purchasing decisions are
ostensibly made using only rational, objective criteria. Further-
more, rapidly changing technology means that products may be
obsolete within a few weeks or months of leaving the factory
floor. Perhaps most daunting of all, some firms have a
traditional managerial mind-set focused on products, produc-
tion, and distribution rather than creating perceptual value in
the minds of customers.
In spite of the unique nature of commercial and industrial
marketing, brands are built in the business-to-business arena in
much the same way as they are established in the consumer
marketplace. Branding is about establishing trust and creditabil-
ity. Strong business-to-business brands create an intellectual and
emotional bond with customers, prospects, end users, channel
partners, employees, and other stakeholders. And strong
business-to-business brands are clearly delineated from their
competitors. The best-practice partners detailed in this report
have established unique and distinctive presences in their
respective markets. In most cases, these brands have
successfully extended their reach from the bricks-and-mortar
world to the Internet. Partner firms are far more likely than
sponsors to report they have a clearly differentiated brand
identity, report much higher levels of immediate recall, and
believe they have achieved higher rates of customer retention
than have their competitors. Furthermore, most are able to
command a premium price for their products and services.
Brand Architecture
Traditionally, business-to-business organizations have highly
product-focused, with less focus on brand identity. In such
organizations, marketing activity is often spread across a wide,
disparate line of products and services, with little forethought
given to creating a unifying or enduring identity in the minds of
customers. As was mentioned earlier, in recent years a number
of leading business-to-business marketers have begun to
reconsider the importance of branding in commercial and
industrial markets.
At the same time, they have recognized the critical link that
must be maintained between the firm’s branding strategy and
its overall business strategies. Frequently this has led to
redefining the relationship among corporate, divisional, and
product level brands (brand architecture). Such changes have
important implications for the roles and responsibilities of
those who are tasked with brand identity management.
Additionally, brand architecture policies and standards must be
developed in a way that fosters the firm’s future growth, its
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entry into e-commerce, and its ability to adapt rapidly to
changing market conditions and organizational forms.
The report explores three key findings related to issues of brand
architecture.
1. Effective business-to-business branding establishes a
strong corporate or competency
platform that supports multiple products and audiences
and links to the organization’s business strategies.
2. Business-to-business brands need high-level champions.
3. Brand architecture provides a solid but flexible framework
for future growth, easing the introduction of new offerings
and the absorption of acquisitions.
Cobranding
Business-to-business marketers increasingly are joining with
other organizations to leverage the value of their brands. This
might be done through joint marketing alliances, market
development partnerships, or cobranding relationships. This
section examines practices in the latter category by focusing on
four primary types of cobranding relationships: licensing,
ingredient branding, composite branding, and sponsorships.
Best-practice organizations have pursued cobranding
relationships of all types more aggressively and successfully
than have the sponsor firms.
Two key findings related to cobranding programsare-
1. Strong business-to-business brands leverage their strength
through cobranding relationships.
2. Cobranding relationships must be carefully developed and
managed to ensure consistent and appropriate portrayal of
the brand.
Development of Brand-Value Proposition or Brand
Promise
In the 1998 study Brand Building & Communication: Power
Strategies for the 21st Century, one of the most important
characteristics that differentiated best-practice organizations
from sponsors was the extent to which the partners had
articulated a clear, concise, and compelling statement of the
brand’s essential value proposition or promise. The goal of the
current study is to examine how business-to-business
organizations successfully create industrial, commercial, or
technology brands. What processes are used? What research is
conducted? Who is involved? And what outside resources
provide guidance or assistance? Partner organizations invest
significant resources in understanding the brand from the
standpoint of its many customer segments, as well as from the
perspective of employees, channel customers, and even the
financial community.
Two major key findings are used as the basis for understanding
how organizations determine and express the heart of the
brand.
1. The brand promise is not a catchy slogan or tag line. It
must be grounded in customer needs and linked to value
delivery.
2. Powerful brands create an enduring and compelling aura of
leadership, authority, and uniqueness.
Integrated Brand Communication
A key challenge facing branding organizations is how to project
a consistent, coherent, and compelling brand identity using an
expanding list of offline and online communication tools. Such
firms are faced with coordinating brand messages across
different communication functions and venues (advertising,
public relations, trade exhibits, sales literature, online efforts,
etc.) and must ensure that messages from different levels and
divisions portray the brand appropriately and consistently.
Increasingly, smart business-to-business marketers are not
stopping at communicating the brand’s values and attributes
only to customers and prospects. Rather, they recognize the
importance of internal brand communication. They align the
promises to customers with the internal policies and rocedures
that enable employees to meet their commitments.
Best practices regarding brand communication are grouped
under four primary key findings.
1. The most important characteristics of brand
communication are: sufficiency, consistency, stability, and
focus.
2. Strong brands adapt and refine external communication
elements over time but remain true to their heritage.
3. External brand communication must portray the brand’s
strength, image, and leadership across a variety of vehicles
and audiences.
4. Great brands are built from the inside out.
Difference Between Consumer and B 2 B
Marketing
• Consumer marketing is concerned with matching the
resources of the selling organization with the needs of
consumers.
• It focuses on end users
• Organisational marketing is concerned with provision of
products and services to the organizations.
Key Issues In B 2 B Branding
Budgets for B 2 B campaigns are often smaller
When Do B2B Customers Want a Close
Relationship?
by Allen Weiss
Given all the talk these days about relationship marketing, B-to-
B auctions, and eWebs of all sorts, one might get the
impression business relationships are changing in a
fundamental way. This view, however, is likely to be misguided.
This is because it is based on the idea that the Internet will do
away with all social aspects of business relationships.
One central idea throughout current discussions is the challenge
of building close relationships with customers. While this is a
reasonable goal, it begs the question as to whether all business
customers want a close relationship.
Here we will try to examine the conditions under which a
customer might want such a relationship. More importantly, a
good understanding of this will help you to appreciate when
the efforts of building a close relationship are not warranted
(just think how much time you can save if you stop trying to
build close relationships with a customesr who don’t want
BRAND MANAGMENT
one!).
Dependence is The Key
Academics in marketing and sociology have, based on several
years of close observation, pointed out the importance of
“dependence” in understanding close relationships.
In short, business customers want a close relationship with a
seller when they are buying something that makes them
dependent on the seller. If you think about it, this makes
perfect sense.
When a customer is dependent on a seller, they need a close
relationship. For example, imagine the customer is putting their
entire Internet business in the hands of a Internet consulting
company. The customer is now dependent on the consulting
company. Can you see how the customer might now want a
close relationship? Won’t they need the consulting company to
be their in case anything happens?
We’ve written about this in some previous articles (Is CRM
really about Relationships? and Customer Loyalty is
Underwater), but we never really mentioned what makes a
customer dependent. So, here we will try to fill out the story.
What Makes A Customer Dependent?
Essentially you can think of a few things that would make a
customer dependent. We will list those below along with some
short discussion.
Strategic Importance of the Product – when a customer is
purchasing something that is strategically important to them, it
makes the customer more dependent on the seller – and
therefore more close relationship-oriented.
What do we mean by strategically important? Well, essentially it
means something that allows the customer to differentiate what
it sells or how develops and sells in the market. Here is a
simple, but realistic example.
MS2.com sells a software product known as Product Lifecycle
Automation. Without going into the specifics, the software
essentially allows companies to develop and market their own
products faster. By so doing, these customer companies are able
to differentiate themselves in the market. This make customers
who purchase the software dependent on MS2.com.
Now, before concluding that it must be complex (like fancy
software) to be strategic, here’s another example.
When NutraSweet (a sweetener) first entered the market, it sold
its formula to Coca-Cola. This allowed Coke to differentiate its
cola from all competitors in the market. Thus, NutraSweet was
strategically important to Coke. NutraSweet, however, is not
complex.
Thus, you don’t have to sell something that is complex for it to
be strategically important!!
So, ask yourself: Is what you sell strategically important to your
customers?
Downside Risks – when a customer is purchasing something
for which there are large downside risks (i.e., if it doesn’t work,
the customer is out of business), this obviously makes a
customer more close relationship-oriented.
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 Note how similar this is to the so-called “Mission Criticality” of combination of these different forces that will inform you
BRAND MANAGMENT

the product or service they’re buying. If you’re selling some- whether your customer is really close relationship-oriented, or
thing that is mission critical to a customer, they are close simply looking for transaction.
relationship-oriented. The important point to remember is this. Not all customers
So, ask yourself: Does what you sell have big downside risks for want a close relationship. It depends on what they’re buying.
your customers? In my experience, the answer to this question typically is
Switching Costs – when a customer must build up high immediately apparent. For example, if what you sell is 1) not
switching costs in order to buy and use your product or service, strategically important to a customer, 2) is not mission critical,
they become more close relationship oriented. What types of 3) requires very little switching costs, and 4) is modular, then
switching costs are there? you are likely dealing with customers who don’t want or need a
We typically think of switching costs in terms of obvious close relationship. They want a transaction...and the driving
things like equipment or software. So, if you have to change force of choice will likely be the best price.
software in order to buy a seller’s product, you incur high But if these factors point to a customer who wants a close
switching costs. While this true, it is a limited view of switching relationship, well you must be prepared for being a great partner
costs. in that relationship.
For example, switching costs can come in the form of training Now you might be able to understand the limitations of these
or replacing people, or even new procedures that are geared to auctions for all business transactions. Customers buying
work with a specific seller (such as information links or adminis- products and services that make them close relationship-
trative controls). oriented are not going to be interested in an auction. Auctions
When a buyer must build up any of these switching costs in put the emphasis on price, but that’s not what close relation-
order to buy a seller’s product, the buyer becomes close ship oriented customers are interested in.
relationship oriented. What they want is a partner who is willing to be there with
Finally, we should note that switching costs might take the them (remember they are now dependent on the seller), and
form of psychological switching costs. These arise due, in part, such customers are typically willing to pay more for a good
to the comfort a customer may derive from purchasing from a partner.
seller with a strong brand name. The follow-up question, is what it takes to be a great partner of
So, ask yourself: Does what you sell require large switching costs a relationship oriented customer, and this we will discuss in a
for your customers? future tutorial.
Modularity – when a customer is buying something that is Notes
easy to mix and match within their usage system, it makes them
less (not more) close relationship-oriented.
To understand this, first understand the concept of a “usage
system”. Most products are purchased as part of an overall
system. A “usage system” is simply a set of products that must
be used together to be useful to a customer. An example would
be an Internet connection. By itself, and Internet connection is
worthless. Its value becomes apparent only within the context
of its usage system (a computer, browser, and the Internet
connection).
Many things that firms sell are in fact part of a larger usage
system (databases and applications, WAP-enabled cell phones
and WML coded content, etc.).
To the extent that what a customer is buying is easily mix and
matched inside the usage system, they become less relationship-
oriented. Thus, if any database can be used with a given
application, then the customer for databases becomes less
relationship oriented towards a database vendor. You can
readily see how industry standards and the open source
movement has a profound impact on modularity when it
comes to technology and the Internet.
So, ask yourself: Is what you sell highly modular for your
customers?
The Bottom Line
As you can see there are various forces acting on customers to
make them more or less close relationship-oriented. It’s the

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LESSON 37:
LIVE INDUSTRY PROJECTS
Objectives
This assignment is based on the basics of Brand Management.
As you must have studied this as a chapter in Marketing course,
based on that knowledge background we will discuss following
cases in groups of 4-5 students each. With this exercise you will
realize how well you know branding.
Methodology
Here are given summary of cases of 4 popular brands. You are
required to collect detail of
each from industry or from
Internet. Go through the
questions given below the
case summary and answer the
same following the
guidelines.
(CASE I ) MTV – Building Brand Resonance
Summary
MTV was established in 1981 as a maverick pioneer in the
burgeoning cable television industry. Over the next 20 years,
MTV moved from the fringe of television culture in America to
the core of pop culture in countries all over the world. The key
to MTV’s success in each market was its ability to connect with
the young consumer. As young consumers grew older, the
challenge for MTV was to establish connections with new
groups of young consumers. This led to a constant cycle of
reinvention. With a few exceptions, at each crossroads MTV was
able to find the right mix of music and culture to capture the
viewership of successive generations of young people, both
domestically and internationally. This case examines the key
decisions and factors that enabled MTV to accomplish its rise as
a global media network from its humble origins. The following
questions will be useful as a guide for class discussion:
1. Describe the current sources of MTV’s brand equity. How
have they changed over time?
2. Discuss the role of the Internet in MTV’s programming.
How should MTV best integrate the Internet into its
brand?
3. How have MTV’s sister networks affected the parent
channel’s brand equity? What changes, if any, would you
make in the positioning of the sister networks
in order to create more sources of equity for MTV?
Objectives
1. To analyze the components and key issues of building a
media entertainment brand
2. To examine the value of awareness-building advertising
3. To overview establishing points-of-parity and points-of-
difference
BRAND MANAGMENT
4. To examine corporate branding strategies vs. product
branding strategies
5. To analyze managing a brand portfolio
Guidelines
The MTV case, as the title indicates, details the process by which
MTV built brand resonance with consumers. The brand
includes a lot of historical detail that you may or may not be
familiar with. The case also addresses many contemporary issues
that may not be familiar to you. Yet, most you would have
heard of and watched MTV and will therefore be able to
participate in the discussion. This is a good case to use in the
beginning of the term, since it reinforces many of the points
about building brand equity from Chapter 1 and Chapter 2.
The case begins by recounting the early history of MTV. At the
time of its launch, the concept of music videos was relatively
novel and certainly the idea of an all-music video channel had
not be seriously considered by many television executives. You
can list the elements of the brand, including the music videos,
the “VJs,” the logo, the studio from which broadcasts were
taped, and so forth. According to company employees, the
name itself was selected for lack of better alternatives, but the
visual look of the channel, from the videos themselves to the
“VJ loft” to the moon landing logo, were carefully designed
and/or selected to reflect the core values and key associations of
the channel. You can enumerate these values and associations,
which include music, youth culture, subverting established
culture, fun, no rules, no parents, creativity, excitement, and so
forth. A mental map is a fruitful way to capture this input.
Further you can identify how each element of the MTV brand
reinforced these values and associations.
MTV’s decision to make the channel the star over the individual
artists was key. It enabled the channel to reinvent itself numer-
ous times over the next 20 years without sacrificing equity built
up in artists or genres. While MTV did have strong associations
with certain genres – such as 80s pop, 90s gansta rap and grunge
– that hurt the image of the brand when these genres fell out
of favor, the channel was able to capitalize on the next trend.
This is analogous to pursuing a corporate brand strategy over a
product branding strategy. You can discuss the advantages and
drawbacks of a corporate brand.. The videos and the stars MTV
broadcast can be thought of entities that provided secondary
associations for the channel to leverage in order to build brand
equity. You can consider what associations this channel content
provided and what contributions to equity it made.
MTV’s initial marketing program was an integral part of its
success nationally. You can search whether MTV needed to
concentrate on image or awareness in the early stages of brand
building. So the marketing strategy was designed to elicit
customer demands from the cable companies that they carry
MTV. Your discussion can evaluate the strategy of using
251
 celebrity endorsers in the advertising as well as the media buy
BRAND MANAGMENT
schedule that attacked key markets for a few weeks at a time
until demand was high enough that cable providers adopted
the channel.
The large part of the discussion can center on how MTV
achieved brand resonance in its first era of growth in the early
1980s. Your group can apply each of the six brand building
blocks to understand how MTV viewers took the steps from
brand salience to brand resonance. In terms of the first step,
brand salience, MTV was able to establish deep awareness in its
category because of the lack of competitors and broad aware-
ness because of the richness of the programming available to
viewers of the channel. With the second step, brand perfor-
mance, MTV’s stylish and artistic videos and design features, as
well as the programming of hot videos its viewers wanted to
hear, led to a high perception of brand performance among
consumers. The next step, brand imagery, is one area where
MTV excelled above most other cable networks. The television
medium consists of images, which made it easy for MTV to
convey a variety of imagery components and personality traits.
Students can be asked to list MTV imagery associations and
personality traits, both historically and currently.
Next, consumers brand judgments of MTV were typically
positive based on the following four components: brand
quality, brand credibility, brand consideration, and brand
superiority. Students can discuss how MTV achieved each of
these four components. The quality production values of the
videos and other programs led to consumer perceptions of
quality. The down-to-earth VJs lent credibility to the brand, as
did the exclusive world premier videos and studio visits from
the major stars. MTV had high levels of brand consideration
due to the high awareness and the uniqueness of the product.
For similar reasons, and for the favorable consumer response to
the brand, MTV also achieved brand superiority. As a result,
MTV attained brand resonance.
The discussion can now move on to the four components of
brand resonance: behavioral loyalty, attitudinal attachment,
sense of community, and active engagement. Again, you can
solicit examples of how MTV achieved each component. In the
early years, MTV built loyalty and attitudinal attachment
primarily with the music videos and the general look and feel of
the channel. To build a sense of community and active engage-
ment, MTV used VJs, held contests, hosted award shows, and
ran some long-form programming. MTV improved the sense
of community and active engagement of its viewers in the early
1990s by developing long-form programming such as the Real
World, Road Rules, and Beavis & Butthead. Further develop-
ments in the 1990s included the live call-in show Total Request
Live (TRL), the Tom Green Show, and Undressed. With the
exception of TRL, none of the long-form programs mentioned
above were explicitly music-based. Instead, they were “musi-
cally-infused.” This can lead to discussion of where MTV is
headed and how it can maintain resonance as it added new
long-form programming such as The Osbournes and MTV
Cribs that did not expressly focus on music.
Naming New Products and Brand Extensions. MTV’s growth
on the Internet, as well as competition from Internet music
252
sources, is another area for discussion. Another topic is MTV’s
global expansion, which can be related to the ideas from. Finally,
the group can conclude with discussion of MTV’s longevity and
the future challenges of remaining relevant and reinventing the
brand repeatedly.
Key Lessons
• MTV used an innovative idea combined with brand
management to build a strong brand
• Building awareness is the vital first step in the customer-
based brand equity model
• MTV designed its brand to be more powerful than the stars
featured in the content
• MTV found new ways to build brand resonance, including
long-form programming and interactive viewing
• MTV used constant reinvention and changed the tastes of
its viewers to establish long-term brand resonance
(CASE II) Nike: Building a Global Brand
Summary
This case concerns the development
of Nike’s international marketing
program. Although Nike met with
great success in thwarting Reebok’s
competitive thrust in the U.S.,
overseas markets posed many
challenges. The case concentrates on the European and Asian
markets and provides some historical marketing perspectives.
The issue faced by Nike is how to best build global brand
equity. The case focuses on some key marketing decisions in
1992 and 1993. Group discussion can revolve around the
following sets of questions that you should answer and
submit:
1. What is the brand image and sources of equity for the Nike
brand? How transferable are these associations?
2. How might Nike’s effort to become a global corporation
affect its sources of brand equity and brand image in the
U.S., Europe, and Asia?
3. Are sponsorships and endorsements vital to Nike’s
business? For instance, what effect would Nike becoming
an official sponsor for the Olympics have on the company’s
relationship with consumers?
4. Why did Nike become a target for critics of globalization?
Do you think Nike’s response to allegations of unfair
global labor practices was appropriate and/or effective?
Objectives
1. To examine issues in global branding
2. To demonstrate the value of integrated marketing
3. To consider how to manage a strong brand
4. To explore PR issues for established brands
Guidelines
Nike is a brand with which each one of you will have no doubt
having experiences and opinions. The value to the case
discussion is that you can still learn some valuable lessons
about Nike and their marketing expertise. A good place to start
the case discussion, after a quick summary of the historical
origins of the brand, is in 1988, a time when Reebok held a
sizable market share lead (30% to Nike’s 18%). In fact, some of
you may have already been exposed to the HBR case that deals
with Reebok’s integrated marketing communication program
from that time. You can identify Reebok’s and Nike’s brand
image at that time. Essentially, Reebok has concentrated on
creating associations to “comfortable,” “fashionable,” and “for
women.” Reebok’s growth was driven by aerobics shoes and
now you can find out what associations might have followed.
Prior to 1988, Reebok was also seen as a hip, cool brand but, by
this time, they were seen as a much more mainstream brand.
The Nike brand image should be easier for you to elicit. Key
brand associations were created to “performance,” “high tech,”
“top athletes (e.g., Michael Jordan),” and “sports.” You should
find out how consistent, cohesive, and reinforcing this brand
image was (and still is). It is important to know how this brand
image was created to provide a point of reference for the
discussion about Europe and other areas of international
expansion. Basically, the brand was built from the “ground up”
in a “grass roots” effort. It is worthwhile to note the duality of
the brand image and how this characterizes strong brands. Nike
has strong product performance associations (remind students
what an innovation air technology was) as well as user and
usage imagery. Nike’s advertising in general, and the “Just Do
It” campaign in particular, can be analyzed some in terms of its
contribution to brand equity. The power of the slogan – a three
word summary of the self-empowerment that the brand
represents – can be emphasized.
After analyzing the Reebok and Nike brand images, their
respective positionings can be considered, time permitting.
Nike’s point-of-difference is clearly performance. Reebok’s
point-of-difference was style. Their respective points-of-parity
follow from there. You can judge the two positionings in terms
of desirability and deliverability. The former is a question of
how strongly the “pyramid of influence” operates in this
market. At the top of the pyramid is the competitive athlete,
which makes up roughly 5 percent of shoe buyers. Next, the
“weekend warrior” or casual athlete makes up the next 15
percent. Since the vast majority of athletic shoes are never used
for anything more athletic than walking, the base of the
pyramid – 80 percent of the total – is the non-user. Some of
you might argue for Nike’s high-end trickle down approach of
using top athletes to represent the brand, while others will
endorse Reebok’s mass-market approach. Deliverability is less
controversial however as Reebok’s UBU is a huge misstep as
compared to the focused, well-executed Just Do It campaign.
The depth of the analysis of the U.S. experience will depend on
the time available. To address the challenge of building a global
brand, you must appreciate how the brand was built in the U.S.
In particular, it is important to point out Nike’s internal brand
mantra, “authentic athletic performance,” and how it helped to
guide brand-building efforts. Once the American experience has
been covered to the degree desired, discussion can switch to the
European market. A good opening question here is to know
how brands should be built in a different geographical market.
The answer, of course, is that they must be built from the
“bottom up” just as had been the case in the original domestic
BRAND MANAGMENT
market. The actual means by which they will built, however,
may differ. In other words, the strategy will be the same –
awareness first and image next – but the actual tactics in terms
of the three main ways to build brand equity may differ. With
this backdrop, you can find out what challenges existed for
building brand equity in the European market in 1992. Perhaps
the most important challenges were that: 1) the brand did not
have the history nor heritage in the market and was starting
more from scratch and 2) European consumers may vary in
significant ways from Americans in terms of their sports
experience.
The case discussion can be extended with a look at Nike’s image
problems in India. Students can identify the various contribu-
tors to these problems, such as labor relations, swoosh
ubiquity, endorsement proliferation, and aggressive marketing.
Nike became a lighting rod for criticism from various citizens
groups, both domestically and abroad. Here, a discussion of
the challenges of becoming a global brand in the 21st century can
be useful. A global economy enables brands to vastly expand
their reach geographically, yet at the same time accountability
increases as well. You can discuss Nike’s steps to remedy its
various image problems, evaluating them for their effectiveness.
Also, the topic of global marketing can be addressed here. You
should enumerate the pros (e.g., economies of scale in produc-
tion and distribution, lower marketing costs, consistency in
brand image, scope, etc.) and cons (e.g., differences in: consumer
behavior, consumer response to marketing, brand and product
development, competitive environment, legal environment,
etc.) of global marketing. Nike’s marketing activities can be
evaluated in terms of how they dealt with these benefits and
drawbacks.
Complicating Nike’s ability to grow its brand was a global
economic downturn in the late 1990s. Regardless of the
prevailing economic conditions, Nike faced many challenges
achieving growth with its brand. In many markets, demand for
its footwear was not as high as it had historically been. Nike
made successful moves into apparel, but its equipment
business was still a small piece of the business. You can also
find out the benefits and hazards of leveraging Nike brand
equity over a wide range of non-footwear products. Interna-
tional growth continued to be strong, however, particularly in
Europe. Discussion can include an evaluation of Nike’s future
prospects for growth in international markets. Latin America,
Africa, and Asia still had huge untapped market segments.
As a high profile brand, Nike is always in the news, and
youngsters always like to talk about the brand. The key to
guiding this case is to make sure you are applying course
concepts to do so.
Key Lessons
• Importance of creating a strong foundation for brand
equity
• depth/breadth, rich, cohesive brand image
• Advantages of brand mantra for brand focus
• Importance of proper positioning
• Value of strong corporate brand
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 • Dangers in taking short-cuts in building a strong global • Blue/White
BRAND MANAGMENT

brand A number of specific points can be made about the brand

(CASE III) Nivea: Managing a Brand Portfolio image. The association of care and protection is an important
one as it works at both the product-level as well as a more
Summary
symbolic, non-product level. This duality is one that character-
This case concerns the marketing program for Beiersdorf ’s
izes strong brands. Mildness and gentleness associations are
flagship Nivea brand. The case addresses the issue of how to
also critical as they represent a key point-of-difference. Classic
manage the brand image for a brand associated with different
and heritage associations present an opportunity and a threat.
products. How can Nivea continue to add new customers to
In terms of the latter, a worry is that the brand will not be seen
their brand franchise without harming their brand equity?
as contemporary and up-to-date, a point we will return to.
Further, how can Nivea maintain its brand equity in its core skin
Finally, the blue and white associations are the foundation for
crème product while also leveraging that equity into new
brand awareness and can be leveraged in that way.
product categories? A number of issues are raised concerning
the coordination of a branding and communication program After some discussion of the brand image of Nivea crème,
across existing and new products. Class discussion can revolve analysis can turn to the sub-brands and brand extensions. As is
around the following sets of questions that students should usually the case, it helps to elicit the brand hierarchy and put it
consider before class: on the board. A few preliminary comments can be made
concerning the range and scope of the Nivea brand (e.g., Which
1. What is the brand image and sources of equity for the
associations are most transferable? Relevant? Unique?). It is
Nivea brand? Does it vary across product classes? How
necessary to individually analyze each major sub-brand, starting
would you evaluate or rate Nivea’s brand extension strategy?
with ones under skin care and moving to ones under personal
How would you characterize the brand hierarchy?
care. A good way to do this is to identify, one by one, the
2. What is the role of the Nivea Crème advertising? Should it points-of-parity and points-of-difference for each sub-brand.
be changed? Students may put together a list somewhat like the following:
3. What would you do now? Provide recommendations to
Nivea concerning next steps in their marketing program.
POP POD
Objectives Crème All-Purpose Application Mildness/Gentleness
1. To examine issues in managing a brand hierarchy and brand Body Texture/Application Mildness/Gentleness
portfolio Soft Pleasurable usage/Texture Mildness/Gentleness/ Lighter crème
2. To review possible roles of brands and communication Visage Beauty Scientific & Technology
strategies for a brand hierarchy and brand portfolio
Vital Beauty/Anti-aging Scientific/Gentleness
3. To consider how to best manage a mature brand over time Baby Safety/Caring/Mildness Heritage
4. To analyze brand extension strategies for appropriateness Sun Protection/Safety Mildness/Gentleness
Beach/Fun
5. To demonstrate proper communication strategies with a
brand extension For Men Sensual image/
Soothing
Mildness/Gentleness

Guidelines Bath Care Convenience/ Mildness/Gentleness

Cleansing
This case is the one with which you may be the quite familiar.
Nevertheless, it can be an excellent means to examine brand Deodorant Efficacy Mildness/Gentleness

extensions and brand hierarchies. A good way to begin the case
is to know what is the brand image of Nivea crème, the flagship
product, in Europe, e.g., if you were to stop someone in the
streets of Paris, London, or Hamburg and asked what came to
mind when they thought of Nivea, what would they say?
Nivea crème has a rich brand image, so students typically are able
to elicit a number of different brand associations, such as:
• Care
• Protection
• Mildness/Gentleness
• Reliable/Trustworthy
• Natural/Pure/Basic/Simple/Honest
• Family/Shared Experiences/Maternal
• Multi-Purpose
• Classic/Heritage/Timeless
• Good Value/Quality
Beauté Beauty/Color Mildness/Gentleness
Hair CareCleansing/ Mildness/Gentleness/ Appearance/Hold
There are a number of specific issues for each sub-brand that
can be considered in the process, time permitting. For example,
Visage is a very different type of sub-brand that deserves closer
scrutiny. One role it can play is to contribute to the perceptions
of the Nivea brand as a whole (e.g., as innovative, contempo-
rary, etc.). Of course, the transfer of associations is not one-way,
so a legitimate question is the effects of the Nivea parent brand
on Visage. This topic can be used to illustrate the flow of
equity, which describes how sources of equity are transferred
between a parent brand and a sub-brand, and vice-versa.
Although Nivea presumably communicates credibility, quality,
and mildness, the transfer may not be all positive. For example,
Nivea Deo raises an interesting dilemma faced by many brands:
how can a brand be effective and therefore by implication,
strong - and mild? The challenge of negatively correlated

254
attributes can be addressed in this context. Another example:
Nivea’s positioning as a mass-market, family brand of skin care
products complicated its extension into color cosmetics, which
is a more sophisticated and image-conscious category.
After listing the positionings of the sub-brand, you can step
back and critique their extension strategy. Has BDF manage-
ment done a good job extending the Nivea brand? You will
admit that the current brand portfolio is generally cohesive and
well put together. It is also worth considering whether Nivea’s
leveraging of its brand across an array of diverse brand exten-
sions could have adverse consequences for the image of the
umbrella brand. Two important points to emphasize about
their sub-brands is that: 1) gentleness and mildness are key
points-of-difference in almost every category; and 2) as Nivea
moves farther away from their core crème brand, points-of-
parity become critical. It is worth noting that these two
observations characterize many brand extension strategies.
These two observations have important implications for the
brand hierarchy as will be developed further.
At this point, it makes sense to return back to the brand
hierarchy to get the “big picture.” For the sub-brands to be
successful, with the exception of Visage, they all need to create a
POD on the basis of mildness and gentleness. BDF manage-
ment has four basic options to do so:
1. Create mildness and gentleness associations to the Nivea
brand as a whole (perhaps reinforced through a family
brand ad) and assume they trickle down to the sub-brands
2. Create mildness and gentleness associations to the collection
of sub-brands through a product umbrella ad that
showcased all the various products and assume that each
one would pick up the associations
3. Create mildness and gentleness associations at the skin care
and/or personal care level through a family brand/product
umbrella ad at that level and assume they trickle down
4. Create mildness and gentleness associations at the Nivea
crème level and assume they go “up and over” to the sub-
brands
Nivea chose the fourth option by implementing the Blue
Harmony campaign, which was essentially an image campaign
for Nivea Crème. This fourth option was the most cost-
effective but, as with the first option, it is not clear that a
BRAND MANAGMENT
different type of ad will be necessary. To make this point, the
Blue Harmony ad campaign should be analyzed. The campaign
certainly modernizes the brand and gives it a more contempo-
rary look. A number of key associations were not, however,
being reinforced initially, especially care, protection, mildness,
gentleness. These associations are only very implicitly dealt with
as the ads are more of a life style variety and lack product
exposure. Later Blue Harmony ads focused more on specific
attributes of Nivea Crème, while keeping the style of the ads
consistent.
The discussion can conclude by knowing what would you do
next – both short-term and long-term. The key for Nivea is to
reinforce equity in the corporate umbrella brand while at the
same time using it to support extensions. If your suggestions
are based on the analysis described above, changing the ads, you
should be able to tell how. There are many good things about
the ad that probably should be preserved. BDF’s solution was
to add phrases to capture key associations to the ad (e.g., “Care,”
“Protection”) while essentially keeping the same visual style.
Although seemingly small and subtle, such changes may help to
provide the proper brand foundation on which the extensions
can build.
Longer-term, a key question becomes what new product
categories should Nivea enter and how. You can generate some
candidate categories and react to some actual categories in which
Nivea entered. You can also discuss the challenges of the
entering the U.S. market. One useful point to consider is
whether BDF should attempt to leverage their European
(although not necessarily German) heritage in marketing Nivea
(e.g., “the European skin care leader”). They have not done so –
is that wise?
Key Lessons
1. Strong brands have rich, cohesive brand images and well-
entrenched brand values
2. An effective brand hierarchy creates relevance, differentiation
and the proper awareness and image at each level
3. Properly extending a brand can broaden its meaning &
scope
4. Creating a strong family or “power” brand involves
choosing categories that “fit” and developing consistent,
well-positioned marketing programs
5. Sub-brands can create unique identities and enhance the
image of the parent brand
6. The role of flagship brands must be carefully managed to
balance deposits and withdrawals
Yahoo!: Managing an Internet Brand
Summary
The Yahoo! case details the rise of one of the Internet
economy’s most visible brands. The case focuses on managing
255
 an Internet brand, which entails numerous topics such as
BRAND MANAGMENT
Internet advertising, branding a technology product, and
managing a brand in a highly competitive category. Yahoo! was
the poster-child and bellwether of the Internet economy during
the second half of the 1990s, and managed to remain indepen-
dent as many search engine and portal competitors were
purchased by media companies. The company encountered
obstacles, however, as the economy worsened in the early 2000s.
After management changes and strategic business restructuring,
Yahoo! looked to capitalize on its position as a leading Internet
brand moving forward. Students can consider the following
questions before class:
1. Describe the sources of equity for the Yahoo! brand. Did
these sources change during Yahoo!’s history? If so, how?
2. How did Yahoo!’s marketing program contribute to the
company’s success? What changes, if any, would you
recommend for the future?
3. What do you think of Yahoo!’s new strategy of selling
services? What impact, if any, will it have on consumers’
perceptions of the brand?
Objectives
1. To examine the selection of brand elements and creation of
a marketing program
2. To analyze the decisions and factors involved in starting an
Internet brand
3. To observe the branding issues facing technology
companies
4. To review new marketing techniques, particularly Internet
advertising
5. To analyze the process of developing new products and
new markets
6. To examine the issues of global branding
Guidelines
Yahoo! should be a very familiar brand to everyone in the class,
and most students should have first-hand experience with the
brand. You should certainly be encouraged, as with most cases,
to go on-line and check out the brand before the class session to
increase their familiarity if need be. With this level of familiarity,
it should be easy to construct a mental map of the Yahoo!
brand at the beginning of class and use this to start your
discussion. An obvious place to start its with the origins of the
brand, which can be used to illustrate selecting brand elements
and devising marketing strategy. In vintage dot-com style,
Yahoo! was conceived by graduate students and started from a
trailer. These roots informed the fun and user-friendly image
that lay at the core of the brand. The name Yahoo! is an
acronym standing for “Yet Another Hierarchical Officious
Oracle,” which is a tongue-in-cheek definition of the search
engine in technology jargon. The name was meant to convey the
fun and excitement of using the Internet, without any
complicated technological associations that would dissuade the
casual consumer.
Yahoo!’s advertising was also designed to make technology
novices, termed “near surfers” because they considered getting
on the Internet but hadn’t yet, feel comfortable using the
256
brand. By Yahoo!’s way of thinking, these near surfers were
more loyal and comprised a large segment of the population.
Yahoo!’s advertising can be analyzed by you for its brand equity
building. Yahoo! had the advantage of being one of the first
Internet companies to use mainstream media buys, which
further contributed to awareness and image. Yahoo! also
developed the “Yahoo! yodel,” the signature audio cue designed
to reinforce awareness of the brand and add to its image of fun
and excitement. The “Do you Yahoo!?” slogan was used
consistently, which the company felt helped it stand out from
competition that was changing their names, taglines, and
positionings.
Another topic for discussion is the Yahoo! business model,
which was initially built almost exclusively on revenue from
selling advertising space on its site. The percentage of visitors to
an ad-sponsored site who clicked on the advertisement to
follow its link was called the “click-through rate.” When
Internet advertising first emerged, click-through rates were
above 20 percent, but rapidly fell to two or three percent in
1996. Currently, click-through rates are less than one percent.
Students can be asked about their Web surfing habits and the
frequency with which they click on ads to illustrate this point.
Once click-through rates bottomed out in the early 2000s, the
business model using online advertising as the primary source
of revenue came into question. Yahoo! had been expanding its
business in product, market, and geographic terms since it was
launched, but the need for further expansion and less reliance
on advertising revenue was imperative. Therefore, the next area
to consider is Yahoo!’s brand expansion.
Yahoo!’s product expansion is a good place to start, because
many students will be familiar with the brand’s numerous
brand extensions. Early on, Yahoo! management noticed that
Web surfers typically used Yahoo! to conduct an Internet search
and then left the site to visit the non-proprietary sites generated
by the search. In order to keep “eyeballs” glued to Yahoo! sites
for longer, the company added homegrown content and vastly
expanded onsite offerings, such as Yahoo! Finance, Yahoo!
Travel, or the Yahoo!ligans kids’ directory. These sites attracted
new users and kept them on Yahoo! pages. For all its brand
extensions, Yahoo! used a sub-branding strategy. Students can
compare the benefits of this strategy vs. other types of brand
extension strategies from Chapter 12. Yahoo! also made a
number of acquisitions, including free e-mail provider Four11
Corp., which became Yahoo! Mail, and Broadcast.com, which
enabled Yahoo! to provide streaming media content. You can
weigh the merits of Yahoo!’s acquisition strategy, in terms of its
product expansion strategy and in terms of valuation method-
ology . It might be interesting to share your experience with the
brand, to see who uses Yahoo! for a search engine, for a
entertainment and streaming-media source, for an information
and news source, for a shopping and e-commerce site, and for
any of its other numerous product and service offerings.
Yahoo! licensing is another product development topic that
student may be interested in discussing.
Yahoo!’s product expansion strategy paralleled its market
expansion strategy, which can be discussed next. From the start,
the brand expanded rapidly into new geographical segments.
Yahoo! Europe and Yahoo!’s first Asian site – Yahoo! Japan – • Yahoo! achieved success in the highly competitive Internet

BRAND MANAGMENT
were developed in 1996. Over the next five years, Yahoo! added portal market with the help of an innovative product and
more country and regional sites in many languages. Yahoo! was the implementation of branding strategies
the leading portal in many of the countries in which it estab- • Yahoo! built awareness and image with a creative and
lished a site, including Japan, Great Britain, and was in the top integrated marketing program
three in every market it entered. It had established a global
• Over-reliance on the Internet advertising model adversely
brand in a short five years. Students can discuss the advantages
affected the company’s financial fortunes
and drawbacks of global branding, as detailed in Chapter 14.
The fact that it was an Internet company was central to Yahoo!’s • Diversification and brand extensions were and are critical to
development of a global brand, because the medium was itself Yahoo!’s past and future success
a global network. The fact that Yahoo! surpassed local competi- • Yahoo! has accumulated significant brand equity in its
tion in many markets and always led big players like AOL and category, must find new ways to capitalize on it
MSN indicates that Yahoo!’s marketing program was better Notes
designed for global marketing. Students can discuss how the
company’s brand elements, its advertising, its grassroots
strategy, and its early geographic expansion all contributed to
this effect.
As the Internet economy foundered, however, Yahoo!’s
expansion grew more aggressive, particularly in the product
dimension. In 2000, 90 percent of Yahoo!’s revenues came
from advertising. This figure was reduced to 80 percent in 2001,
but advertising revenues decreased by almost 40 percent that
year. Yahoo! sought to achieve a 50-50 split between ad
revenues and revenues from other sources by 2004. Yahoo!’s big
initiative was expanding its corporate services by establishing
offerings such as Yahoo! Portal Solutions, which specialized in
building website portals for corporations such as McDonald’s,
Pfizer, and the state of North Carolina; Yahoo! Enterprise
Solutions (YES), which offered a customized version of the
Yahoo! portal for corporate clients; and on-line conference
hosting. In another move to boost revenues from non-
advertising sources, Yahoo! began charging for services that had
traditionally been free, such as e-mail forwarding, responding to
personal ads, and Web phone applications. Yahoo! also raised
commission rates for sellers on its auction site. Students can
discuss the potential affects on brand equity of these moves.
For example, most mass-market consumers would not know
about Yahoo!’s corporate offerings and their perception of the
company might not be affected. Mass-market consumers might
balk, however, at being asked to pay for traditionally-free
services. Corporate clients, on the other hand, would be familiar
with Yahoo!’s mass-market appeal and might not perceive the
company as a powerful corporate solutions provider.
The discussion can end by soliciting thoughts on Yahoo!’s
future strategy. Some industry analysts foresaw a future merger
with or acquisition by a large media company. Others recom-
mended that Yahoo! start charging its users a fee for all services.
These options can be analyzed for their viability and their
consequences for Yahoo!’s brand equity. You may also have
different ideas for Yahoo! It should be emphasized that
Yahoo! was one of the most recognized and oft-used Internet
brands, and possessed a great deal of equity that could be
leveraged as the brand sought new sources of revenue.
Key Lessons

257
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internet for the convenience of the users. The university has no proprietary right on the same.”

Jorethang, District Namchi, Sikkim- 737121, India

www.eiilmuniversity.ac.in
 2003:094 CIV

MASTER’S THESIS

Brand Development in
Small Service Company
A case study at I nfologigr uppen

MAGNUS HEDLUND

MASTER OF SCIENCE PROGRAMME

Department of Business Administration and Social Sciences

Division of Industrial Marketing

2003:094 CIV • ISSN: 1402 - 1617 • ISRN: LTU - EX - - 03/94 - - SE

Confidentiality
Chapter 5 Empirical data and chapter 6 Analysis are confidential until the 1st of March
2006.
Abstract
Branding has today a central role in marketing. Branding has in theory been focused
on brands of large corporations and consumer goods. The situation of branding in this
study differs from the traditional view. In this case is branding studied from the
perspective of a small company offering services for an industrial market. The key
concepts of the study are identity, image and positioning. The aim is to find how the
concept applies on a small company brand, but also how the company will benefit
from the brand development. The study is limited to brands that already exist,
excluding building of a completely new brand. The branding strategies considered
means further development of a present brand with consideration to the existing
customer relationships. The existing customer group has to be considered since the
brand is already established.
The research approach is explorative and qualitative. The study is conducted by a case
study at Infologigruppen, an IT-consultant firm located in Norrbotten.
Infologigruppen is representative for the brand situation described above, a small
local company offering industrial services. The research method is interviews from
both identity and image perspective.
The results indicates that the theoretical benefits and advantages from branding can be
applied only to a limited extent in this case, the brand is of most benefit in the
communication with new customers. Functional positioning seems to have a great
influence on the composition of identity and image. Further, brand development is in
this case not limited by existing customer relationship in any significant way.
Acknowledgements
This study was conducted in the fall of 2002 as my final thesis in industrial marketing
at Luleå university of technology. The problem area for the study was formulated by
Infologigruppen. During this project I have relied on help from many people. I would
like to thank Håkan Wallmark and Anders Lundkvist at Infologigruppen for sharing
knowledge and experience from the IT-consultant industry. I would like to thank
Håkan Perzon at Luleå university of technology for supervision, support and valuable
advice, and also Eva Ronström for help in the initial stage of the research. My thanks
also go to Uminova Center for financing a major part of this project. Finally, thanks to
everyone who participated in the interviews for taking time to answer my questions,
the study could not have been completed without your participation.

Luleå, February 2003

Magnus Hedlund
 Table of Contents

Table of Contents

1 INTRODUCTION 7

1.1 BACKGROUND 7
1.1.1 HISTORY OF BRANDING 7
1.2 PROBLEM DISCUSSION 8
1.2.1 DEFINITION OF BRAND 8
1.2.2 COMPONENTS OF BRANDING 9
1.2.3 BRAND STRATEGY 9
1.2.4 BRANDING SERVICES 10
1.2.5 BRANDING IN INDUSTRIAL MARKETS 10
1.2.6 SME-BRANDING 11
1.3 RESEARCH PROBLEM 12
1.4 RESEARCH QUESTIONS 12
1.5 DELIMITATIONS 13

2 THEORY 14

2.1 SERVICE BRANDS 14

2.1.1 CATEGORIES OF SERVICE BRANDS 14
2.2 BENEFITS OF BRANDING 16
2.2.1 VALUES OF A SUCCESSFUL BRAND 16
2.2.2 LEVERAGES OF BRAND PROFITABILITY 18
2.2.3 BUILDING SUCCESSFUL BRANDS 20
2.3 IDENTITY AND IMAGE 21
2.3.1 THE BRAND IDENTITY PRISM 21
2.3.2 FOUR BRAND IDENTITY PERSPECTIVES 22
2.3.3 BRAND ORIGIN 25
2.4 IDENTITY AND IMAGE 27
2.5 POSITIONING 28
2.5.1 FUNCTIONAL AND SYMBOLIC POSITIONING 28
2.5.2 BRAND POSITIONING DECISIONS 28
2.5.3 POSITIONING SERVICES 29
2.5.4 POSITIONING IN SPECIALISED INDUSTRIAL MARKETS 30
2.5.5 POSITIONING AGAINST STRONG COMPETITORS 31
2.6 BRANDS AND CUSTOMER RELATIONSHIPS 32
2.6.1 EXTENDED SERVICE OFFER MODEL AND IMAGE 32
2.6.2 BRANDS AS RELATIONSHIP BUILDERS 34

3 FRAME OF REFERENCE 37

3.1 RESEARCH MODEL 37

3.1.1 BENEFITS OF BRANDING 37
3.1.2 IDENTITY AND IMAGE 38
3.1.3 POSITIONING 38
3.1.4 CUSTOMER RELATIONSHIPS 39
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3.2 CONCEPTUALISATION AND OPERATIONALISATION 39

3.2.1 FIRST RESEARCH QUESTION 40
3.2.2 SECOND RESEARCH QUESTION 42
3.2.3 THIRD RESEARCH QUESTION 42
3.2.4 FOURTH RESEARCH QUESTION 43

4 METHODOLOGY 44

4.1 TYPES OF BUSINESS RESEARCH 44

4.2 RESEARCH DESIGN 44
4.2.1 INDUCTIVE VS. DEDUCTIVE 45
4.2.2 QUALITATIVE VS. QUANTITATIVE 45
4.3 RESEARCH METHODS 45
4.3.1 SURVEYS 46
4.3.2 OBSERVATIONS 46
4.3.3 EXPERIMENTS 46
4.4 DATA COLLECTION 46
4.4.1 SECONDARY DATA 47
4.5 CASE SELECTION 48
4.5.1 INFOLOGIGRUPPEN AB 48
4.6 INTERVIEW GUIDE DESIGN 48
4.6.1 QUESTIONNAIRE RELEVANCY 49
4.6.2 QUESTIONNAIRE ACCURACY 50
4.6.3 OPEN-ENDED VS. FIXED ALTERNATIVES 50
4.6.4 SELECTION OF RESPONDENTS 50
4.7 VALIDITY AND RELIABILITY 51
4.8 METHODOLOGY PROBLEMS 53

5 EMPIRICAL DATA 55

6 ANALYSIS 56

7 CONCLUSIONS, EVALUATION OF STUDY AND FURTHER

RESEARCH 57

7.1 BENEFITS OF BRAND DEVELOPMENT 57

7.2 IDENTITY AND IMAGE 57
7.3 POSITIONING 58
7.4 CUSTOMER RELATIONSHIPS 58
7.5 EVALUATION OF STUDY 58
7.6 FURTHER RESEARCH 59

8 REFERENCES 61

APPENDIX – INTERVIEW GUIDE 64

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List of Figures
Figure 1.1 The brand equity chain. 8
Figure 2.1 Representational vs Functional Matrix. 15
Figure 2.2 Economies of scale vs relationship matrix. 15
Figure 2.3 Brand growth matrix. 17
Figure 2.4 The leverages of brand profitability. 19
Figure 2.5 Brand identity prism. 21
Figure2.6 Aaker’s brand identity model. 25
Figure2.7 Service branding model. 25
Figure 2.8 Identity and image. 27
Figure 2.9 Brand positioning. 29
Figure 2.10 Image, communication and the extended service offer model. 34
Figure 4.1 The Infologigruppen logotype. 48
Figure 4.2 The position of questionnaires in the research process. 49
Figure 4.3 Possible Reliability and Validity situations. 53

List of Tables
Table 3.1 General concepts definition. ___________________________________ 40
Table 3.2 Concepts in the first research question. __________________________ 41
Table 3.3 Concepts in the second research question. ________________________ 42
Table 3.4 Concepts in the third research question. _________________________ 42
Table 3.5 Concepts in the fourth research question. ________________________ 43

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1 Introduction
This chapter will present the reader with a background to the problem area, a
discussion on important concepts and the research problem. The research problem is
divided into research questions and limitations are presented.

1.1 Background
Brands are a central issue in marketing of today. The purpose of marketing is to
discommodities the company’s offer. If a customer perceives a company’s offer to be
the same as the competitor’s offers the customer will select the cheapest product.
(Doyle 1998, p 165). When customers perceive a brand as superior they will prefer it
and also pay more for it. The branding of products is a way to differentiate from the
competition.
For companies today one of the most important assets are their brands. The brand is
not only what a company sells, it is what a company does and what a company is.
Strong brands own a unique position in the mind of the customer. (Davis 2000).
A brand can provide many benefits for the customer. According to Davis (2000) is a
brand representing a set of promises and implies trust, consistency and a defined set
of expectations. The brand also reduces confusion and uncertainty. A good brand
creates value for the customer, but can also accelerate awareness and acceptance
when a new product is introduced (Rooney 1995).

1.1.1 History of branding

The exact origin of the word brand is diffuse. According to Lagergren (1998) is there
a possibility that the word brand derives from the ancient nordic word “brandr”,
which means marking cattle to make it possible to identify their owner. Even if the
Vikings invented the word brand is the concept much older. Objects of much older
dates are many times marked, with a signature of the craftsman. In order to put an
identifier on the objects without damaging it aesthetically, the craftsmen used initials,
or a unique symbol (Dolak 2001). This symbol or signature showed the origin of the
item and was also an assurance of quality. Lagergren (1998) argues that this is the
base of any modern brand, a guarantee of quality.
The early forms of branding have little in common with the modern use of brands.
The modern branding is still more than a hundred years old according to Rooney
(1995). Already in the 1890s was brands protected legally by trademark acts in most
countries (Rooney 1995), and since then have branding evolved as a major component
of marketing strategy.
Brands are today regarded as a key asset in a company. The interest in the value of
brands increased significantly in the 1980s in the wave of mergers and acquisitions of
companies with brands by giants such as Nestlé, Philip Morris, Seagram, Lever and
Proctor & Gamble (Kapferer 1997, p.21). Target companies with well-known brands
were highly valued, even if the company had a negative cash flow. This separated the
value of the brand from the income of the company. An example is Nestlés
acquisition of Rowntree for three times its value on the stock market and 26 times the
earnings. (Kapferer 1997, p.23). The value and measurement of brand strength, brand
equity, emerged in the early 1990s (Kapferer 1997, p.21).
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The importance of studying and analysing brand value is increasing. The competitive
environment is the main reason for an increasing interest in brand management
according to Calderón, Cervera and Mollá (1997). The competition increases the costs
for creating and managing brands.

1.2 Problem discussion

Branding is a wide area with many different perspectives and components. The first
issue is to find a definition of brands and the components. Second, to discuss branding
in the specific settings of this study.

1.2.1 Definition of brand

The different definitons of what a brand is, are numerous. The differences in
definitions are according to Wood (2000) a result of different philosophies and
stakeholder perspective. The brand concept can be defined from the brand owner’s
perspective or from the customer’s.
Lagergren (1998) gives a customer oriented definition, claiming that brands are a
guarantee of quality. Kapferer (1997) is also defining brand as quality assurance or
contract, although, economic not legal. A wider definition is offered by Dolak (2001),
“a brand is an identifiable entity that makes specific promises of value”.
The brand equity concept is many times used to describe the relationship between
customers and brands. The concept is used both in accounting and marketing, which
leads to different meanings of brand equity (Wood 2000). Brand equity has according
to Wood (2000) three different meanings:
• Brand value. The total value of a brand seen as a separable asset, when sold
or included on a balance sheet.
• Brand strength. A measure of the strength of consumers’ attachment to the
brand, synonymous with brand loyalty.
• Brand description. A description of the associations and beliefs the consumer
has about the brand, similar with brand image.
Wood (2000) present the relationship between the three interpretations of brand
equity as a chain, figure 1.1.

Brand description Brand strength Brand value

Figure 1.1. The brand equity chain (Wood 2000).

The chain starts with brand description that is tailored for a specific target market
using the marketing mix, product, place, price and promotion. The performance on
this market determines the brand strength, loyalty. The value of a brand is determined
by the loyalty since this guarantee future cash flows. (Wood 2000).
Aaker (1996, p.7) define brand equity as: “a set of assets (and liabilities) linked to a
brand’s name and symbol that adds to (or subtract from) the value provided by a
product or service to a firm and/or that firm’s customers”. This definition shows that
brands can provide both positive and negative effects. Another aspect of Aaker’s
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definition is that brand equity provides value for both the firm and the customer.

1.2.2 Components of branding

Brand identity is a central concept in brand strategy. The identity describes the core
values and provides direction, purpose and meaning of the brand (Aaker 1996, p.68).
Brand identity is important in communications, it is the common element sending a
single message, even if the brand covers a wide variety of products (Kapferer 1997,
p.91). This means that customers still consider the brand as a single brand, instead of
a several different product brands.
Image is the receiver’s perception of the brand. The image is formed in the mind of
the receiver and is therefore beyond control by the sender (Meenaghan 1995). The
company can control the identity that is sent but not the image. According to
Meenaghan (1995) this result in confusion in terminology, identity and image is many
times used in the same way at corporate level. In short, identity is sent, and image is
received/perceived (Meenaghan 1995).
Positioning is an important component in branding since it seeks to give the brand a
position in the mind of the customer (Lagergren 1998). This also highlights that
positioning refers to position in mind, perception, not a market position.
Positioning strategy is the selection of a target market and a choice of competitive
advantage that will define how to compete in the selected market segment
(Brooksbank 1994). Further, a positioning strategy is applied at the level of a specific
product on a specific market and should not be confused with the concept of corporate
strategy. Dwyer and Tanner (2001) are also placing positioning strategy at a product
level and argue that multiple product-lines should be managed with different
positioning strategies for each of the lines.

1.2.3 Brand strategy

Companies trying to achieve a strong brand have a wide range of different strategies
to choose from depending on the situation. Doyle (1990) divides branding strategy in
two main categories, building or buying. To build and develop a brand is a long-term
route to achieve brand strength with a high level of costs and risks involved. The
acquisition route is faster and relatively less costly than building. Doyle (1990) points
out that although acquisitions in theory are less risky, they many times fail to generate
the planned long-term value. The primary objectives of the firm influence the decision
between building and buying. Companies with primarily financial objectives, such as
return on investment, are more oriented towards acquisitions. On the other hand,
companies with primarily marketing objectives, such as market share, tend to build
and develop brands. (Doyle 1990).
Brands have to be built and managed in order to great value for the company. Young
& Rubicam’s Brand Asset Valuator, describes the values brand generates with four
dimensions, differentiation, relevance, esteem and knowledge (Young & Rubicam
Inc. 2000). The Brand Asset Valuator is one the most ambitious attempts to measure
brand equity, covering 450 global and 8000 local brands (Aaker 1996, p.304). Brands
are built sequentially along the four dimensions, starting with differentiation. A new
brand needs do be distinctive in the marketplace, differentiated from the competition.
Brands that are fading usually start losing differentiation first. (Young & Rubicam
Inc. 2000). The next step is to make the brand relevant to the customer. Niche brands
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are usually strong in differentiation and weaker in relevance, but are still the brands
with highest margin. A reason is that the relevance is low on the overall market, but
high in the target segment. The third dimension is esteem, describing to what extent
the customer’s like the brand. Knowledge is the final element, which means that
customers understands the brand and what it stands for. Knowledge cannot be gain by
higher spendings or investments, it has to be achieved over time. (Young & Rubicam
Inc. 2000).

1.2.4 Branding services

The service sector is today dominating the Western world. More people earn their
living by producing services than manufacturing goods (Palmer 2001). Yet, there has
been relatively little research on the role of branding in service marketing (Krishnan
& Hartline 2001).
According to Dibb and Simkin (1993) is branding in practice used less in service
marketing than for more tangible products. Branding is linked to the need to build
customer loyalty to get a higher stability in sales. Brand loyalty in service marketing
has traditionally been seen as less important. (Dibb & Simkin 1993).
The intangibility of services and the difficulties for customers to distinguish one
service from another gives powerful reasons to build strong service brands. A strong
brand helps the customer to identify the company’s offerings. The role of branding
has gone through changes in many sectors. The hotel industry is an example; branding
was once regarded as insignificant, but is today highly important, with many strong
brands like Holiday Inn. (Dibb & Simkin 1993).
The high perceived risk associated with service purchases highlights the importance
of branding. High perceived risk-level cause the customer to seek further information
before deciding on purchase. This information usually comes from three sources:
internal, external word-of-mouth and external from the selling company. Internal
information is the customer’s earlier experiences of the product. External word-of-
mouth information comes from individuals who have experiences of the particular
service. External information from the selling company’s efforts is usually
advertising. Dibb and Simkin (1993) points out that word-of-mouth is of particular
importance for services. Therefore is it essential for service companies to promote and
reinforce their brand in a way that improves the likelihood of a positive word-of-
mouth promotion. (ibid).

1.2.5 Branding in industrial markets

Branding is usually associated with consumer products, brands on industrial markets
are many times neglected. Doyle (1998, p.165) regards brands as equally important in
consumer as well as industrial markets. The reason for the lack of interest for brands
in industrial markets is according to Morrison (2001) the common view that
businesses use rational decision-making in buying based on quality,
feature/functionality and price. This results in many companies neglecting branding
efforts, considered to belong in consumer marketing. Further, the area of industrial
branding is less developed in marketing than the consumer counterpart. This is
unfortunate since branding is highly important in industrial markets. (Morrison 2001).
De Chernatony and Mcdonald (1998, p.147) points out a common distinction between
consumer and industrial marketing. Consumer marketing aims for the end of the value
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chain and focus on the consumer purchasing brands to satisfy their own personal
needs or those of their family or friends. Industrial marketing is concerned with
providing goods and services for organisations, which are not the final consumer.
Industrial brands are still aimed at people, within an organisation, satisfying their
needs and the organisation’s. Emotional factors are still important, even if
organisational buying is considered more rational. (de Chernatony & McDonald 1998,
p.147).
According to Mudambi, Doyle and Wong (1997) is consumer-branding theory not
directly translatable into an industrial context. Industrial brands add value for the
customer in a more complex way than consumer counterparts. Considerations must be
taken to industrial buying, buyer-seller relationships and industrial segmentation.

1.2.6 SME-Branding
Today the role of small companies is increasingly important. More than half of all
employees in privately-owned companies in Sweden work for a company with less
than 50 employees (Brytting 1998). Further, the percentage of employment within
small companies seems to be increasing. Brytting (1998) points out two reasons,
increasing number of small companies and rationalisations and down-sizing of large
companies.
Small to medium-sized enterprises faces a different marketing situation than larger
corporations. Gilmore, Carson and Grant (2001) use the limitations for small
companies to explain the differences. The limitations are resources (e.g. finance, time,
marketing knowledge), lack of specialist (owner-managers tend to be generalists more
than specialists) and limited impact on the market place. Conventional marketing
theory is not completely applicable on the situation of smaller firms. According to
Gilmore et al. (2001) is SME marketing more likely to be haphazard, informal, loose,
unstructured, spontaneous, reactive, built upon and conforming to industry norms.
Small companies are a very heterogeneous group. The organisational size does not
determine the purpose and goals of the company. This wide range of organisations
included in the SME-concept can still be categorised. Brytting (1998) classifies small
companies in three categories, child-, dwarf- and pygmy companies. The classification
is based on the company’s ambition and possibility to grow.
Child companies are small because they are newly started. These companies are
growing and will with time and the right resources expand beyond their present size.
Dwarf companies are small because of problems. A dwarf company is handicapped
by its small size. This type of company needs to grow or otherwise re-structure in
order to be competitive.
Pygmy companies are small because that is their most suitable size. Pygmy companies
are not trying to grow. They are profitable and competitive in their present size.
Expansion is usually qualitative since organisational growth is not desirable.
Brytting’s (1998) categories give three reasons to explain why a company is small.
The company is small because it is new, there is something wrong or the company is
supposed to be small.
In marketing literature very little is written about brands of small firms. However,
small brands are covered in the literature. A niche brand is strong within its market

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segment, but small in absolute terms (Doyle 1990). Brands that fall into this category
can be highly profitable without a large share of the total market. According to Doyle
(1990) is it possible for a niche brand to receive a higher return on investment ratio
than an overall market leader. Bergvall (2001) agrees that small brands can be
successful within its own defined market. A small organisation can give advantages
within the regional market. Small companies can be more flexible and creative since
they are physically closer to the market (Bergvall 2001). Another advantage is the
organisational structure that is flat in a small company, therefore simplifying decision-
making processes (ibid). These advantages make it easier for a small organisation to
manage and perform a consistent branding strategy compared to larger organisations
(Bergvall 2001).

1.3 Research problem

Branding is a very wide area that includes many different strategies. This extensive
range of strategies will be narrowed in this study. The focus will be on strategy for
development of already existing brands. This means that acquisitions of brands will
be excluded from the research, purchasing brands is probably not a likely method for
smaller firms. Another implication of this limitation is that building new brands is not
included. The research is focused on existing brands and their development.
This study is primarily concerned with how to attract new customers rather than the
issue of retaining existing customers.
The research problem is formulated as:
“How to develop the brand of a small service company in order to attract new
customers?”

1.4 Research questions

The research problem is too wide to be studied directly. Therefore are research
questions created that will cover the research problem.
The first issue is finding benefits and advantages of brand development. Before a
company invests time, money and work into branding activities there has to be
benefits to gain. As mentioned earlier, brands can be examined from two different
perspectives, the firm’s and the customer’s (Wood 2000). The benefits of branding
can also be divided according to these perspectives. Customers can perceive benefits
of a strong brand as well as the company. This research is conducted from a company
perspective, but this does not mean that benefits for customers are excluded. Benefits
for the firm can be seen as direct benefits, whereas direct benefits for the customer
can be seen as indirect benefits for the firm. As mentioned above, the marketing
situation is different for small companies and effects of branding might also apply in a
different way. The benefits from the brand have to be examined in the situation
described in the research problem. The first research question examines how different
benefits, both direct and indirect, applies on brands of small service firms.
RQ 1: How can the benefits obtained from brand development be described?
Identity and image are concepts with key roles in any brand. Identity and image
describes a brand from different perspectives, identity is the brand owner’s perception
of the brand and image is the target group’s perception. The identity precedes image
in brand management, because the company needs to have a clear identity before it
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can be communicated to a target group (Kapferer 1997, p.94). Further, the identity is
important since it defines the purpose and meaning of the brand (Aaker 1996, p.68).
Image, on the other hand, is the receiver’s (usually customer) perception of the brand.
The result of the communicated identity after it has been received and decoded is
image (Kapferer 1997, p.94). Identity and image are critical factors in brand
management and development and must be considered. The second research question
deals with how identity and image are utilized in development of brands.
RQ 2: How can identity and image be utilized in brand development?
Image refers to the customer’s perception of the brand, or the brands position in the
customer’s mind. Positioning is closely linked to image, since its purpose is to create
an image. This is achieved by selecting a target group and a competitive advantage to
use in this market segment (Brooksbank 1994). The role of positioning can be
specified as transferring the identity into an image in the mind of the customer. The
third research question deals with the role of positioning in branding and how it can
be utilized to develop a brand.
RQ 3: How can the role of positioning in brand development be described?
Altering identity, image or positioning can affect relationships with the existing long-
term customers, even if the branding activities are aimed at attracting new customers.
The effect can be direct; the new brand personality does not fit the existing customer
group (van Mesdag 1997). The new customers attracted to the company because of
the brand development, can be of a different market segment. There is of course a risk
that the new customers change the image that the existing customers have. This effect
is not necessarily negative, but has nonetheless an impact on how the brand can be
altered. The fourth and final research question deals with the restriction that existing
customer relationships put on brand development.
RQ 4: How are relationships with existing customers affected by the development of
the brand?

1.5 Delimitations
The study will only cover brands in the industrial market. Consumer brands will not
be included in the research.
The research problem points out new customers as the focus of the research.
Strategies and activities that aim at retaining existing customers will not be included.
However, relationships with long-term customers is still a consideration for the brand
development, the new brand strategy should not damage the relations to these long-
term customers.
Only already existing brands will be studied. The purpose of this paper is not to study
the process of creating logotypes and brand names.

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2 Theory
The purpose of the theory chapter is to provide theories and models that can be used
when answering the research questions. Theories are presented in the same order as
the research questions in the introduction.

2.1 Service brands

The difference between goods and services is usually explained with five criteria,
separating good and services (Palmer 2001, p.15-20).
• Intangibility. Services cannot be examined directly before purchase.
• Inseparability. Production and consumption is simultaneously.
• Variability. Services are heterogeneous and difficult to standardise.
• Perishability. Services cannot be stored.
• Ownership. The service itself cannot be owned.
These criteria have been criticised, whether they are applicable for services or any
product. According to Gummesson (1991) is the major difference that the customer
enters the production process earlier. Manufactured goods are usually produced
completely before the customer is involved. Services require that the customer
participate in the production process already at an early stage.

2.1.1 Categories of service brands

Service brands differ from goods brands, but there are also a wide variety of service
brands. A number of different ways to categorise service brands are provided by de
Chernatony and Segal-Horn (2001).
Customer involvement is a common way of categorising service brands. In the case of
goods brands is the value to a high extent controlled by the manufacturer. For services
is value dependent on an interaction between staff and customer, resulting in less
easily definable values.
Duration of consumption can be used to classify service brands. This variable ranges
from services that are consumed instantly at the point of delivery, like restaurants, to
services that are consumed over a long time, like education and health care.
Consumption over a long time span creates a challenge in providing a service with
consistency over time.
Brands can be categorised by the extent to which they rely on functional and
representational (emotional) values. This can be visualised in a two-dimensional
matrix (figure 2.1) with emphasis of functional and representational values as axles.

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Co-operative Disney
High Bank The Body Shop
Emphasis on
representationa
l values Kwik-Fit
Low IKEA

Low High
Emphasis on functional values
Figure 2.1 Representational vs Functional Matrix
(de Chernatony & Segal-Horn 2001).
Another matrix provided by de Chernatony and Segal-Horn (2001) divides service
brands by the possibility to achieve economies of scale through standardisation and
the degree of committed relationship, figure 2.2. A typical example of highly
standardised services with low degree of personalisation is airlines, which results in
little commitment to the relationship. The conclusion from this categorising is that
brands usually emerge in the sector of services where it is possible to achieve
economies of scale by standardising repetitive human tasks.

Airline
Scope for High
economies of
scale by
standardising Personal
Low trainer
repititve tasks

Low High
Committed relationship
Figure 2.2. Economies of scale vs relationship matrix
(de Chernatony & Segal-Horn 2001).
A difference between goods and service brands is the time it takes for customers to
form a preference for the brand. Goods brands tend to evoke preferences within a
relatively short time. Service brands on the other hand are assessed over a longer time.

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2.2 Benefits of branding

This section will provide a theoretical framework for the first research question. The
possible benefits of brands are presented to give a more systematic view of this issue.

2.2.1 Values of a successful brand

Brands are not necessarily successful because they are well recognised. According to
Doyle (1990) are brands perceived either positive or negative. A brand can be strong
and still negative. British Telecom was in a survey rated high in awareness but low in
terms of customers’ preference, an example of a strong negative brand (Doyle 1990).
Doyle (1990) defines a positive or successful brand as: “a name, symbol, design or
some combination, which identifies the product of a particular organisation as having
a sustainable differential advantage”.
Differential advantage means that customers have a reason for preferring the brand
instead of a competitor brand. Sustainable means that the advantage is not easily
copied by competitors. The business creates barriers to entry, for example by
developing an outstanding reputation or image for quality, service or reliability.
Brands like Coca-Cola, IBM and Sony are successful because they have this
sustainable competitive advantage (ibid). According to Doyle (1990) are successful
brands always the brand leaders of their segments.
Successful brands are valuable because they can generate a stream of future earnings.
Doyle (1990) divides the positive effects of successful brands in the following
components.

2.2.1.1 Market share and profit

A successful brand is one that customers want to buy and retailer wants to stock. This
gives the brand a high market share. Brands with high market share are more
profitable than brands with less market share. Profitability is linked with market share,
the leader of the segment is the most profitable. In the UK grocery market is the
number one brand generating over six times the return on sales of the number two
brand. (Doyle 1990).

2.2.1.2 Niche brands

The conclusion above does not mean that a successful brand has to be large in
absolute terms. It is the market share that is the key to performance. Profit is usually
higher for the number one brand in a small segment than number three in a huge
market. The return on investment can many times be higher for a strong brand in a
niche market than a strong brand in a big market. The reason for this is that
competitive threats and retailer pressure is stronger in a large market and therefore
holding back profits even for the top brand. (Doyle 1990).

2.2.1.3 Prices
The differential advantage of successful brands is usually making them able to obtain
higher prices than less successful brands. Strong brands can resist pressure to offer
discount and in this way generate a higher profit. (Doyle 1990).

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2.2.1.4 Brand loyalty

Calderón, Cervera and Mollá (1997) define loyalty as the grade of attachment
between the customer and the brand. Successful brands generate a higher customer
loyalty. Attracting new customers is always more expensive than to hold existing
customer, because of advertising, promotion and selling costs. New brands and
unsuccessful brands must attract new customer that lowers the net margin. (Doyle
1990).
Strong brands have an ability to override temporary problems that could damage or
even destroy weaker brands. If the company occasionally fails to provide the right
quality it does not damage the customers loyalty. (ibid).
To some extent a brand can rely on habits of the customer. Customers keep buying a
satisfactory brand. Even if the purchase is non-repetitive and customer has no
experience of the brand, he or she has a perception of brands and are many times
reluctant to try an unknown brand. Doyle (1990) refers to the classic quotation of an
IBM salesman “nobody’s ever been fired for buying IBM”.

2.2.1.5 Common products, unique brands

The competition of today can quickly copy advances in products or technology.
Competitors can easily copy a soft drink formula or a PC specification, but the brand
personalities of Coca-Cola and IBM cannot be copied. The best strategy for building
profitability and growth is to focus on brand differentiation, rather than cost and price.
The best strategy in theory is both low cost and high differentiation. In practice it is
usually worth to achieve a strong differentiation at the expense of low cost. (Doyle
1990).

2.2.1.6 The brand growth direction matrix

The product life cycle describes how products peaks and eventually dies as its
markets mature and become replaced by new technologies. The product life cycle is
referring to products not brands. Brands can adapt to new technologies and make the
transition from a mature market to a new growth market. The brand growth matrix
shows the available growth opportunities (Figure 2.3).

Markets
Existing New

Brand share New segments

Existing
Technology
New technology Global brands
New

Figure 2.3. Brand growth matrix (Doyle 1990).

Initially is the strategic focus on brand share. However, in order to keep the brand
successful there must be a shift in strategy to incorporate new technology, move into
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new market segments or into global branding. Growth based on continuous

development of successful brands is more secure than growth based on new untried
products where failure rates can be as high as 95%. (Doyle 1990).

2.2.1.7 Difficulty of competitive depositioning

The brand leader is in a strong position to fend off attacks from competitors. First, the
leading brand has the financial strength, from market share and higher profit margins.
This advantage should enable the leading brand to use aggressive promotion and
innovation to outgun competitors. Second, retailers are always reluctant to add new
brands as long as the brand leader satisfies retailers and their customers. Third, the
brand leader can exploit its superior position in advertising. (Doyle 1990).
In order to dethrone a successful brand there has to be a major strategic window or a
substantial under investment in quality and brand support. (ibid).

2.2.1.8 Motivating stakeholders

Companies with strong brands find recruitment easier than other brands. People want
to work with companies that exhibit success. Brands also increase awareness and
understanding of the company among the shareowners. Successful brands can help in
getting support from local authority and governments. (Doyle 1990).

2.2.2 Leverages of brand profitability

The benefits of brands are not always direct, such as increased sales. Good brands can
give positive effects that are more indirect. Kapferer (1997, p.32) describe how
investments in brands create profitability, Figure 2.4. The resources of the company
are invested in productivity, marketing and distribution. Investments in productivity
set the objective quality level and the costs for quality. Investments in communication
create brand awareness. Marketing investments adapts the brand for the market in
combination with productivity and distribution efforts. (Kapferer 1997, p.32-34).

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Corporate
Resources

Investments: Marketing Distribution

Productivity, R&D, investments: investments and
know-how, patents Forecasting changes Communication
of consumer values

Level of Brand relevance Brand awareness,

objective quality and adaptation to image, liking and
cost of quality its market familiarity

Competition: Market:
-Other brands Perceived value -Involvement
-Distributors´own Vis-à-vis competition -Price sensitivity
brands -Buying criteria
-Hard discount

Level of Incremental Cost advantages

sustainable price attraction and due to market
premium loyalty leadership

Extending brand
equity beyond its
market

Figure 2.4. The leverages of brand profitability (Kapferer 1997, p.33).

The result of all these investments is a perceived value by the customers compared
with the competition. An increase in the perceived value generates profit in three
different ways. The level of sustainable price premium is set by the perceived value.
Loyalty and attraction is increased. Finally, the strong perceived value can put the
brand in a market leader position. A market leader can use the advantage to cut costs.
There is also an opportunity to extend a strong brand beyond the present market.
(Kapferer 1997, p. 34). Both Kapferer (1997) and Doyle (1990) value brands in a
market share context. Kapferer (1997) define a strong brand as providing high
perceived value compared with the competition and the cost advantage benefit is from
a market leader position. Doyle (1990) takes the market share issue one step further
and claims that a successful brand always is the market leader of its segment.

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2.2.3 Building successful brands

Brands are usually not built on advertising. A successful brand is built upon quality,
service, innovation and differentiation (Doyle 1990). These four components of brand
development are described by Doyle (1990) in the following way:
1. Quality is number one. The most important determinant of brand strength is
perceived quality. Brands with a high perceived quality are more profitable
than low-quality brands. Quality generates higher margins in two ways. First,
quality generates market share, which results in economies of scale. Second,
quality creates a differential advantage, which permits a higher relative price.
2. Build superior service. Successful brands rely on a sustainable differential
advantage. Service might be the most sustainable differential advantage.
Goods are relatively easy copied by competitors. Service depends on training,
attitudes of employees and organisational culture, which is much more
difficult to copy. Brands like McDonald’s, Singapore Airlines and Federal
Express are all based on service.
3. Get there first. One of the most common means of building a strong brand is
to be first in the market. Being first does not mean technologically first, but
first in the mind of the customer. IBM, Kleenex, Casio and McDonald’s have
not invented their products. However, they were first to build brands out of the
product and bring it to the mass market. It is much easier to build a strong
brand in the mind of the customer when there are no established competitors
in the market. Therefore are pioneering brands usually more profitable than
late entrants. Being first can be achieved in five different ways: exploiting new
technologies, new positioning concepts, new distribution channels, new
market segments and exploiting gaps created by sudden environmental
changes.
4. Look for differentiation. The main principle when building brands is to invest
in markets with high differentiation or differentiation can be created. In a
highly differentiated market, different segments are looking for different
attributes in the product. Both the big powerful brands and the niche brands
can make earn high profits on a differentiated market. Brands like IBM and
Coca-Cola are usually seen as high-quality brands in most of the segments and
get an overall market share. Niche brands can instead earn high profits by
being highly preferred in one segment, although the overall market share is
low.
Brands are not based on advertising, but advertising still has an important role in
brand building. Doyle (1990) identifies two functions of advertising. First, advertising
accelerates the communication process. Advertising speeds up the process of creating
awareness and interest. A brand can be built entirely on word-of-mouth, customer
experience and presence in the market, but the process of building the brand would
take time, in most cases too much time. Because of competition, few companies have
the time to build brands without advertising. Secondly, advertising positions the
brand’s values in a way that appeals to the target customer and also increases
confidence in the choice process. (ibid).

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2.3 Identity and image

Identity and image are two main concepts in branding. They refer to the brand from
different perspectives, brand owner and customer.

2.3.1 The brand identity prism

Kapferer (1997, p. 99) provides a model that describes brand identity with a
hexagonal prism. A brands identity can be described with a six-facet prism. The facets
represent components of the brand identity, which are interrelated in a structured
entity. Figure 2.5 visualises the components of brand identity.

Picture of sender

Physique Personality
Externalisation

Internalisation
Relationship Culture

Reflection Self-image

Picture of recipient
Figure 2.5. Brand identity prism (Kapferer 1997).

1. Physique. A brands physique is both the brand’s backbone and tangible added
value. Traditional communication focus on the key product and brand
attributes. The first step in developing a brand is to define its physical aspect:
What is it concretely? What does it do? What does it look like?
2. Personality. A brand has a personality of its own. Brand personality shows
what kind of person the brand would be if it were human. When the brand is
communicated it builds character. Personality has been an important factor
since the 1970s. A method to quickly give the brand a personality is to give
the brand a spokesperson. The spokesperson can be either real or fictional.
3. Culture. A brand has its own culture. The products represent the culture of the
brand and are also a means of communicating the culture. The culture of the
brand is linked to the corporate culture. The cultural link between brand and
firm is strongest when the brand has the same name as the company. Country
of origin is another important source for brand culture. Country of origin can
be either denied or emphasised. Canon and Technics are Japanese brands that

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deny their origin when Mitsubishi and Toyota emphasise theirs. The cultural
facet is the most important facet when differentiating luxury brands.
4. Relationship. Brands are often central in transactions and exchanges between
people. Brands symbolises the relationship with customers. IBM symbolises
orderliness and Apple symbolises friendliness. The relationship facet is crucial
for service brands, since relationships are critical for services.
5. Reflection. Brands reflect the user or purchaser. The reflection is an image of
the customer as he or she wishes to be seen as a result of using the brand.
Reflection is many times mixed up with target. Target describes the potential
customers, as they are. Reflection describes the customers as they wishes to be
seen. Reflection is important since customers uses brands to build their own
identity.
6. Self-image. A brand speaks to the customer’s self-image. Reflection is the
outward mirror of the customer, self-image is the customer’s own internal
mirror. A customer’s self-image can differ from the reflection. Customers who
buys a Porsche, might do so only to prove to themselves that they are capable
of buying such a car.
The brand identity prism form a structured entity where all six facets are interrelated.
A basic concept in the prism is that brands speak. Brands can only exist if they
communicate. The physique and personality facets provides a picture of the sender,
the company. In the same way is reflection and self-image giving a picture of the
receiver. Relationship and culture bridges the gap between sender and receiver.
The prism is also divided vertically. The left facets, physique, relationship and
reflection are the social facets that give the brand its outward expression. These are
the visible facets. The right facets, personality, culture and self-image are
incorporated in the brand itself.

2.3.2 Four brand identity perspectives

Brand identity is by Aaker (1996, p.78) divided into four perspectives that gives a
detailed view of the identity concept. The perspectives view brands as: a product, an
organisation, a person and a symbol. For every brand all of the perspectives should be
considered. However, not all of them have to be integrated in the brand identity, in
some cases only one is appropriate. Aaker (1996) describes the perspectives as
follows:

2.3.2.1 The brand as product

Product related associations are usually an important part of a brand’s identity since
they are directly linked to the choice decisions and the use experience. Brands are
normally associated with a product class. Examples, Visa is associated with credit
cards and Compaq with computers. The goal of linking a brand with a product class is
not gain recall of a product class when the brand is mentioned, but the opposite, to
have the brand recalled when the product class is mentioned. It is not important to
have people respond “rental cars” when Hertz is mentioned, the goal is to get Hertz
mentioned when a rental car is needed. (Aaker 1996, p.80).
Brands can also be associated with attributes linked directly to the product. Product
attributes should, however, not be the focus of identity efforts since there is a risk that
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perspectives that can add value are excluded. Quality is an important product related
attribute. Quality has a different role in the competition of different markets. At some
markets is quality the main element in competition, the one with highest quality wins.
At other markets a minimum quality level is needed to stay in competition. (Aaker
1996, p.81).
A particular use or application can be associated with the brand and in the same way
can the brand be connected with a type of users.
Brands can be associated with countries or regions that will add credibility. Country
of origin is widely used to imply that the product will provide higher quality since the
country or region is considered to be the best in the product class. (Aaker 1996, p.82).
The brand as product perspective is similar to the physique-facet in Kapferer’s (1997)
brand identity prism, both deals with the tangible parts of the brand.

2.3.2.2 The brand as organisation

The brand as organisation perspective focus on attributes of the organisation rather
than product specific attributes. Organisational attributes can be, innovation, a drive
for quality or environmental concern. These attributes are created by the people,
values and programs of the company. Organisational attributes are more sustainable
than product attributes. Competitors can relatively easy copy a product, but copying
an organisation is much more difficult. Organisational attributes many times apply to
several product classes and a competitor in one product class may find competition
difficult. (Aaker 1996, p. 82-83).
A corporate brand like Sony or Siemens does not necessarily need to have
organisational associations as a part of the brand identity. However, it can be
beneficial to include organisational associations in the corporate brand. First, a
corporate brand represents an organisation with people in design, production and
consumer contact. This makes it natural to focus on organisational values, employees,
programs and assets of the organisation. Second, companies are usually involved in
many different product classes. Siemens has its name on 100000 products around the
world. Organisational associations like innovation or quality can be applied over all
these products. (Aaker 1996, p.116).
The brand as organisation perspective has some similarities with the culture facet in
Kapferer’s (1997) brand identity prism. Kapferer (1997) refers to the corporate culture
has a source of culture for the brand. Ind (1997, p.3) separates corporate brands from
brands in general. Corporate brands is a distinct area because of three core attributes,
intangibility, complexity and responsibility. A corporate brand is far more intangible
than a product brand. The level of complexity is higher because companies can
include several decision making bodies, numerous operating divisions, large numbers
of products and thousands of employees. This makes control very difficult.
Companies can even have several different cultures. Corporate brands have a broader
social responsibility than a product brand. A company is not independent of the
society in which it operates. It relies on the goodwill of the employees, the local
communities, governments and the customers. (Ind 1997, p.4-12).

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2.3.2.3 The brand as person

The brand as a person is a perspective that can make the brand identity richer and
more interesting than the product perspective alone. Like a person, brands can be
perceived as being competent, impressive and trustworthy and many other attributes.
Brand personality can strengthen a brand in several ways. First, a brand personality
can create a self-expressive benefit for the customer to express his or her own
personality. (Aaker 1996, p.83).
Second, just as human personalities affect relationships between people, brand
personality can set the relationship between the brand and the customers. As an
example, Dell Computers might be a professional who helps with though jobs.
Third, a brand personality can help to communicate product attributes and functional
benefits. For example, the Michelin man’s strong and energetic personality, suggests
that Michelin tires also are strong and energetic. (Aaker 1996, p.84).
Both Aaker (1996) and Kapferer (1997) include personality in the brand identity. The
difference is that Kapferer (1997) include personality as a component of identity and
Aaker (1996) creates a perspective of the identity.

2.3.2.4 The brand as symbol

A strong symbol can structure an identity and make it easier to gain recognition and
recall. A symbol can be a key ingredient in the brand development. Anything that
represents the brand can be a symbol, a person like Bill Gates for Microsoft, a design
like the Beetle for Volkswagen. Symbols can be visual imagery, metaphors and brand
heritage. (Aaker 1996, p.84).
Symbols that involve visual imagery can be memorable and powerful, like Nike’s
“swoosh”, McDonald’s golden arches and the Mercedes-Benz emblem. Connections
between the symbol and the identity have been built up over time and capture much of
the brand identity. It takes just a glance at the symbol to be reminded of the brand.
(ibid).
Symbols are more meaningful if they involve a metaphor, with the symbol or its
characteristics representing a functional, emotional or self-expressive benefit.
Examples, Michael Jordan’s leaping ability for the performance of Nike, and the
Energizer bunny for long battery life. A meaningful heritage can sometimes represent
the values of a brand. Amtrak relates to the experience of first-class travel and
Starbucks coffee has a link to the first coffeehouse in Seattle. (Aaker 1996, p.85).
Moorthi (2002) combines Aaker’s four perspectives (figure 2.6) with the 7Ps of
service marketing. This extended model provides a service marketing point of view to
brand identity. The 7Ps of service marketing are the 4Ps from traditional marketing
(product, price, place and promotion), and three additional Ps that separates services
form goods (physical evidence, process and people).

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Brand as product

Brand as organization
Brand
Brand as person

Brand as symbol

Figure2.6. Aaker’s brand identity model (Moorthi 2002).

Moorthi (2002) adds an additional brand as process perspective to Aaker’s model, see
figure 2.7. Product, price, place, promotion and physical evidence are all placed in the
brand as product perspective. Process is placed in the additional brand as process
perspective and people is placed in the brand as organisation perspective. (Moorthi
2002).
Brand as product
(product, price, place, promotion, physical evidence)
Brand as process
(process)
Brand Brand as organization
(people)
Brand as person
Brand as symbol

Figure2.7. Service branding model (Moorthi 2002).

2.3.3 Brand origin

In Kapferer’s (1997, p. 99) brand identity prism is country of origin included in the
culture facet as a source of brand culture. Aaker (1996, p.82) also includes country of
origin, but as a product related attribute. The country of origin is not necessarily the
same as brand origin. Thakor and Kohli (1996) provide a more complex view on
origin cues for brands, a distinction between country of origin and brand origin.
Country of origin is on product level and communicates the location of
manufacturing. This is the message provided by the “made in” label. Brand origin, on
the other hand, refers to the integration of origin cues into the brand image. The
difference between the two concepts is obvious when considering customer
perception. The brand does not change nationality just because the product is
manufactured in a new country. An example, the customer still considers Honda to be
a Japanese car even if the car itself is manufactured in the US. (Thakor & Kohli
1996). Brand origin is defined by Thakor and Kohli (1996) as: “the place, region or
country to which the brand is perceived to belong by its target consumers”.

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2.3.3.1 Strategic use of brand origin

Origin cues can be communicated to customers in many different ways. Thakor and
Kohli (1996) present the following ways to integrate origin cues to the brand image.
• Symbolic, functional and usage-situation based images. Brands that are based
on a symbolic image communicate more abstract concepts such as status,
luxury and similar. Functional and usage situation based brands will rely on
communication of more specific features and attributes. The usage of origin
cues will differ between the two types of appeals. Origin cues will be used
implicit if the brand is relying on a symbolic image. Brands with a functional
image will have more explicit origin cues.
• Explicit uses. Mostly used to give the brand a nationality. This is usually done
when the country involved is considered to possess some natural resource or
expertise that the brand can benefit from being associated with. This kind of
national level cue is heavily emphasized in beer and vodka advertising,
although, used in many other product categories. The examples are numerous
Heineken (Netherlands), Absolut (Sweden) and Stolichnaya (Russia).
Examples in other categories are Swissair and German cars (e.g. BMW,
Volkswagen) where the origin cues are explicitly used. Sometimes to the
extent that German words are used.
• Implicit uses. Origin cues can be used in a more implicit way. There is a range
of different methods to communicate origin implicitly. The styling of the
product and package can be used to emphasize the origin. Pronunciation of the
brand name is many times used by French companies to communicate their
origin. The retail outlet can be designed to reinforce origin image. An
example, Infiniti dealerships in the US is designed with unique Japanese
elements to signify the Japanese attributes of the product. The corporate brand
can also provide origin cues. Japanese companies usually rely on the corporate
brand instead of creating individual brands for each product line. The reason is
many times that the corporate brand has a stronger brand origin.
• The origin of global brands. Brand origin has implications even on brands
considered to be global. Coca-Cola may be considered a global brand, but can
also be seen as an American brand with an international image. The brand still
has an American core that is important to the image. Thakor and Kohli (1996)
argues that there might exist a “default” origin for brands, based on where the
business first started. Brands like Honda and Toyota are widely regarded as
Japanese even when the products to a large extent are produced elsewhere, in
the US for example.
Brands can adopt an origin, but Thakor and Kohli (1996) claim this to be a risky
action and identify two types of risk. First, there are legal implications, some
geographical areas have legal protection. The French government are fiercely
protective of the right to use terms like champagne, cognac and armagnac.
Second, brands that seek to associate themselves with favourable countries or regions
may be vulnerable to counter-attacks if their claims can be shown to be false. A good
example is when Stolichnaya vodka could discredit competitors who implicitly
claimed to be Russian by running an ad campaign showing that brands like Smirnoff

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and Wolfschmidt were in fact produced in the US. These brands were damaged by the
obvious gap between implicit promised origin and the actual place of manufacture.

2.4 Identity and image

There are two different points of view when analysing brands, identity and image.
Kapferer (1997, p. 94) connects identity and image in a model, which also includes
disturbances between sender and receiver, referred to as noise. Identity is on the
sender’s side. The purpose of identity is to define the brand’s meaning, aim and self-
image. The identity precedes image in brand management. Before an image can be
projected onto the target group, the sender must decide what to send and how to send
it. Image is the result of decoding message, extracting meaning and interpreting signs.
These signs have two possible sources, brand identity and extraneous factors (noise),
which speak in the brand’s name, but are disconnected from it, figure 2.6. (Kapferer
1997, p. 94).

Sender Media Receiver

Brand identity
Signals Brand image
transmitted
Other sources
of inspiration
-mimicry
-opportunism Competition
-idealism and noise

Figure 2.8. Identity and image (Kapferer 1997, p.95).

Kapferer (1997, p. 95) identifies three communication glitches, mimicry, opportunism

and idealism. These glitches result from unclear identity or messages with wrong
identity that creates confusion.
Mimicry means that the company is unaware of their brands identity and chose to
mimic the competitors. This means that the company is only imitating the competitors
marketing communication.
Opportunism refers to a company, which is only focusing on the image. The brand is
popularity-seeking and the company tries to follow trends in order to meet the
expectations of the public. The identity is not considered and the brand has no
meaningful substance.
Idealism occurs when the brand has a fantasised identity, the brand, as the company
would like to see it. The company does not perceive the brand as it really is. There is a
risk that communication with the audience creates confusion and rejection.
Kapferer (1997, p. 95) concludes that brands over time gain their independence and
their own meaning, even if they started as product names. Brands can over time define
their own area of competence, potential and legitimacy.

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2.5 Positioning
Dwyer and Tanner (2001, p. 151) define positioning as “a loosely used term that
generally refers to marketing efforts to secure a valued categorization in the mind of a
customer”. Positioning must be focused on the key criteria of the segment. Multiple
product lines is usually reflected in multiple positioning strategies, because it strains
credibility if a single product is best across the diverse criteria of several segments
(Dwyer & Tanner 2001, p. 151).

2.5.1 Functional and symbolic positioning

Brand image concepts can be divided into two major categories, functional and
symbolic brands. Bhat and Reddy (1998) describes the concepts as satisfying different
needs. Functional brands satisfy immediate and practical needs. Symbolic brands, on
the other hand, satisfy symbolic needs like self-expression and prestige. The practical
usage in case of symbolic brand is only incidental. (ibid).
The symbolic and functional are not two ends on a range of brand concepts, but two
distinct separate concepts. The functionality and symbolism of a brand are not
contradicting each other; a brand can be both functional and symbolic. This means
that a brand can positioned both functionally and symbolic without causing confusion
to the customers. (Bhat & Reddy 1998).
Although the functional and symbolic concepts are separate, is positioning involving
both concepts difficult. Bhat and Reddy (1998) argues that associations of the both
concepts have to fit well. Otherwise there is a risk that the brand is perceived as
neither functional nor symbolic.
According to Bhat and Reddy (1998) does brand symbolism not necessarily have to
be linked with prestige or exclusivity. In some cases is a marketing mix that shows
how the brand can be used to express the customer’s personality a cheaper, easier and
more effective strategy than positioning based on prestige and exclusivity. Examples
of brands that have been successful with this approach are Dr Pepper and Volkswagen
Beetle.

2.5.2 Brand positioning decisions

Positioning aims at emphasising the distinctive characteristics of a brand that makes it
different from its competitors and appealing to customers. Kapferer (1997, p.96)
present four questions to base the positioning decisions upon.
• A brand for what? This refers to the promises and benefits of the brand. For
example, Volkswagen is reliable and Twix gets rid of hunger.
• A brand for whom? This question refers to the target customer for the brand.
• A brand for when? Refers to the occasion when the product will be consumed.
• A brand against whom? The competition of today makes it important to
consider competitors when positioning brands. Further, the brand will also be
compared against competitors.
The four positioning questions are illustrated in figure 2.9. The customers decision is
based on comparison, which highlights the importance of differentiating from
competitors.
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Why? For whom?

When? Against whom?

Figure 2.9. Brand positioning (Kapferer 1997, p.97).

The positioning process is according to Kapferer, a two-stage process:
1. Indicate to what category the brand should be associated and compared.
2. Indicate what the brand’s essential difference is compared to the other
products and brand.
Choosing category is a critical step, easy for products like toothpaste, but difficult for
products that are more unique and original.

2.5.3 Positioning services

Positioning aims at distinguishing the offers of a company from the competition and
in that way achieve a competitive advantage. Palmer (2001, p.180) describes
positioning of services with three basic steps.
1. Identifying the organisation’s strengths and the opportunities of the marketplace to
be exploited. Strengths such as customer familiarity can be used as an advantage
when positioning new services. The existing position should be considered when
positioning towards a new segment. An example, a high quality/price service
provider risk tarnishing the present brand values by entering a low price segment.
2. Evaluating the position possibilities and selecting the most appropriate. The
possible position alternatives are evaluated on basis of their suitability.
Alternatives can be discarded because they result in uneconomically small
segments, inconsistency with brand image or too high development costs. The
final decision should be based on the greatest differential advantage in areas
which are most valued by the target customers.
3. Developing the marketing mix and establishing in the eyes of target customers the
position that has been adopted. The organisation must develop programmes to
implement and promote the adopted position. Positioning in service industry
differs from manufactured goods in that the production of the service is an
important element of the positioning process.
Services can be positioned either on a stand-alone basis or as a part of the service
provider’s total range of services. The service organisation as a whole can be
positioned. This approach is many times the most suitable since customers usually
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evaluate the service provider at least as much as the service itself. (Palmer 2001,
p.182).

2.5.4 Positioning in specialised industrial markets

Specialised products on industrial markets require extensive marketing efforts. Doyle
and Saunders (1985) claim that companies historically focused on basic commodities
face problems when switching to more specialised products, usually in an attempt to
increase growth and profit. Specialised products requires skills in marketing, specially
in segmentation and positioning, that is not needed to the same extent on a commodity
market (Doyle & Saunders 1985). Doyle and Saunders (1985) present the following
seven step-procedure for segmentation and positioning:
1. Defining objectives. Management needs to define its market and financial
objectives over a three to five year horizon. Objectives should be quantitative
and realistic. Market share objectives are important since they influence the
segmentation and positioning strategies.
2. Determine market segments. A market segment in consumer marketing is
defined as a group of consumers with homogenous needs. This definition is
usually not applicable in a specialised industrial market, where situation
specific variables are more relevant than general customer characteristics. The
buyer will often purchase multiple specialist products from a wide range of
suppliers. In this kind of market is it usually more relevant to segment by
product benefits than customer.
3. Evaluate attractiveness of alternative segments. When the segments have been
identified, management will have to evaluate the opportunities they represent.
Product based segmentation usually makes it easier to estimate size and
growth rates of the segments. The analysis of competitor’s goals, strategies
and capabilities can be more complex, this analysis will determine the
competitor’s ability to defend their positions. Finally, the company will have
to match their own technical and marketing capabilities with the requirements
of different segments.
4. Select target market(s). Speciality markets are heterogeneous and success is
rarely achieved by undifferentiated strategies or overall cost leadership.
Focused strategies are usually needed. The number of segments the company
can compete in depends on its overall share goals, the flexibility of
manufacturing and the heterogeneity of the buyer’s needs.
5. Develop a positioning strategy. After the target market has been selected,
management will have to decide how to compete in this segment. The
positioning should be sustainable and not easily matched by competitors.
Production oriented managers often underestimate the importance of
developing competitive advantage, to profitably gain market share.
6. Develop the marketing mix. This step deals with the implementation of the
detailed marketing plan. Consistent decisions on product design, technical
support, service, channels, distribution, promotion and pricing must be made.
7. Validating the strategy. Segmentation positioning strategy is critical for
success in a specialised industrial market. Therefore is it essential to validate

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the previous analysis and derived strategic plan. Follow-up research in the
market is also needed to test the marketing plan.

2.5.5 Positioning against strong competitors

Sometimes the market leader position is impossible to reach. The market leader is
simply too strong to be dethroned. IBM was the dominant market leader in mainframe
computers with a 70 percent market share (Ries & Trout 2001, p.40). Competitors
were too small to be able to threat IBM’s position. Ries and Trout (2001) conclude the
situation: “you can’t get there from here”. Nevertheless, companies have to deal with
the situation. The solution is not to follow and act like IBM. Instead smaller
competitors should focus on the position the already have and relate it to the segment
with the strong competitor. (ibid).
A positioning strategy that works for a market leader, does not necessarily work for
the number two brand. A follower should not try to copy the leader. Instead find an
open position in the mind of the customer. The positioning should be based on
different strengths than the market leader, for example a different price level. (Ries &
Trout 2001, p.53).

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2.6 Brands and customer relationships

A brand cannot be used to sell anything, just because the brand is perceived as strong.
Brand compatibility is described by van Mesdag (1997) as compatibility between the
brand and the goods and services offered by the company. The range of products
compatible with the brand can be extended. The Yamaha brand covers motorcycles,
musical instruments and summer-houses, but this type of brand compatibility takes
time to achieve (van Mesdag 1997).
Incompatibility can occur in two ways: 1. new products offered are incompatible with
the brand’s personality and present target group, 2. the brand is incompatible with the
new target group. Van Mesdag (1997) gives examples of both cases of
incompatibility. The first type of incompatibility is Levi Strauss that successfully
broadened the product range by adding shoes, shirts, skirts and jackets to the Levi’s
brand. Then Levi’s added suits and people did not buy them. Levi’s brand personality
focused on informal clothes and the consumers used the brand to express their
growing independence. The suits were in conflict with the informal personality. The
second type of incompatibility, between brand and a new target group, occurs when a
company is trying to extend the target group to completely new customers. The risk is
that relations to the original, faithful, long-standing customers are damaged. An
example, Cartier served an upmarket, international audience with fashion and
cosmetic products. Most of this audience was lost when Cartier tried to extend to a
price sensitive target group, by selling at discount prices. (ibid).
Brand compatibility does not mean that extension to new products and/or target
groups is impossible. According to van Mesdag (1997) compatibility as perceived by
customers can be altered gradually over a considerable time. Another solution is to
introduce a new brand to compete in the new segment. These so-called fighter brands
are a suitable approach when competing with low-price alternatives (Jobber 1998,
p.211).
The customer’s relationship to a company, goods or services are many times not
personal, but a relationship through an image (Gummesson 1998, p.128). These
relations are based on associations to corporate name, logotypes and person connected
with the company.
There are risks in trying to build relationships based on visual symbol efforts. Trying
to show the market an image of the company that is not real. Customers may perceive
the image as false. However, Gummesson (1998, p.129) argue that customer
sometimes wants to believe the image, even if it is not accurate.

2.6.1 Extended service offer model and image

Services are preferably analysed from a customer perspective. Grönroos (1990, p.77-
88) has developed two models, the basic service offer and the extended service offer.
The basic service offer model facilitates three service components, core service,
enabling services and supporting services. The core service is the meaning of the
company’s existence, e.g. transport for the airline company. To be able to consume
the core service needs enabling services or goods. For example, a credit card enables
the customer to consume the services of the bank. Support services are not necessary
in the consumption of the core service, instead they add value to the service and
differentiate it from the competition. The service could still be consumed without the
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support services, but would probably be less attractive and competitive. The basic
service offer model describes, what the customer gets. The model has to incorporate
the process of service production, to be able to analyse how the service is perceived.
The extended service offer model adds the service process to the basic model. Based
upon the characteristics of services Grönroos (1990) describes three important
components:
• Availability of the service. It is critical that the service is available to the
customer. An otherwise excellent service offer can easily be ruined if the
service fails in availability.
• Interactions. The interactions between the customer and the service
organisation occur in several ways. The interaction with the staff depends on
behaviour and actions of the employees. The customer also interacts with
physical and technical resources as well as systems for delivery, payment and
maintenance. Sometimes the customer interacts with other customers, who are
involved in the service process at the same time.
• Consumer participation. Services rely on participation from the customer.
Example, the customer is many times required to give information to the
service provider.
Benefits for the customer is created within these three components. What benefits to
emphasise is dependent on the needs and demands of the specific customer segment.
The fourth and final component is the service concept, which is an umbrella concept
guiding core, enabling and support services. Further, giving guidance in developing
interactions, availability and enabling the customer to participate.
Image and communication is of high importance in the service offer. Image act as a
filter for the perceived service, a good image enhances the perception and a bad
image can ruin it. Grönroos (1990, p.88) adds communication, image and reputation
to the extended service offer model, figure 2.10.

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 Chapter II - Theory

Service concept

Lo
e

ca
ag

li
im

m
e

ag
at

e
or
rp
Co

Core service

Availability Interactions
Enabling services Supporting services
(or goods) (or goods)

th
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ou
ar

-m
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om

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Consumer participation or
ic

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at

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Figure 2.10. Image, communication and the extended service offer model
(Grönroos 1990, p.88).
The intangible nature of services leads to market communications that not only set
the expectations of the service, but also directly affect the perception. The corporate
image is strengthened and sometimes formed by market communications like
advertising, sales and PR. Advertising can even have a direct effect on the perceived
quality. Reputation and word-of-mouth communication is of high importance. The
effect from word-of-mouth is strongest when the customer is about to purchase the
service. (Grönroos 1990, p.87).

2.6.2 Brands as relationship builders

Doyle (1990) describes customers unwilling to change brand because of habit. De
Chernatony and McDonald (1998, p.168) identifies a desire for stability among
industrial purchasers. The buyers were reluctant towards switching to a competitive
brand because:
• They did not want to spend time finding and evaluating alternative brands.
• They were worried about technical problems in adapting their production
processes for a new brand.

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 Chapter II - Theory

• They might have had internal production problems, which could be easier to
resolve by involving a loyal supplier.
Many purchasers have a good relationship with the supplier. Therefore, must the
alternative be very good in order to give an incentive for change. De Chernatony and
McDonald (1998, p.168) describe four factors building these relationships, the
interaction process, organisations involved, atmosphere affecting interaction and
environment of interaction.

2.6.2.1 The interaction process

The interaction process consists of a series of episodes or exchanges between the time
when the order is placed and delivery. Examples are, information exchange, financial
exchange and social exchange. Over time, these exchange episodes lead to
institutionalised expectations about the roles of buyer and seller.

2.6.2.2 Organisations
Characteristics of the buyer and seller organisations can indicate the relationship.
Technical issues are often important. Companies at the same level of technological
development will have a different working relationship than if they had different level
of technology expertise. In the same way are company size, experience of working
together and individual’s background forming the relationship.

2.6.2.3 Atmosphere
The overall atmosphere affects the relationship. The atmosphere is set by a number of
different factors. For example, mutual expectations, overall closeness or distance in
the relationship, sense of conflict or cooperation and whether the stronger firm is
trying to use its power over the weaker firm. If there is an atmosphere of overall
closeness, cost advantages can be gained from more efficient negotiations and
administration, joint work on redesigning existing brands and more effective
distribution. In contrast, some atmosphere may be characterised by a power-
dependence relationship. For example, a powerful buyer can take advantage of the
supplier’s dependence of their firm.

2.6.2.4 Environmental issues

Environmental issues like social systems, channel structure and market dynamics will
influence the interaction relationship. The buyer and seller must consider the type of
channel used. The relationship between any two firms in the channel is affected by
relationships of other firms in the channel. Highly dynamic markets make buyers and
sellers seek a large number of relationships, however, less close than for more stable
markets.
The four influencing factors can be used by brand marketers to better appreciate the
basis of their relationships with purchasing organisations. Further, brand selection is
based on both rational and emotional factors. De Chernatony and McDonald (1998,
p.171) present a set of variables that can determine the success of a relationship:
• Commitment, the desire and effort of both parties to continue the relationship.
• Trust, the belief that each partner will act in the best interest of the other.

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• Cooperation, complementary actions taken to achieve mutually beneficial

outcomes.
• Mutual goals, the degree to which partners share goals.
• Interdependence and power, the degree of power balance between partners,
which determines the dependence of one partner on the other.
• Performance satisfactions, the degree to which firms can meet or exceed the
expectations of the partner.
• Structural bonds, systems interlinking the companies so closely that it
becomes difficult to end the relationship, for example shared technology.
• Number of alternatives, the number of choices a company has among available
high-quality outcomes. The fewer alternatives, the more dependent the
company will be on the current one.
• Adaptation, the amount of modification a company undergoes to
accommodate the needs of the partner.
• Non-retrievable investments, resources a company commits specifically to a
relationship.
• Shared technology, the degree to which one partner uses the technology
contributed by the other partner to the relationship.
• Social bonds, the degree of personal relationship that develops between the
firms.
These factors measure the degree of dependence between the two parties in a
relationship. The factors help to anticipate how likely the relationship is to continue.

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 Chapter III – Frame of Reference

3 Frame of Reference
The purpose of this chapter is to develop a research model of the theories presented in
chapter 2 in order to answer the research questions. Important concepts will also be
defined and operationalised.

3.1 Research model

Chapter 2 contains theories relevant to the research area, which here will be selected
and more in specific adopted to answer the research questions. This section will be
divided to deal with each of the research questions.

3.1.1 Benefits of branding

The first research question is “How can the benefits obtained from brand development
be described?” The purpose of the question is to describe the possible benefits and
values of branding. Doyle (1990) and Kapferer (1997) describe the positive effects of
a strong brand. According to Doyle (1990) are the positive effects of a brand relying
on market share. Kapferer (1997) is also to some extent connecting positive effects of
brands with market share and how the brand performs compared with the competition.
However, the benefits of a brand are a result of how the company’s resources are
invested (Kapferer 1997). The following concepts will be included in the research
model to answer research question one:
Market share. The success of a brand is linked with its performance compared to the
competitors. The market or segment share is according to Doyle (1990) the
determinant of brand success.
Price premium. A higher sustainable price level is an important benefit of a brand. A
strong brand can usually obtain a higher price than lesser brands (Doyle 1990;
Kapferer 1997).
Loyalty. Successful brands generate a higher customer loyalty (Doyle 1990; Kapferer
1997). Further, the loyalty can sustain temporary problems and crisis (Doyle 1990).
Brand perception. Customers have a perception of a brand even if they lack
experience from earlier purchases (Doyle 1990). Many customers are reluctant to try
an unknown brand when they can choose a strong established brand.
Cost advantages. Increased loyalty gives cost advantages since it is less expensive to
keep existing customers than attracting new ones (Doyle 1990). Cost advantages and
a premium price increase the margin, or increased profit (Kapferer 1997).
Possibility for growth or extension. Kapferer (1997) argues that a strong brand can
utilize a strong position in the present market to extend into a new market. Continuous
development of a brand can enable the brand to move from a mature market to a new
growth market. There are three directions for brand growth, new segments, new
technology and global branding, see figure 2.3. (Doyle 1990).
Motivating stakeholders. Companies can benefit from strong brands in relation to
different stakeholders. Recruitment is easier, awareness and understanding from the
shareowners is increased and getting support from government and local authority is
easier. (Doyle 1990).
These possible benefits of a brand depends on competition and market variables like:
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Buying criteria. The criteria customers use to select product and supplier will have
implications on how the brand performs compared with the competition, see figure
2.4 (Kapferer 1997).
Market differentiation. In a highly differentiated market is different segments looking
for different attributes in a product (Doyle 1990). This is basically a difference in
buying criteria. Markets with a high level of differentiation can be highly profitable
for both big brands with a large market share and small niche brands that only serve a
specific segment of the market (ibid).
Price sensitivity. The degree of price sensitivity in the market is affecting the success
of the brand, see figure 2.4 (Kapferer 1997).
Strength of other brands. The level of competition from other brands is of course
affecting how the brand will perform.

3.1.2 Identity and image

The second research question “How can identity and image be utilized in brand
development?” deals with two main concepts in branding, identity and image. There
are two models suitable to describe identity, the brand identity prism (Kapferer 1997)
and the four brand identity perspectives (Aaker 1996). Both models cover the same
area to a large extent, although the identity prism (Kapferer 1997) has a more detailed
approach. This research model will include the brand identity prism to analyse the
identity concept in detail. The brand identity perspectives (Aaker 1996) will also be
included with the fifth additional “brand as process” perspective (Moorthi 2002),
which makes the theory more adopted for service branding. The perspectives will
provide an overview of the identity and show the major directions of the brand.
Image is the customer’s view of the brand, a reflection of identity. The image is the
identity from a customer perspective. However, there is a risk of glitches between
identity and image. Kapferer (1997) identifies three causes, mimicry, opportunism
and idealism.
Brand origin cues, (Thakor & Kohli 1996), in the image will be included in the
research. The purpose is to analyse if regional or local origin associations can be
useful for small firms, especially to differentiate from larger national or international
competitors.
Most of the theories dealing with identity and image have a consumer market
perspective. This study is limited to industrial markets, which leads to some concern
about how applicable the models are. The theories are still most relevant, but needs to
be interpreted from an industrial market situation. This means that concepts like
reflection and self-image in the identity prism can refer to several persons in an
organisation, rather than a consumer.

3.1.3 Positioning
The third research question “How can the role of positioning in brand development be
described?” is concerned with the positioning concept, which is closely linked with
image. The purpose of positioning is to create the image. The theories necessary to
answer the research question will also be close to image. A major decision when it
comes to positioning is whether to position functionally or symbolic. Bhat and Reddy
(1998) discuss symbolic and functional positioning and the possibilities to combine
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them. A brand can be positioned both functionally and symbolic, yet with difficulties
(Bhat & Reddy 1998).
The three-step service-positioning model by Palmer (2001, p.180) will be used as a
framework to describe the positioning procedure. Even though the model describes
positioning in a service setting is it probably valid for both goods and services, since
the procedure is rather general. However, there are some differences in positioning
between goods and services. Palmer (2001, p.182) argue that positioning the service
provider rather than the service itself is usually a preferable approach.
The positioning process for specialised industrial markets by Doyle and Saunders
(1985) describe the role of positioning in a more extensive procedure. This procedure
includes positioning as a step following segmenting and targeting.
Ries and Trout (2001) discuss positioning in a competitive situation. Positioning must
be developed according to the company’s position in the market, leader or follower.
The competitive situation is included in the research model, since this study has a
small company perspective. The situation with strong competitor is common among
small firms.

3.1.4 Customer relationships

The previous three research questions deals with how branding is utilized to attract
new customer. The fourth research question “How are relationships with existing
customers affected by the development of the brand?” deals with how existing
customers restrict the brand development. Changes from brand development can
affect the relationships with the existing customer group. According to van Mesdag
(1997) is compatibility important. The brand must be compatible with the products
offered and with the target customer group. This restricting factor on brand
development is important since undesirable to win new customers by losing the old
ones.
Another restriction on brand development can be found in the service offer model
(Grönroos 1990). The interaction component refers not only to interactions between
company and customer, but between customers. This interaction is not necessarily
direct communication. Instead other customers are likely to affect the image just by
being clients to the service provider. In this research are interactions considered even
if it is in form of perception of the brand due to who the other customers are. In other
words, how the composition of the customer group affects image.
The relationship model by de Chernatony and McDonald (1998) is based on
interactions between buyer and seller. The interaction process is affected by three
factors, organisation, atmosphere and environment. The customer’s brand loyalty is
driven by an attempt to increase stability. This model will be included in the research
model to consider how brand development affects buyer-seller relationship. Effects
from brand development will be analysed against the factors of relationship building,
in order to find risks for negative changes.

3.2 Conceptualisation and operationalisation

The purpose of this section is to define important concepts that will be used to answer
the research questions. First are the concepts in the research problem and
delimitations defined and then each of the research questions. To make the concepts
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measurable is each concept operationalised. The defined concepts are translated into
practically measurable terms.
The first concepts to be defined are general to this study and covers research problem
and questions and the delimitations.
Concept Definition
Small company Company with less than 30 employees.
Service company Company with offerings mainly consisting of services.
New customer Organisation that has not purchased anything from the
supplier before. The new customer can be a division
within a company that has purchased before as long as
they are organisationally separated.
Existing brand Brand built in terms of name, logotype and other visual
aspects. The brand has been present in the marketplace for
at least enough time to have an established customer
group.
Brand development Branding strategies for existing brands. Strategies for
creating new brands or acquisitions are excluded.
Table 3.1 General concepts definition.

3.2.1 First research question

The first research question is focused on the possible benefits of branding in terms of
attracting new customers. The concepts that will be defined are of two main types,
first different benefits of brands and second, market and customer characteristics that
will affect the benefits.
Benefits are gained both for new and existing customers, even if the research problem
is aimed at new customers. The reason for this is that existing customers perception of
the brand has implication on how the brand can be developed to attract new
customers. This aspect will be covered in detail in the fourth research question.
Concept Conceptualisation Operationalisation
Market share Percentage of a market that a Comparing the sold volume in
company’s sold volume money of the company and the
stands for. In terms of sold total of the market for services
units, hours or similar. solving the same problem.
Price premium Price difference between two Measured as the price difference
technically identical services. per hour for similar services
The higher price is the contracted over the same length
additional payment to buy a of time.
stronger brand.

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Loyalty The degree of customer Measured with three cues: 1.

retention. Customer’s will to degree of repeated purchase. 2.
stay with the supplier. price incentive needed to switch
supplier. 3. degree of failure
from the supplier before the
customer switch supplier.
Perception of brand How the customer relate to Ranking the brand against
the brand before the first competitors among potential
purchase. new customers.
Cost advantages Cost savings due to brand Identifying areas for cost
loyalty. savings since it is less expensive
to keep than to win customers.
Buying criteria Base for the customer’s Ranking criteria as quality,
selection of product and price, competence and similar
supplier. among present and potential
customers.
Differentiation of Difference between market The degree of difference in
market segments in preferred buying criteria.
attributes of the product.

Table 3.2 Concepts in the first research question.

Market share is measured monetarily, instead of volume in hours. The possible

difference in price between identical services, price premium, could make this market
share measurement inaccurate to some extent. Measuring in hours can cause
difficulties in comparison between companies. Monetary measurements have the
benefit of being the standard unit in companies’ financial reports. Therefore, a
measurement that is easier to acquire. The market itself is limited to services that are
offered by the company at the geographical market it is active on.
The brand perception concepts is identical to brand loyalty, with the exception that
brand loyalty refers to an existing customer. A potential customer can prefer a brand
and perceive it has superior, without having purchased it before. This situation occurs
if the customer prefers the brand, but has not been in need of the product earlier.
The cost advantages in table 3.2 derives from brand loyalty. Loyal customers enable
the supplier to save money, since it is far more expensive to win new customers than
it is to keep those who are loyal. The operationalisation refers to finding the areas
where these cost savings apply.
The perspectives of the benefits of branding are from the brand owner or the
customer. Brand perception, buying criteria and loyalty is analysed from a customer
perspective. Price premium and cost advantages, on the other hand, is analysed from a
brand owner point of view.

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3.2.2 Second research question

The second research question covers brand identity and image, two concepts based on
different point-of-view. Therefore are the concepts defined and operationalised with
considerations on viewing perspective.
Concept Conceptualisation Operationalisation
Identity Core values of the brand, The brand owner’s view of the
direction, purpose and identity, based on the
meaning of brand. The brand components of the identity
from the sender’s point of prism.
view.
Image The receiver’s (customer) Same measurement as identity,
view of the brand. but from customer perspective.
Brand origin Place, region or country the The value of a regional origin
brand is perceived to belong to cue compared to a national or
by its target customers. international.
Communication Mismatch between identity Describe the differences and
glitches and image. classify them as mimicry,
opportunism or idealism.
Table 3.3 Concepts in the second research question.
Identity and image are using similar measurement, but from different perspectives.
This means that theories have to be interpreted according to the perspective. Image is
analysed from a customer perspective and therefore is focus put on the customer’s
perceived benefits of the brand.

3.2.3 Third research question

The third research question focus on positioning, which means transferring identity
into image. Positioning is closely linked with image and some concepts and theories
can be applied on both image and positioning.
Concept Conceptualisation Operationalisation
Positioning How to give the brand a Identify activities, methods
position in the mind of the and tools that transfer the
customer. values in identity into an
image.
Functional positioning Positioning that emphasises Associations connected
practical and immediate directly to the service or its
benefits. direct, practical benefits.
Symbolic positioning Positioning that emphasises Associations to benefits of
self-expression and the brand that are not
prestige benefits. connected to solving the
actual problem, e.g.
prestige related benefits.
Table 3.4 Concepts in the third research question.

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Positioning does not have to be divided in either functional or symbolic. There is a

possibility of positioning relying on both functional and symbolic associations.

3.2.4 Fourth research question

The fourth research question covers the limitations of brand development from
existing customers. This research focus on branding in order to get new customer, but
changes to the brand can affect the existing customers.
Concept Conceptualisation Operationalisation
Brand compatibility How the brand’s The degree to which the
personality matches customer’s perception of the
products and target group. brand fits to the actual offerings
of the company. Which means
whether the brand’s image
stands for the same values as the
products.
Interaction Exchanges, communication Measured as the frequency of
or activities involving at communication between buying
least two parties, e.g. buyer and selling organisation and the
and seller. number of people involved.
Communication includes phone,
e-mail, letters as well as
meetings in person.
Relationship A long-term link between Same measurement as
two parties. Including interaction, but also duration of
cooperation, cooperation and perceived
interdependence and degree of trust. The degree of
communication. trust applies on contracts,
cooperation and share of
information.
Table 3.5 Concepts in the fourth research question.
The purpose of the fourth research question is to explore how far a brand can be
developed with considerations to the existing customer relations. The aim is not to
find methods to manage customer relationships, but to describe the role of the brand
in these relationships.
Relationships are difficult to define and measure in exact terms. Buyer-seller
relationship is a long-term link, including repeated purchase. It is not possible to put
an exact limit in time to when the relationship occur, since time or number of
purchases are not the only significant factors. Trust and interdependence are important
components that must be present for a relationship to occur.

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 Chapter IV - Methodology

4 Methodology
The purpose of this methodology chapter is to discuss and select appropriate methods
for this research. Validity and reliability issues are also considered to answer the
research question in the most accurate and reliable way.

4.1 Types of business research

Research can be conducted in several different ways, depending on the purpose or
research problem. Zikmund (1999, p.50) presents three types of research, exploratory,
descriptive and causal.
Exploratory research is an initial research that clarifies and defines the nature of a
problem. Exploratory research will not provide conclusive evidence or a specific
course of action. To be able to obtain conclusive evidence further subsequent research
is required. (Zikmund 1999, p.50).
Descriptive research aims at describing characteristics of a population or a
phenomenon. A descriptive research is unlike an exploratory research based on a
previous understanding of the nature of the problem. The result of a descriptive
research is answers to who, what, when, where and how questions. Although, giving
no explanations to for the cause of the findings. (Zikmund 1999, p.50-51).
Causal research seeks to find cause-and-effect relationships between variables.
Exploratory and descriptive studies usually precede causal research since this kind of
research requires knowledge about research subject. The research problem and the
variables in the study must be narrowly defined. (Zikmund 1999, p.51).
The purpose of this research is “How to develop the brand of a small service company
in order to attract new customers?” The research has to be exploratory since it is an
initial study and the nature of the problem is unclear. Branding concepts are widely
used in marketing, but not in the specific setting of this study. The exploratory
approach will not provide answers in form of a general course of action. The
conclusions of this research can point out a course of action suitable for the specific
case, however not generally applicable for other situations. Some aspects of this study
could be perceived as descriptive, e.g. identity and image are measured with
established theories in order to find out how they apply. However, the study cannot be
descriptive since the previous understanding of the problem is insufficient. Branding
is studied in a situation where previous theories have not been tested. Conclusions can
be descriptive if the theories apply, but the approach has to be exploratory.

4.2 Research design

The exploratory research can be conducted through a case study. A case study
investigates one or few situations similar to the research problem, in depth. The
advantage is that an entire organisation or entity can be investigated in depth and very
detailed. The drawback is that conclusions from a few cases cannot be generalised for
an entire population. Even if it is not possible to generalise findings, can insights be
gained and hypotheses suggested for further research. (Zikmund 1999, p.107).

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4.2.1 Inductive vs. Deductive

Theories can be generated from two different kind of reasoning, inductive or
deductive. A deductive reasoning is the logical process of making conclusions based
on something known to be true (Zikmund 1999, p.43). Deductive research is based on
earlier knowledge, such as established theories. The other way to generate a
conclusion is from inductive reasoning, which is based on observations instead of
theories. An inductive reasoning is the logical process of establishing a general
proposition on the basis of observations of particular facts (Zikmund 1999, p.43). In
this way is an inductive research conducted based on observations, without
considering theories established earlier.
This study will rely on a deductive reasoning, since it is based on existing theories and
models. The findings from empirical data will be analysed with existing theories as a
frame of reference.

4.2.2 Qualitative vs. Quantitative

The terms qualitative and quantitative are used to divide methods of investigation.
Qualitative methods are concerned with obtaining an understanding of a subject and
quantitative methods are used to measure things (Hague & Jackson 1996, p.64).
Qualitative research relies on a smaller number of respondents and more open-ended
questions. Quantitative methods are based on representative sample of a population,
large enough to make the results general for the entire population, within estimated
levels of accuracy (Hague & Jackson 1996, p.77). Qualitative research is aimed at in-
depth understanding of a subject instead of measuring, which gives troubles in
generalising findings. The lack of measurement makes it impossible to be absolutely
sure that the findings are correct. (Hague & Jackson 1996, p.64). Another problem
with qualitative and exploratory research is that findings are judgemental, conclusions
are based on interpretations (Zikmund 1999, p.120).
Qualitative research many times precedes a quantitative study. Cahill (1996) argue
that the opposite order of research also has applications. A qualitative research can
provide an understanding of the quantitative results and be of help in internalising the
results. According to Milliken (2001) has practitioners emphasised quantitative
research and many times regarded qualitative methods with scepticism. Qualitative
research is increasingly important and has a major role in marketing research. For
example, qualitative research is important in purchase logic since it can indicate why
individuals behave in a certain way (Milliken 2001).
This research will have a qualitative approach, which is logical since the study is
conducted as an exploratory case study. A case study approach is suitable for a
research problem formulated as “How?” or “Why?” (Yin 1994, p.7). Further, the
research problem will not benefit from quantifiable results. Instead is understanding
of the nature of the problem more desirable, even if it does not result in general
conclusions.

4.3 Research methods

Primary data can be collected by surveys, observations and experiments (McDaniel &
Gates 1999). Surveys are a data collection method based on communication with
representative sample of individuals (Zikmund 1999, p.167). Observation methods are
based systematic recording of behavioural patterns without directly communicating
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with respondents (Zikmund 1999, p.217). Experimental research uses controlled

conditions to investigate effects of altering one or more variable (Zikmund 1999,
p.238). Experiments are common in physical science, but works in the same way in
business research, a controlled environment allows study of causal relationships.
In this study I will use a survey method, the exploratory nature of the study makes
other approaches very difficult. Experiments are impossible since there are no clear
cause-effect relationships to investigate. There is no realistic method to control the
situation either. Observations are also close to the impossible in this case, the
situations when the brand applies are difficult to identify and measure. In this case is a
survey the best approach, letting the people in contact with the brand describe their
view on the issue.

4.3.1 Surveys
Survey research is based on direct communication with a representative sample of
respondents. The communication takes place even if the data collecting method is a
questionnaire distributed by mail, the respondent is asked for information and
answers. Surveys can be qualitative or quantitative, they are mostly descriptive, but
can be used to explain causal explanations or explore new ideas (Zikmund 1999,
p.167). In this research is a qualitative survey method to be used. There are no
realistic alternatives to a survey method. The research problem is based on concepts
that deals with opinions, attitudes and perceptions which are best measured by a
communication with the respondents.

4.3.2 Observations
Observation methods are a systematic process of recording the behavioural patterns of
people, objects and occurrences without questioning or communicate with them.
Observation methods can be either visible or hidden. The visible observation refers to
situations in which the observer’s presence is known to the subject. In a hidden
observation is the subject unaware of the observation taking place. The main
advantage of observations compared to surveys is that data has no distortions,
inaccuracies or response biases caused by the respondent. (Zikmund 1999, p.217-
219). Observations are not suitable for this research. The main reason is that area of
research includes brand concepts such as identity and image. There is no possible way
to observe or monitor people’s opinions and perception of these concepts.

4.3.3 Experiments
The purpose of experiments is to evaluate causal relationships. Experiments rely on a
controlled situation were one or more variables can be manipulated. Experiments
differ from surveys and observations since the degree of control is much greater. In a
typical experiment is one variable (independent variable) manipulated and its effect
on the other variables (dependent variable) is measured. (Zikmund 1999, p.238).
Experimental methods are not applicable in this type of research. A controlled
environment is not possible to achieve and therefore is experiments impossible.

4.4 Data collection

Data can be divided into two different categories, primary and secondary data.
Primary data is collected in order to solve the specific problem. Secondary data, on

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the other hand, is previously gathered for some other project than the one at hand
(Zikmund 1999, p.124).

4.4.1 Secondary data

Since secondary data is already collected is it far less expensive than primary data.
Secondary data can be collected with a fraction of the cost, time and effort of primary
data (McDaniel & Gates 1999, p.100). There are more benefits of secondary data than
just the cost aspect. McDaniel and Gates (1999, p.100) present advantages that are
less obvious:
• Secondary data may help to clarify or redefine the definition of the problem as
a part of the exploratory research process. Secondary data has a key role in
exploratory research.
• Secondary information may solve the problem. There is a great chance that the
identical problem already has been addressed and solved by someone else.
• Secondary information may provide alternatives for primary data research
methods. The methods used to collect the data in the secondary source can be
applicable the primary research at hand, at least to some extent. In
questionnaire design is it many times helpful to examine previous methods in
the same area of research.
• Secondary information may alert the marketing researcher of potential
problems or difficulties. Problems can be avoided by studying previous
research.
• Secondary information may provide necessary background information and
build creativity for the research report. Secondary information can provide a
good background data for planning a research project.

4.4.1.1 Disadvantages of secondary data

Even if secondary data provides many advantages, there some limitations. The main
disadvantages are according to McDaniel and Gates (1999, p.101), lack of
availability, lack of relevance, inaccuracy and insufficiency.
Lack of availability occurs when there are no secondary sources for the problem. This
type of research problem can only be solved with primary collected data. The
availability problem usually occurs when the problem is defined to a specific
company or product.
Lack of relevance occurs when the available sources are irrelevant to the problem.
The information can be outdated or expressed in units or measures that are of no use
in the research.
Inaccuracy can occur when a researcher collects, codes, analyses and presents data.
The risk of inaccuracy exists in any report, but a researcher can assess this risk. The
researcher should determine, who collected the data, for what purpose and how. The
researcher should also check if the information is consistent with other sources.
Insufficient data is a problem that can exist even if the information is available,
relevant and accurate. However, not sufficient to base a decision upon. If data is
insufficient, will primary data still have to be collected.

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4.5 Case selection

The research problem requires a case selection that fits the specific setting of the
problem. The case company has to be small (less than 30 employees, table 3.1) and
offering mainly industrial services. A typical industrial service is technical
consultancy. Consultant firms range from small local firms to large multi-national
corporations. Infologigruppen is a small local consultant firm with services
completely on the industrial market. This makes Infologigruppen an ideal case, for
this research and covers the requirements, small company, service offerings and
industrial market.

4.5.1 Infologigruppen AB
Infologigruppen is a small consultant firm based in Norrbotten. The company has 20
employees at two offices in Luleå and Piteå. Infologigruppen offers technical
consultant services for database applications and telecom systems. These services are
completely purposed for industrial markets. The most important customers are today
the Swedish Customs and Telia Mobile.

4.5.1.1 Background
Infologigruppen as the company it is today was funded in 1996. However, the brand
name and logotype has a much longer history. The word infologi was invented in
1973 and means the science of how thoughts, ideas and opinions by humans can be
handled by computers and other devices.
The infologigruppen logotype, figure 4.1, is not an abbreviation of the company
name, which only consists of two i’s . The “iii” symbol represents a group of
individuals, (one is an individual, two are a couple and three a group).
(www.infologigruppen.se 2002-11-24).

Figure 4.1. The Infologigruppen logotype.

4.6 Interview guide design

All survey researches rely on some form of questionnaire. A questionnaire is a set of
questions designed to generate the data necessary to achieve the objectives of the
research project (McDaniel & Gates 1999, p.356). Further, the questionnaire provides
standardisation to the data collection, since every respondent gets the same question.
The questionnaire has a critical role, positioned between the surveys objectives and
the respondent’s information, see figure 4.1.

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Survey Respondent’s
objective information

Questionnaire

Data analysis

Findings

Recommendations

Managerial
action
Figure 4.2. The position of questionnaires in the research process
(McDaniel & Gates 1999, p.358).
Relevance and accuracy are the two basic criteria for a questionnaire to achieve the
purpose of the research. According to Zikmund (1999, p.309) are there a number of
decisions the researcher has to do in order to obtain relevancy and accuracy.
1. What should be asked?
2. How should each question be phrased?
3. In what sequence should the questions be arranged?
4. What questionnaire layout will best serve the research objectives?
5. How should the questionnaire be pretested? Does the questionnaire need to be
revised?

4.6.1 Questionnaire Relevancy

A questionnaire is relevant if no unnecessary information is collected and the
information needed to solve the problem is obtained (Zikmund 1999, p.310). This
means that researcher’s should avoid asking wrong or irrelevant question. The
researcher should also be specify the data needed.

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4.6.2 Questionnaire Accuracy

Accuracy becomes the primary concern once it is decided what to ask. Accuracy
means that the results are reliable and valid. Accuracy is achieved by designing a
questionnaire motivating the respondent to cooperate. Questions should be simple,
understandable and unbiased. (Zikmund 1999, p.310).

4.6.3 Open-ended vs. Fixed alternatives

Questions can be divided in two groups according to the degree of freedom for the
respondent. Fixed-alternative questions, (or closed questions), gives the respondent a
specific, limited alternative responses. The respondent is asked to choose the
alternative closest to his or her own viewpoint. Open-ended questions are more
suitable in exploratory research. The open-ended questions let the respondent answer
in his or her own words. A benefit of open-ended questions is that the researcher may
find unanticipated answers and reactions on the topic. (Zikmund 1999, p.311).
This research is mainly exploratory and will therefore rely on open-ended question.
The main purpose of using open-ended question in this case is to let respondents
describe the brand-related topics. Closed questions would also be inappropriate since
this research does not seek quantifiable measurements.

4.6.4 Selection of respondents

The research questions contain concepts that require analyses from different
perspectives. To be able to answer the research questions, three groups of respondents
will be included in the study. The first category of respondents is the brand owner, in
this case Infologigruppen. The brand owner can describe possible benefits of brand
development, the brand identity and how the positioning is managed. The second
category is the existing customer, who best can describe the image of the brand. The
long-term customers are also able to provide answers to the fourth research question,
describing how brand development can affect customer relationships. The third and
final category is potential new customers, who can describe the brand image from a
different point-of-view, than the existing customers. The main purpose of this
research as defined in the introduction chapter “How to develop the brand of a small
service company in order to attract new customers?”, aims at new customers,
therefore is the image perception of this category highly important. Both existing and
potential customers can indirectly provide answers for the first research question
because the benefits of branding can be both in retaining customers as well as
attracting new ones.
Different perspectives and three different groups of respondents make it necessary to
use different interview guides (Appendix A). The following three interview guides
will be used for data collection:
• Interview guide A, covers the identity perspective, positioning and benefits of
brand. This interview guide is used only at Infologigruppen.
• Interview guide B, image perspective from existing customers point-of-view.
Measuring image and the customer relationship issue of the fourth research
question. Benefits of branding is also included, but more indirectly.
• Interview guide C, image perspective from a possible future customer point-
of-view. Image will be measured as a comparison between different consultant
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firms present at the local market. The aspects of the first research question that
are related to attracting new customers are also measured.
Analysis must also be adopted to fit the different perspective approach. All data
cannot be directly compared across the different groups. The construction of
Interview guide C is differing from the two previous interview guides in the way
image is measured. The image of Infologigruppen is measured in a competitive
context. A sample of consultant companies is included in the interview guide. The
reason is to provide a picture of the brand in the competitive environment. The results
are also more reliable. If the respondents only were asked about Infologigruppen is
the risk that the findings apply on any competitor and not just the studied brand. An
image association that apply on every company in the market is not really of value in
branding efforts since it does not differentiate the brand. For example, a respondent
answers that Infologigruppen is perceived as competent, but it is not necessary an
advantage if consultants in general are perceived as equally competent.

4.7 Validity and Reliability

Validity and reliability are important considerations for any research. Validity is the
ability of the measuring instrument to measure what is intended to be measured
(Zikmund 1999, p.281). McDaniel and Gates (1999, p.309) present the following
ways to measure the validity:
• Face validity. The weakest form of validity, concerned with whether the
measurement instrument appears to be valid. Face validity is many times the
judgementally determined by the researcher when constructing questions.
Straightforward questions like “what is your age?” is usually considered to
have a high degree of face validity. Marketing research is many times
concerned with attitudes and behavioural intentions, which are more difficult
to determine.
• Content validity. The degree to which the instrument represents the universe of
the concept under study. In other words, how well the instrument actually
covers the area under study. Content validity can sometimes be difficult to
achieve. Example, a study on brand image must cover all dimensions of the
image to obtain content validity, which is difficult since the researcher cannot
predict what the respondents are going to answer.
• Criterion-related validity. The degree to which a measurement instrument can
predict a variable that is designated criterion. This means how well the
measurement instrument correlates with other instruments measuring the same
variables. Criterion-related validity can be split up in two categories.
Predictive validity is the degree to which the instrument can forecast a future
measurement. Concurrent validity is the degree to which the instrument can
predict the variable of interest measured at the same point in time.
• Construct validity. The degree to which the measurement instrument
represents and logically connects to underlying theory. Construct validity is
usually of little interest for practitioners in day-to-day research, but of high
interest for marketing scientists. A measurement has construct validity if it
behaves according to the relevant theories.

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These types of validity combined determines whether what is intended to be measured

actually is measured.
Reliability is the degree to which measures are free from error and therefore yield
consistent results (Zikmund 1999, p.280). A measure is reliable if results are similar
when obtained over time and across situations. A key question regarding reliability is,
“If we measure some phenomenon over and over again with the same measurement
device, will we get the same or highly similar results?” (McDaniel & Gates 1999,
p.304).
McDaniel and Gates (1999, p.305) presents the following three ways to assess the
reliability of a measurement instrument:
• Test-retest reliability. This form of reliability is obtained by repeating the
measurement using the same instrument under close to identical conditions.
Random errors and variation will be revealed by differences between test and
retest. Test-retest reliability is in reality problematic. First, it may be difficult
to get the same respondents to cooperate in a repeated testing. Second, the first
measurement may alter the respondent’s answer in the second measurement.
Third, environmental or personal factors may change and therefore causing the
second measurement to change.
• Equivalent form reliability. This reliability is the ability to produce similar
results using two instruments as similar as possible to measure the same
object. The problems of the test-retest approach can be avoided since the
respondent does not have to answer identical question, but highly similar ones.
The equivalent form reliability has two problems. First, it is very difficult to
construct two totally equivalent forms, such as questionnaires. Second, if
equivalence can be achieved, it may not be worth the effort in time and
money. Equivalent form reliability is similar to test-retest reliability with
exception of the testing instrument itself. Test-retest uses the same instrument
and equivalent form uses highly similar measuring instruments.
• Internal consistency reliability. This way of determining reliability is based on
the measurements ability to produce similar results using different samples to
measure a phenomenon during the same period of time. The internal
consistency approach is based on the variation at one point in time among
samples of items. Internal consistency differs from the two previous
approaches is that the same respondents are not included more than one time.
There is no repeated contact with the respondents to check for reliability.
Validity and reliability are many times illustrated as a marksman shooting at a target.
Figure 4.3 illustrates three different results for the shooting practice. In the first
situation there are holes all over the target. This result can be caused by a number of
reasons such as inaccurate rifle, a poor marksman or other factors. Because the
instrument lacks consistency there is no reliability. An instrument with no reliability,
causing huge errors, cannot be valid.
The second situation shows a tight, consistent pattern, but far from the centre of the
target. The instrument is highly reliable (little variance), but no validity. This means
that the instrument is consistent, but is not measuring what it is supposed to measure.
The marksman has a steady eye, but the sights are not adjusted properly. The third

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situation illustrates a situation when the instrument is both reliable and valid.
(McDaniel & Gates 1999, p.312).

Situation 1 Situation 2 Situation 3

Neither Reliable Highly Reliable Highly Reliable

nor Valid but not Valid and Valid
Figure 4.3. Possible Reliability and Validity situations
(McDaniel & Gates 1999, p.313).

4.8 Methodology problems

The selected methods of conducting research have some areas where problems may
arise. The first issue is the sample of respondents that includes respondents from three
different categories. This will cause the analysis to become more complex since
results from the respondents cannot be analysed as one group. Clearly the groups of
respondents are unbalanced. The first category (interview guide A) consists of only
one company, Infologigruppen that provides the identity related answers. The second
group (interview guide B) is also small since the number of long-term customers is
limited. The third group (interview guide C) is much bigger than the two previous,
there are many companies that buys IT-consultant services even when only the local
market is considered. The sample that will be presented in chapter 5 with the results is
not numerically balanced. The first and second group are both consisting of one
company each. The third group, potential customers, includes five companies. The
results will still be valid since all the interviews are measuring the same phenomenon.
Even if parts of the results can be difficult to compare directly is it of course still
possible to find areas where the result can be analysed against each other. A perfect
balance in numbers is impossible in this case. The only possible way to reach such a
balance would be to only cover one category of respondents, for example possible
future customers. This approach would only cover image aspects and gives a very
limited view of the problem area. The total population in the first group is only one
company. In the second group, long-term customers, has a total population of two
companies. However, only one of them is interviewed due to limited time, one
interview was not possible within the time scope of this study. There is a disadvantage
of only interviewing half of the possible respondents, but the information acquired
should be sufficient.
All of the interviews are direct, telephone interviews are not used at all. The reason is
that most respondents provide longer and more detailed answer in a direct interview.
Telephone interviews can make the respondent lose concentration if the interview
consists of many questions and require detailed answers.
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The questions asked in the interviews are constructed in a way that does not force the
respondent to give away information that can be sensitive for their company.
Questions on buying criteria can be perceived as suspicious if the respondent does not
know how the information is to be used. The purpose of the interviews is to find
patterns in the market, not to determine the buying behaviour of specific companies.
The use of three different interview guides can arise questions on validity. Different
measuring instruments in the same study can be questionable since there are risks of
bias between the instruments. This risk is reduced or eliminated in the construction of
the questions. The questions are generally open-ended and formulated in an equal and
consistent way in all of the interview guides.
The open-ended questions reduce the risk that the respondents will be directed to
answer in a certain way. The risk with questions that are too open is that the answers
are not comparable. Respondents may provide answers in directions that do not help
to answer research questions. However, the benefit of open-ended questions is greater
than the risk of irrelevant answers. The exploratory approach is also making more
fixed questions unsuitable.

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 Chapter V – Empirical Data

5 Empirical data
Confidential until March 1st 2006.

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 Chapter VI - Analysis

6 Analysis
Confidential until March 1st 2006.

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 Chapter VII - Conclusions

7 Conclusions, evaluation of study and further

research
This chapter will present the conclusions of the study, the answers to the research
questions. Second, the study will be evaluated. Finally, suggestions for further
research are presented.

7.1 Benefits of brand development

Branding theory points out several areas where brands can provide advantages. The
empirical results do not match the theories directly. The benefits in pricing and cost
saving is not likely to occur in this case, at least not to any significant degree. Brand
strength is not likely to build loyalty either. The benefit of a stronger brand for
companies like Infologigruppen is more likely to occur in sales to new customers. The
brand can help in the process of finding a new customer. The brand creates awareness,
which makes it easier to communicate the values of the company. The brand functions
as a “door-opener” in sales to new customers. The benefit for the customer is that the
brand reduces uncertainty since the customer has an established image of the
company.
Differentiation is a central concept in branding. In this case is the differentiation of
the market difficult to assess. The buying criteria of the customers are similar and do
not really indicate any differentiation of the demand. The decision on hiring a large or
small consultant company is similar between the respondents. The big companies are
hired for critical projects involving more money, and the smaller firms are contracted
for smaller assignments. The similarities in buying criteria indicate low differentiation
of the market, but the competitive situation contradicts low differentiation.

7.2 Identity and Image

The identity and image concepts have been studied by using the same theoretical
framework, which enables comparisons. The identity prism applied to the brand, but
not completely. The reflection and self-image facets did not apply on either identity or
image. A possible reason is that the Infologigruppen brand is not communicating
values like reflection and self-image. There was no indication that the missing facets
were important for the customer. The identity is based mostly on culture and
relationship, but the image was focused on physique and culture. The differences
between identity and image are probably not caused by mismatching communication.
A more probable explanation is that relationship associations are difficult to
communicate to a new customer, but will evolve over time. However, none of the
differences are in direct contradiction, instead differences can be seen as a shift of
bias between the facets in the identity prism.
In general terms IT-consultant companies on the Norrbotten market can be divided
into two categories, big and small. The difference exists mostly between the groups
rather than within them. A conclusion from this is that the small company aspect of
branding is significant. Brands for small companies cannot be built and developed in
the same way as for larger organisations.

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Local presence seems to be necessary to achieve any success in this market. The local
presence can be incorporated in the brand image. Many of the consultant companies
are identified with the geographical area they are considered to origin from.

7.3 Positioning
The positioning of Infologigruppen is functional, which is representative for the
industry in general. There are no indications of symbolic positioning of
Infologigruppen or any of the competitors. The functional positioning transfers the
identity into a functional image. The lack of symbolic values in the positioning is the
best explanation for the reflection and self-image facets irrelevance in the identity
prism. Infologigruppen is an industrial brand and has therefore probably more
difficulty to apply to symbolic values than a typical consumer product. The link
between functional positioning and the missing facets in the identity prism indicates
that the composition of the image is determined by positioning. The purpose of
positioning is to form an image in the mind of the customer. The decision to rely on
functional or symbolic positioning seems to be most important since it determines
which facets of the identity prism the image will emphasise. An identity that is not
based on reflection or self-image is not likely to benefit from symbolic positioning.
The risk is that positioning that does not correspond to the identity will cause a
communication glitch.

7.4 Customer relationships

The fourth research question was intended to investigate the restrictions on brand
development from existing customers. In other words, determine how far the brand
can be altered without stressing the customer relationships. The brand compatibility
concept has been used to evaluate what range of offerings that can be covered by the
Infologigruppen brand. It is of course difficult to find an exact limit to which range of
products that the brand can be associated with. However, the target group seem to
associate Infologigruppen with product class, IT-consultant services. The result is that
the brand can be used for services in the present area, but not to cover products
involving manufactured goods. The brand is today associated with consultant services
and is compatible as long as this is the main product class. Brand compatibility with
the target group seems less limiting than compatibility with product. There is no
indication that other customers of the consultant company affect the customer
relationships. Neither positive nor negative effects appear from the customers of the
consultant firm. Negative effects of competing customers are eliminated by legal
means in contracts. References to previous work can be beneficial for new customers,
but is probably not adding value to the image in any significant way.
The service offer model presents three components creating value for the customer,
availability, interactions and participation. All three are important, but availability is
critical when considering the importance of a local presence. It is evident in this case
that a consultant company has to be located on the geographical market it aims to
compete in.

7.5 Evaluation of study

The purpose of the study, “How to develop the brand of a small service company in
order to attract new customers?” puts the traditional branding theory in a different
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setting. Branding is studied in the situation of a small company offering services at an

industrial market. Practically all theory on branding is based on consumer goods,
which causes problems when constructing the research model. The theories used are
applicable even if they are not directly intended for industrial markets. However, the
consumer-industrial market aspect has to be considered throughout the study.
The conclusions and findings of the study should not be seen as general, since only
one brand is studied, but as a first view of how the branding concepts apply to the
specific settings of the problem. The findings can in some case be industry specific,
valid only for the consultant service industry. It can be difficult to assess exactly how
far from the consultancy industry these findings can be transferred without losing
relevancy.
The first research question deals with benefits of branding. There are great differences
between theory and empirical results. The usual advantages of brand strength, e.g.
higher price, are not found. Instead, benefits are more indirect, like the advantages
when selling to new customers. This indicates that the present theory is not accurate
for the situation of small companies and/or industrial markets.
The second research question is concerned with identity and image, two major
concepts in this study. The present theory seems more applicable than in the first
research question. However, the results from the study indicate that parts of the
identity and image theories do not fit this situation.
The third research question deals with positioning, which is closely linked to the
concepts in the second research question. Positioning and image are sometimes
difficult to separate; it can be difficult to draw an exact line where positioning ends
and image begins. The impact of positioning on image is therefore predictable, but
nevertheless is there a link between positioning and the achieved image.
Finally, the fourth research question includes customer relationships in the study. This
aspect of brands is usually not mentioned in theory. The lack of theory was overcome
by including the brand compatibility concept and service marketing theory. The
customer relationships have little influence on the studied brand, at least not directing
the way the brand develops. The study is in this way limited to a situation where the
customer relationships are not limiting brand development in any significant way.
Brand compatibility indicates a limit of possible development or altering of the brand,
but of little importance in the present situation.
In some cases have the empirical results not applied on theory, but the reasons for this
are difficult to determine. The differences between theory and practice might be
caused by the industrial brand in the study, but theories for consumer brands. Another
explanation is that the study focused on brands in a small company situation, but the
theories refer to larger organisations.

7.6 Further research

This study has used an exploratory approach on issues of branding in the setting of
small companies and industrial services. During the research it has become evident
that the present theory on branding is focused heavily on consumer goods and brands
of larger organisations. This study has only dealt with the branding concepts from the
perspective of one company at one market. A suggestion for further research is a

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 Chapter VII - Conclusions

study across markets and industries to find general patterns. Such a study could clarify
the difference between industrial and consumer brands.
Further research is also needed to provide a theoretical framework for branding in
small companies. Strategy in the present theory for large companies cannot be directly
applied on the situation of a small company. The situation of small companies differ
in many ways from the large companies, for instance in available resources.
Infologigruppen and its competitors are relying on functional positioning, which
probably is the most common for industrial brands. An interesting approach for
further research would be to examine the use of symbolic positioning for industrial
brands. A study of industrial brands built on symbolic values would provide a more
complete picture of how positioning decisions influence image.

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 Chapter VIII - References

8 References

Articles
Bhat, S. Reddy, S.K. (1998). Symbolic and functional positioning of brands. Journal
of Consumer Marketing, 15 (1), 32-43.
Brooksbank, R. (1994). The anatomy of marketing positioning strategy. Marketing
Intelligence & Planning, 12 (4), 10-14.
Cahill, J.P. (1996). When to use qualitative methods: a new approach. Marketing
Intelligence & Planning, 14 (6), 16-20.
Calderón, H. Cervera, A. Mollá, A. (1997). Brand assessment: a key element of
marketing strategy. Journal of Product & Brand Management, 6 (5), 293-304.
Davis, S.M. (2000). The power of the brand. Strategy & Leadership, MCB University
Press, 28 (4), 4-9.
de Chernatony, L. Segal-Horn, S. (2001). Building on services’ characteristics to
develop successful services brands. Journal of Marketing Management, 17,
645-669.
Dibb, S. Simkin, L. (1993). The strength of branding and positioning in services.
International Journal of Service Industry Management, 4 (1), 25-35.
Doyle, P. Saunders, J. (1985). Market Segmentation and Positioning in Specialized
Industrial Markets. Journal of Marketing, 49 (Spring 1985), 24-32.
Doyle, P. (1990). Building successful brands: the strategic options. The Journal of
Consumer Marketing, 7(2), 5-20.
Gilmore, A. Carson, D. Grant, K. (2001). SME marketing in practice. Marketing
Intelligence & Planning, 19 (1), 6-11.
Gummesson, E. (1991). Truths and Myths in Service Quality. International Journal of
Service Industry Management, 2 (3), 7-16.
Krishnan, B.C. ,Hartline, M.D. (2001). Brand equity: is it more important in services?
Journal of Services Marketing, 15 (5), 328-342.
Meenaghan, T. (1995). The role of advertising in brand image development. Journal
of Product & Brand Management, 4 (4), 23-34.
Milliken, J. (2001). Qualitative research and marketing management. Management
Decisions, 39 (1), 71-77.
Moorthi, Y.L.R. (2002). An approach to branding services. Journal of Service
Marketing, 16 (3), 259-274.
Mudambi, S. Doyle, P. Wong, V. (1997). An Exploration of Branding in Industrial
Markets. Industrial Marketing Management, vol. 26, 433-446.
Rooney, A. R. (1995). Branding: a trend for today and tomorrow. Journal of Product
& Brand Management, 4 (4), 48-55.
Thakor, M.V. Kohli, C.S. (1996). Brand origin: conceptualisation and review. Journal
of Consumer Marketing, 13 (3), 27-42.
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 Chapter VIII - References

Van Mesdag, M. (1997). Brand strategy needs turning back to front. Marketing
Intelligence & Planning, 15 (3), 157-159.
Wood, L. (2000). Brands and brand equity: definition and management. Management
Decision, 38 (9), 662-669.

Books
Aaker, D. A. (1996). Building strong brands. New York : The Free Press. ISBN 0-02-
900151-X.
Brytting, T. (1998). Att växa eller inte? Värmdö : Idé & Norm AB. ISBN 91-630-
6532-0.
de Chernatony, L. McDonald, M. (1998). Creating Powerful Brands in Consumer,
Service and Industrial Markets. 2nd edition. Oxford : Butterworth-Heinemann.
ISBN 0-7506-2240-7.
Doyle, P. (1998). Marketing Management and Strategy. 2nd edition. Harlow : Prentice
Hall Europe. ISBN 0-13-262239-4.
Dwyer, F R. Tanner, J F (2001). Business Marketing, connecting Strategy,
Relationships and Learning. 2nd edition. New York : McGraw-Hill. ISBN 0-
07-241063-9.
Grönroos, C. (1990). Service Management. Swedish translation. Göteborg : ISL
Förlag. ISBN 91-7698-0251.
Gummesson, E. (1998). Relationsmarknadsföring: Från 4P till 30R. 2nd edition.
Malmö : Liber Ekonomi. ISBN 91-47-04279-6.
Hague, P. Jackson, P. (1996). Market research, a guide to planning, methodology and
evaluation. London : Kogan Page. ISBN 0-7494-1785-4.
Ind, N. (1997). The Corporate Brand. London : MacMillian Press. ISBN 0-333-
67472-3.
Jobber, D. (1998). Principle and Practice of Marketing. 2nd edition. London :
McGraw-Hill. ISBN 0-07-709435-2.
Kapferer, J N. (1997). Strategic Brand Management. 2nd edition. London : Kogan
Page. ISBN 0-7494-2069-3.
Lagergren, H. (1998). Varumärkets inre värden. Göteborg : ICT Education. ISBN 91-
973394-0-7.
McDaniel, C. Gates, R. (1999). Contemporary marketing research. 4th edition.
Cincinnati : South-Western College Publishing. ISBN 0-538-88507-6.
Palmer, A. (2001). Principles of Services Marketing. 3rd edition. Berkshire :
McGraw-Hill. ISBN 0-07-709748-3.
Ries, A Trout, J. (2001). Positioning: The battle for your mind. New York : McGraw-
Hill. ISBN 0-07-137358-6.
Yin, R.K. (1994). Case Study Research. 2nd edition. Thousand Oaks : SAGE
Publications. ISBN 0-8039-5662-2.

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 Chapter VIII - References

Zikmund, W.G. (1999). Business research methods. 6th edition. Orlando : The
Dryden press. ISBN 0-03-025817-0.

Electronic sources
Bergvall, J. (2001). Brand small brands. Available at URL:
http://www.brandchannel.com/images/papers/BrandSmallBrands.pdf (2002-09-
11).
Dolak, D. (2001). Building a strong brand: brands and branding basics. Available at
URL: http://www.davedolak.com/whitepapers/dolak4.htm (2002-09-11).
Morrison, D. (2001). The six biggest pitfalls in b-to-b branding. Available at URL:
http://www.brandchannel.com/images/papers/Pitfalls_of_BtoB_Branding.pdf
(2002-09-12).
Infologigruppen website (2002). Available at URL: http://www.infologigruppen.se
(2002-11-24).
Young & Rubicam Inc. (2000). Brand Asset Valuator. Available at URL:
http://www.yr.com/knowledge/YR-BAV_white_paper.pdf (2002-09-25).

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 Appendix – Interview Guide

Appendix – Interview Guide

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 Appendix – Interview Guide

Intervjuguide - A

Allmän information
Respondentens befattning/ansvarsområde

Respondentens ansvar i varumärkesfrågor

Varumärket Infologigruppen - identitet

Hur skulle du beskriva varumärket Infologigruppen?

Vilka anser du är företagets styrkor?

Vilka anser du är företagets svagheter?

Vad skiljer Infologigruppen från konkurrenterna?

Varumärkets fördelar
Vilka fördelar kan uppnås med ett starkt varumärke?

Påverkar varumärket prissättningen?

Vilka kostnader skulle kunna sparas genom ett starkt varumärke?

Vilken marknadsandel har Infologigruppen, på den lokala marknaden?

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 Appendix – Interview Guide

Kan varumärket användas för att säkra den nuvarande marknadspositionen?

Positionering
Hur arbetar Infologigruppen med att utveckla varumärket?

Vilka värden i varumärket Infologigruppen förmedlas till kunder, nuvarande och

tänkbara?

Vilka metoder används för att kommunicera varumärket Infologigruppen?

• Reklam
• Direkt kommunikation med kund
• Direkt kommunikation med tänkbar kund
• Prissättning
• Arbetssätt
• Annan metod

Hur har utformning av varumärket påverkats av konkurrens och konkurrensstrategi?

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 Appendix – Interview Guide

Intervjuguide - B

Allmän information
Företagsnamn

Respondentens befattning/ansvarsområde

Företagets organisation
Antal anställda?

Hur är företagets organisation strukturerad?

Hur är företaget indelat geografiskt?

Företagets verksamhet
Vad är företagets huvudsakliga verksamhet?

Konsulttjänster
Vilka typer av konsulttjänster används?

Inom vilka tekniska områden anlitas konsulter?

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 Appendix – Interview Guide

Hur skulle du gradera vikten av följande kriterier vid köp av konsulttjänster?

Mycket viktigt oviktigt

Konsultens kompetens
5 4 3 2 1

Pris
5 4 3 2 1

Kvalitet på utfört arbete

5 4 3 2 1

Renommé
5 4 3 2 1

Samarbetsförmåga
5 4 3 2 1

Tidigare uppdrag
5 4 3 2 1

Övriga kriterier
5 4 3 2 1

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 Appendix – Interview Guide

Är kontrakt över lång tid att föredra?

Söker ni aktivt alternativ när det gäller konsulttjänster?

Varumärket Infologigruppen – image

Hur skulle du beskriva varumärket Infologigruppen?

Vad anser du är företagets styrkor?

Vad anser du är svagheterna?

Vad skiljer Infologigruppen från konkurrenterna, gällande:

Arbetsmetoder

Kommunikation

Företagskultur

Prissättning

Andra skillnader

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 Appendix – Interview Guide

Kund relationer
Hur länge har ni anlitat Infologigruppen?

Hur skulle du beskriva relationen till Infologigruppen?

Hur skulle du vilja beskriva kommunikation och samarbete med Infologigruppen?

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 Appendix – Interview Guide

Hur skulle du gradera betydelsen av konsultföretagets övriga kunder,

om dessa kunder är:

Konkurrenter
Positiv Ingen Negativ

Inom liknande bransch, men inte konkurrent

Positiv Ingen Negativ

Statligt eller privat ägda

Positiv Ingen Negativ

Tekniskt ledande företag

Positiv Ingen Negativ

Företag med starkt varumärke

Positiv Ingen Negativ

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 Appendix – Interview Guide

Intervjuguide - C

Allmän information
Företagsnamn

Respondentens befattning/ansvarsområde

Företagets organisation
Hur många är anställda?

Hur är företagets organisation strukturerad?

Hur är företaget indelat geografiskt?

Företagets verksamhet
Vad är företagets huvudsakliga verksamhet?

Konsulttjänster
Vilka typer av konsulttjänster används?

Till vilken omfattning anlitas tekniska konsulter?

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 Appendix – Interview Guide

Hur skulle du gradera vikten av följande kriterier vid köp av konsulttjänster?

Mycket viktigt oviktigt
Konsultens kompetens
5 4 3 2 1

Pris
5 4 3 2 1

Kvalitet på utfört arbete

5 4 3 2 1

Renommé
5 4 3 2 1

Samarbetsförmåga
5 4 3 2 1

Tidigare uppdrag
5 4 3 2 1

Övriga kriterier
5 4 3 2 1

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 Appendix – Interview Guide

Vad är att föredra:

Stort eller litet konsult företag?

Regionalt- eller multinationellt företag?

Specialiserad eller bred kompetens?

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 Appendix – Interview Guide

Konsultföretagens image
Hur skulle du beskriva ditt intryck av följande företag, m.a.p arbetsmetoder,
kommunikation, företagskultur, prissättning eller andra faktorer:

Avantra

Candeo Nordkonsult

Cap Gemini

Frontec

Infologigruppen

WM-data

Annan konsult

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 Appendix – Interview Guide

Anser du att något av konsultföretagen särskiljer sig från konkurrenterna, positivt eller
negativt?

Vilket konsultföretag anser du har det starkaste varumärket, och varför?

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 SYLLABUS
Product and Brand Management

Objectives: The focus of this course is on decisions about how a company can build and manage its products so that they are
profitable to the company and at the same time adequately meet target customers' needs and wants. The course aims to
synchronize product and brand management processes.

S. No. Description
1. Introduction to Product & Product Related Concepts: Product Management & Scope
Marketing Organization & Types, Marketing Planning: Components of Marketing Plan
Defining the Competitive Set: Levels of Market Competition, Methods for Determining Competitors
Category Attractiveness Analysis: Aggregate Market Factors, Category Factors, Environmental Analysis
2. Competitor Analysis: Sources of Information, Assessing Competitors’ Current Objectives & Strategies,
Differential Advantage Analysis
Customer Analysis: Purpose, Segmentation Criteria
3. Market Potential & Sales Forecasting, Methods of Estimating Market & Sales Potential
4. Developing Product Strategies, PLC, Product Strategies Over the Life Cycle
Managing New Product Development ,Product Modification, Line Extension & Brand Extension
5. Brands & Brand Management, Branding Challenges & opportunities, Concept of Brand Equity
6. Strategic Brand Management Process: Introduction & Phases
7. Identifying & Establishing Brand Positioning: Building A Strong Brand, Positioning Guidelines
8. Planning & Implementing Brand Marketing Programs: Criteria for Choosing Brand Elements, Options &
tactics for Brand Elements, Use of IMC for Brand Building, Leveraging Secondary Brand Associations to Brand
building
9. Measuring & Interpreting Brand Performance: Developing A Brand Equity Measurement & Management
System, Measuring Sources of Brand Equity & Outcome of Brand Equity
10. Growing & Sustaining Brand Equity: Designing & Implementing Branding Strategies
Managing Brands Over Time
 CONTENTS

Unit 1: Introduction to Product Management 1

Unit 2: Marketing Planning 19
Unit 3: Competitor Analysis 52
Unit 4: Market Potential and Sales Forecasting 79
Unit 5: Developing Product Strategies 98
Unit 6: Extension 115
Unit 7: Brand and Brand Management 146
Unit 8: Brand Equity 162
Unit 9: Strategic Brand Management Process 186
Unit 10: Identifying and Establishing Brand Positioning 196
Unit 11: Planning and Implementing Brand Marketing Programs 220
Unit 12: Measuring and Interpreting Brand Performance 248
Unit 13: Growing and Sustaining Brand Equity 273
Unit 14: Managing Brands over Time 289
 Unit 1: Introduction to Product Management

Unit 1: Introduction to Product Management Notes

CONTENTS

Objectives

Introduction

1.1 Product

1.2 Concepts related to Product

1.2.1 Product Development

1.2.2 New Product

1.2.3 Product Life Cycle

1.2.4 Product Upgrade

1.3 Product Management: Meaning

1.4 Aspects of Product Management

1.4.1 Product Planning

1.4.2 Product Marketing

1.5 Product Management: Scope

1.6 Marketing Organisation

1.6.1 Characteristics of a Good Marketing Organisation

1.6.2 Types of Marketing Organisation

1.7 Organizational Structure

1.8 Role of Product Manager

1.9 Summary

1.10 Keywords

1.11 Review Questions

1.12 Further Readings

Objectives

After studying this unit, you will be able to:

 Learn the Concept of Product

 Explain the Concepts related to Product

 Discuss the Definition and Scope of Product Management

 Understand Marketing Organisation

 Illustrate the Types of Marketing Organisation

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Product and Brand Management

Notes Introduction

Product Management is becoming an important function of marketing. With the passage of

time, product management has undergone many changes. It is no more a department of churning
out promotional materials but is has now become the nerve center of the organization.

Effective product management is a practical, purposeful and positive approach of improving the
company results, through the efforts of a competent and committed team, coordinating
manufacturing, marketing and sales. In short, it can be said that product management involves.

1.1 Product

The word “product” can be defined in many ways. The definitions differ according to the
difference in the connotation in which it is being used.

Technically, a product can be defined as anything that is produced, whether as the result of
generation, growth, labor, or thought, or by the operation of involuntary causes; as, the products
of the season, or of the farm; the products of manufactures; the products of the brain.

In manufacturing, products are purchased as raw materials and sold as finished goods.

In project management, products are the formal definition of the project deliverables that make
up or contribute to delivering the objectives of the project.

In marketing, a product is anything that can be offered to a market that might satisfy a want or
need.

Notes Commodities are usually raw materials such as metals and agricultural products,
but a commodity can also be anything widely available in the open market.

From all the above connotations, we can say that in general usage, product may refer to a single
item or unit, a group of equivalent products, a grouping of goods or services, or an industrial
classification for the goods or services.

1.2 Concepts related to Product

The world of products has many important concepts related to it that are very popularly prevalent
in the industries world over. Let us understand each of them one by one.

1.2.1 Product Development

Product development is the process of designing, building, operating, and maintaining a good
or service. Product development adds things like pricing, marketing, and customer support to
the technology to create a complete product.

The companies world over, use a product development process to ensure that they are not just
manufacturing a product that people will want to buy but also one that people would like to
continue to use. To be sure, a base technology is at the heart of the product, but product
development ensures that the customer’s voice is not lost in the rush to an exciting technology.

Product development is performed by a multi-disciplinary team whose goal is building,

operating, and maintaining the product. Team members may include product managers, product
developers, project managers, product operations engineers, customer support managers, quality

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 Unit 1: Introduction to Product Management

assurance managers, user interface design engineers, marketers, financial personnel, graphic Notes
artists, etc.

1.2.2 New Product

The dynamics of markets, technology, and competition have brought changes to virtually every
market sector and have made new product development one of the most powerful business
activities. The monumental changes that constantly impact commerce have forced companies to
innovate with increasing speed, efficiency, and quality. In turn, this has made new product
development one of the most complex and difficult business functions. However, firms must
innovate in order to survive. The power of innovation is revealed in numerous studies, which
show that companies leading their industries attribute about half of their revenues to products
developed in the most recent five years. By comparison, companies at the bottom of their
industries achieve approximately one-tenth of their sales from new products. A new product can
be defined as a product that is new to the market.

Example: Sony introduced Walkman

GE introduced Light
HLL’s adult diapers, DEPEND, in Indian market.
There are five categories of new products.
1. New-to-the-world products or services are new inventions.

Example: In-line skates and health maintenance organizations.

2. New category entries are products or services that are new to a firm

Example: Sport utility vehicles

3. Additions to product lines add products or services to a firm’s current markets.

Example: When a powder laundry detergent offers a liquid version it is considered a

line extension.
4. Product improvements are another type of new product and are common to every product
category.

Example: Product improvement made in Lifebuoy Soaps (as shown through Figure
below)
Figure 1.1

5. Repositionings target products to new markets or for new uses.

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Notes

Case Study Repositioning Maggi

N
estlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major, Nestlé
SA, introduced the Maggi brand in India in 1982, with its launch of Maggi
2 Minute Noodles, an instant noodles product.

With the launch of Maggi noodles, NIL created an entirely new food category – instant
noodles – in the Indian packaged food market. During the 1990s, the sales of Maggi
noodles declined, and this was attributed partly to the growing popularity of Top Ramen,
another instant noodles product. In order to improve sales and attract more consumers,
NIL changed the formulation of Maggi noodles in 1997. However, this proved to be a
mistake, as consumers did not like the taste of the new noodles. In March 1999, NIL
reintroduced the old formulation of the noodles, after which the sales revived.

Over the years, NIL also introduced several other products like soups and cooking aids
under the Maggi brand. However, these products were not as successful as the instant
noodles. In the early 2000s, Maggi was the leader in the branded instant noodles segment,
and the company faced little serious competition in this segment.

In the early 2000s, NIL started introducing new ‘healthy’ products in accordance with the
Nestlé Group’s global strategy to transform itself into a health and wellness company.
NIL also adopted the same strategy for the Maggi brand with the launch of the Maggi
Vegetable Atta Noodles (Vegetable Atta Noodles), a ‘healthy’ instant noodles product
made of whole wheat flour and vegetables (instead of refined flour), in 2005. The Dal Atta
Noodles were another variant of Maggi’s healthy instant noodles.

Because of its first-mover advantage, NIL successfully managed to retain its leadership.

Questions

1. Analyse three benefits that NIL derived by repositioning Maggi.

2. What do you learn from the case above?

Source: www.icmrindia.org

Firms can obtain new products internally or externally. External sourcing means the company
acquires the product or service, or obtains the rights to market the product or service, from
another organization. Internal development means the firm develops the new product itself.
This is riskier than external development because the company bears all of the costs associated
with new product development and implementation. Collaborations, which include strategic
partnerships, strategic alliances, joint ventures, and licensing agreements, occur when two or
more firms work together on developing new products.

1.2.3 Product Life Cycle

We have all heard about the product life cycle can be divided into four phases namely introduction,
growth, maturity and decline. On the basis of these stages, product planning is done. The life
cycle concepts on which a product planning team works are shown in Figure 1.2.

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 Unit 1: Introduction to Product Management

Figure 1.2
Notes

Product Initiation

Feasibility

Development

Testing

Product Launch

Operation

Decommisioning

1. Product Initiation Phase: In the Initiation Phase, Product Management, Engineering, or

Operations submits a request for a new service or modification to an existing service.

Figure 1.3

Right Executive
Team Sponsor

Scope &
Boundaries

These requests are received and prioritized by the Program Management Office (PMO).
Once prioritized, the requests are reviewed by various management teams to assess the
impact and viability of the request in the context of business needs and the organization’s
strategy. If approved, the request is given necessary funding and resources in order to
proceed to the Feasibility Phase.

2. Feasibility Phase: The Feasibility Phase is where an idea is explored in more depth in
order to determine the feasibility of engineering the requested service within the scope of
the business needs. The request that has been approved during the initiation phase by the
Governing Committee is evaluated at the engineering and product management level.

From an engineering perspective, the service is evaluated for technical feasibility. The
preliminary Technical Service Description outlines the general architecture of the proposed

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Product and Brand Management

Notes service. The Feasibility Analysis and stable Business Case are also developed during this
phase. These documents summarize time and cost estimates and other investment
information necessary for deciding whether to continue the product development process
or not.

3. Design and Plan Phase: In the Design & Plan Phase, the cross-functional team documents
all detail pertaining to the development of the service. While core documents, such as the
Marketing Service Description, Technical Service Description, and Design Specifications,
are stabilized, other groups, including Operations, QA, and Customer Care begin to specify
their requirements for supporting the service. All of these documents are approved and
signed off by the project team and the Design & Plan Checklist is presented to the Governing
Committee for final approval before moving into the Development Phase.

4. Development Phase: In the Development Phase, the actual engineering of the service is
completed. As the service is being developed, other functional groups continue preparatory
work for the Testing and Introduction Phases. Much of the documentation to support
Customer Care, Training, Vendors, and Clients is created during this phase. Also, the
Quality Assurance (QA) Group prepares for the testing handoff by documenting Test
Plans and Test Specifications, and configuring the test environment. In this phase, a decision
gate ensures that all pieces required for testing have been completed. The following are
requirements to pass through the decision gate:

(a) Ready for Testing Phase from a System Integration Test perspective

(b) Documentation Complete

(c) Test Environment Complete

(d) Code Complete

(e) Vendor Requirements met

(f) Integration Testing & Results Complete.

Once the Project Team has approved the readiness of the service, the Development Checklist
is compiled and presented to the Governing Committee for approval to move the service
into the Testing Phase.

5. Testing Phase: The majority of the Testing Phase is spent certifying the hardware and
software changes involved in the service. The service will undergo a number of readiness
tests in a Lab Environment. An operation also performs necessary system and network
tests to ensure operational readiness prior to deployment. Once QA Test Results and
Operations Readiness Test Results are completed, the service may undergo field trials as
directed by product management. The Testing Phase Decision Gate is based on the QA Test
Results, Operations Test Results, Field Verification, Change Requests, and Business Needs.
A ‘go’ decision at the gate authorizes the launch of the service.

6. Product Launch Phase: The Product Launch Phase coordinates the deployment of the new
or modified service. As the service is enabled by Operations, the supporting organizations
initiate support processes to maintain the service. Once deployed a service check is made
by the Project Team and Program Management Organization to ensure that the Service is
available. If the service is found to be unsuccessful, a predetermined un-launch process
will be executed. If the service is launched without incident, the Project Team then evaluates
the stability of the release and the service is transitioned to the Life Cycle Management
Process.
7. Operation Phase: The Operation Phase is typically the longest of the phases since once a
product is developed, it may be operated for quite some time before it is updated or

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decommissioned. The operation phase requires an organization that can manage the Notes
product, track problems and bugs, and respond to customer issues regarding the product
in a timely and cost effective manner. A multi-tiered product support model is used to
ensure that products are operated in a way that leads to RASM (reliability, availability,
security, and manageability).
8. Decommissioning Phase: The Decommissioning Phase occurs at the end of the product life
cycle. While it may seem like the decommissioning phase is something that can be safely
ignored since there will likely be larger problems if the product is decommissioned, the
truth is that many products are taken out of service. Even when a company is in bankruptcy,
the rational, orderly closing down of a product or service is important to managing the
company’s assets.

!
Caution The distinction between a new product and a minor modification to an existing
product is not always clear. Certain products have a product life cycle in which the supply
and demand for the product increases then decreases over time. The demand for certain
food products such as bread will tend to increase with population, but the supply and
demand for a specific brand of bread may decline over time.

1.2.4 Product Upgrade

When a customer is finished using a product, he can be upgraded to a follow a product that meets
their needs or deprovisioned. The product upgrade path is desirable because it keeps the customer
and reduces customer reacquisition costs. Customers frequently outgrow products or their
needs change. If a company has a well managed product portfolio, a product more suited for the
customer’s current situation will be waiting for them.

Did u know? What is Deprovisioning?

Deprovisioning a customer may seem like an issue that need not be dealt with: the customer
stops using the product and nothing more need be done. However, in many cases,
particularly where service with a recurring billing has been provided, if the customer is
not properly deprovisioned, there will be future costs resulting from either providing
service that is not being paid for or from billing a customer who is not receiving service.
In either case there are likely to be costly customer support calls and an unhappy customer.
Customer deprovisioning, where appropriate, should be planned for and built into the
product from the beginning.

Self Assessment

Fill in the blanks:

1. Effective ………………………..is a practical, purposeful and positive approach of
improving the company results.
2. A commodity can also be anything widely available in the ………………………..market.
3. The product ………………………..path is desirable because it keeps the customer and
reduces customer reacquisition costs.
4. The dynamics of markets, technology, and competition have brought changes to virtually
every market sector and have made ………………………..development one of the most
powerful business activities.

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Notes 1.3 Product Management: Meaning

Product management is an organizational life cycle function within a company dealing with the
planning or marketing of a product or products at all stages of the product life cycle. Product
management and product marketing are different yet complementary efforts with the objective
of maximizing sales revenues, market share, and profit margins.

Product Management Process starts with the type of company one works for. There may be
companies that are:

1. Technology-driven

2. Company driven

3. Sales-driven

4. Market-driven

Product Manager’s primary role is to serve as the “voice of the customer”. Thus product
management includes indirect management and cooperation with other members of various
groups other members of various groups. The day to day work revolves around executing four
main tasks:

1. Developing the market requirements document

2. Managing the product feature list

3. Coordinating activities of different functional groups

4. Participating in and/or running the launch and post-launch marketing activities for a
product.

The goal of product management is to:

1. Ensure a market-driven “whole” product offering

2. Establish competitive and profitable pricing models

3. Ensure the existence and support of product distribution

4. Create effective marketing promotions that generate revenue.

1.4 Aspects of Product Management

Depending on the company size and history, product management has a variety of functions
and roles. Sometimes there is a product manager, and sometimes the role of product manager is
held by others. Frequently there is Profit and Loss (P&L) responsibility as a key metric for
evaluating product manager performance. In some companies, the product management function
is the hub of many other activities around the product. In others, it is one of many things that
need to happen to bring a product to market.

1.4.1 Product Planning

Product Planning is the ongoing process of identifying and articulating market requirements
that define a product’s feature set.

Defining New Products: It is important to define the products and services you want to promote.
Ideas for new products can be obtained from basic research using a SWOT analysis and/or
brainstorming of new product, service, or store concepts.

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Gathering Market Requirements: This is helped by analyzing market and consumer trends, Notes
competitors, focus groups, corporate spies, trade shows, or ethnographic discovery methods.

Task Find out the meaning of ethnographic method. What do you analyse about the
consumers of Indian fashion industry using the ethnographic study. Enlist all the points of
your analysis.

Building Product Roadmaps, Particularly Technology Roadmaps: A great roadmap walks the
fine line between being too narrow (“a one-trick pony”) and too wide (“all over the map”).
Demonstrate focus by building your plan and presentation to spend the most time on your
initial products. Size the markets conservatively, and pick realistic penetration rates. Roadmaps
are always subject to change.

Product Life Cycle Considerations: The idea of a product life cycle acknowledges the fact that
designing and selling a product is only part of the story. In fact, every product goes through a
series of steps between the time it is first conceived and the time the manufactured product is
retired or discarded.

Product Differentiation: Product differentiation (also known simply as “differentiation”) is the

process of distinguishing the differences of a product or offering from others, to make it more
attractive to a particular target market. This involves differentiating it from competitors’ products
as well as one’s own product offerings.

1.4.2 Product Marketing

Product marketing deals with the first of the “4P’s” of marketing, which are Product, Pricing,
Place, and Promotion. Product planning, as opposed to product management, deals with more
outbound marketing tasks. Product Marketing is based on identifying, anticipating and satisfying
customer needs effectively and profitably. It encompasses market research, pricing, promotion,
distribution, customer care, your brand image and much more.

Example: Product planning deals with the nuts and bolts of product development within
a firm, whereas product marketing deals with marketing the product to prospects, customers,
and others.

1. Product Positioning and Outbound Messaging: Positioning is a process that focuses on

conveying product value to buyers, resulting in a family of documents which drive all
outbound communications. Yet in recent years, it seems as if positioning has ‘devolved’
into a document of vague superlatives that convey nothing as they attempt to trick the
customer into buying the product. The best positioning clearly states how the product will
solve specific customer problems.

2. Promoting the Product Externally with Press, Customers and Partners: Launching a new
product on the market, to gain sales and exposure for it can be a challenge. There are many
other ways to promote and sell a new product, but the most important of them all include
packaging, trade shows, exhibitions, promotional videos, internet marketing, etc. Each of
the marketing method includes liaison with press, customers and partners.

3. Monitoring the Competition: The old adage, “keep your friends close, and your enemies
closer”, is applicable not only to personal relationships but business relationships as well.
While it does not mean that you befriend your competitors, it is important that you are
cognizant of your competitors’ business ventures and methods. There are several ways to

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Notes conduct successful stealth competitive intelligence operations. While it is fanciful to

imagine yourself as a secret agent or spy, none of these techniques are difficult, hidden or
secretive. In fact, most of them are tools or services available to all businesses.

Self Assessment

Fill in the blanks:

5. ……………………….. is the process of distinguishing the differences of a product or offering

from others.

6. Product planning, as opposed to product management, deals with more

……………………….. tasks.

1.5 Product Management: Scope

Product management as a discipline is about what the product should be. Product managers are
advocates for the customer’s needs and desires. A large product might have numerous product
managers working towards its success at a variety of levels, all the way from the junior product
manager writing specifications about single feature sets to a product strategy director who has
overall responsibility to executive management for the product direction. A product manager’s
responsibilities include the following:
1. Defining and planning product lines and product enhancements
2. Managing product contracts and sales. Setting strategic direction based on customer needs
and business goals
3. Interpreting strategic goals into operational tasks
4. Making proposals to senior management regarding implications of proposed plan
5. Serving as a representative to internal and external clients. Taking the leading establishing
tactical plans and objectives
6. Developing and implementing administrative and operational matters ensuring
achievement of objectives
7. Evaluating risks and trade-offs
8. Proposing contingency plans
9. Analyzing business processes and creating applications to improve or support those
processes
10. Branding
11. Working with graphic designers to create look and feel
12. Defining navigational flow and user experience
13. Defining feature sets and scooping releases.
People not familiar with the discipline of product management frequently get a product manager
confused with other players. It’s useful to look at what a product manager is not. A product
manager is not:
A developer – Developers are focused on the technology and not the overall product. Some
great product managers are former developers, but it is difficult to do both at once. There is a
natural tension between developers and product managers that should be maintained to create
a balanced product. A software manager – the software manager is a functional manager and
usually not focused on the product or the customers. A project manager – project managers are

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about how and when, while the product manager is about what. Project managers work closely Notes
with product managers to ensure successful completion of different phases in the product life
cycle. Marketers – while product management is usually seen as a marketing discipline, marketers
are focused on the marketing plan and are usually not driving the overall product direction.

Product managers are accountable to executive management for overall product direction, key
decisions, product budget (and sometimes even the complete product P&L), ensuring that final
product meets specifications, and evangelizing product to internal and external stakeholders.
Product managers also have accountability to users for feature sets, navigation, quality, and
overall experience.

Self Assessment

Fill in the blanks:

7. Developers are focused on the technology and not the overall ……………………….. .

8. A ………………………..organization is in constant touch with the customers.

1.6 Marketing Organisation

Marketing Organization is an organization that markets one or more systems, applications,

and/or components produced by a development organization to potential customer
organizations. The typical responsibilities of a Marketing Organization are to:

1. Market applications to the customer organization(s).

2. Provide change requests based on customer feedback to the development organization.

3. Act as a source of requirements during the performance of the requirements identification

task.

Faced with increasing demand for accountability and greater pressure from a changing media
landscape, marketers are being asked by senior management as never before to address
organizational issues: Is your marketing organization set up for success? Are you aligned with
key stakeholders across the business? Can your organization provide the nimble response
you’ll need to be able to manage your marketing investment? A lot of the problem can be
explained in how marketing organizations are structured and how they manage.

1.6.1 Characteristics of a Good Marketing Organisation

A good marketing organization should have following characteristics:

1. It should be flexible so as to allow the managers to use any type of marketing structure.

2. It must give possible future growth and acceptable philosophy to the whole concern.

3. Personnel in marketing department must be willing to take various job assignments.

4. Connected with the problem of flexibility is the growth potential. With the change of
market positions new products are introduced in place of old ones. So, the provisions are
required for the growth of new products and segments in concern in future.

5. There should be a central philosophy or tradition prevailing in the concern that should be
intimated to all. This forms the whole objective of the marketing. Some concerns pay
more heed to middle and lower income group. In this way while policies and programmes
change, the central philosophy remains guide to the future action.

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Notes 1.6.2 Types of Marketing Organisation

Marketing organizations may be of various types. The most important of them all include:

1. Function Oriented

2. Market Oriented

3. Product Oriented

4. Customer Oriented

5. Combined Type

Let us understand each of them one by one.

1. Function Oriented: This is the most simple and common type of organization. Under this
type, the activities are grouped on the basis of function, such as production planning,
marketing research, advertising and sales. There are separate managers for specific
functions and each of these functions is further subdivided into various sub functions like
product planning, marketing research, advertising, sales promotion, physical distribution,
customer service, etc.

Notes The number of sub functions varies from organization to organization taking into
account, its nature, size and area of operation.

The main advantages of function oriented marketing organization are increased efficiency
and elasticity in the organisation.

2. Market Oriented: This type of structure is used by big companies who serve a large
number of customers spread over very large territory. The structure is divided into regional
basis and specific areas are assigned to different persons.

Each region may be under a supervisor whose numbers depend on the characteristics and
requirements of a particular region. Each supervisor is given a number of salesmen under
his control. Thus the market is fragmented into sale territories which may be a district,
division or region.
The main advantage of this type of marketing structure is that it enjoys all the advantages
of being functional. Additionally, such an organization is in constant touch with the
customers. It comes to know the changing habits, fashion and needs of the customers of
every region and therefore can make necessary changes in their products in a short span of
time. Also, the responsibility can be fixed in such an organization very easily for any
lapse.

3. Product Oriented: Big companies as well as smaller concerns exist side by side in the field
of production. The smaller companies have another popular form or structure which
assigns to product managers and brand managers with the responsibility for marketing
decisions of particular products or groups of products. Advertising, sales promotion,
marketing research, etc. can be centralized activities. The product manager takes decisions
and executes decisions regarding advertising and sales promotions after taking necessary
suggestions from the advertising manager and sales promotion manager respectively.

This type of structure is best suited to industries producing different products or brands.
Every department can be controlled efficiently by the department in charge, rendering
thereon, an additional benefit of making it possible for evaluation and comparison of the
performance of the different departments.

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4. Customer Oriented: Under this type of structure, concentration is on the type of customers. Notes
Separate groups are designated responsible for marketing classes of their different classes
of customers such as:

(a) Distributors

(b) Retailers

(c) Customers

Under this type of organization, full attention can be paid to each class of customers and
their problems can be well understood by the organization. As an organization comes in
contact with the customers regularly, it is easier to estimate their demand and satisfy
them.

Although the customer satisfaction is the main aim of the structure, but it is suitable in
those organizations only where the nature of customers is different.

5. Combined Type: The four types discussed above are basic concepts regarding organization
structures. Any structure in its pure form is rarely found in an organization.

In practice, one normally comes across a combination such as:

(a) Functional with territorial structure, or

(b) Functional with product oriented structure, or

(c) Market oriented with product structure.

Task Analyse different types of marketing organisations and find out their disadvantages.
Enlist each with reasons.

Self Assessment

Fill in the blanks:

9. ………………………..structure is used by big companies who serve a large number of

customers.

10. Every marketing organization should possible future growth and acceptable philosophy
to the ……………………….. .

11. In ………………………..marketing organization, separate groups are designated

responsible for marketing classes of their different classes of customers.

1.7 Organizational Structure

Organizational structure depends on the product to be developed.

1. Wheelwright and Clark define a continuum of organizational structures between two

extremes, functional organizations and project organizations.

(a) Functional organizations are organized according to technological disciplines. Senior

functional managers are responsible for allocating resources. The responsibility for
the total product is not allocated to a single person. Coordination occurs through
rules and procedures, detailed specifications, shared traditions among engineers
and meetings (ad hoc and structured). Products that need a high level of specialized
knowledge require a functionally organized structure.

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Notes A light-weighted matrix organization remains functional and the level of

specialization is comparable to that found in the functional mode. What is different
is the addition of a product manager who coordinates the product creation activities
through liaison representatives from each function. Their main tasks are to collect
information, to solve conflicts and to facilitate achievement of overall project
objectives. Their status and influence are less as compared to functional managers,
because they have no direct access to working-level people.

A heavy-weighted matrix organization exists of a matrix with dominant the project

structure and underlying the functional departments. The product manager has a
broader responsibility. Manufacturing, marketing and concept development are
included. The status and influence of the product manager, who is usually a senior,
is the same or higher as compared to the functional managers, because they have no
direct access to working-level people.

(b) A project organization exists of product oriented flows: project and teams. The project
members leave their functional department and devote all their time to the project.
They share the same location. The professionals are less specialized and have broader
tasks, skills and responsibilities. The functional manager is responsible for the
personnel development and the more detailed technology research in the functional
groups.

2. Another way in which companies can be classified is the nature of the projects undertaken.
We characterize projects by the number of employees needed to perform the tasks, or
workload, and the number of tasks that are fundamentally different in nature. An example
of the latter aspect is PCB development and structural design.

Another way to classify organization structure is by one of the following four categories:

(a) The product to be developed is comprehensible for one person. One person is likely to have
all the knowledge needed to develop Manufacturing and Assembly. The development
departments in companies that undertake these kinds of projects are usually very
small. If a company consists of more than one department, it is usually structured as
a functional organization.

(b) The product to be developed has a fairly low complexity, but total work is high.
These kinds of products are likely to be developed within one functional department.
Employees are involved on a full-time basis. Tasks may be performed concurrently.
The sequence can be determined using the Design Structure Matrix.

(c) The product to be developed consists of a lot of different elements, such as software,
PCB, power supply and mechanical structure. The product is however in the
engineering phase, i.e. it is clear what needs to be done to get the product into
production. Various disciplines perform their own tasks. These tasks have mostly a
low workload. Employees cannot work full-time on one project. This creates a
complex situation that may be compared to a job shop situation in production
logistics. Though the comparison between manufacturing and product development
is not accepted by all product development managers, it may yield good results.
Studying each step in the Product Development Process and fluctuations in workloads
reveals ways to reduce variation and eliminate bottlenecks. It is necessary to view
the Product Development Process as a process and not as a list of projects. Three
important findings regarding this are:

(i) Projects get done faster if the organization takes on fewer at a time.

(ii) Investments to relieve bottlenecks yield disproportionately large time-to-

market benefits.

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(iii) Eliminating unnecessary variation in workloads and work processes Notes

eliminates distractions and delays, thereby freeing up the organization to
focus on the creative parts of the task.

Creating cross-functional concurrent engineering teams is the right way to develop

products. However, the pitfall is too many project at the same time, so that key
people from engineering, marketing and manufacturing work at five or more projects
at once. This results in congestion. Striving to work at 100% of the product
development capacity lengthens product development lead times enormously.
A more realistic percentage is 80%. Attention must be focused on bottlenecks, these
days most commonly found at the software development side of the project.

(d) The product is complex. Total work is high. Employees can thus participate on a
full-time basis. A project organization is the most appropriate organizational
structure for these kinds of products.

Self Assessment

Fill in the blanks:

12. In marketing, a ……………………….. is anything that can be offered to a market that

might satisfy a want or need.

13. ………………………..are accountable to executive management for overall product

direction.

1.8 Role of Product Manager

A product manager plays an utterly important role in an organization. Being at a very responsible
position, he/she has to guide a team that is charged with a product line contribution as a
business unit. This extends from increasing the profitability of existing products to developing
new products for the company.

A product manager builds products from existing ideas, and helps to develop new ideas based
on the industry experience and his contact with customers and prospects. He possesses a unique
blend of business and technical savvy; a big-picture vision, and the drive to make that vision a
reality. He spends time in the market to understand the problems of the customers, and finds
innovative solutions for the broader market.

The role of a product manager also becomes important because he has to communicate with all
areas of the company. The product manager works with an engineering counterpart to define
product release requirements. At the same time, he works with marketing communications to
define the go-to-market strategy, helping them understand the product positioning, key benefits,
and target customer. He serves as the internal and external evangelist for his product offering,
occasionally working with the sales channel and key customers.

A product manager’s key role is strategic, not tactical. The other organizations will support your
strategic efforts; you won’t be supporting their tactical tasks.

The key responsibilities of a product manger may include:

1. Managing the entire product line life cycle from strategic planning to tactical activities

2. Specifying market requirements for current and future products by conducting market
research

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Notes 3. Driving a solution set across development teams (primarily Development/Engineering,

and Marketing Communications) through market requirements, product contract, and
positioning.

4. Developing and implementing a company-wide go-to-market plan, working with all

departments to execute.

5. Analyzing potential partner relationships for the product.

Self Assessment

Fill in the blanks:

14. ………………………..is an organization that markets one or more systems, applications,

and/or components produced by a development organization to potential customer
organizations.

15. ………………………..is the most simple and common type of marketing organization.

1.9 Summary

 A product can be defined as anything that is produced.

 Product management is an organizational life cycle function within a company dealing

with the planning or marketing of a product or products at all stages of the product life
cycle.

 Product Management is becoming an important function of marketing.

 Product development is the process of designing, building, operating, and maintaining a

good or service.

 Product development adds things like pricing, marketing, and customer support to the
technology to create a complete product.

 The power of innovation is revealed in numerous studies, which show that companies
leading their industries attribute about half of their revenues to products developed in the
most recent five years.

 Depending on the company size and history, product management has a variety of functions
and roles.

 Product Planning is the ongoing process of identifying and articulating market

requirements that define a product’s feature set.

 Product management as a discipline is about what the product should be.

 Product managers are advocates for the customer’s needs and desires.

 Product marketing deals with the first of the “4P’s” of marketing, which are Product,
Pricing, Place, and Promotion.

 Marketing Organization is an organization that markets one or more systems, applications,

and/or components produced by a development organization to potential customer
organizations.

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1.10 Keywords Notes

External Sourcing: The company acquires the product or service, or obtains the rights to market
the product or service, from another organization.

Product Planning: The process of producing a specification or chart of the manufacturing

operations to be performed by different functions and workstations over a particular time
period. Production scheduling takes account of factors such as the availability of plant and
materials, customer delivery requirements, and maintenance schedules.

Product Manager: Person responsible for overseeing all activities and functions associated with
a particular product or product family. Also called brand manager in case of consumer goods or
services.

1.11 Review Questions

1. Discuss the scope of product management in marketing environment?
2. What do you think are the bases upon which a marketing organizational structure can be
built? What factors do you think should be taken into account while designing the
organisation?
3. Examine the potential advantages of various types of marketing organisations.
4. Make an analysis of your favorite marketing organisations companies in (a) India
(b) Abroad and find out which type they belong to.
5. Product managers are accountable to executive management for overall product direction.
Why so?
6. Examine the scope of product management.
7. Effective product management is a practical, purposeful and positive approach of improving
the company results. Comment.
8. If you are made a product manager of a company, which would be the type of marketing
organization you would suggest for your organization and why?
9. What do you think can be the ways to generate ideas for new products?
10. Illustrate the concept of deprovisioning through appropriate example.
11. What is a product? Does every product go through the same stages of product life cycle?
Why/why not?

Answers: Self Assessment

1. Product management 2. Open

3. Upgrade 4. New product

5. Product differentiation 6. Outbound marketing

7. Product 8. Market oriented

9. Market oriented 10. Whole concern

11. Customer oriented 12. Product

13. Product managers 14. Marketing Organization

15. Function Oriented

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Notes 1.12 Further Readings

Books Harvard Business Review on Brand Management, Harvard Business School

Press, 1999.

Linda Gorchels, The Product Manager’s Handbook: The Complete Product Management
Resource, McGraw-Hill, 2000.

Scott Bedbury, A New Brand World: Eight Principles for Achieving Brand Leadership in
the Twenty-First Century, Penguin, 2003.

Online links http://www.tcs.com/industries/manufacturing/end-to-end/npi_plm/Pages/

default.aspx

http://www.teeled.com

http://managementhelp.org/productdevelopment/

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Unit 2: Marketing Planning Notes

CONTENTS
Objectives
Introduction
2.1 Components of Marketing Plan
2.2 Defining the Competitive Set
2.2.1 Levels of Market Competition
2.2.2 Factors Determining Competition
2.2.3 Methods for Determining Competitors
2.3 Category Attractiveness Analysis
2.3.1 Aggregate Market Factors
2.3.2 Category Factors
2.3.3 Environmental Analysis
2.4 Summary
2.5 Keywords
2.6 Review Questions
2.7 Further Readings

Objectives

After studying this unit, you will be able to:

 Discuss the various Components of marketing plan

 Define the competitive set

 Identify the Levels of market competition

 Explain the Methods for determining competitors

 Discuss the Category attractiveness analysis

 Describe the Aggregate market factors

 Explain Category factors and environmental analysis

Introduction

In most organizations, “strategic planning” is an annual process, typically covering just the year
ahead. Occasionally, a few organizations may look at a practical plan which stretches three or
more years ahead.

To be most effective, the plan has to be formalized, usually in written form, as a formal “marketing
plan.” The essence of the process is that it moves from the general to the specific; from the
overall objectives of the organization down to the individual action plan for a part of one
marketing program. It is also an interactive process, so that the draft output of each stage is
checked to see what impact it has on the earlier stages - and is amended.

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Notes Figure 2.1: Marketing Process Model

(1) (2) (3) (4) (5)

Market and Fixing Setting Marketing Marketing
Environment marketing marketing mix controlling
Analysis target strategy

Behind the corporate objectives, which in themselves offer the main context for the marketing
plan, will lay the “corporate mission”; which in turn provides the context for these corporate
objectives. In a sales-oriented organization, marketing planning function designs incentive pay
plans to not only motivate and reward frontline staff fairly but also to align marketing activities
with corporate mission.

2.1 Components of Marketing Plan

Marketing plans vary by industry, by size of company and by stage of growth. The form isn’t as
important as the process of preparing it. Preparing a marketing plan is a process that makes you
think about your business goals and what your marketing strategy will be to achieve those
goals.

This is an outline of a typical marketing plan. Your marketing plan may contain all or just some
of these components, depending on your company type, stage of growth, and goals.

1. Executive Summary: The executive summary introduces your company and explains the
major points of your plan

Things to do:

(a) Briefly describe the nature of your business and the products or services you offer.

(b) State your mission and company objectives.

(c) Describe your management and marketing team, and the structure of your
organization.

(d) Summarize the marketing objectives and strategies contained in the plan.

2. Current Situation: This section provides information about your location, target market
and competitive environment. Also, identifies key issues your company faces.

Things to do:

(a) Describe your current or planned business location.

(b) Describe you target market.

(c) Include a brief competitor and issues analysis.

3. Competitor and Issues Analysis: This section includes the details of the competitor and
issue analysis.

Things to do:

(a) Include information about other individuals or companies (competitors) who offer
similar products and services as you.

(b) List key business issues that are potential challenges, such as new legislation or the
impact of an impending technological advance in your industry.

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4. Marketing Objectives: As the name suggests, this section states your marketing objectives, Notes
including the time frame for achieving them.

Things to do:

(a) List key objectives that you want to achieve through your plan.

(b) Include the time frame against each objective

! Be as objective as possible in this section.

Caution

5. Marketing Strategy: The section including marketing strategy describes how you plan on
achieving your marketing objectives.
Product: Describes your product or service in detail, including product features and benefits.

Price: Describes your pricing strategy and payment policies.

Promotion: Describes the promotional tools or tactics you will use to accomplish your
marketing objectives.

Place: Describes how and where you will place your product so customers have access to it
and how you will make the sale.

6. Action Programs: Describes what will be done, when it will begin or be completed, and
who will accomplish the tasks.

7. Budget: Lists the cost of the marketing activities you are describing in the marketing plan.

8. Measurements: Describes numerical targets that will measure the results of implementing
your marketing plan, including time limits for achieving your goals. For example, increase
sales by 10 percent in 12 months.

9. Supporting Documents: Include any supporting documents referenced in other plan sections
here, such as resumes of key personnel, spreadsheets, and market research results.


Case Study Marketing Plan: American Technology

O
ur new marketing focus, made explicit in this plan, renews our vision and strategic
focus on adding value to our target market segments, the small business and
high-end home office users, in our local market.

American Technology will change its focus to differentiate itself from box pushers and
improve the business by filling the real need of small business and high-end home office
for reliable information technology including hardware, software, and all related services.
Our marketing challenge is to position our product and service offerings as the high-
quality, high value-add alternative to box pushing in a vacuum.

Contd...

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Notes
Planned Sales by Month

$800,000
Training

$600,000
Software

$400,000
Services

$200,000 Systems

GEN
$0
Jan Mar May July Sep Nov Year 1997
Feb Apr June Aug Oct Dec

Product 1997
GEN $1,372,500
Systems $3,293,500
Service $380,000
Software $799,250
Training $113,000
Totals $5,958,250

Vision

AMT is built on the assumption that the management of information technology for
business is like legal advice, accounting, graphic arts, and other bodies of knowledge, in
that it is not inherently a do-it-yourself prospect. Smart business people who aren’t computer
hobbyists need to find quality vendors of reliable hardware, software, service, and support.
They need to use these quality vendors as they use their other professional service suppliers,
as trusted allies.
Target Markets

Contd...

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Notes
AMT is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty
of a business partner and the economics of an outside vendor. We make sure that our
clients have what they need to run their businesses as well as possible, with maximum
efficiency and reliability. Many of our information applications are mission critical, so we
give our clients the assurance that we will be there when they need us.

Objectives

1. Increase sales by 20%.

2. Increase gross margin to more than 25%.

3. Increase our non-hardware sales to 65% of the total.

Target Markets

AMT focuses on small business in the local market, with special focus on the high-end
home office and the 520 unit small business office.

Market 1997 1998 1999 2000 2001 Total

Home Office $25,000,000 $27,500,000 $30,250,000 $33,275,000 $36,602,500 $152,627,500
Small Business $50,000,000 $52,500,000 $55,125,000 $57,881,250 $60,775,313 $276,281,563
Totals $75,000,000 $80,000,000 $85,375,000 $91,156,250 $97,377,813 $428,909,063

Market Definition and Segmentation

We have broken our markets into groups according to standard classifications used by
market research companies: home offices and small business.

Exact definitions of these market segments is not necessary for our marketing planning
purposes here; general definitions will suffice. We know our home office customers tend
to be heavy users, wanting high-end systems, people who like computing and computers.
The low-end home office people buy elsewhere. We also know that our small business
customers tend to be much less proficient on computers, much more likely to need and
want handholding, and much more likely to pay for it.

Target Markets for 1997

Home Office

Small Business

Target Market Segment Strategy

We cannot survive just waiting for the customer to come to us. Instead, we must get better
at focusing on the specific market segments whose needs match our offerings. Focus on
targeted segments is the key to our future.

Therefore, we need to focus our marketing message and our product offerings. We need to
develop our message, communicate it, and make good on it.

Contd...

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Notes
Target Market: Home Office

The home offices in Tin town are an important, growing market segment. Nationally,
there are approximately 30 million home offices, and the number is growing at 10% per
year. Our estimate in this plan for the home offices in our market service area is based on
an analysis published four months ago in the local newspaper.
Home offices include several types. For our plan, the most important are the home offices
that serve as the only offices of professional firms. These are likely to be professional
services such as graphic artists, writers, and consultants, also some accountants and the
occasional lawyer, doctor, or dentist. There are also individuals who maintain home
offices for part-time use, including “moonlighters” and hobbyists. This segment is not
who AMT wishes to sell to; our marketing focus consists of professionals and entrepreneurs
who maintain a full-time office. In this plan, we will refer to customers in the home office
segment as HOs.
Needs and Requirements: Our target HOs are on average as dependent on reliable
information technology as any other businesses. They care more about reliable service
and confidence than about the rock-bottom lowest price. They don’t want to rely solely on
their own expertise, so they choose instead to deal with us with our promise of service and
support when needed.
Our standard HOs will be one system installations, no networks, much more powerful
systems than the average small business. Fax modems, voicemail, and good printers are
likely. They tend to be interested in desktop publishing, accounting, Internet, and
administration software as well as their job specific software needs.
It’s important that we realize we won’t be selling to the price oriented HO buyers. We’ll be
able to offer an attractive proposition to the service oriented and security oriented buyers
only.
Distribution Channels: Unfortunately, our HO target buyers may not expect to buy with
us. Many of them turn immediately to the superstores (office equipment, office supplies,
and electronics) and mail order to look for the best price, without realizing that there is an
option that provides greater value for dollars.
Competitive Forces: Our focus group sessions indicated that our target HOs consider price
but they would buy on quality service if the offering were positioned correctly. Price is
the message they’re exposed to again and again; they have been trained to shop on price.
We have very good indications that may would much rather pay 10–20% more for a
relationship with a long-term vendor providing backup and quality service and support;
they end up in the box pusher channels because they aren’t aware of the alternatives.
Availability is also very important. The HO buyers tend to want immediate solutions to
problems. Consequently, they can be subjected to high-pressure, under-trained salespeople
who may not be able to factor in all of a customer’s needs.
Communications: One of the best places to reach the target HO is the local newspaper.
Unfortunately, that medium is saturated with pure price only messages, and we’ll have to
make sure that our message is accurately stated.
Radio is potentially a good opportunity. Our HO target buyers listen to local news, talk
shows, and sports. Sponsoring a technology discussion/calling talk show is a possibility.
Seminars are a tough sell. The target HO buyer rarely has time for seminars. They think
most seminars are low content sales pitches, and many times they are correct. The challenge
here is to communicate how our information adds value to their enterprise while selling
our organization in a subtle, indirect fashion.
Contd...

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Notes
Keys to Success: The main key to success with HO buyers is making the product and
marketing positioning clear. Many potential buyers would much prefer our offering to
the box only offerings of the chain stores and mail order sources, if only they possessed
adequate information to conduct a value-add cost/benefit analysis.
Word of mouth is critical in this segment. We will have to make sure that once we gain a
customer, we never lose them. To help accomplish this, we must work to reinvigorate
relationships through successful database marketing, among other means.
We must always remember to sell the company, not the product. They have to understand
they are taking on a relationship with AMT, not just buying boxes. Boxes they can get
cheaper elsewhere.

Target Market: Small Business

Small business in our market includes virtually any business with a retail, office,
professional, or industrial location outside of someone’s home, and fewer than 30
employees. We estimate 45,000 such businesses in our market area.
The 30 employee cutoff is arbitrary. We find that the larger companies turn to other
vendors, but we can sell to departments in larger companies, and we shouldn’t be giving
up leads when we get them.
Needs and Requirements: Our target SBs is very dependent on reliable information
technology. They use the computers for a complete range of functions beginning with the
core administration information such as accounting, shipping, and inventory. They also
use them for communications within the business and outside of the business, and for
personal productivity. They are not, however, large enough to have dedicated computer
personnel such as the MIS departments in large businesses. Ideally, they come to us for a
long-term alliance, looking to us for reliable service and support to substitute for their in-
house people.
These are not businesses that want to shop for rock-bottom price through chain stores or
mail order. They want to be sure they have reliable providers of expertise.
Our standard SBs will be 520 unit installations, critically dependent on local area networks.
Backup, training, installation, and ongoing support are very important. They require
database and administrative software as the core of their systems.
Distribution Channels: The SB buyers are accustomed to buying from vendors who visit
their offices. They expect the copy machine vendor, office products vendors, and office
furniture vendors, as well as the local graphic artist, freelance writer, or whoever, to come
visit their office to make their sales.
There is usually a lot of leakage in ad hoc purchasing through local chain stores and mail
order. Often the administrators try to discourage this, but are only partially successful.
Competitive Forces: The SB buyers understand the concept of service and support, and are
much more likely to pay for it when the offering is clearly stated.
There is no doubt that we compete much more against all the box pushers than against
other service providers. We need to effectively compete against the idea that business
should buy computers, the heart of their business, as plug-in appliances, that don’t need
ongoing service, support, and training.
Communications: One of the best places to reach the target SB is the local newspaper.
Unfortunately, that medium is saturated with pure price only messages, and we’ll have to
make sure that our message is excellently stated.
Contd...

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Notes
Radio is potentially a good opportunity. Our SB target buyers listen to local news, talk
shows, and sports. Sponsoring a technology discussion/call-in talk show is a possibility.
Seminars are a good marketing opportunity with SBs. Employees are often happy to leave
their normal routines for a day to learn something new.
Keys to Success: The main key to success is making the product positioning clear. Many
potential buyers would much prefer our offering to the box only offerings of the chain
stores and mail order sources, if only they knew the trade-offs.
Word of mouth is critical in this segment. We will have to make sure that once we gain a
customer, we never lose them.
We must always remember to sell the company, not the product. They have to understand
they are taking on a relationship with AMT, not just buying boxes. Boxes they can get
cheaper elsewhere.

Marketing Plan Strategy

AMT will change its focus to differentiate itself from box pushers and improve the business
by filling the real need of small business and high-end home office for reliable information
technology including hardware, software, and all related services.
Emphasize Service and Support: We must differentiate ourselves from the box pushers.
We need to establish our business offering as a clear and viable alternative, for our target
market, to the price only kind of buying.

Emphasize
Service and Support

Networking Excellent Proprietary

Expertise Training Offering

Service Training mailers, Train VAR Mailers,

Training, pricing the trainers remarketing company
Mailers pricelist sales promotion programs programs literature

Emphasize Relationships: We need to focus our offerings on small business as the key
market segment we should own. This means the 520 unit system, tied together in a local
area network, in a company with 550 employees. Our values training, installation, service,
support, knowledge are more cleanly differentiated in this segment.

Emphasize
Relationships

Market More Regular Increase sales

the Company Contacts per Customer

New Regular mailings, Upgrades, training,

Mailings seminars, seminars, software
Literature
sales management expertise

Contd...

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Notes
As a corollary, the high end of the home office market is also appropriate. We do not want
to compete for the buyers who go to the chain stores or mail order, but we definitely want
to be able to sell individual systems to the smart HO buyers who want a reliable full
service vendor.

Expense Budget Summary

The following marketing budget comes to a total of less than $450K. This is actually a
decrease over the $485K we spent this year on the marketing budget. We believe we can
get more effective marketing with less money, because we are managing the marketing
better with the Marketing Plus software by Palo Alto Software.

Planned Expenses by Type for 1997

Type 1997

Ads $285,000

Catalog $25,000

Mailing $113,300

Promo $16,000
Shows $20,200
Literature $7,000

PR $1,000

Seminar $31,000
Training $60,000
Service $10,250

Totals $568,750

Expense Budget by Manager: As the following table and chart show, the largest budget
piece is the $151K (almost entirely advertising budget) managed by Ralph.

Contd...

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Notes
Planned Expenses by Manager for 1997

Jan
Sonny

Ralph

Leslie

Casey

Manager 1997

Ralph $286,000

Casey $65,700

Leslie $75,000

Sonny $111,050

Jan $31,000

Totals $568,750

Expense Budget by Markets: Most of our budget falls into the general category that applies
to both target markets. This is because much of the spending is impossible to divide into
specific market categories. Of the portion of the budget that is specific, by far the largest
share falls into the small business market, because this tends to lead the market.

Planned Expenses by Markets for 1997

Markets 1997

GEN $414,200

SB $118,550

HO $36,000

Totals $568,750

Expense Budget by Type: The largest single expenditure program is advertising, at $150K
This is actually $30K less than we will have spent this year. The second largest is mailing,
which is a priority because of its importance to our database marketing strategy.

Contd...

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Notes
Planned Expenses by Type for 1997

Type 1997

Ads $285,000

Catalog $25,000

Mailing $113,300

Promo $16,000

Shows $20,200

Literature $7,000

PR $1,000

Seminar $31,000

Service $10,250

Training $60,000

Totals $568,750

Expense Budget by Product: The non-specific product spendings amount to the largest
total, $235K of the total $423K. The least is the training spending, at only $26K. The non-
specific spending on product makes sense, because it is related to general training and
development of our business expertise.

Planned Expenses by Product for 1997

Training
Software
Service

Systems

GEN

Contd...

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Notes
Product 1997

GEN $371,200

Systems $90,000

Service $59,750

Software $22,000

Training $25,800

Totals $568,750

Sales Forecast

The $6 million sales forecast is shown in detail in the tables and charts to follow. This
represents a 20% increase over the present year. We believe it is a conservative forecast,
and we are sure we can make our numbers this year as a result of more effective marketing.

Planned Sales by Month

$800,000

Training

$600,000
Software

$400,000
Services

$200,000 Systems

GEN
$0
Jan Mar May July Sep Nov Year 1997
Feb Apr June Aug Oct Dec

Type 1997
Ads $1,372,500
Shows $82,500
Service $0
Mailing $427,750
Sales $3,693,000
Seminar $272,500
Promo $100,000
Catalog $10,000
Totals $5,958,250

Contd...

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Notes
Sales Forecast by Manager: As might be expected, Leslie has by far the largest sales quota
to manage. This is suited to our strategy of putting Leslie in charge of the sales force, and
tracking sales through the sales force. Details follow:

Planned Sales by Manager for 1997

Casey Jan
Ralph Sonny

Leslie

Manager 1997

Ralph $1,372,500

Leslie $4,100,750

Sonny $110,000

Jan $272,500

Casey $102,500

Totals $5,958,250

Sales Forecast by Markets: Our most important market, by far, is the small business
market. The sales forecast shown in the following table and chart is a superb reminder of
why we need to focus on the specific target markets.

Planned Sales by Markets for 1997

Markets 1997

GEN $2,543,000

SB $3,133,750

HO $281,500

Totals $5,958,250

Contd...

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Notes
Sales Forecast by Type: The data shows that we are still unable to attribute our sales in any
significant way to our sales and marketing program. The “Sales” type shown here is the
general sales coming in that is not tied to a specific type of program. This is obviously by
far the largest portion of our projected sales. Advertising comes second. This doesn’t
indicate a problem with the plan or our implementation; it is just a fact of life. Much of our
marketing activity generates sales in ways that don’t allow us the luxury of tying it back
directly to a specific program.

Planned Sales by Type for 1997

Type 1997

Ads $1,372,500

Mailing $427,750

Promo $100,000

Sales $3,693,000

Seminar $272,500

Shows $82,500

Service $0

Catalog $10,000

Totals $5,958,250

Sales Forecast by Product: The $6 million sales forecast is shown in the following table
and chart. As always, our largest single sales item is the sales of systems. The next largest
item is the general, non-specific sales, which of course will also be mostly systems. The
details follow:

Contd...

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Notes
Planned Sales by Month

$800,000

Training

$600,000
Software

$400,000
Services

$200,000 Systems

GEN
$0
Jan Mar May July Sep Nov Year 1997
Feb Apr June Aug Oct Dec

Product 1997

GEN $1,372,500

Systems $3,293,500

Service $380,000

Software $799,250

Training $113,000

Totals $5,958,250

Measurement and Comparison

Overall, we plan to spend 7.28% of sales on sales and marketing expenses, which seems
about in line for our plan, and for our industry. That breaks down to 3.78% of sales for
home offices, 12.79% for small business, and 10.98% for expenses not tied to either one. As
broken down by products, we spend about 3% of sales on software and systems, and 16%
on service and 23% on training. This breakdown makes sense for our marketing, because
of the impact on software and systems of better training and better service.

Marketing Organization

AMT is still a small company, despite our recent growth.

Ralph, President, is responsible for general management. He specifically manages the

advertising budget, but otherwise is responsible for sales and marketing as the head of the
organization.

Leslie, our sales manager, is responsible for managing the in-house and the outbound
sales forces. We have also put the mailing programs under Leslie, because they must be
carefully coordinated with the follow-up of the sales force.
Contd...

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Notes
Casey, our marketing manager, is responsible for marketing programs including sales
literature, trade shows, the catalog, etc.

Jan, who reports to Casey, will take the key role in the seminar marketing programs.

Sonny, who manages service, will also manage the marketing programs related to service.

Critical Issues

1. Tracking and follow-up: will we have the discipline, as an organization, to track

results of the marketing plan and make sure that we implement?

2. Market segment focus: how can we be sure we have the discipline to maintain the
focus?
3. Saying no: can we say no to special deals that take us away from the target focus?
Can we say no to unprofitable deals?

Self Assessment

Choose the appropriate answer:

1. Marketing plan objectives, strategies, and mix decisions are influenced by the firm’s:
(a) mission (b) objectives and strategies
(c) policies and resources (d) all of the above
2. A marketing plan is a written document for all the below reasons except:
(a) produces disciplined thinking
(b) gets the plan out of the marketing managers head
(c) to publish externally
(d) vehicle of communication across internal functional areas
3. In reality, which of the following is often overlooked or at least given minimal effort in
the marketing plan process?
(a) Talking with other marketing managers
(b) Competitor, Industry and Customer analysis
(c) Working on the marketing mix
(d) None of the above
4. When identifying competition, product managers usually focus the current competition
or product form of competition. Why is this a significant issue?
(a) It leads the product manager to overlook other potentially serious competitors.
(b) It leads the product manager to focus on generic competitors.
(c) It leads the product manager to focus on how competitors are pricing.
(d) They are lazy.
5. Which of the following is not a category factor?
(a) Bargaining power of suppliers (b) Bargaining power of buyers
(c) Pressure from substitutes (d) Pressure from international agencies

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2.2 Defining the Competitive Set Notes

A thorough study of your potential competitors is essential to the successful positioning of your
property. Choosing your “competitive set,” is a step by step task. Data has to be gathered on
each step before the analysis can be preceded further.

Notes While gathering data, keep in mind that some of the information may be outdated
or not specific enough for the web.

1. One has to define one’s competitors in terms of primary and secondary importance.

Example: For a Fitness club or Spa, the primary competitors may be comparable properties
(such as upscale day spas within a fifty-mile radius), while the secondary competitors could be
any similar product competing for the same consumer dollars-such as fitness clubs, full-service
beauty salons and community-based wellness centers.

2. List the bases of competition and key success factors for industry success—in descending
order of importance. Then define competitive characteristics in terms of:

(a) Market segments

(b) Products offered

(c) Prices/rates

(d) Advertising programs

(e) Distribution Channels

Did u know? What are the bases of Competition?

Bases of competition are known characteristics that customers use to choose among
competitors. They include location, price, product/service offering, quality, and reputation.

2.2.1 Levels of Market Competition

The level of competition can also vary. At various levels, competition can be in

1. Product form

2. Category

3. Generic

4. Budget

Let us understand each of them one by one.

Product form: In this level one has to convince the customers his brand is better than others.

Category: This level involves one to convince customers that his product form (like small
refrigerator) is best in a particular category (of refrigeration).

Generic: Generic level of competition involves the marketers to convince customers that a
particular category (refrigeration) is best way to satisfy needs (of providing safe food).

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Notes Budget: Under this level of competition, the customers are convinced that generic benefits (of
refrigeration) are best use of income compared to TV, washing machine, etc.

2.2.2 Factors Determining Competition

In 1965, IBM faced 2,500 competitors for all its markets. By 1992, it faced 50,000. And IBM is not
alone in feeling outside pressure. Whole industries that were sheltered from significant
competition, such as transportation, utilities, communications, health care, defense contracting,
legal services, and even some quarters of government, now face growing competition. Stable
industries have become dynamic. For example, insurance was once a stable industry with a
distribution system of local insurance agents. Now it’s undergoing significant change, with
competition emerging from foreign companies, banks selling insurance, and agent-less
competitors.
1. Price: It is a very easy to understand the concept the relationship between price of a
product and the competition it can generate in the market. If the prices of the product of a
particular firm are substantially high, it is very likely to generate a price war among
competitors. The competitors in such a case would very easily come up with similar
products (that may even be low quality goods) with low or relatively very low prices.
This would result in a very fierce competition.

If the price of a product is already quite low, it is likely to attract few competitors since the
resultant profit margins are also likely to be low only.

2. Cost of Production: Cost of production per unit is the costs associated with production
divided by the number of units produced. Is a case, where the factors of production are low
priced, it would mean the cost of production is also low. This might give rise to a possibility
of the determination of price level at a high level and a subsequently significant profit.
This would in turn lead to attract a higher number of competitors in the market.

The competitors would adapt all means to reduce their costs of production to a level as
low as possible. Also, they would like to increase the cost of production – price gap so as
to increase the profit margins.

On the contrary, if the cost of production of a particular good is high, it would have a high
selling price in the market. At the same time, the profit margins may not be very high as
the customers might not be interested/willing/able to pay such high prices. In such a
situation, the producers have to decrease their profit margins so as to sustain as many
customers as possible and capture as much market as possible. Having a possibility of a
low profit margin will definitely pose a restriction in the minds of the potential competitors
of the industry and they would think a hundred times before taking a plunge into it.

3. Demand in the Market: Demand comes out as a very important factor of determining
competition. It is a quite well understood fact that the higher the demand of a product in
the market, the higher is the willingness of the customers to pay for it. For a product with
an inelastic or near inelastic demand, the customers most often than not pay even high
prices. Again the higher the prices that can be charge from the customers, the higher are
the chances of the profit being huge in such transactions. So the competition in such cases
is very strong.

In a situation where the demand of a product is low, or highly elastic, the customers would
not like to pay for it at higher level of pries and the sellers are left with no choice else than
to cut profit margins and sell the goods at a low price level. In such a situation, not many
competitors like to plunge into the market until and unless the market size is so huge as
to compensate for the opportunity cot that they bear.

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4. Availability of Substitutes: There is a likeliness of having a smaller number of competitors Notes

in the market if a particular product has a large number of substitutes. Obviously, the
moment a seller would try to increase his profit margins, the consumers would shift to a
more satisfactory substitute.

5. Number of existing Players in Market: If the market of a particular product witnesses a

huge number of players in teak market, it is not very likely to attract more competitors.
But the situation may be opposite if each or most of the market players are making good
profits.

On the contrary, if the number of market players in a particular industry is low and the
product is a new introduction with good potential, it would always attract a strong
competition. Similarly, if the product is an old and well accepted in market with a low
number of players, the competition will be strong.

The competition can also be strong if the number of existing players in the market is high
but the product comes up with a huge possibility of innovation. Many potential competitors
can come up with varied innovations in the package to allure the customers and the
competition might become very strong henceforth.

6. Barriers to Entry: Barriers to entry are designed to block potential entrants from entering
a market profitably. They seek to protect the monopoly power of existing (incumbent)
firms in an industry and therefore maintain supernormal (monopoly) profits in the long
run. Barriers to entry have the effect of making a market less contestable.

Example: Patents: Giving the firm the legal protection to produce a patented product for
a number of years.

Limit Pricing: Firms may adopt predatory pricing policies by lowering prices to a level
that would force any new entrants to operate at a loss.

Cost advantages: A lower cost, perhaps through experience of being in the market for
some time, allows the existing monopolist to cut prices and win price wars.

Advertising and Marketing: Developing consumer loyalty by establishing branded

products can make successful entry into the market by new firms much more expensive.
This is particularly important in markets such as cosmetics, confectionery and the motor
car industry.

Research and Development expenditure: Heavy spending on research and development

can act as a strong deterrent to potential entrants to an industry. Clearly much R&D
spending goes on developing new products but there are also important spill-over effects
which allow firms to improve their production processes and reduce unit costs. This
makes the existing firms more competitive in the market and gives them a structural
advantage over potential rival firms.

Presence of Sunk Costs: Some industries have very high start-up costs or a high ratio of
fixed to variable costs. Some of these costs might be unrecoverable if an entrant opts to
leave the market. This acts as a disincentive to enter the industry.

International Trade Restrictions: Trade restrictions such as tariffs and quotas should also
be considered as a barrier to the entry of international competition in protected domestic
markets.

Sunk Costs: Sunk Costs are costs that cannot be recovered if a business decides to leave an
industry.

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Notes The larger the number of barriers to entry the market, and the stronger the barriers, the weaker
would be the competition presented by the rival firms.

Apart from the factors discussed so far, increased competition is being driven by many factors,
including the emergence of a global marketplace, the increased number of firms, new technology
that makes it easier for firms to enter new markets, and ever-increasing pressure from securities
markets to raise shareholder value. In particular, the frenetic atmosphere of mergers and
acquisitions, coupled with the increased number of large institutional investors, has meant that
firms that do not cut costs and improve financial performance face swift action in equity markets.
This competition has meant that companies are less able to insulate workers (like, keep wages
or the number of employees higher than the market can allow), or invest in “public goods” such
as basic research or employee training.

2.2.3 Methods for Determining Competitors

Out of the many methods for determining the competitors, the most important and prevalent
ones are discussed under:

Substitution in Uses: This focus group exercise focuses on generating substitute uses for the
target use. Then product/service substitutes can be brainstormed for the identified uses. Generates
a lot of potential competitors.

Perceptual Mapping: This method does a pair wise comparison of two brands. They are then
rated on being similar or dissimilar. This leads to a mapping of brands along identified vectors.
Brands close together are similar. Brands far apart are deemed dissimilar. Clusters of brands are
looked at as competitors.

Levels of Competition: Looks at identifying competition at four levels: Product form, Product
category, Generic and Budget. Within each level appropriate competitors are identified. The
trick here is to determine how many levels to analyze. To few, means missing competitors. To
many, means having an overwhelming number to analyze.

Brand Switching: Looks at actual consumer buying patterns over time. It shows the percentage
of consumers who purchase the same or different products after purchasing the current product.
Customers who do not switch to other products will be identified with low or zero percentages
(not competitors). Larger percentages indicate competitors.
Managerial Judgment: Brainstorming by managers who know the product category. It is framed
along two axis: same or different markets, and same or different products. This is a quick
method, but may miss competitors not previously seen.

Geographic: Looking at the geographic reach of competition. Those firms with a sales reach into
where we are located is our competition.

Porter’s 5 forces: This method looks at five potential sources of competition. Potential entrants,
Buyers, Suppliers, Substitutes, and current Competition. This method recognizes value chain
competition along with more common competition. It can generate a large amount of competitors
including potential competitors.

Task Make a competitors’ analysis in the market of FMCG goods in and around your
city.

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Self Assessment Notes

Choose the appropriate answer:

6. Environmental factors attempt to take into account and analyze factors that are not in the
companies control when assessing category attractiveness.

(a) The statement is TRUE.

(b) The statement is FALSE.

(c) This statement is unrelated to the topic.

(d) This statement is true in certain conditions and false in others.

7. Competitor analysis utilizes many methods of analysis to help predict competitor future
strategies and programs.

(a) The statement is TRUE.

(b) The statement is FALSE.

(c) This statement is unrelated to the topic.

(d) This statement is true in certain conditions and false in others.

8. Market potential and sales forecasting attempt to quantify sales. In general, which of the
following is true?

(a) Sales forecasting leads to larger sales estimates than Market potential.

(b) They both lead to the same sales estimates.

(c) Sales forecasting leads to smaller sales estimates than Market potential.

(d) None of the above.

9. Developing marketing strategies do which one of the following?

(a) They enhance coordination among functional areas of the organization.

(b) Defines how resources are to be allocated.

(c) Leads to superior market position.

(d) All of the above.

10. After product positioning themes are identified, they need to be screened. Two for the
four uses for screening questions are to ensure the positioning is meaningful to customers,
and are they competitively sensible.

(a) The statement is TRUE.

(b) The statement is FALSE.

(c) This statement is unrelated to the topic.

(d) This statement is true in certain conditions and false in others.

2.3 Category Attractiveness Analysis

An essential component of the marketing planning process is an analysis of a product’s potential

to achieve a desired level of return on the company’s investment. Thus the category analysis is
done to define the set of competitors against which one most often competes on a daily basis.

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Notes Analysis of this type not only assesses financial opportunities but also provides ideas about how
to compete better under the given structural characteristics of the category. The characteristics of
a product category rarely all point in the same direction. Consequently, the categories that some
firms find attractive will be of little interest to others.

Example: In automobile industry, most observers think that the luxury car segment is
over populated because of the presence of so many cars with so small a group of customers to
buy them. However, Ford still chose to purchase Jaguar because of the brand equity in the name
and because the Ford Management believed the brand gave the company an instant entry into
the luxury car field.

Also, as we know, more channel members particularly retailers are interested in category
management. They give more space and/or selling time to those categories that are attractive
which means faster inventory turnover, greater total profits, and less space for categories that
are unattractive.

Category attractiveness analysis examines the main areas of enquiry including business aggregate
factors related to the major participants and environmental factors. Let us see each of them one
by one.

2.3.1 Aggregate Market Factors

Aggregate market factors include those factors that are determinant of the entire market segment.

Category Size: Category Size is an important determinant of the likelihood that a product will
generate revenues to support a given investment. That is why, in general larger markets are
better than smaller ones. Besides, having more market potential large categories usually offer
more opportunities for segmentation than smaller ones. Therefore both large firms and
entrepreneurial organizations might find large markets attractive. Large markets however tend
to draw competitors with considerable resources thus making them unattractive for small firms.

Category Growth: While analyzing the category growth as a crucial factor, it has to be
remembered that fast growing categories are almost universally desired due to their ability of
support high margins and sustain profits in future years. However the faster the growth the
category has, the higher is number of the competitors the category is likely to attract.
Stage in Product Life Cycle: This makes a very interesting stage of the category attractiveness
analysis. In the introductory phase, both the growth rate and the size of the market are low, thus
making it unattractive for most potential participants. When market growth and sales start to
take off, the market becomes more attractive. In the maturity phase the assessment is unclear;
while the growth rate is low, the market size could be at its peak. This is a classic pattern for
many consumer packaged goods (esp. eatables).

However, the phases do not guarantee the category attractiveness. While the introductory phase
despite having low growth rate can be attractive for a participant with long-term perspective,
the growth stage can very easily witness failure.

Example: AT&T had a big problem in the home segment of the personal computer
market even though it was at its growth stage.

Sales Cyclicity: Many companies experience cyclicity in demand of their products.

Example: Air conditioners are more in demand in the summers.

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High capital intensive businesses suffer through peaks and valleys of sales as GDP varies. Notes
Agricultural goods vary in accordance with the rainfall and similar natural phenomena. Such a
category would obviously not be considered to be attractive.

Profits: While profits vary in products and brands in category, large inter-industry differences
also exist. The higher the profit margin, the higher is the category attractiveness for the potential
participants in that category.

2.3.2 Category Factors

Although the aggregate factors are important determinants of the category attractiveness, they
do not show the underlying structural factors affecting the category. Porter developed a five
force model to assess the structure of the industries.
1. Threat of New Entrants

2. Bargaining Power of Buyers

3. Bargaining Power of Suppliers

4. Current Category Rivalry

5. Pressure from Substitutes

Let us understand each of them one by one.

Figure 2.2: Porter’s Five Force Model

Threat
of
New
Entrants

Current
Bargaining Bargaining
Category
Power of Suppliers Power of Buyers
Rivalry

Pressure
from
Substitutes

Threat of New Entrants: The competition in an industry will be the higher, the easier it is for
other companies to enter this industry. In such a situation, new entrants could change major
determinants of the market environment (e.g. market shares, prices, customer loyalty) at any
time. There is always a latent pressure for reaction and adjustment for existing players in this
industry.

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Notes The threat of new entries will depend on the extent to which there are barriers to entry. These are
typically:

1. Economies of scale (minimum size requirements for profitable operations),

2. High initial investments and fixed costs,

3. Cost advantages of existing players due to experience curve effects of operation with fully
depreciated assets,

4. Brand loyalty of customers,

5. Protected intellectual property like patents, licenses, etc.

6. Scarcity of important resources, e.g. qualified expert staff,

7. Access to raw materials is controlled by existing players,

8. Distribution channels are controlled by existing players,

9. Existing players have close customer relations, e.g. from long-term service contracts,

10. High switching costs for customers,

11. Legislation and government acts.

Bargaining Power of Buyers: Similarly, the bargaining power of customers determines how
much customers can impose pressure on margins and volumes.

Customers bargaining power is likely to be high when:

1. They buy large volumes, there is a concentration of buyers,

2. The supplying industry comprises a large number of small operators,

3. The supplying industry operates with high fixed costs,

4. The product is undifferentiated and can be replaces by substitutes,

5. Switching to an alternative product is relatively simple and is not related to high costs,

6. Customers have low margins and are price-sensitive,

7. Customers could produce the product themselves,

8. The product is not of strategic importance for the customer,

9. The customer knows about the production costs of the product,

10. There is the possibility for the customer integrating backwards.

Bargaining Power of Suppliers: The term ‘suppliers’ comprises all sources for inputs that are
needed in order to provide goods or services.

Supplier bargaining power is likely to be high when:

1. The market is dominated by a few large suppliers rather than a fragmented source of
supply,

2. There are no substitutes for the particular input,

3. The supplier’s customers are fragmented, so their bargaining power is low,

4. The switching costs from one supplier to another are high,

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5. There is the possibility of the supplier integrating forwards in order to obtain higher Notes
prices and margins. This threat is especially high when the buying industry has a higher
profitability than the supplying industry,

6. Forward integration provides economies of scale for the supplier,

7. The buying industry hinders the supplying industry in their development (e.g. reluctance
to accept new releases of products),

8. The buying industry has low barriers to entry.

In such situations, the buying industry often faces a high pressure on margins from their suppliers.
The relationship to powerful suppliers can potentially reduce strategic options for the
organization.

Current Category Rivalry: This force describes the intensity of competition between existing
players (companies) in an industry. High competitive pressure results in pressure on prices,
margins, and hence, on profitability for every single company in the industry.

Competition between existing players is likely to be high when:

1. There are many players of about the same size,

2. Players have similar strategies,

3. There is not much differentiation between players and their products, hence, there is much
price competition,

4. Low market growth rates (growth of a particular company is possible only at the expense
of a competitor),

5. Barriers for exit are high (e.g. expensive and highly specialized equipment).

Pressure from Substitutes: A threat from substitutes exists if there are alternative products with
lower prices of better performance parameters for the same purpose. They could potentially
attract a significant proportion of market volume and hence reduce the potential sales volume
for existing players. This category also relates to complementary products.

Similarly to the threat of new entrants, the treat of substitutes is determined by factors like

1. Brand loyalty of customers,

2. Close customer relationships,

3. Switching costs for customers,

4. The relative price for performance of substitutes,

5. Current trends.

To the above five factors as given by Porter, one more factor is added, that is the factor of
category capacity.

Category Capacity: Chronic overcapacity of a category is not a positive sign for profitability.
When a category is operating at capacity, its costs stay low and their bargaining power with
buyers is normally high. Thus a key indicator of the health of a category is whether there is a
consistent tendency toward operating at or under capacity.

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Notes 2.3.3 Environmental Analysis

Environmental factors include those factors that are outside the control of the firm and its
industry. These factors can be divided into five categories viz.:

1. Technological

2. Political

3. Economic

4. Regulatory

5. Social

Let us understand each of them one by one:

1. Technological: Product categories that are weaker on the technology dimension are
particularly vulnerable to competition both from new products and from foreign
competitors that have ventured the industry and the category.

Obviously it follows from above that attractive product categories are strong in invention,
innovation, or diffusion of new products and services.

2. Political: The political/legal system creates the rules and frameworks within which
business operates. Government policy supports and encourages some business activities
e.g. enterprise, while discouraging others.

3. Economic: The monetary system facilitates business exchange. Monetary activity is based
around earning, spending, saving and borrowing. Money has been likened to the oil that
lubricates the wheels of commerce. Monetary activity involves businesses in a web of
relationships involving financial institutions (e.g. banks and building societies), creditors,
debtors, customers and suppliers. A key monetary influence for business is the interest
rate. Higher interest rates increase business costs and act as a break on spending in the
economy. Almost all capital goods industries are sensitive to interest rate fluctuations
since their high costs to buyers are often financed at short-term interest rates.

4. Regulatory: Government and other agencies have an impact on category attractiveness

through regulations. Some product categories might become less attractive over time
because of laws that restrict product manager’s abilities to market certain categories in
ceratin markets.

5. Social: The social system is the fabric of ideas, attitudes and behavior patterns that are
involved in human relationships. In particular businesses are influenced by consumer
attitudes and behaviours which depend on such factors as the age structure of the population,
and the nature of work and leisure.

For consumer products, a key question is whether the product category under consideration is
well positioned to take advantage of current trends. Moreover, the social trends also determine
the attractiveness of a category.

Example: The tendency of more time spent during working in office and less time left
for family and household cores has given way to the attractiveness of restaurant category.

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Self Assessment Notes

Choose the appropriate answer:

11. Which of the following are good criteria for customer segmentation?

(a) The segment is of relatively large size.

(b) The segment is reachable.

(c) The segment members are stable over time.

(d) All of the above.

12. If little attention is paid to a brand by the firm, which of the following is most likely for
brand equity:
(a) it is hard to build and hard to harm.

(b) it is easy to build and hard to harm.

(c) it is hard to build and easy to harm.

(d) it is easy to build and easy to harm.

13. Marketing strategies, especially basic customer strategies, will most likely stay the same
over the entire product life cycle.

(a) The statement is TRUE.

(b) The statement is FALSE.

(c) This statement is unrelated to the topic.

(d) This statement is true in certain conditions and false in others.

14. Which of the following is not a environmental factor?

(a) Technology

(b) Social customs

(c) Regulatory practices

(d) Marketing plan

15. Which of the following is not a reason for supplier bargaining power to be high?

(a) The market is dominated by a few large suppliers rather than a fragmented source
of supply

(b) There are many substitutes for the particular input

(c) The customers are fragmented, so their bargaining power is low

(d) The switching costs from one supplier to another are high

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Notes

Case Study Life‘s Good for LG
LG Electronics India’s market share dropped in January 2005 — for the first time since the
company was set up in 1997. But Managing Director Kwang-Ro Kim isn’t worried.

“The dealers must have met their targets in December itself, so they took it easy in
January,” he explains.

Were it any other company, the managing director’s insouciance would appear to border
on foolhardiness. But this is LG, a company that can afford to take it easy.

Even after the blip in sales in January — LG’s market share in refrigerators fell fractionally
from 28.6 per cent the previous month to 28.1 per cent — the Korean consumer electronics
brand is still the preferred white goods brand in India — across categories and
sub-categories.

Whether it is refrigerators, air-conditioners, washing machines or colour televisions —

LG’s dominance over the white goods market is complete.

In volume term LG No. 2 player

Refrigerators 27.22 - 1.2 (Whirlpool)

Colour TVs 25.5 - 15.1 (Samsung)

Microwave ovens 41.4 - 19.7 (Samsung)

Washing machines 34.0 - 13.8 (Whirlpool)

That’s pretty decent going for a company whose first experience in the Indian market was
nothing short of disastrous. In its earlier avatar, the Korean company came to India as
Lucky Goldstar.

This was in the early 1990s, and the rules at the time didn’t permit foreign companies to
start independent ventures. So Lucky Goldstar took on not one, but two joint venture
partners. The first partnership ended acrimoniously while the second one never got off
the ground.

In 1997, the Foreign Investment Promotion Board finally gave the Korean company
permission to set up its own factory to make washing machines and refrigerators.

Rechristened LG Electronics, the new company — a 100 per cent subsidiary of the Korean
‘chaebol — swung into action and set up a state-of-the-art manufacturing facility at Greater
Noida, Uttar Pradesh.

There’s been no looking back since then. In October 2004, LG set up a second manufacturing
facility at Ranjangaon, near Pune, which makes white goods as well as cellular phones —
the first GSM handset manufacturing facility in India.

Another facility, exclusively for GSM handsets, is being set up and will start operations in
August. Turnover is also on the upswing: starting from ` 150 crore in 1997, LG registered
a turnover of ` 6,500 crore last year and is targeting ` 9,000 crore in 2005.

So, what went right?

Perhaps the most important step was to leave behind the baggage of the past.

Contd...

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As Lucky Goldstar, the company’s biggest fault was that it did precisely what other white Notes
goods brands of the 1990s were doing: some half-hearted advertising and pushing the
products only when the consumer entered the store.

Activities that “pulled” potential buyers into showrooms were conspicuous by their
absence. Once it got the permission to operate as a wholly owned subsidiary, though, all
that changed. Within just five months, LG products were available across the country
compared to the average two years competitors took for a nationwide launch.

An advertising blitzkrieg followed. And the momentum hasn’t let up since. LG is one of
the most aggressive advertisers in the white goods industry, spending close to 5 per cent
of its revenue on marketing activities — that’s ` 130 crore last year.

A close tie up with cricket ensured the brand building exercise would score well on
consumer recall — apart from signing on leading Indian cricketers, LG also launched a
cricket game on one of its television models. Points of sales promotions were also
extensively advertised to ensure customers were tempted to visit the stores.

Importantly, for LG, a nationwide launch meant just that. A penetrative distribution strategy
ensured that products were available even in smaller towns and cities, breaking the chain
of urban dependency that plagues most white goods manufacturers.

More than 65 per cent of last year’s ` 6,500 crore revenue came from non-urban sources; up
from under 60 per cent the previous year. And what was the industry average? It was
between twenty-five to 30 per cent. Add the fact that the rural markets accounted for a
remarkable 30 per cent of total sales and it’s clear that LG’s strategy is working. “We push
rural marketing,” agrees Kim.

How does it do that? LG reaches into the hinterland through a pyramidal sales structure.
Branch offices in larger cities set up Central Area Offices (CAOs) in smaller towns; these in
turn reach out to even smaller towns and villages through Remote Area Offices (RAOs) —
at last count, the company had 51 branch offices, 87 CAOs and 78 RAOs.

Each RAO has servicing, marketing and sales teams at its disposal and an individual
budget for marketing activities in its territory. The executive in charge has independent
decision-making powers — he can decide the tenor and scale of brand promotions in his
area, without having to cross check every little detail from the head office.

Technology, too, is being used to the hilt to ease their jobs. The RAOs and CAOs are all
electronically connected through a V-SAT and Intranet network.

And where earlier decisions about putting up large hoardings could be approved only
after a visit from the head office, LG has provided all its branch managers digital
cameras — now they just click images of suitable locations and get them approved
electronically.

For customers, though, the direct approach is preferred. The advantage of an extended
distribution network is that marketing executives can keep a finger on the pulse of the
market. Promotions and finance schemes are designed to suit the needs of local customers.

In a small town in Uttar Pradesh, for instance, last year LG offered select households a free
15-day trial of a 50-inch flat screen television during the cricket season. The TV set costs
close to ` 1 lakh, but several families took the bait and considered buying the TV — at
which point the showroom staff offered them carefully planned finance schemes.

Of course, it’s not just the finance schemes that are tailor-made. LG has been careful right
from the start to offer customers a “value-plus” proposition.
Contd...

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Notes
Explains KSA Technopak Principal Harminder Sahni, “LG has always taken the stand that
‘We’re selling the AC, not the remote. The remote comes as part of the package.” “Which
is why, he adds, the company does not qualify as a “budget” models company.” “LG does
not sell no-frills products; it gives you all the bells and whistles,” Sahni says.

LG recognised the need to do that early on. Kim — who’s been with LG India since 1997 —
points to a basic characteristic of Indian consumers: “They are very price sensitive. They
want the best quality at reasonable prices.” Accordingly, LG introduced its economy
range in the country, which Kim predicted would be “easily accepted”.

The company was ready to do battle on two flanks: it offered modern, features-packed
products, at the same time keeping its margins wafer-thin. Even competitors accept the
merit of the tactic.

“LG has been a price warrior while retaining its brand equity,” points out Ajay Kapila,
vice president, sales and marketing, Electrolux India. “Our success is the result of hard
work and commitment. There’s no miracle involved,” says Kim.

The hard work was on the features, which were carefully chosen — and adapted — to
appeal to Indian audiences. For instance, Kim points out that consumers in southwest
India prefer big sound and big bass outputs.

Accordingly, LG India created Ballad, a flat screen television model that sells only in the
subcontinent and comes equipped with 2,000 watt speakers.

Similarly, refrigerators in India have smaller freezers and big vegetable compartments —
Indians prefer fresh food and a significant proportion are vegetarian. Colours, too, are
chosen keeping market preferences in mind. White refrigerators, for instance, don ’t sell
well in Kolkata and Punjab — while the sea air in Bengal corrodes the paint, the masalas
used in Punjabi cooking discolour the fridge.

So LG offers a range of bright colours in these markets. The cricket game in TV sets wasn’t
the only “go local” innovation: LG also offered on-screen displays in five languages and
large capacity semi-automatic washing machines that would suit Indian families.

The research for these adaptations and innovations is done in-house. LG invests significantly
in local R&D — last year the company spent over ` 100 crore on research.

“We want to be independent of Korea,” states Kim. It’s working towards that: already 70
per cent of its product line is produced locally, with the rest imported from China, Korea
and Taiwan. In refrigerators, 95 per cent of the components are localised. All of which also
help keep prices down.

But that was in the past. “Economy” and “value-for-money” are no longer going to be the
cornerstones of LG’s India strategy. In the next five years, says Kim, the company will
concentrate on building itself as a premium brand, targeting 10 per cent of its earnings
from super-premium products.

That includes products like the Whisen range of wall-mounted air-conditioners ( ` 50,000
and above), Dios refrigerators (` 65,000 and above) and X-canvas plasma TVs (` 1 lakh and
above).

LG has already set up 75 exclusive showrooms for these products, which were launched
earlier this year, with more in the pipeline. This year it will spend upward of ` 20 crore
promoting the super-premium sub-brands. “High-end products need high-end outlays,”
smiles Kim.

Contd...

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Notes
Perhaps, but industry analysts have their doubts whether exclusive showrooms for such
big-ticket items will bring in the bucks. “When it comes to consumer durables, people
prefer comparison shopping. I will be surprised if the stores make money,” comments
KSA’s Sahni.

Meanwhile, there’s the imminent departure of the man who built up LG India to its
present height. Kim, who was last year promoted as head of LG South West Asia, is likely
to move up within the parent organisation some time soon. “I am preparing to leave,” he
admits. Will that make a difference to LG’s growth curve? Kim doesn’t think so.

“The system is working, so things will continue as they are,” he says. That thought finds
an echo in Sahni, who points out “Kim may be leading from the front, but LG couldn’t
have achieved what it has without a strong team.”

The challenge now will be to integrate the new incumbent’s working style with the
existing culture of the organisation — and work on the new marketing strategy. If LG
meets that head on, then, like its tagline says, Life’s Good.

Questions:

1. Study the case and identify significant issues.

2. Conduct a SWOT analysis of LG.

3. What marketing strategies did LG adopt to be so successful in India?

Source: www.bsstrategist.com April 5, 2005

2.4 Summary

 To be most effective, the plan has to be formalized, usually in written form, as a formal
“marketing plan.”

 The essence of the process is that it moves from the general to the specific; from the overall
objectives of the organization down to the individual action plan for a part of one marketing
program.

 Marketing plans vary by industry, by size of company and by stage of growth.

 The form isn’t as important as the process of preparing it.

 A thorough study of your potential competitors is essential to the successful positioning

of your property.

 Choosing your “competitive set,” is a step by step task.

 The level of competition can also vary. At various levels, competition can be in Product
form, Category, Generic and Budget.

 Out of the many methods for determining the competitors, the most important and
prevalent ones are Substitution in Uses, Perceptual Mapping, Levels of Competition,
Brand Switching, Managerial Judgment, Geographic and Porter’s 5 forces.

 An essential component of the marketing planning process is an analysis of a product’s

potential to achieve a desired level of return on the company’s investment.

 Thus the category analysis is done to define the set of competitors against which one most
often competes on a daily basis.

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Notes  Category attractiveness analysis examines the main areas of enquiry including business
aggregate factors related to the major participants and environmental factors.

2.5 Keywords

Economy of Scale: Reduction in cost per unit resulting from increased production, realized
through operational efficiencies. Economies of scale can be accomplished because as production
increases, the cost of producing each additional unit falls.

GDP: The abbreviation for Gross Domestic Product. The total market value of all final goods
and services produced in a country in a given year, equal to total consumer, investment and
government spending, plus the value of exports, minus the value of imports.

Law of Diminishing Returns: The tendency for a continuing application of effort or skill toward
a particular project or goal to decline in effectiveness after a certain level of result has been
achieved.

2.6 Review Questions

1. List and describe two methods for determining who competition may be. If you could
only choose one method to use, which method would you choose and why would you
choose it?

2. Discuss the aggregated market factors, their impact on category attractiveness and give a
specific source for where you’d get the information for each of them.

3. What would be those 7-8 questions that you would consider necessary to answer before
making your marketing strategy and implementation summary?

4. In your opinion, what should a marketing plan address?

5. In your opinion, which environmental variables shows effect on marketing plan? Justify
your answer with reasons.

6. According to you, what are the qualities necessary for a marketing planner?

7. In which situations, the bargaining power of customers is low? Is it always useful for the
producers?

8. “A threat from substitutes exists if there are alternative products with lower prices of
better performance parameters for the same purpose”. Examine this threat.

9. Evaluate the role of Porter’s analysis in the category attractiveness analysis.

10. What would be the main factors on which you would base your decisions of choosing a
category to enter as a new marketer and why?

Answers: Self Assessment

1. (d) 2. (c)

3. (b) 4. (a)

5. (d) 6. (a)

7. (a) 8. (c)

9. (d) 10. (a)

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11. (d) 12. (c) Notes

13. (b) 14. (d)

15. (b)

2.7 Further Readings

Books Angelo Kinicki, Brian Williams, Management: A Practical Introduction, McGraw-

Hill/Irwin.

Jessie Paul, No Money Marketing, McGraw Hill.

Marc Gobe, Emotional Branding, Allworth.

Roger Kerin, Steven Hartley, and William Rudelius, Marketing, McGraw-Hill/

Irwin.

Online links http://inventors.about.com/od/licensingmarketing/a/in_marketing.htm

http://www.themarketingprocessco.com/marketing/marketing%20strategy/
marketing_strategy.htm

www.marketingplanning.org/marketing-planning-process.html

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Notes Unit 3: Competitor Analysis

CONTENTS

Objectives

Introduction

3.1 Competitor Analysis

3.2 Sources of Information

3.3 Main Aspects of Competitor Analysis

3.3.1 Competitor’s Objectives

3.3.2 Competitor’s Assumptions

3.3.3 Competitor’s Strategy

3.3.4 Competitor’s Resources and Capabilities

3.4 Limitations of Customer Analysis

3.5 Assessing Competitor’s Objectives

3.6 Accessing Competitor’s Current Strategies

3.7 Differential Advantage Analysis

3.8 Customer Analysis Purpose

3.9 Customer Segmentation

3.9.1 Criteria for Customer Segmentation

3.10 Summary

3.11 Keywords

3.12 Review Questions

3.13 Further Readings

Objectives

After studying this unit, you will be able to:

 Explain the main aspects and limitations of Competitor Analysis

 Assesses Competitors Objectives and Competitors Current Strategies

 Identify the differential advantage analysis

 Explain the Customer Analysis Purpose

 Discuss the Customer Segmentation

 Illustrate the Criteria for Customer Segmentation

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Introduction Notes

Competitor analysis is a critical part of a firm’s activities. It is an assessment of the strengths and
weaknesses of current and potential competitors, which may encompass firms not only in their
own sectors but also in other sectors. Directly or indirectly, competitor analysis is a driver of a
firm’s strategy and impacts on how firms act or react in their sectors. Gluck, Kaufman and
Walleck (2000) showed that competitor analysis is one of two components that give a firm a
strong market understanding. This drives the formulation of a strategy and it applies whether a
firm formulates a strategy through strategic thinking, formal strategic planning, or opportunistic
strategic decision making. Competitor analysis, together with an understanding of major
environmental trends, is a key input in strategy formulation and should be developed properly.

3.1 Competitor Analysis

Competitor analysis in marketing is an assessment of the strengths and weaknesses of current

and potential competitors. This analysis provides both an offensive and defensive strategic
context through which to identify opportunities and threats. Competitor profiling coalesces all
of the relevant sources of competitor analysis into one framework in the support of efficient and
effective strategy formulation, implementation, monitoring and adjustment.

Given that competitor analysis is an essential component of corporate strategy, it is argued that
most firms do not conduct this type of analysis systematically enough. Instead, many enterprises
operate on what is called “informal impressions, conjectures, and intuition gained through the
tidbits of information about competitors every manager continually receives.” As a result,
traditional environmental scanning places many firms at risk of dangerous competitive blind
spots due to a lack of robust competitor analysis.

3.2 Sources of Information

The sources of competitor information can be neatly grouped into three categories:

1. Recorded data

2. Observable data

3. Opportunistic data

Recorded Data

This is easily available in published form either internally or externally. Good examples include
competitor annual reports and product brochures.

Observable Data

This has to be actively sought and often assembled from several sources. A good example is
competitor pricing.

Opportunistic Data

To get hold of this kind of data requires a lot of planning and organisation. Much of it is
“anecdotal”, coming from discussions with suppliers, customers and, perhaps, previous
management of competitors.

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Notes Possible sources of competitor data using Davidson’s categorization are mentioned in the
following table:

Recorded data Observable data Opportunistic data

Annual report & accounts
Press releases
Newspaper articles
Analysts reports
Regulatory reports
Government reports
Presentations/speeches
Pricing/price list Meetings with suppliers
Advertising campaigns Trade shows
Promotions Sales force meetings
Tenders Seminar/conferences
Patent applications Recruiting ex-employees
Discussion with shared distributors
Social contacts with competitors

To gather the information about your competition that you need for the competitive analysis.
This can be the hard part. While you can always approach your competitors directly, they may
or may not be willing to tell you what you need to know to put together this section of your
business plan.

You need to know:

1. What markets or market segments your competitors serve;

2. What benefits your competition offers;

3. Why customers buy from them;

4. And as much as possible about their products and/or services, pricing, and promotion.

There are good sources of information existing already in order to do a good competitor analysis.
Possibly up to approximately 90% of the information needed for a proper competitor analysis
and related assessment and decisions already exists in the public domain. The information can
be organised across a number of different groupings. One way is to look at what the competitor
presents about them and what other sources external to the competitor present about the
competitor. Some examples of these are shown below:

1. Company reports: annual reports, regulatory filings (e.g. financials), investor presentations,
patent applications

2. Company advertisements: TV and print advertisements, sales literature, company website,

product literature

3. Company news: press releases, general news articles

4. External reports: equity/analyst reports (for public companies), ratings agencies reports
(for credit-rated companies), industry associations, government publications

5. External, but common, network: buyers and suppliers, third-party affiliates, industry
experts.

Most of the information mentioned above can be accessed through the internet already. The last
point on external, but common, network is a source that will require interaction as this requires
getting the viewpoints of other people. While this would comprise only a small part of the
competitor analysis, this may actually prove to be quite insightful as different viewpoints are
received from other people who would have had interaction as well with the competitor.

Task Before launch a new product in the market, what is the responsibility of organization?

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Self Assessment Notes

Choose the appropriate answer:

1. Out of the following which one is the source of competitor information?

(i) Observable data (ii) Experimental data

(iii) Meaning data (iv) Search data

3.3 Main Aspects of Competitor Analysis

The key objectives in competitor analysis are to develop a greater understanding of what
competitors have in place in terms of resources and capabilities, what they plan to do in their
businesses, and how the competitors may react to various situations in reaction to what the firm
does. Michael Porter has defined a competitor analysis framework that focused on four key
aspects (Porter, 1980 cited in netmba.com): competitor’s objectives, competitor’s assumptions,
competitor’s strategy, and competitor’s resources and capabilities. These four aspects of
competitor analysis are the areas critical for a firm to understand and they should pursue this
knowledge not only for current competitors but also for other potential competitors in the
business.

There are other competitor analysis frameworks that firms can utilise.

Example: International competitor analysis framework presented by Garsombke (1989)

but the foundations follow Porter’s framework with additional components relating to the
understanding of the “international” marketplace.

Figure 3.1: Porter’s Framework

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Notes Others focus on specific components and thus become a subset of the framework. For example,
Slater and Narver (1994) looked at this through the value to customers and identified three
components in the analysis: customer orientation, competitor focus and cross-functional
coordination.

Rather than compare various competitor analysis frameworks, the focus from hereon is Porter’s
framework (see Figure 3.1) for competitor analysis. This framework is broken into two parts.
The competitor’s objectives and assumptions drive the competitor while the competitor’s strategy
and resources and capabilities define what the competitor is doing or is capable of doing.
Together, these four aspects define a competitor response profile which gives the firm an
understanding of what actions a competitor may take. Taking this analysis across a firm’s key
competitors will give the firm a viewpoint on where the sector is heading, and provides the firm
with a basis for developing their strategy and actions. The key aspects of competitor analysis
and the resulting competitor response profile are defined further below.

3.3.1 Competitor’s Objectives

In competitor analysis there are two key factors to note in building knowledge of a competitor’s
objectives. The first factor is to know the actual objectives of a competitor. This could range from
building market share in a specific market or overall business, entering a new market or even
just maintaining profitability. This should also look at not only current competitors but also
potential competitors.

Example: In Denmark’s telecommunications sector in 2000, a new entrant Telmore

targeted college students with a specific promotion catering to their requirements.

The second factor is to know if the competitor is actually achieving their stated (or sometimes
unstated but implied) objectives. Looking at these two factors will provide a firm with an
opinion on a competitor’s potential actions to changes in the sector. As part of a comprehensive
competitor analysis piece, firms should identify their key competitors and be able to define the
objectives of each competitor and their likelihood of achieving their objectives.

Example: We can look at is Apple which recently launched its iPhone product. Knowing
the innovation in Apple, one could sense that the eventual goal of Apple would be to have a
product that combines the iPhone capabilities and the iPod features, or have an iPhone with
other capabilities such as a global positioning system. With the recent success of Apple in
various markets, there would be no doubt that Apple would be able to achieve this.

Some of the questions to ask for the competitor’s strategic objectives are:

1. What are the short-term and long-term objectives?

2. What are the financial objectives?

3. Where is the competitor investing?

3.3.2 Competitor’s Assumptions

Another key aspect in competitor analysis is an understanding of competitors’ assumptions

about the overall market (trends in the market, products, and consumers).

Example: Competitors could define their actions based on what their assumptions are
on the growth of the market. In a cyclical industry (say pulp and paper or shipping sectors),

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investments decided by players in the industry should be driven by when competitors expect Notes
the industry to be at their peak, as timing is critical for players in the industry to meet demand.
However, this is not what usually happens. Typically, shipping companies such as China Cosco
(largest shipping line in China) tends to invest and order new ships when the industry is at its
peak, and financing is not an issue (Stanley, 2006). As shipbuilding takes a number of years, by
the time the ships are ready, the industry is at the other end of the cycle or in decline already.

For a proper competitor analysis work, the assumptions made by competitors on the industry
and other players should be indicated, but as seen in the example, the validity of these assumptions
should be challenged.

Federal Express is a good example to highlight. When FedEx considered overnight delivery,
they assumed that demand would reach high levels and that it would change the mail-and-
package delivery industry. FedEx turned out to be correct and this changed the industry with
other competitors following suit to offer the same service. In this example, FedEx made a strong
assumption on the industry behaviour and was able to establish a presence in overnight delivery
quickly.

Some questions to address for this aspect include:

1. What is the competitor’s viewpoint on the market and development?

2. Who are the key consumers or clients who the competitor feels will be most profitable?

3.3.3 Competitor’s Strategy

A third aspect in competitor analysis is the understanding of a competitor’s strategy. In most

cases, this strategy will be defined and stated, particularly for public firms. In other cases, it may
not be openly stated what competitors’ strategies are but these can be understood by utilising a
number of sources available to firms from analysing a competitor’s behaviour in certain situations
to discussing with industry experts to get their viewpoints.

Examples:
1. Bookmaker Ladbrokes has clearly been expanding their international presence
through joint ventures in other markets. This strategy was pursued after the firm
split from the Hilton Group in 2006. By observing Ladbrokes’ activities, one can
determine what the firm’s strategy has been since the split.

2. Southwest Airlines, which pursued a “no-frills, point-to-point service and which

turned out to be a highly innovative, industry-changing and value-creating strategy”.

These two examples indicate the value of having an understanding of competitors’ strategies
and their focus.

A number of questions that need to be addressed are:

1. What are the strategy and plans of competitors in their key markets?

2. Which markets and products will the competitor focus on?

3.3.4 Competitor’s Resources and Capabilities

Finally, a competitor analysis should also include an understanding of a competitor’s resources

and capabilities as these would give a firm an idea of how a competitor can achieve its strategy
and objectives, and also give a firm a timeline for when it would expect competitors to pursue

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Notes certain activities. For this aspect, a large part of information can be gleaned from press articles
and news.

Examples:
1. The increase in orders of the Airbus A380, the largest commercial aircraft in the
world, by Dubai-based Emirates Airlines from the current 55 to double the number.
This indicates several thoughts: (1) Emirates Airlines has large funding capability,
and (2) Emirates Airlines will be expanding its international business and presence
once these aircraft are received.

2. Lanier Business Products. A leading manufacturer of dictating machines, the firm

leveraged its marketing strength to successfully expand into another product, word
processors, which they sourced from another firm (Bales et al., 2000). This shows
how important it is to understand a competitor’s resources and capabilities, and
their strengths.

Several questions that can be raised in this respect are:

1. What is the level of resources available to the competitor for their investments?

2. What are the areas of strength for the competitor?

Self Assessment

Choose the appropriate answer:

2. Which one is not the part of Porter’s competitor analysis framework?

(i) Competitors objectives (ii) Competitors assumption

(iii) Competitors strategy (iv) Competitors condition

3.4 Limitations of Customer Analysis

The limitations of competitor analysis are linked to the information gathered from various
sources and the interpretation of the information. Also, with the exception of a few information
sources (e.g. patent applications, forecast financial statements), most of the other printed
information shows historical information and may not necessarily give a good indication of a
competitor going forward. This is particularly the case if there are a lot of structural changes
happening in a sector and all players are expected to have dynamic strategies to capture their
market.

Self Assessment

Fill in the blanks:

3. ............................ is an activity that is or should be performed by organizations.

4. ............................ is the practice of dividing a customer base into groups of individuals that
are similar in specific ways relevant to marketing, such as age, gender, interests, spending
habits, and so on.

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3.5 Assessing Competitor’s Objectives Notes

The company has to make efforts understand what drives each competitor’s behavior. Normal
microeconomic assumption is that every firm attempts to maximize their profits. However, in
actual practice, companies differ in the weights they put on short-term versus long-term. Hence,
each firm pursues a mix of objectives, current profitability, market share growth, cash flow,
technological leadership, service leadership, etc. with different weights attached to them.

A critical step in a competitor analysis is to assess what the current objectives are for the major
competitor products. An assessment of current objectives provides valuable information
concerning the intended aggressiveness of the competitors in the market in the future. It also
provides a context for assessing the capabilities of competitors, i.e., does firm marketing brand
A have the resources to successfully pursue such an objective?

When discussing objectives, it is important to define them precisely for many different types of
objectives exist. In the context of marketing planning, three basic business objectives can be
identified.

1. Growth Objective: A growth objective usually implies increasing unit sales or market
share, with profit conditions being secondary.

2. Hold Objective: The hold objective could also be termed a consolidation objective. A hold
scenario might be logical for a brand that is losing market share in that a reasonable first
step in reversing its fortunes is to stop the slide.

3. Harvest Objective: Finally, a harvest objective, also referred to as milking, describes a

situation in which profit is paramount relative to market share. At the corporate level,
return on investment or other, more aggregate statistics becomes more relevant.

3.6 Accessing Competitor’s Current Strategies

Resourceful competitors revise their strategy through time. Companies have to monitor the
strategies of companies that fall in their strategic group more closely.

A group of firms following the same strategy in a given target market is called a strategic group.
A company needs to identify the strategic grouping in which it competes. It has to monitor
efforts of even potential new entrants into this strategic group. Also it has to monitor efforts of
companies in adjoining strategic groups.

The two elements of a strategy are the segments it appeals to and the core strategy. For industrial
products, both can be easily determined by examining three sources of information: product
sales literature, the company’s own sales force, and trade advertising. The former provides
information about the core strategy because brochures usually detail the point of difference the
competitor wants to emphasize. Even if the sales literature does not present a product features
chart, it should indicate the brand’s major strengths. Physical brochures are not often needed
today; most industrial firms website’s provide a wealth of technical and positioning information
that help to determine the core strategy. A firm’s own sales force can provide some data concerning
targeted companies or industries, much of it resulting from informal contacts, trade show
discussions, and the like. Finally, differential advantage being touted. One can determine the
differential advantage directly from the ad copy and the target segments at least partially by the
location (publication) in which the ad appears.

For consumer goods or other products targeted toward a large audience, simply tracking
competition’s ads, either yourself or by using one of the services provides most of the necessary
information. Television ads can be examined for their messages and for the programs in which

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Notes they appear. TV advertising is quite useful for determining the core strategy because the nature
of the medium prohibits communicating all but the most important message. Similarly, print
advertising can provide equivalent information, but with greater elaboration of the core strategy.

Example: Consider the copy for a print as in Forbes for Rolex watches, shown in Figure
3.2. From data obtained from Mediamark Research’s Magazine Total Audiences Report, Spring
2003, we know that 73.8 percent of the readers are 18 to 49 years old, 38.8 percent have household
income over $75,000, and 83.3 percent either attended or graduated from college. It is probably
not a surprise that readers are businesspeople with high incomes. Looking at the copy itself, the
ad copy says nothing about the physical characteristics if the watch, only the people who wear
them: people in leadership positions.

Notes There is no explicit mention of the competition. Of course another key factor is the
price of the ad; these data are obtainable from publication such as Marketer’s Guide to
Media.

Figure 3.2: Current Strategies

Information about implementing current strategies is also easily found. Pricing information
can be obtained from basic market observation: Distributors, salespeople, customers, advertising
agencies, or even firm’s own employees acting as customers on their own behalf can be the
sources of pricing data. Promotion, distribution, and product information can be obtained from
similar sources. In other words, as in determining competitors’ objectives, it takes market
sensitivity rather than sophisticated management information systems to assess much of the
competitive activity.

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Both customer and stakeholders get special mailing and information that make strategy Notes
assessment easier. Furthermore, personal use of competitors products often gives one a feeling
for them that does not come through even the best-prepared research. Thus, policies that forbid
or discourage the use of competitive products are usually foolish.

Task Explain the relation between organizations with customers.

Self Assessment

Fill in the blanks:

5. A …………………………..usually implies increasing unit sales or market share, with profit

conditions being secondary.

6. The two elements of a strategy are the segments it appeals to and the ………………….

3.7 Differential Advantage Analysis

Several frameworks have been proposed to indicate what information to collect about
competitors. A useful way to examine competitors capabilities is to divide the necessary
information into five categories that include the competitors abilities to conceive and design, to
produce, to market, to finance, and to manage. You might need information from both the
corporate parent are important in determining the amount of money that could support a
specific product.

Examples of Competitor Information to Collect:

Ability to Conceive and Design

(a) Technical Resources

(i) Concepts
(ii) Patents and copyrights
(iii) Technological sophistication
(iv) Technical integration
(b) Human Resources
(i) Key people and skills
(ii) Use of external technical groups
(c) R&D Funding
(i) Total
(ii) Percentage of sales
(iii) Consistency over time
(iv) Internally generated
(v) Government supplied
(d) Technological Strategy
(i) Specialization

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Notes (ii) Competence

(iii) Source of capability

(iv) Timing: initiate versus imitate

(e) Management processes

(i) TQM

(ii) House of Quality

Ability to Produce

(a) Physical Resources

(i) Capacity
(ii) Plant
 Size
 Location
 Age
(iii) Equipment
 Automation
 Maintenance
 Flexibility
(iv) Processes
 Uniqueness
 Flexibility
(v) Degree of integration
(b) Human Resources
(i) Key people and skills
(ii) Workforce
 Skill mix
 Union
(c) Suppliers
(i) Capacity
(ii) Quality
(iii) Commitment

Ability to Market

(a) Sales force

(i) Skills
(ii) Type

(iii) Location

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(b) Distribution Network Notes

(i) Skills
(ii) Type

(c) Service and Sales Policies

(d) Advertising

(i) Skills
(ii) Type

(e) Human Resources

(i) Key people and skills

(ii) Turnover
(f) Funding

(i) Total
(ii) Consistency over time

(iii) Percentage

(iv) Reward system

Ability to Finance

(a) Long-term
(i) Debt/equity ratio
(ii) Cost of debt
(b) Short-term
(i) Cash or equivalent
(ii) Line of credit
(iii) Cost of debt
(c) Liquidity
(d) Cash flow
(i) Days of receivables
(ii) Inventory turnover
(iii) Accounting practices
(e) Human Resources
(i) Key people and skills
(ii) Turnover
(f) Systems
(i) Budgeting
(ii) Forecasting
(iii) Controlling

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Notes Ability to Manage

(a) Key people

(i) Objectives and priorities
(ii) Values
(iii) Reward systems
(b) Decision making
(i) Location
(ii) Type
(iii) Speed
(c) Planning
(i) Type
(ii) Emphasis
(iii) Time span
(d) Staffing
(i) Longevity and turnover
(ii) Experience
(iii) Replacement policies
(e) Organization
(i) Centralization
(ii) Functions
(iii) Use of staff

Ability to Conceive and Design

This category measures the quality of competitors new product development efforts. Clearly a
firm with the ability to develop new products is a serious long-term threat in a product category.
The use of such procedures as total quality management or six sigma generally improves product
design capabilities.

Ability to Produce

This category concerns the production capabilities of the firm. For a service firm, it is the ability
to deliver the service. A firm operating at capacity to produce a product is not as much of a threat
to increase sales or share in the short run as is a firm that has slack capacity, assuming a substantial
period of time is required to bring new capacity online. Product quality issues are important
here.

Ability to Market

How aggressive, inventive and so on are the firms in marketing their products? Do they have
assess to distribution channels? A competitor could have strong product development capabilities
and slack capacity but be ineffective at marketing.

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Ability to Finance Notes

Limited financial resources hamper effective competition. Companies with highly publicized
financial problems (such as the low defunct airlines Eastern, Pan Am, and Braniff), firms going
through LBOs, and companies or divisions for sale become vulnerable to competitors in their
product lines.

Example: When Procter and Gamble announced in 2001 that it was selling its Jif peanut
butter and Folgers coffee brands, competitors took notice. While financial ratios are key pieces
of information, how the competitor allocates its resources among products is also critical.

Ability to Manage

In the mid-1980s, Procter and Gamble replaced the manager of its U.S. coffee business with the
coffee general manager from the United Kingdom. This new manager has a reputation for
developing new products in a 15-month period.

Example: He oversaw the launch of four new brands, above average for the company.
The message to competitors such as General Foods was clear. New products were likely to be a
focus of the Folgers division.
A stronger emphasis on marketing at RJR Nabisco’s tobacco division emerged in 1989 when a
former senior manager who had a reputation for building brands was named CEO. He was in
charge when the controversial but successful “Joe Camel” advertising campaign was developed.

Self Assessment

Choose the appropriate answer:

7. Which one concerns the production capabilities of the firm?

(i) Ability to produce (ii) Ability to finance

(iii) Ability to market (iv) None

3.8 Customer Analysis Purpose

Customer analysis is an activity that is or should be performed by organizations. The Customer

Analysis section of the business plan assesses the customer segments that the company serves. In
it, the company must:

1. Identify its target customers

2. Convey the needs of these customers

3. Show how its products and services satisfy these needs.

Task Why most of the organizations more emphasis on segmentation of customer with
their needs? Discuss.

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Notes Self Assessment

Fill in the blank:

8. …………………….is an activity that is or should be performed by organizations.

3.9 Customer Segmentation

Customer segmentation is the practice of dividing a customer base into groups of individuals
that are similar in specific ways relevant to marketing, such as age, gender, interests, spending
habits, and so on. Using segmentation allows companies to target groups effectively, and allocate
marketing resources to best effect. According to an article by Jill Griffin for Cisco Systems,
traditional segmentation focuses on identifying customer groups based on demographics and
attributes such as attitude and psychological profiles. Value-based segmentation, on the other
hand, looks at groups of customers in terms of the revenue they generate and the costs of
establishing and maintaining relationships with them.
Customer segmentation procedures include: deciding what data will be collected and how it
will be gathered; collecting data and integrating data from various sources; developing methods
of data analysis for segmentation; establishing effective communication among relevant business
units (such as marketing and customer service) about the segmentation; and implementing
applications to effectively deal with the data and respond to the information it provides.
Customer segmentation means analysing our customers and identifying groups of individuals
with similar requirements, preferences or competencies. This helps us to tailor our services to
ensure that we are inclusive and meet the requirements of all of our customers. Understanding
more about our customers helps us to design and deliver appropriate clusters of services in
ways that are most convenient for different groups. It can also help us to deliver services in more
effective and efficient ways.

Example: We will be able to target our marketing and communications activities more
effectively.
Customer segmentation and associated provision of service will be driven through the council’s
work on equalities. One of the aims of the Corporate Equality Plan is:
“We are committed to addressing disadvantage and discrimination to ensure that all communities
are able to access our services and employment opportunities and be involved in what we do.”
We can easily identify certain segments of customers who may have specific requirements, and
these can then be sub-divided into further segments.
Customer segments could include:
1. Different age groups – e.g. children, 16-24 year olds, elderly, etc.
2. Gender
3. People with a disability
4. People from black or minority ethnic backgrounds
5. People with children
6. People who do not speak English
7. People with basic skills requirements
8. Community groups
9. Businesses

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3.9.1 Criteria for Customer Segmentation Notes

The criteria of customer segmentation depend on the market segmentation.

Markets are such a heterogeneous place that unless we get to understand each part of it we
remain ignorant of the market. There are people buying Mercedes cars and in the market,
people are also buying low cost bicycles as a means of transportation. Marketers of Mercedes
communicate with the rich elitist class to sell their product. These people reside in certain
section of the town; visit one club or the other and read a few business magazines like Business
India, Business Today and India Today. The cycle buyers go to cinema halls for low cost
entertainment. Cycle sellers can show film advertising clips and slides to communicate to the
segment. Both elite class and lower class persons would get the right message without too much
clutter and in a language understood by them. Therefore, market segmentation helps both,
namely the buyers and sellers.
Market segmentation is done on the following lines:

1. Geographic factors

2. Demographic factors

3. Psychological factors

4. Socio-cultural factors

5. Use related

6. Benefit segment

7. Combination of some of the above mentioned factors.

Geographic Segment

Geographic segment is for the region like south northwest and east of the country. Each region
has its own peculiarities in customer needs and therefore consumer behaviour too is different
for each. In each region there are Metro large areas, large cities and smaller towns, besides
villages. Urban, semi-urban and rural divide provides a market segment.

Demographic Segment

Demographic segment is by age, sex, marital status, income, education and occupation. Age
segment is important as with growing population of senior citizens and a large teenage group,
product needs for these segments are increasing. Health care products and vacation time products
are needed for elder citizens. Teens need coffee bars, discos and video game parlours.

Income separates people in their buying pattern and product groups. Marketers can decide to
cater to one income group or the other, make products needed by them and then advertise in the
media those that are most seen and read. Low cost readymade garments for low-income segment
can be advertised best on radio and local language press. Likewise, Rolex watches for the rich
segment can be advertised in business magazines and TV channels such as Star Plus.

Male and female customers have some specific products for each, like shaving creams for men
and lipstick for women. With age the use of cosmetics change for women and marketers can
make use of this change by offering products of their need. Young girls need cosmetics to enjoy
mutual attraction with boys and for flirtation. Married women use cosmetics to keep their
husbands happy and senior ladies use them to feel young.

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Notes Psychological/Psychographic Segment

People’s needs like shelter, food, safety, affection and self-actualization makes for different
segments. These are the hierarchy of needs as per Maslow. The person who is self-actualized will
have graphics given below demonstrating that he has different needs than others.

Psychological/Psychographic segment divides customers around their mindsets. People need

ego boosting and certain products like fashion garments, designer watches and accessories
make them feel good when they can have their head in cloud nine. People can be motivated to
buy a car just because they have been selected to test drive it. Today’s business executive is
extremely busy and his/her involvement in buying daily need products is low. The target
customer therefore is the buyer and not the user, may be the servant or some retired member of
the family. The involvement increases with the value of purchase or some personal preference.
Please buy only Godrej shaving cream for me is a way in which the involvement manifests
itself.

Socio-cultural Segmentation

Family: When they start life, the young persons may be unmarried. They need household
goods, like cleaning equipment washing machines, cooking equipment and TV set. Married
couples initially need to go on a honeymoon and later according to their status and income,
their needs keep adding to include car, house and soon baby foods, diapers. Once the children
grow then music system, books, games and sports equipment are needed. As the children start
their own life, the aging parents may require health product and medicines.

Society: Social groups originate from parity in income, occupation and education. Lots of
purchases especially of consumer durables are made because the neighbour has purchased it.
“Keeping up with the Jones” is the phrase used to describe this tendency of copying and is quite
common in the social segment. Advertising based on targeting one social group becomes easy
as the group members speak the same language, understand the same subtleties, the same comic
situations and have the same attitudes and beliefs.

Cultural and sub-cultural segmentation: Our country boasts of unity in diversity. Cultural
differences are quite pronounced as we travel from north to south and east to west. In the north
for instance, when guests are visiting, offering them anything which is three in number is
considered inauspicious, while in the south, it is the done thing. Traditional women keep their
heads covered in the north on auspicious occasions and in the south they have their heads
uncovered.

Sub-cultural segments come from areas like the north Punjabi culture with exuberant dances,
music and an extrovert life-style, as compared to the Rajasthani segment, which is more
conservative and traditional, although they also have their own dances and music. Each area in
India has a vast reservoir of cultural heritage, which drives that particular segment’s members
to behave in a certain manner. Durga Puja sees Bengalis buying dresses, decoration material and
the like.

With Global marketing becoming important in India, cultural diversity round the world, has to
be learnt. Simple things like favourite colours become important; cycles exported to Iran can
come back to India if they do not come in Iran’s favourite green colour.

Segmentation on the basis of usage

Imagine a person who buys a cell-phone and uses it only to see the number calling him and then
goes to the nearest land phone to call back. Another guy uses cell-phone the whole day, making
STD and ISD calls to his foreign clients and collaborators. Or, a person stays in a five star hotel

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only for one day in a year, eats out and just pays for the room rent of about ` 6000, as against the Notes
person who stays at least for a week in a month, throws parties, uses the hotel facilities and his
yearly bill exceeds ` 1,000,000. While it is understood that the customer is king, we can now see
that some customers are emperors, others are kings, some are princes and yet others are just
buyers. That is why to lure big buyers firms have special treats for them, including the frequent
flyer programme of many airlines, room upgrades of big hotel users. It may however be
remembered that today’s prince can become tomorrow’s emperor and hence firms can ill afford
to neglect to provide the best possible service to him.
Usage situation segment: Situational usage is prevalent for greeting cards, flower and gift items
that are given on occasions like Christmas, Deepavali and Eid. Card maker’s gift suppliers focus
their advertising effort towards customers.

Benefit Segment

People are looking for benefits all the time, like the calorie conscious person who wants tasty
food with low calories and insurance people who sell insurance promising life long benefits. In
fact the entire marketing is based on making customers aware of the benefits the firm’s products
provide as value for money and which are unique.
Segmentation of customer also depends on the following:
1. Customer attitude
2. Customer needs and degree of self-sufficiency
3. Different degree of value added
4. Customer behavior and their buying practices.

Customer Attitude

In simple terms attitude refers to what a person feels or believes about something. Additionally,
attitude may be reflected in how an individual acts based on his or her beliefs. Once formed,
attitudes can be very difficult to change. Thus, if a consumer has a negative attitude toward a
particular issue it will take considerable effort to change what they believe to be true.
Example: Attitude, is an enduring organization of motivational, emotional, perceptual
and cognitive processes with respect to some aspect of our environment. Consumer form attitude
towards a brand on the basis of their beliefs about the brand. For example, consumers of Sony
products might have the belief that the products offered by Sony are durable; this will influence
those customers to buy any products due to this attitude towards the brand.

Marketing Implications

Marketers facing consumers who have a negative attitude toward their product must work to
identify the key issues shaping a consumer’s attitude then adjust marketing decisions (e.g.,
advertising) in an effort to change the attitude. For companies competing against strong rivals
to whom loyal consumers exhibit a positive attitude, an important strategy is to work to see
why consumers feel positive toward the competitor and then try to meet or beat the competitor
on these issues. Alternatively, a company can try to locate customers who feel negatively toward
the competitor and then increase awareness among this group.

Customer Needs

Customer needs are the expectations of the product buyers. There are several needs of customers
in this open market and it is also seen that its very difficult to measure the exact needs and
demands from customers.

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Notes Well somebody had mentioned that it is not possible to understand the customer’s behaviour.
To some extent we have to agree on this because the expectations are the subset of many factors
(Environment, competition, nature, attitude etc.) which keeps on changing and nobody in this
world can define 100% correctly.

Here we broadly categorise the customer expectations/needs into:

1. General Needs: General needs are the needs which are related to the product which is being
purchased and used. Let us take the example of Automobiles. If customer has purchased a
car from a showroom, then his general (technical) needs would be good service, New
Products display at dealerships, Workshop to be equipped with all latest tools and machines,
no repeat failuresm, etc.

2. Emotional Needs: Emotional needs can be defined as needs which are related to customer
inner feelings and are non-technical in nature. Nowadays, emotional needs are considered
as more important than General needs. Some of the examples related to car customer can
be good customer waiting room, Free tea and snacks arrangement, Some lockers to be
provided to keep his belongings, etc.

Notes It is for sure that if we provide such amenities to our customers, we can reach to a
level of customers satisfaction. These needs are now become the basics for the sellers
(service providers), however if the sellers are doing over and above the customer
expectations then it is called customer delight.

When a particular goal or need cannot be fulfilled, a substitute goal emerges. Similarly, after
fulfillment a new goal or need arises. In any case needs can never be fully satisfied. When a
person becomes Vice President of a firm, he changes his goal to becoming the President. Product
updates and newer technologies help the firms to use this urge as a spring board for launching
innovative products.

Once the basic needs are fulfilled, people want to achieve higher goals. After getting a good
house to live, people would like to be community leaders.

As the saying goes, “Nothing succeeds like success.” Success gives an extra fillip to people for
going to a higher level of goals. Failure, on the other hand make people redefine their goals, by
either lowering the standard or taking a different road altogether. Goal substitution occurs on
non-attainment of goal. If you cannot buy a Honda City car, buy a Maruti 800. Some people go
into a dream world which is devoid of reality.

Non-achievement causes people to go into depression, which can result in behavioural changes
like sulking and going into a shell, anger or rationalisation of failure, which is bad as it makes
a person complacent and frustrated.

Customer Behavior and their Buying Practices

Consumer behavior refers to the mental and emotional process and the observable behavior of
consumers during searching, purchasing and post consumption of a product or service.

Consumer behavior involves study of how people buy, what they buy, when they buy and why
they buy. It blends the elements from psychology, sociology, socio-psychology, anthropology
and economics. It also tries to assess the influence on the consumer from groups such as family,
friends, reference groups and society in general.

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Buyer behavior has two aspects: the final purchase activity visible to any observer and the Notes
detailed or short decision process that may involve the interplay of a number of complex
variables not visible to anyone.

Task What is the effect of segmentation by product usage in the market? Discuss.

Factors Affecting Consumer Buying Behavior

Consumer buying behavior is influenced by the major three factors:

1. Social Factors: Social factors refer to forces that other people exert and which affect
consumers’ purchase behavior. These social factors can include culture and subculture,
roles and family, social class and reference groups.

Example: By taking into consideration Reference group, these can influence/affect the
consumer buying behavior. Reference group refers to a group with whom an individual identifies
herself/himself and the extent to which that person assumes many values, attitudes or behavior
of group members. Reference groups can be family, school or college, work group, club
membership, citizenship, etc.

Reference groups serve as one of the primary agents of consumer socialization and learning
and can be influential enough to induce not only socially acceptable consumer behavior
but also socially unacceptable and even personal destructive behavior.

Example: If fresher student joins a college/university, he/she will meet different people
and form a group, in that group there can be behavior patterns of values, for example, style of
clothing, handsets which most of group member prefer or even destructive behavior such as
excessive consumption of alcohol, use of harmful and addictive drugs, etc. So, according to how
an individual references him/herself to that particular reference group, this will influence and
change his/her buying behavior

2. Psychological Factors: These are internal to an individual and generate forces within that
influence her/his purchase behavior. The major forces include motives, perception,
learning, attitude and personality.

3. Personal Factors: These include those aspects that are unique to a person and influence
purchase behavior. These factors include demographic factors, life-style, and situational
factors.

Example: Life-style is an indicator of how people live and express themselves on the
basis of their activities, interests, and opinions. Life-style dimension provide a broader view of
people about how they spend their time the importance of things in their surroundings and
their beliefs on broad issues associated with life and living and themselves. This is influenced by
demographic factors and personality.

Example: A CEO or Manager is likely to buy more formal clothes, ties and shoes or
PDAs and less informal clothes like jeans as compared to a Mechanic or Civil engineer.
So according to their life-style and profession, the buying behavior of people differ from one
another.

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Notes Possibly the most challenging concept in marketing deals with understanding why buyers do
what they do (or don’t do). But such knowledge is critical for marketers since having a strong
understanding of buyer behavior will help shed light on what is important to the customer and
also suggest the important influences on customer decision-making. Using this information,
marketers can create marketing programs that they believe will be of interest to customers.

As you might guess, factors affecting how customers make decisions are extremely complex.
Buyer behavior is deeply rooted in psychology with dashes of sociology thrown in just to make
things more interesting. Since every person in the world is different, it is impossible to have
simple rules that explain how buying decisions are made. But those who have spent many years
analyzing customer activity have presented us with useful “guidelines” in how someone decides
whether or not to make a purchase.


Case Study Parle Agro Mineral Water

I
n 1993, when Prakash Chauhan’s Parle Agro entered the mineral water market with its
brand, Bailley, market analysts thought it fit to keep their fingers crossed about its
prospects. For one, the concept of bottled mineral water was not well established, with
usages restricted to foreign tourists and jet-setting Indians. On the other, for whatever the
market was worth, it was firmly within the stranglehold of Bisleri, owned by brother
Ramesh Chauhan’s Parle Exports. Bisleri enjoyed a clear first-mover advantage and was
on its way to assume the generic brand status in a 3.5 million-case market (estimated at
` 36 crores).

For Prakash Chauhan, however, the market presented a very clear opportunity. Parle
Agro had two well-entrenched brands in its portfolio, Frooti and Appy, which occupied
leadership positions in the tetra packed fruit drinks market with a combined share of over
90 per cent. That meant that the distribution system was already in place and the new
brand of bottled water from the same stable would have a readymade network of outlets
throughout the country. Second, with very little investment required in terms of technology
or infrastructure, the entry barriers were not very difficult to overcome.

However, as a new entrant, Bailley’s task was formidable. Through the 1970s and 1980s,
the mineral water category was a virtual, with only a handful of players catering to the
sporadic demands of an equally small audience comprising travellers and a few affluent
consumers. According to some estimates, travellers then accounted for 80 per cent of the
sales volume. Research findings corroborated the fact that people associated the
consumption of mineral water with foreign tourists, who were wary of consuming
contaminated water. But for the average traveller, the price tag of ` 8-9 for a 1-litre bottle
appeared unreasonable for a product which could be had for free and for which he had no
clear need. Instead, most travellers carried their own water bottles. In any case, even
though the concept of water filters had made its way into people’s homes, the idea of
carrying hygienic drinking water outside of home was accorded very low priority. Instead,
travellers were quite content to consume tap water at railway stations or restaurants
located near bus stops.

The biggest barrier was the high recall that Bisleri enjoyed. So much so that consumers
who went to buy mineral water would actually walk up to the retail counter and say: “Ek
Bisleri Dena.” (Give me a bottle of Bisleri). Or even when the consumer did ask for a
particular mineral water brand, the retailer would fish out whichever brand he had in

Contd...

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Notes
stock and hand it over to the consumer. In essence, the brand awareness was low, and apart
from localised competition, the small size of the market did not grant enough space for
another national player to join the fray.
To thrive in such a scenario, the company had to expand the market. Here, new entrants
and relatively smaller players were at a disadvantage because freight costs claimed a
large part of the operating expenses, at times as high as 30–40 per cent of the total cost.
Maintaining an efficient delivery system required both high volumes and investment in
infrastructure. But raking in the volumes in a category where the scope for brand
differentiation was low presented another formidable barrier.
Despite these barriers, when Parle Agro began exploring the market in detail, it realised
that with increasing health consciousness the market was poised for a take-off. Added to
that was the prospect of increasing tourist traffic, both domestic and foreign. But the
existing capacities were not quite enough to serve the steadily increasing demand.
Since Parle Export’s Bisleri was so strongly identified with the category, Parle Agro took
great care to brand its new product carefully. Without being radically different, the company
chose a name that was slightly anglicised to project a more upmarket image. The company
also figured that the consumer took a little more time to articulate the name, which in turn
made sure that recalling the name would be so much easier. But more than just the brand
name, the company realised that to penetrate the market effectively, an efficient distribution
system and competitive freight costs were important.
Bailley had learnt important lessons from the Bisleri experiment. Parle Exports’ distribution
system started out with its bottling plant in Mumbai. Later, it went ahead and added
11 more franchisees who had their own bottling plants in the metros and a few mini-
metros. While this restricted the spread, it also resulted in a lopsided cost structure because
the freight and handling costs to survive in the interior markets proved sufficiently
prohibitive.
Parle Agro had a very clear game plan from the beginning. One thing was clear: distribution
was the key to success. Mineral water being a logistics business and a voluminous item,
transportation was expensive. Therefore, it was essential to locate plants across the country.
But that was an expensive proposition. Also, differing sales tax, excise, and octroi rates
across states makes it difficult to have uniform national pricing. A network of franchisees
that was widely spread out was the only way to things would work.
Parle Agro established franchisees near the markets that it identified to attack. This meant
they had to limit their focus to only a few markets initially. But that was fine for the
company, as long as the freight cost was kept to the barest minimum. This structure also
ensured that Bailley had shorter replenishment cycles and lower inventories for the plants.
While Bisleri reverted to the same route later, Parle Agro simply doubled the number of
franchisees. This allowed Bailley to penetrate the market quickly. All these franchisees
were expected to set up PET bottle manufacturing facilities at the bottling plant as well.
This was because packaging costs – bottle, pilfer-proof cap and so on – made up some
40 per cent of the total costs. This also did away with the uncertainty of bottle supply.
Parle Agro also decided to differentiate Bailley in terms of bottle design, since there was
very little scope for differentiation in the product itself. Mineral water bottles, irrespective
of brand, are made through the process of blow moulding. Since the preform-supplier of
all those bottles was the same, all the mineral water brands available in the market had an
identical design. To stand out, Parle Agro decided to standardise preform and cap designs
for Bailley. The company set up a preform plant at Silvassa, which produced these moulds
from PET granules that it buys from Reliance. These moulds are small test-tube like
structures, which are sent to bottling facilities where they are blown, filled, and despatched.
Contd...

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Notes
Initially, the company introduced two pack sizes. 500 ml bottle was priced at ` 5 and was
meant to induce trials, and was also most convenient for the individual traveller. The
1-litre bottle was initially meant to spell safety and security for ‘integrated consumers’
who were genuinely into health and fitness. Thereafter, it was placed on the prestige
platform for the achiever segment – those who like to make a fashion statement by
drinking mineral water. The prestige aspect was fully exploited when the Bailley team hit
upon the idea of exploring the wedding market. While caterers had reservations about
whether the host would pick up the tab for water, Bailley salesmen did a fair amount of
direct servicing to set the ball rolling. This has now turned out to be one of the fastest
growing segments.

Side by side, Parle Agro’s sales team also established franchisee networks in relatively
inaccessible places such as Guwahati, Palghat, Jaipur, and Belgaum, which gave the company
access to remote markets.

Another advantage was that while attacking these markets, the threat of any immediate
retaliatory action from Bisleri was minimised. That was mainly because Bisleri was quite
well established in the metros and such low-volume fringe markets were of very little
interest to the company. Moreover, at the time Parle Exports was determined on paring
down its investments on the mineral water brand and was content to let it piggyback on
its existing soft drinks network. After the task of cracking the market open was through,
Parle Agro devoted all its energies to exploit the non-traditional routes of increasing
distribution width. It tied up with various long-distance bus operators who kept stocks of
Bailley on board. A small incentive was given to bus operators and conductors to push the
brand. The company also sought out restaurants or dhabas on Mumbai–Pune and Nasik–
Pune route which had been neglected by other players. The company encouraged stockists
to service these outlets, especially restaurants at which buses made their day or night-time
halts.

Typically, the interior markets had far more players than could be accommodated. To
fight the regional players, Parle Agro used a two-pronged approach at the outlet level. It
offered better service cycles and better product quality.

In some cases, the company also resorted to an ingenious retail monitoring system, the
Agro Retail Barometer to identify those outlets where competitive brands were not moving
fast, so that the company could seize the opportunity to persuade the retailer to stock
Bailley instead and push it.

Despite its aggressive stance, the Delhi market eluded Bailley for a long time. That was
because it faced major problems in getting its franchisee set-up in Delhi right. While
Bailley was widely available in the markets of Jammu and Uttar Pradesh, till December
last year Parle Agro was not able to fix a big enough franchisee which would be able to
service Delhi and adjacent towns. Despite that, till about a year back, Parle Agro was able
to command a 20 per cent share nationally (against Bisleri’s 45 per cent) with its persistent
attempts to crack the areas that the leader wouldn’t dare.

The company’s aggressive marketing strategy seems to have paid off. For one, it
successfully broke the monopoly of Bisleri and is now the leader in a number of regions
including Maharashtra (especially Mumbai), Gujarat, West Bengal, Karnataka, and Goa,
and a close second in many others. With a total production capacity of 120 million bottles
per year, Parle Agro has mainly targeted towns with populations of more than one lakh,
although Bailley is also available in towns with populations less than 50,000. Being a low-
margin business, the company hasn’t spent any money and effort on mass media advertising

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Notes
but has concentrated on educating consumers on the use of pure, hygienic water through
direct mailers and other media. Participation in corporate events also gives it a lot of
mileage and the brand is patronised by corporates such as the Taj Group of Hotels and Jet
Airways.
But the main reason for Bailey’s success has been the strength of its franchisee network.
Following the example of the West, the company realised that the best growth strategy is
not one that entails extra space, capital investments and added manpower, but franchising.
Franchised operations provided it a quick expansion route, while keeping costs low and
profitability high, and at the same time ensured deeper penetration and easy accessibility.
Parle Agro now has a network of 18 franchisees. With regular monitoring of its decentralised
operations and strict checks on quality, Parle Agro provides the overall expertise, cashing
in on the local franchise’s understanding of his area.
Today, the mineral water business has grown to a healthy ` 500 crore and is growing at a
phenomenal rate of more than 50 per cent. Of this, unorganised sector players constitute
about 40 per cent. Till four years ago, the market had only two national players; today,
more than 168 are jostling for shelf space.
According to industry sources, a new label is launched every three months and one existing
player recedes into oblivion. For all practical purposes, Bisleri and Bailley today dominate
the organised sector. Bisleri leads the pack with a 40 per cent share by value. Bailley is a
60-crore brand and is the No. 2 player with a share of 22 per cent. In percentage terms, the
brand is growing faster than the category, claims the company.
But the fact remains that even to this day, about 76 per cent of the mineral water
consumption in the country is by travellers, and bottled water hasn’t made inroads into
middle class homes yet. For Bailley too, the biggest segment of consumers is that of
travellers, followed by institutions and tourists. According to the company, the mineral
water consumer is attracted by the benefits of easy accessibility, purity, and hygiene and
only a small segment of consumers have evolved to the level of being loyalists of good
brands.
The mineral water consumer is typically in the 25–35-years age group and is an educated,
evolved person from SEC A and B.
The consumption pattern is changing, though. Mineral water is now served on trains,
airlines, and parties. Besides the standard I litre bottle, Parle Agro has introduced bigger
pack sizes to cater to a variety of needs. Bailley is available in I litre, 1.5 litre and 500 ml
bottles, 20 litre jars and 200 ml glasses. The one-litre bottle sells the most.
While new players are making a beeline for this industry every day, hygiene continues to
be the main plank of most brands. Worldwide, mineral water stands fortified with genuine
minerals. However, it is different in India, since the Bureau of Indian Standards hasn’t laid
down any specifications. So what is predominantly available is purified water. Even
techniques such as ozonisation and reverse osmosis are used only by a handful.
Questions:
1. Study the case and identify major issues related to studying competition, as Parle
Agro did.
2. What weaknesses of the competitor helped Parle Agro establish Bailley?
3. What is the typical profile of a mineral water consumer?
4. How do consumers shop for mineral water? What implications does it have for its
distribution?

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Notes Self Assessment

State whether the following statements are true or false:

9. Customer needs are the expectations of the product buyers.

10. Consumer behavior does not involve study of how people buy, what they buy, when they
buy and why they buy.

11. Segmentation by sex is related to geographic segmentation.

3.10 Summary

 Competitor analysis is an important part of a firm’s development of its strategy.

 Its importance lies in the understanding of competitors, their strategy, and resources and
capabilities.

 More specifically, competitor analysis also allows a firm to assess its own firm versus
competitors and plan for what competitors’ actions may be as a reaction to actions the firm
may take.

 A competitor analysis provides a firm with the knowledge to leverage its strengths and
address its weaknesses and, conversely, take advantage of weaknesses of competitors and
counter their strengths.

 Finally, competitor analysis also gives a firm a better understanding not only of the
competitors but also their overall sector and where the emerging opportunities may be.

 Consumer buying decision process is the processes undertaken by consumer in regard to

a potential market transaction before, during and after the purchase of a product or service.

 Customer segmentation is the practice of dividing a customer base into groups of individuals
that are similar in specific ways relevant to marketing, such as age, gender, interests,
spending habits, and so on.

3.11 Keywords

Consumer: A term used to describe two different kinds of consuming entities: personal consumers
and organizational consumers.

Consumer Behavior: The behavior adopted by consumers display in searching for, purchasing,
using, evaluating and disposing of services and ideas.

Geographic Segmentation: Geographic segment is for the region like south northwest and east
of the country.

Segmentation: Customer segmentation means analyzing our customers and identifying groups
of individuals with similar requirements, preferences or competencies.

3.12 Review Questions

1. Competitor analysis is helpful or harmful for organization. Explain.

2. Segmentation of customer by geographic segment is more successful or by the behavior

of customer?

3. Why sub-cultural segmentation is necessary? Comment.

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4. Discuss Porter’s framework of competitor analysis. Notes

5. You are a product manager in FMCG company, your company assign a job to you to
segment the entire country according the previous experience of segmentation of market.
Describe.

6. List some limitations of competitor’s analysis with example.

7. Why any organization access competitor’s current strategy?

8. What do you mean by customer segmentation?

9. How does consumer behavior affect the market strategy?

Answers: Self Assessment

1 (i) 2. (iv)

3. Competitor analysis 4. Customer Segmentation

5. Growth objective 6. Core strategy

7. (i) 8. Customer analysis

9. T 10. F

11. F

3.13 Further Readings

Books Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand
Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Aaker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.

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Notes

Online links www.en.wikipedia.org

www.web-source.net

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Unit 4: Market Potential and Sales Forecasting Notes

CONTENTS

Objectives

Introduction

4.1 Market Potential

4.2 Uses of Market Potential

4.3 Sales Forecasting

4.4 Estimating Market Potential

4.4.1 Retail Market Potential

4.4.2 Target Market

4.4.3 Market or Trade Area

4.4.4 Market Size

4.4.5 Consumption or Usage

4.5 Estimate Sales Potential

4.6 Summary

4.7 Keywords

4.8 Review Questions

4.9 Further Readings

Objectives

After studying this unit, you will be able to:

 State the Market Potential

 Identify the uses of Market Potential

 Formulate Sales Forecasting

 Discuss the Estimation of Market Potential and Sales Potential

Introduction

In this unit we will discuss market potential, primarily market analysis, sales forecasting, and
sales analysis, it is desirable to give specific meaning to each. Market potential analysis will
apply to those studies of individual markets that seek to determine the sales potential within
them. Sales forecasting will be used to mean the prediction of sales of a particular product,
company, branch office, or other unit for a given time period.

Sales forecasting is a difficult area of management. Most managers believe they are good at
forecasting. However, forecasts made usually turn out to be wrong! Marketers argue about
whether sales forecasting is a science or an art. The short answer is that it is a bit of both.

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Notes 4.1 Market Potential

Marketing management is interested in obtaining sales potentials for each of the geographic
markets it serves to help determine the amount of sales effort that should be allocated to a
specific market. Market or sales potential must be stated for a given product or group of products
for given area for a given period of time, usually a year. The sales potential for product A in a
given geographical area for 1988 is the maximum amount that can be sold in that area by all
sellers of product A in that year. Area potentials can be expressed in both absolute terms and as
a percent of the total market.
Since most products are similar to a number of others, consumers often engage in considerable
substitution; therefore, the degree of substitution, as well as the conditions under which it takes
place, must be considered in the development of potentials. The decision on whether to include
or exclude closely related substitutes will often have a pronounced effect on estimated sales
potentials.

Example: In considering the relative sales potential for canned peas one would have in
consider the possible sales of frozen peas, since the two can be viewed as close substitutes for
each other.
Market potentials and sales forecasts are not the same thing, although the two are sometimes
used interchangeably. Market potentials typically refer to total sales possibilities. Several different
potentials may be considered depending on what conditions are assumed. One potential could
have to do with the conditions of use.

Example: The amount of toothpaste that would be used if all persons using toothpaste
brushed after every meal.
Another potential could be one based on brushing only once a day, and so on. Thus the word
potential has specific meaning only in terms of the assumptions used when making the calculation.

4.2 Uses of Market Potential

There are three main uses of market potential and these are:

1. Allocation of marketing resources

2. Defining sales techniques

3. Setting sales quotas.

Allocation of Marketing Resources

The primary use of information on market potentials has been in the allocation of marketing
resources, especially the allocation of salesmen. It is difficult to estimate a market-response
function, i.e. the way a given group of potential customers will respond to various combinations
of marketing inputs under ideal conditions, resources will be invested in each market until the
incremental returns for each unit of resources invested is equal in each market and until further
investment will yield a return smaller than could be obtained by investing elsewhere.

All setting effort sales force, advertising, and non-advertising promotion should be allocated
only after a consideration of potentials. In the simplest situation, a market with 10 percent of the
total potential should most simple situation; a market with 10 percent of the total potential
should receive 20 percent of the sales effort. If New York has twice as much potential as Chicago,
New York should receive twice as much sales effort as Chicago.

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Notes

Task According to you a new product is very successful in Metro what is the potential of
that product into the rural market.

Defining Sales Territories

A sales manager typically tries to develop sales territories that are equal in sales potential and
in workload so that each salesman has an opportunity to make sale. A study of the literature in
the field found that four territorial characteristics were typically used in defining territories.
Market potential was used in every case, while concentration, dispersion and workload were
used to lesser degrees. Potential was found to have a positive effect of sales in almost all
instances and concentration, the extent to which potential was concentrated in a new accounts,
also tended to have a positive relationship to sales. Geographical dispersion and worked were
not found to be strongly related to sales, but this may be partially the result of the fact that only
proxy measures were available to measure them.

!
Caution Before setting the sales quotas for a particular region. Organization clarifies the
capability of the market as well as sales representative.

Setting Sales Quotas

Sales quotas should be set after market potentials have been derived and sales territories
established. The potential for each territory is then known; but sales quotas must also consider
past sales performance changes to be made in the amount of supporting sales effort during the
coming year, and anticipated activities of competitors. Quotas are usually set for each sales
territory and for each sales representative. They are ordinarily not the same as potentials or
even of the same relative size. One market may have twice the potential of another, but may
have local competitor that take so large a share that a given firm’s quotas may be smaller there
than in as area with less potential.

Sales quotas set in light of sales potential furnish a much better basis for measuring the efficiency
of sales representatives than do quotas set by the old rule of thumb, last year’s sales plus
5 percent. If two sales representatives turn in the same annual sales volume, they are usually
paid about the same and are held in equal esteem by the sales manager. If market analysis shows
that representative A has a territory with far less potential than sales representative B, the sales
manager may wonder if representative A may not actually be superior. A shift of the two might
lead to an improvement in total sales. The following table illustrates.
Table 4.1

Sales Representative A Sales Representative B

Sales last year 500,000 635,000
Territory potential 2,000,000 4,000,000
Percent of potential 25.0% 15.9%

As noted above, however, market potential and sales representative effectiveness are but two of
the basic determinants of sales result in a territory. To measure sales representative performance,
it is necessary to take into account some of the other factors which influence sales results. One
study of a national sales organization found that six factors explained 72 percent of the variation
in sales among territories. These factors and the methods of measuring them were the following:

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Notes Table 4.2

S.No. Factors Method of Measurement

1. Market potential Industry sales in territory
2. Territory workload Weighted index based on annual purchases and
concentration of accounts
3. Experience of sales representative Length of time employed by company.
4. Motivation and effort of sales Aggregate ratings by field sales manager on eight
representative dimensions of performance.
5. Company experience Weighted average of market share past four years
Market-share trend same period
6. Company effort Advertising dollar expenditure in territory.

While sales potential is a key factor in establishing sales quotas, and other measurable factors
such as those listed above also pay a role, it should be remembered that the setting of quotas also
involves a complex interpersonal relationship between the sales manager and the salesman.
The best quota is the one that stimulates the best effort by the salesman. Since salesman varies in
personal reaction to the challenge and risk implied by quotas, the successful manager is one
who can adopt the objectively determined quota to each individual salesman.

Self Assessment

Fill in the blanks:

1. ................................. should be set after market potentials have been derived and sales
territories established.

2. ……………………….typically refer to total sales possibilities.

4.3 Sales Forecasting

Sales forecasting is the process of organizing and analyzing information in a way that makes it
possible to estimate what your sales will be.

A sales forecast is a prediction based on past sales performance and an analysis of expected
market conditions. The true value in making a forecast is that it forces us to look at the future
objectively. The company that takes note of the past stays aware of the present and precisely
analyzes that information to see into the future.

Conducting a sales forecast will provide your business with an evaluation of past and current
sales levels and annual growth, and allow you to compare your company to industry norms.
It will also help you establish your policies so that you easily can monitor your prices and
operating costs to guarantee profits, and make you aware of minor problems before they become
major problems.

Task How sales forecast play vital role for making strategy of company sales and
production? Discuss.

The Importance of Sales Forecasting

Sales forecasting is a self-assessment tool for a company. You have to keep taking the pulse of
your company to know how healthy it is. A sales forecast reports, graphs and analyzes the pulse

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of your business. It can make the difference between just surviving and being highly successful Notes
in business. It is a vital cornerstone of a company’s budget. The future direction of the company
may rest on the accuracy of your sales forecasting.

Companies that implement accurate sales forecasting processes realize important benefits
such as:

1. Enhanced cash flow

2. Knowing when and how much to buy

3. In-depth knowledge of customers and the products they order

4. The ability to plan for production and capacity

5. The ability to identify the pattern or trend of sales

6. Determine the value of a business above the value of its current assets

7. Ability to determine the expected return on investment (This can be very helpful if the
company is trying to obtain financing from investors or other lending institutions).

The combination of these benefits may result in:

1. Increased revenue

2. Increased customer retention

3. Decreased costs

4. Increased efficiency

For sales forecasting to be valuable to your business, it must not be treated as an isolated
exercise. Rather, it must be integrated into all facets of your organization.

What Information is Needed to Prepare a Sales Forecast?

Since the forecast is based on your company’s previous sales, it is necessary to know your dollar
sales volume for the past several years. To complete a thorough sales forecast, you also need to
take into consideration all of the elements, both internal and external, that can affect sales.

Mathematically, it is possible to forecast sales with some precision. Realistically, however, this
precision can be dulled because of external market and economic factors that are beyond your
control. The following are some of the external factors that can affect sales:

1. Seasonality of the business

2. Relative state of the economy

3. Direct and indirect competition

4. Political events

5. Styles or fashions

6. Consumer earnings

7. Population changes

8. Weather

9. Productivity changes

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Notes Sales forecasting requires sufficiently detailed analysis of both the external and internal factors
related to the sales function. Internal factors that can affect sales are somewhat more controllable,
such as:
1. Labor problems
2. Credit policy changes
3. Sales motivation plans
4. Inventory shortages
5. Working capital shortage
6. Price changes
7. Change in distribution method
8. Production capability shortage
9. New product lines
The following internal data will be scrutinized and analyzed when conducting a sales forecast.
Therefore, this data must be prepared on a consistent basis:
1. Accounting records
2. Financial statements
3. Sales-call reports
4. After-sales service demands from clients
It is significant to note that if you sell more than one type of product or service, you should
prepare a separate sales forecast for each service or product group. The more focused your sales
forecast is, the more precise its outcome will be.

How Long and How Often should One Forecast?

A sales forecast needs to be performed, reviewed and compared with actual performance results
on a regular basis. Think of it as a routine tune-up that keeps the gears of your business running
smoothly so your company can achieve a higher performance record.
Although every business owner’s comfort level may be different, sales forecasts should be
conducted monthly during the first year, and quarterly after that. The more often you forecast,
the better your chances of weeding out extreme variations in year-to-year sales. It will also
possibly identify a trend or level of variations that is more realistically oriented to probable
future sales patterns.

Although any forecast has a percentage of uncertainty, the farther into the future you project, the
greater your uncertainty. As a rule, there are three lengths of time for sales forecasting:

1. Short-range forecasts are for fewer than three months. They are used to make continual
decisions about planning, scheduling, inventory and staffing in production, procurement
and logistics activities.

2. Intermediate forecasts have a span of three months to two years. They are used for budgetary
planning, cost control, marketing new products, sales force compensation plans, facility
planning, capacity planning and process selection and distribution planning.

3. Long-range forecasts cover more than two years. They are used to decide whether to enter
new markets, develop new products or services, expand or create new facilities, or arrange
long-term procurement contracts.

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Perhaps the simplest method is to assume that the percentage increase (or decrease) in sales will Notes
continue and that no market factors will influence sales performance more in the future than in
the past.

How Sales Forecasting Applies to a New Business?

Statistics show that 80 percent of new business start-ups never survive the first three years. 9 out
of 10 of those business failures are caused by poor management decisions. Implementing sales
forecasting forces a new business to base decisions on facts rather than hunches. Since you have
no historical information on your new business, i.e., past sales, you need to look elsewhere.

You need to consider the following:

1. How well does your competition satisfy the needs of its potential customers?

2. Note the population and economic growth in your location.

3. Develop a customer profile.

Experienced business people will tell you that a good rule of thumb is that 20 percent of your
customers account for 80 percent of your sales. If you can identify this 20 percent, you can begin
to develop a profile of your main markets.

After you’ve identified your primary markets, then you need to determine trends in your
industry. Now you need to know the approximate size and location of your planned trading
area. Your trading area is how far your average customer will travel to shop, as well as how far
you are prepared to distribute and promote your product or service. It is helpful to recognize the
personality of your trading area, which can be found by talking to other neighborhood business
owners, contacting the Chamber of Commerce, and reading the local papers.

At this point, you should be able to estimate your sales on a monthly basis for a year. The basis
for your sales forecast could be the average monthly sales of a few similar-sized competitors
that are operating in a similar market.

To estimate their sales, you have to list, profile and study your competitors. This is accomplished
by visiting either their stores or the stores where their products are offered. You need to analyze
their customer volumes, the location, hours of operation, traffic patterns, busy periods, quality
of their goods and services, prices, product lines carried, promotional techniques, positioning,
product catalogues and other handouts. If possible, talk to customers and sales staff.

Software as a Tool for Sales Forecasting

Projections become even more precise when software programs written specifically for sales
forecasting are utilized. Investing in a simple but effective forecasting package can also free up
the time of valuable personnel. All basic sales forecasting software packages evaluate the history
of your business, extrapolate pertinent information, and offer a forecast of your company’s
future.

When shopping for a good software package, look for the following features:

1. Capability to adjust for special factors, i.e., promotion and price changes

2. Documents underlying forecasting assumptions

3. An effective management review and communication step

4. Historical data-tracking and plotting of current performance against past trends and future
projections

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Notes 5. Allows multiple parties (e.g., sales, marketing, manufacturing and logistics) to enhance,
manipulate and use the forecast.

Unfortunately, such programs are not usually stocked in computer software stores. To locate the
companies that produce this type of software, you can contact professional associations, check
ads in your professional magazines, and talk with other businesspeople for recommendations.
The Internet is a great additional source for seeking out these companies, and a simple search
will bring up several choices.

As you research forecasting software you will find those that run the gamut of very affordable
to very expensive. Some examples include: Strategic Planning Software ($29), Ward System
Group’s Neuroshell PREDICTOR ($395) and ParkerSoft Products’ Exforecaster 1.0 ($99) and Fastcast
($600.00).

Before purchasing a program, it is advisable to either download or request a demo program for
evaluation. Be aware that some software programs are not stand-alone and often require another
program such as Excel and Oracle Personal Express to be installed on your computer.

Sales forecasting is an unwieldy and difficult process, yet doing it correctly is key to understanding
what’s in store for your business’ future. The numbers you come up with will permeate almost
every aspect of your company, making it all the more important to ensure accurate forecasts. By
using the information presented here, you can develop a realistic projection for the future
performance of your organization.

Task Are you aware of any software tool related to or used in sales forecasting?
Discuss it.

Self Assessment

State whether the following statements are true or false:

3. Long-range forecasts not cover more than two years.

4. Intermediate forecasts have a span of three months to two years.

5. Statistics show that 80 percent of new business start-ups never survive the first three years.

4.4 Estimating Market Potential

Estimating the market or market potential for a new business or business expansion is critical in
determining the economic feasibility of a venture. Estimating the market potential will determine
if the market is large enough to support your businesses.

Estimating the market potential for a business is critical in evaluating its viability and provides
an estimate of the maximum total sales potential for a given market. Once the estimated market
potential has been calculated, it is possible to determine if the market is large enough to sustain
your proposed business or sustain an addition competitor in the marketplace. It is important to
remember that the estimated market potential sets an upper boundary on the market size and
can be expressed in either units and/or sales. Unless there are no direct or indirect competitors,
a business will capture a share of the total estimated market potential not all of it. The following
provide the steps and data necessary to estimate the market potential.

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Key Steps in Estimating Market Potential Notes

The key steps in estimating market potential are:

1. Define your target market and market segments.

2. Define the geographic boundaries of your market.

3. Derive an average selling price.

4. Determine the average annual consumption.

Estimating the market potential for a business requires specific information on the number of
people or potential buyers, an average selling price, and an estimate of consumption or usage
for a specific period of time. Once this information has been collected, it can be plugged into the
following formula to derive the estimated market potential.

Estimating Market Potential: MP = N x P x Q;

Where:

MP = market potential

N = number of possible buyers

P = average selling price

Q = average annual consumption

However, the better the information that is being plugged into the formula, the better the
estimate of the market potential.

4.4.1 Retail Market Potential

If you are evaluating a retail establishment, a more refined method of calculating the retail trade
area market potential is available. The market potential for a retail establishment provided an
estimate of the maximum total sales potential for a specific retail operation in a given market.
As with the general market potential estimate, the market potential sets an upper boundary on
the market size and can be expressed in either units and/or sales. The following are the steps and
information that are needed to estimate the retail trade area market potential.

Key Steps in Estimating Retail Market Potential

The key steps in estimating retail market potential are:

1. Define your target market and market segments.

2. Define the geographic boundaries of your market.

3. Derive average expenditures for the category.

4. Determine the average household income for the area and state.

5. Estimate market share.

As with estimating the market potential for any business, estimating the retail trade area market
potential requires specific information on the number of people or potential buyers, an average
expenditure figure for the retail category, area and state income figures, and an estimate of
market share. Once this information has been collected, it can be plugged into the following
formula to derive the estimated retail trade area market potential.

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Notes Trade Area Analysis is a mean of evaluating the potential retail sales for a specific retail operation
can be estimated by using a standard formula:

ES = P x EXP x (ADI/MDI) x MS, where

ES = estimated sales

P = market area population

EXP = average expenditures for retail outlet category

ADI = area estimated average household disposable income

MDI = Georgia average household disposable income

MS = estimated market share

The following material will provide direction and information needed to estimate the market
potential. There are a number of factors that need to be investigated in order to derive the best
estimate possible.

4.4.2 Target Market

One of the most important components of estimating the market potential for a business is to
determine its target market. A target market can be thought of as the customers who are most
likely to buy from you and generally are described using demographic variables (gender, age,
education) as well as psychographic variables (life-style and belief system variables). In many
cases, a business may have more than one target market. Think about the automobile industry,
automobile manufactures have a number of target markets, i.e., truck buyers, luxury car buyers,
economy buyers. Your business should be able to develop specific profiles for each of your
target markets using demographic and psychographic variables.

The first method of describing your target market segments is using a set of demographic
descriptors like the following:

1. Age

2. Marital status

3. HH income
4. Gender

5. Race/Ethnicity

6. Family life cycle

7. Education

8. Religious affiliation

It is important to create a profile of your target market describing them with demographic
variables like those listed above. Once you have created your demographic profile, you can
determine how many people fit your profile using various demographic data sources. It is
important to note that creating a demographic profile does may not provide specific enough
information to accurately determine your market potential as it may be too general.

Task What is your opinion trade analysis is helpful for estimate market potential or not?
Discuss.

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The second profile is referred to as psychographic life-style and describes your target market Notes
segment by their activities (work and leisure), interests (family, animals, environment, home,
and community), and opinions. The life-style profile is more important in predicting future
patronage than the demographic profile because it will determine what type of experience they
are seeking. Failure to meet these needs will result in loss of business. The following are a few
psychological descriptors:
1. Political affiliation
2. Socially conscious
3. Cutting-edge
4. Family-oriented
5. Conformist
6. Power-wielding
7. Trend follower
8. Thrill seeker
9. “Green”
10. Fun-loving
11. Fashion-forward
12. Sports enthusiast
Psychographic information is more difficult to obtain than demographic information. As a
result, it is less frequently used when determining a target market profile.

Example: An individual would like to convert his family farm into a hunting plantation.
The farmer has done his research to determine both the demographic and psychographic profile
of his target market, avid hunters and fishermen. Combining these demographic and life-style
characteristics, you are able to develop a profile of one of your target markets below:

Demographic Lifestyle
Race: White NASCAR fan
Age: 25-54 Owns a Ford Truk
Education: High school Camps and fishes
HH Income: $74,000 County Music
Martial Status: Married Boat
Home Ownership: Mixed Outdoor Life TV Show

4.4.3 Market or Trade Area

The market area can be thought of as the geographic area where the business intends to operate,
i.e., a city block, between the rivers or the globe. Defining the market area is important because
it defines the geographic area where potential consumers live and/or work. However, not
everyone in the defined market area will be a customer. As a result, it is important to compare
your target market profile, generally described using demographics, to the population in the
market area. There are a number of ways to define a market area, some are easy and others are
more difficult and require the services of a marketing professional.

Methods of Defining Market

A market area is generally defined by geography, radius, trade area or drive-time.

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Notes 1. Geography is the simplest form of defining a market area. This method defines the market
area by using landmarks or logistical barriers to define the market area. The following are
easy-to-use geographical areas:

(a) Neighborhoods

(b) Zip codes

(c) City or County Boundaries

(d) Metropolitan Statistical Areas

(e) State (multi state) Boarders

(f) Nation

(g) Continent

(h) World

2. A ring or radius defined market area is performed by creating a circle a specified number
of miles from a business location. The ring analysis allows a business to evaluate the
demographics of people residing within a predefined distance from specific business
location. The ring technique assumes a circular trade area with the business in the center.
The ring analysis may cut through geographic obstacles and/or barriers (large bodies of
water, mountains, railroad tracks) that may hinder or restrict access to a given location.

3. Drive Time Analyses: Drive time analysis is a more sophisticated analysis than the radius
analysis as a number of variables are used to estimate the drive time to a given location.
The analysis takes speed limits, road type, vehicle, time of days, and congestion values.
Customers may be willing to drive 15 miles, but given traffic conditions the 15 miles may
take 30 minutes to travel. A customer may be willing to travel 15 minutes but in a heavily
congested area, that may translate into a considerably shorter actual distance. As a result,
incorporating these driving-related variables, a drive time analysis may provide a better
estimate of the market area than a ring study.

4.4.4 Market Size

Once the market area and target market has been defined, it is possible to determine the number
of potential customers for your business. This will allow you to estimate the N (number of
potential customers) in the market potential equation. This total market potential will typically
have to be adjusted downward to account for non-users.

Example: An agri-tourism operation has decided its will target its market towards children
under 9 years old. The business has concluded its market area is Wake County which has 101,768
children under 9 years old. Therefore, N = 101,600 potential customers. These numbers were
obtained from the US Census Bureau.

However, not all children under 9 years of age will visit an agricultural facility. It is important
to adjust these Figures to get a more accurate estimate of the actual market potential. A survey
of elementary school teachers found that only 68% of kindergarten through 3rd grade teachers
indicated they would take an agriculturally-related field trip in the next year.

As a result, the 101,600 kindergarten through 3rd graders should be adjusted downward by
multiplying by 68%. This results in an adjusted market potential of 69,088 potential students.

Adjusted Market Potential = 101,600 × 68% = 69,088

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4.4.5 Consumption or Usage Notes

You need to determine how often your target market segment uses your product or service. This
figure will have a significant impact on the estimated market potential. For instance, is the
product purchased frequently, occasionally, or infrequently? Obviously the more frequently
the product is purchased, the larger the market potential. Durable goods, products that can be
used over a long period of time, are purchased less frequently than perishable items. As a result,
the annual consumption of apples is greater than the annual consumption of television sets.
There is an abundance of consumption information from the government as well as industry
trade associations. For example, the USDA collects volumes of disappearance data for
commodities that is converted into per capita annual usage estimates.

Example: It is important to determine how often these school groups will take an
agriculturally based field trip. A study of elementary school teachers indicated that they will
take an average of 1.25 agriculturally-based field trips per year. Therefore, we can use 1.25 as our
usage or consumption of agriculturally-based field trips, (Q = 1.25).

Estimating Market Potential

MP = 69,088 x P x 1.25

Self Assessment

Fill in the blanks:

6. The ................................. can be thought of as the geographic area where the business intends
to operate.

7. A market area is generally defined by ……………………………

4.5 Estimate Sales Potential

There are many methods used for estimate the sales potentials and these are:

1. Survey method

2. Expert opinion method

3. Market studied methods

4. Sales force opinion methods

5. Statistical methods

1. Survey Method: The survey method is based on the opinion of buyers and consumers it is
useful with respect to industrial products, but not as far as consumer goods are concerned.
According to this method, a company first of all selects potentials buyers/consumers.
It then collects their opinions for sales forecasting.

2. Expert Opinion Method: According to this method, a company invites the opinions of
executives and consultants who are acknowledged experts in studying sales trends. On the
basis of their opinions, it forecasts future sales. This estimate is also made on the basis of
past performance. However, the method suffers from the drawback of not taking into
consideration changes in the future business environment.

3. Market Studies Methods: This method is commonly used by marketers for consumer
goods. It is also known as the Market Test Methods. A market test provides data about

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Notes consumers and the marketing mix. Some people use this method as a market experiment
method. According to this method, market experiments are conducted on changing
consumer behaviour, prices, advertising expenditure, etc. This method lets the management
know how the people might actually buy the product in question.

4. Sales Force Opinion Method: This method estimates the buyers intentions from experienced
personnel in the sales force. They can easily forecast for their respective territories.
Territory-wise forecasts are consolidated at the branch level, and the branch level forecasts
are consolidated at the corporate level. This method can be used only when the firm has
competent high-caliber sales personnel.

5. Statistical Methods: Statistical methods are considered to be superior techniques of estimate

sales forecasting, because their reliability is higher than that of other techniques. Statistical
methods divided into four different categories and these are:

(a) Trend method

(b) Graphical method

(c) Time-series method

(d) Regression method

(a) Trend Method: This method provides a rough trend of the forecast on the basis of past
experience. It does not, however, take into account the changing environment. It is
a simple method for business forecasting on the basis of past performance.

(b) Graphical Method: According to this method, sales data are plotted on graph paper
and a graph is drawn for a number of years. This is a simple and inexpensive
method.

Figure 4.1

y
Sales (`)

x
0
1980 1981 1982 1983 1984 1985 Years

(c) Time Series Method: This method is used for long periods duly taking into account
cyclical changes, seasonal variation and irregular fluctuation.

“A time series may be defined as a collection of magnitudes belonging to different

time periods, of some variable or composite variables, such as production of steel,
per capita income, gross national product, price of tobacco, or index of industrial
production.”

–Ya-uin-chou

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The Time Series Method shows the future trends of sales. The various techniques Notes
that can be used for determining these trends are:

(i) Freehold or Graphical Method

(ii) Semi-Average Method

(iii) Moving Average Method

(iv) Method of Least Squares

(d) Regression Analysis: This is a branch of statistical theory, is popularly used on the
principles of sciences. It helps determine the relationship among various variables.
According to Ya-uin-chou, “Regression analysis attempt establishing the ‘Nature of
the relationship’ between variables that is to study the functional relationship
between the variables and thereby provide a mechanism for prediction, or
forecasting”.

Task Why organizations generally follow the statistical methods for estimate the sales
potential?


Case Study Pricing in an Explosive Market-Computers Ltd.

I
n November 1976, HCL announced a dramatic reduction in prices of their Personal
Computers (PCs). The prices came down from ` 60,000 to ` 30,000 per PC. At that
time CL wanted to introduce their PCs in the Indian market. Other players, like Wipro,
DCM Data and PCL, were trying to match HCL prices. The market had just about started
picking up and the growth rate was 6% per annum and likely to go up to 20% as per
marketing gurus who had been watching the international market of PCs for a while.

Background: CL is a wholly owned subsidiary of Telecom and Electronics Ltd. (TEL)

TEL is a major firm dealing in electrical and electronic goods since 1960. They have been
dealing in motors, generators, process control instruments, tape recorders and domestic
appliances.

TEL exports motors to Australia, Asia and Africa markets, besides having 15% share in the
domestic market. They have built brand equity in India and hope to make full use of it in
the area of computers as a spin off.

Competitive Environment

Threat of new entrants is quite real as the world players including IBM and Compaq are
eyeing the Indian market, as it gives the impression of being almost a virgin market. With
government of India’s support the MNCs will have easy entry and with their brand name
alone they hope to take over a big chunk of the market.

Bargaining power of buyers is increasing with new players and local assemblers offering
their product with marginal cost. Local assemblers have low overheads and can compete
on price and personalised service. Buyers are at an advantage as they get the best deals at
low prices.

Contd...

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Notes
Bargaining power of suppliers is weak, as they want to sell in large volumes, which is
possible only if they can cut down their prices of chips, motherboards connectors and
other components.

Rivalry amongst existing players is increasing by the day as business growth has yet to
reach expected levels and players have already set up manufacturing facilities. Known
brands get an advantage with large firms, but the smaller buyers and individual buyers
look for the latest product at downsized prices, which the assemblers are able to provide.
They also resort to bundling the PC with software of the customers’ choice, mostly pirated
versions and offer site maintenance for the product.

Price Behaviour: As the average price of a branded product was ` 30,000, local, brands and
assemblers were selling the product about 15-20% cheaper. With the local brand, the
customer was usually in danger of losing technical support, as many players would close
shop after they have made a profit and start again, perhaps at a new location with a new
name to avoid problems with the pirated software. The assemblers could further reduce
the price as they were getting components from overseas through dubious means.

CL wants to market their branded product at ` 26,000 and keep dealer margin at
` 3,000. They are able to get a gross margin of ` 4,000. However, should the necessity arise
they can sell it even at ` 23,000.

CL believes that’s since HCL has just reduced prices drastically, no further price cut would
be possible by branded products.

CL has to decide on its pricing strategy. It can go for penetrating prices at ` 18,000 also if
they want to capture a large share of the market, or keep to skimming price at ` 26,000.
They can follow the medium pricing at ` 22,000. Depending on the market growth the
profit situation for CL will be as follows:

The firm has to decide about the strategy, taking the optimum scenario or most likely
future demand seeing the environment factors of today. In case of skimming prices, the
firm can keep the option of heavy investment in brand building and other marketing
inputs and still get a good market share.

Question:

1. Use the decision tree, or Delphi technique to find out the best possible price for the
CL Computers. Will bundling with software help? Discuss the pros and cons of each
type of pricing formulae. Also, looking at the Indian market, work out a promotional
strategy for CL.

Self Assessment

Choose the appropriate answer:

8. Which one is not the method of estimate the sales potential?

(i) Survey method (ii) Statistical methods

(iii) Service methods (iv) Expert opinion methods

9. Which one is the main use of market potential?

(i) Allocation of marketing resources (ii) Defining sales techniques

(iii) Setting sales quotas (iv) All of the above

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10. Out of the following which is not the key steps in estimating market potential. Notes

(i) Define the geographic boundaries of your market.

(ii) Derive an average selling price.

(iii) Unique Selling Proposition

(iv) Determine the average annual consumption.

4.6 Summary

 Market potential analysis involves the development of potentials for individual markets.

 Market potentials are used in establishing sales territories, allocating marketing effort,
and setting sales quotas.

 A sales forecast is a prediction based on past sales performance and an analysis of expected
market conditions.

 Conducting a sales forecast will provide your business with an evaluation of past and
current sales levels and annual growth, and allow you to compare your company to
industry norms.

 A sales forecast reports, graphs and analyzes the pulse of your business.

 Estimating the market potential for a business requires specific information on the number
of people or potential buyers, an average selling price, and an estimate of consumption or
usage for a specific period of time.

4.7 Keywords

Estimate Market Potential: Estimating the market or market potential for a new business or
business expansion is critical in determining the economic feasibility of a venture.

Market Potential: Market or sales potential must be stated for a given product or group of
products for a given area for a given period of time, usually a year.

Sales Forecasting: A sales forecast is a prediction based on past sales performance and an analysis
of expected market conditions.

Short-range Forecast: Short-range forecasts are for fewer than three months.

4.8 Review Questions

1. A country divided into the different territory is useful for market point of view. How it
beneficial for organization?

2. How a organization setting sales quota to their sales manager or sales representatives?
Explain in detail.

3. Forecasting is related to the future. What are the effect of forecasting in the organization
strategy?

4. Discuss how sales forecasting is helpful for new or old business.

5. Market potential is the techniques to know the exact capability of market. Explain how we
estimate market potential.

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Notes 6. Describe the alternative methods of preparing a sales forecast. Which of these would you
prefer to use in marketing forecast for a new personal computer?

7. What are the problems involved in using the sales force to forecast sale? How can these be
minimized?

8. Is there a significant difference between a sales quota and a sales forecast? Discuss.

9. What do you think household income will affect the organization policy of marketing or
sales of a product?

10. How you divide a country into the territory and sales region. Give a suitable example.

Answers: Self Assessment

1. Sales quota 2. Market potentials

3. F 4. T

5. T 6. Market area

7. Geography, radius, trade area or drive-time

8. (iii) 9. (iv)

10. (iii)

4.9 Further Readings

Books Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand
Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Aaker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.

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Notes

Online links www.en.wikipedia.org

www.web-source.net

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Notes Unit 5: Developing Product Strategies

CONTENTS
Objectives
Introduction
5.1 Developing Product Strategies
5.2 Product Life Cycle
5.2.1 Introductory Stage
5.2.2 Growth Stage
5.2.3 Maturity Stage
5.2.4 Decline Stage
5.3 Product Strategies over the Life Cycle
5.3.1 Product Development
5.3.2 Introduction Strategies
5.3.3 Growth Strategies
5.3.4 Maturity Strategies
5.3.5 Decline Stage Strategies
5.4 Product Modification
5.5 Product Line Extension
5.5.1 Customer Segmentation
5.5.2 Consumer Desires
5.5.3 Pricing Breadth
5.5.4 Excess Capacity
5.5.5 Short-term Gain
5.5.6 Competitive Intensity
5.5.7 Trade Pressure
5.6 Summary
5.7 Keywords
5.8 Review Questions
5.9 Further Readings

Objectives
After studying this unit, you will be able to:
 Recall the Developing of Product Strategies
 Discuss Product Life Cycle
 Describe Product Strategies over the Life Cycle
 Provide insight into Product Modification
 Identify Product Line Extension

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Introduction Notes

A product development strategy provides the framework to orient a company’s development

projects as well as its development process. There is no one right strategy for a company. The
strategy takes into account the company’s capabilities (strengths, weaknesses and core
competencies), the competition’s capabilities (strengths, weaknesses, core competencies and
strategy), market needs and opportunities, goals, and financial resources.

You are aware of the fact that like all living beings, everything in the market place is presumed
to be going through several phases from birth until its death. A product or a brand is launched,
it grows, attains maturity, and starts declining, and is buried on its death. Product is basically a
need satisfier. In reality there may be several products satisfying the need of a customer. For
example, the need for document and producing multiple documents was existent since the
human civilization started communication. As the civilization matured, the need for
documentation has also grown. This change in the need level is captured by the demand life
cycle. For every need cycle there is a sequence of phases starting with emergence, accelerating
growth, decelerating growth, maturity, and decline.

A product is an embodiment of technology, and the technology in fact satisfies the need. The
need for document was first satisfied by mud tablets, palm leaves, copper leaves, paper and now
electronic pages. You would agree that the succeeding technologies normally satisfy the need
better than the predecessor. Once you consider the need for multiple copies of the same
information, the modern technology would suggest use of carbon papers, cyclostyling,
photocopying, printing and so on.

5.1 Developing Product Strategies

As a starting point to develop a product development strategy, the company must determine its
primary strategic orientation. A company must recognize that it cannot be all things to all
people and that it must focus on what will distinguish it in the market place. There are six
primary product development strategic orientations:

1. Time-to-Market

2. Low Product Cost

3. Low Development Cost

4. Product Performance, Technology & Innovation

5. Quality, Reliability, Robustness

6. Service, Responsiveness & Flexibility

Time-to-Market: This involves an orientation to getting a product to market fastest. This is

typical of companies involved with rapidly changing technology or products with rapidly
changing fashion. Pursuit of this strategy will typically will lead to trade-offs in optimizing
product performance, cost and reliability. Technology development must occur on an
independent path from product development and technologies inserted on a “modular” basis,
often with frequent product upgrades to make this strategy work.

Low Product Cost: This orientation is focused on developing the lowest cost or highest value
product. This is typical of companies with commodity type products, products reaching a mature
phase in their life cycle, or where there is consolidation or a shrinking market. This orientation
typically will require additional time and development cost to optimize product cost and the
manufacturing process.

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Notes Low Development Cost: This orientation focuses on minimizing development cost or developing
products within a constrained budget. While this orientation is not as common as the other
orientations, it occurs when companies are developing products under contract for other parties,
where a company has severely constrained financial resources, or where a “stealth” development
effort is being undertaken on a “shoestring”. This orientation is somewhat compatible with
time-to-market, but involves trade-offs with product performance, innovation, cost and reliability.

Product Performance, Technology & Innovation: This orientation focuses on having the highest
level of product performance, the highest level of functionality or functions and features, the
latest technology or the highest level of product innovation. This orientation can be pursued by
companies in many industries or many products except commodity products. Pursuit of this
strategy involves higher risks with newer technologies and accepts a trade-off of time and cost
to pursue these objectives.
Quality, Reliability, Robustness: This orientation focuses on assuring high levels of product
quality, reliability and robustness. This orientation is typical of industries requiring high quality
because of the significant costs to correct a problem (e.g., recalls in the automotive or food
processing industries), the need for high levels of reliability (e.g., aerospace products), or where
there are significant safety issues (e.g., medical devices, pharmaceuticals, commercial aircraft,
nuclear plants, etc.). This orientation requires added time and cost for planning, testing, analysis
and regulatory approvals.

Service, Responsiveness & Flexibility: This orientation focuses on providing a high level of
service, being very responsive to customer requirements as part of development, and maintaining
flexibility to respond to new customers, new markets and new opportunities. This orientation
requires additional resources (and their related costs) to provide this service and responsiveness.

Task How quality, reliability and robustness affect the product development strategy?

5.2 Product Life Cycle

You are aware that a product or brand goes through several phases from birth until its death.
Firstly a product is launched; it grows, attains maturity, then starts declining and finally is
ironed out. Accordingly the product life cycle is explained by the following stages:
1. Introductory stage
2. Growth stage
3. Maturity stage
4. Decline stage.

Figure 5.1: Product Life Cycle

Sales Introduction Growth Maturity Decline

Time

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5.2.1 Introductory Stage Notes

The introductory stages of a product are believed to be relatively slow, even after its technical
problems have been ironed out, due to a number of marketing forces and consumer behaviour
factors. The major marketing obstacle to rapid introduction of a product is often distribution.
Retail outlets are often reluctant to introduce new products, and may prefer to wait until a track
record has been established before including them. In their stock.

Consumer acceptance of new products tends to be relatively slow. The newer the product, the
greater the marketing effort required to create the demand for it. The length of the introductory
period depends on the product’s complexity, its degree of newness, its fit into consumer needs,
the presence of competitive innovations of one form or another, and the nature, magnitude and
effectiveness of the introductory marketing effort.
At this stage it is usually assumed that there are no competitors, the market structure is defined
as ‘Virtual Monopoly’. But there are very few really radical innovations with no existing
substitutes. Most new products and services face considerable competition from existing products,
and also experience severe competitive pressure from other new products.

There are many cases where two firms introduce similar products almost at the same time,
which is possible if the two companies are working on similar technological developments. On
noticing success of test market conducted by one company others may follow suit with similar
products. If two or more firms introduce products at about the same time, the result is likely to
be a shorter introductory period. The length of the introductory period is a crucial aspect of PLC.
From managerial point of view, shorter this stage the better.

The consumers who buy the product in the introductory stage itself are called innovators, and
those who buy later are called late adopters or laggards. This may be misleading, for example,
a buyer who hears about a product for the first time two years after its introduction buys it at
once. Can this individual be considered a laggard?

5.2.2 Growth Stage

The growth stage begins when demand for the new product starts increasing rapidly. Innovators
are satisfied with the trial, they move to repeat purchase. They then influence others by word-of-
mouth, which is often considered the most effective mode of communication. The product
availability and visibility in distribution and in use (e.g., new cars on the road) tend to bring
new tries into the market. At this stage, the entry of competitors increase the total demand for
the product through their advertising and promotional efforts.

5.2.3 Maturity Stage

The maturity or saturation stage occurs when distribution has reached its planned or unplanned
peak and the percentage of total population that is ever going to buy the product has been
reached. Volume (reflecting the number of customers, quantity purchased, and frequency of
purchase) is stable. At this stage it becomes difficult to maintain effective distribution, and price
competition is quite common.

5.2.4 Decline Stage

Changes in competitive activities, consumer preferences, product technology and other

environmental forces tend to lead to the decline of most mature products. If decline is for a
product and not brand, producers may withdraw from that product category. The typical reason

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Notes for a product decline is the entry of new products and decreased consumer interest in the specific
product. One of the few options left for keeping a brand alive is price reduction and other drastic
means that depress the profit margin and leads to product withdrawal.

Product decline occurs even when most customers no longer buy the product, only few loyal
customers remain. The latter continue buying the product in spite of no advertising or
promotional campaign. The company may decide to follow a ‘milking strategy’ i.e., retain the
product with meager marketing support as long as it generates some sales. But this requires
maintaining distribution of the product, which becomes less profitable.

!
Caution Before reading the product strategies over the life cycle student’s please recall
product life cycle concept again.

Self Assessment

Choose the appropriate answer:

1. The primary product development strategic orientation:

(i) Low Development Cost

(ii) Product Performance, Technology & Innovation

(iii) Quality, Reliability, Robustness

(iv) All of the above

2. Out of the following which one is not a stage of PLC

(i) Introduction stage (ii) Maturity stage

(iii) Group (iv) All of the above

5.3 Product Strategies over the Life Cycle

Product life cycle can be used is to conceptualize different general approaches to developing
core strategies and tactics.

5.3.1 Product Development

Product development is a specialised activity, which may result in the creation of new products
or in the modification of the existing production process to produce the same product. Developing
new products and processes is risky. So, developing a new product is a major task which considers
various factors. Development is necessary to fulfill the old and new wants as well as to adjust
with the changes in the customers’ demands or with an object of greater production efficiency
and more profits. In other words, the aim of product development is:

1. Production of goods to meet market demand.

2. Adjusting with the variation in quantity required.

3. Right Pricing of the products

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Categories of Product Development Notes

Product development can be divided into mainly two categories:

1. Introduction of new products

2. Improvement of existing products

To Introduce New Products: There should be sufficient market research and development work
before introducing any product in the market. It is essential because the chances of a new
product failing in the market are very high. The company should properly evaluate the potential
market for the product. The behavioural pattern of the market, viz. shift, change in technology,
etc. should be carefully assessed for effective production planning. The new product should
have the capability to replace the existing product/s. Proper designing and development of the
product can accomplish this.

Improvement of Existing Product: Change is the law of nature. Similarly, every manufacturer
continuously endeavours to bring about changes and improvements in his product. For example,
around 1920, there were two-wheeler brakes like in sedans rood esters, etc. which were replaced
within a short period, by four wheeler brakes with self starter. Gradually, by the 1950s, power
brakes, power steering and stream lining were introduced. Over a period of time, a number of
developments in the automobile industry took place. Air-conditioned cars with improved tires
came into use. Similarly, refrigerators with larger freezing units; typewriters and quickly
detachable bars and other electronic equipments developed with the passage of time. Probably,
the most important factor contributing towards product development is the work going into the
improvement of the existing product by way of improved ideas, systems, techniques, etc.

Stages of Product Development

Product development comprises of following stages:

Find Consumer Desire: Product development depends on the consumers’ attitudes and desires
with regard to the products. The product designer should keep this fact in mind while developing
a new product.

Analysing Feasibility: The technical, operational and economical feasibility of developing the
product should be considered while preparing plans for product development.

Design: The design of the product depends on the consumers’ needs and it is also based on the
report submitted by the research department.

Selection of Process and Production Systems: The type of process and production systems basically
depend on the nature of the product.

Process Development: In this stage, the company has to select a suitable process by using different
systems like production and control systems.

There are several general categories of new products. Some are new to the market (e.g. DVD
players into the home movie market), some are new to the company (e.g. Game consoles for
Sony), some are completely novel and create totally new markets (e.g. the airline industry).
When viewed against a different criteria, some new product concepts are merely minor
modifications of existing products while some are completely innovative to the company.
These different characterizations are displayed in the following diagram.

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Notes Process of New Product Development

There are several stages in the new product development process...not always followed in
order:

1. Ideas for new products can be obtained from customers (employing user innovation), the
company’s R&D department, competitors, focus groups, employees, salespeople, corporate
spies, trade shows, or through a policy of Open Innovation. Ethnographic discovery methods
(searching for user patterns and habits) may also be used to get an insight into new
product lines or product features.

2. Formal idea generation techniques can be used, such as attribute listing, forced relationships,
brainstorming, morphological analysis and problem analysis.

3. Idea Screening with the objective to eliminate unsound concepts prior to devoting resources
to them.

4. Concept Development and Testing to develop the marketing and engineering details.

5. Business Analysis to estimate likely selling price based upon competition and customer
feedback; sales volume based upon size of market; profitability and breakeven point.

6. Beta Testing and Market Testing to produce a physical prototype or mock-up to test the
product (and its packaging) in typical usage situations by conducting focus group customer
interviews or introductions at trade show, making adjustments where necessary and
produce an initial run of the product and sell it in a test market area to determine customer
acceptance.

7. Technical Implementation including new program initiation, resource estimation,

requirement publication, engineering operations planning , department scheduling,
supplier collaboration, logistics plan, resource plan publication, program review and
monitoring, contingency planning, what-if planning.

8. Commercialization including launch of the product, produce and place advertisements

and other promotions, fill the distribution pipeline with product, critical path analysis is
most useful at this stage.

These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that
the product development process takes, many companies are completing several steps at the
same time (referred to as concurrent engineering or time to market). Most industry leaders see
new product development as a proactive process where resources are allocated to identify
market changes and seize upon new product opportunities before they occur (in contrast to a
reactive strategy in which nothing is done until problems occur or the competitor introduces an
innovation). Many industry leaders see new product development as an ongoing process (referred
to as continuous development) in which the entire organization is always looking for
opportunities.

5.3.2 Introduction Strategies

Introductory stage in the life cycle has several characteristics.

1. There are often few competitors, perhaps only one.

2. Sales volume increases slowly due to the small number of firms marketing the product
and the reluctance on the part of customers to purchase it.

Early on, selling and advertising focus on selling the generic product and the effort is on product
form benefits. Distributors also have the power in the relationship because the product is still

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unproven with customers, so securing distribution is a major issue. Price can be high or low Notes
depending on the entry strategy of the firms marketing the product.

What are the core strategy options at this stage? There are two well-known options:

1. Skimming

2. Penetration

The skimming strategy assumes a product feature-based differential advantage that allows the
product manager to enter and stay in the market during the introductory period with a high
price. Target customers are the least price sensitive, that is, the pioneers or early adopters of the
product. A penetration strategy is just the opposite. The product manager uses a low-price core
strategy and attempts to get as many customers and establish a significant market share position
as quickly as possible. This is particularly beneficial if purchase by one customer makes the
product more attractive to others.

A skimming strategy is useful when the cost structure of the product is largely variable costs,
usually the case when the product is a manufactured good.

A high margin can be sustained because the product manager is not under intense pressure to
cover large fixed costs. Distribution outlets should be limited to protect the high price. This
strategy is most effective when high entry barriers exist because the high price and high margins
make the category very attractive to potential competitors. The margins can then be used to
fund investment in research and development, leading to new products which can be skim
period when the inevitable competition arrives in the current product category.

A penetration strategy is more appropriate when fixed costs are high (e.g., many services,
general purpose computer software). When a broad segment is being pursued it is important to
obtain wide distribution and thus spend heavily on trade-oriented promotion. The product
manager is also under pressure to make the market as larger as possible, which involves generic
or product strategy marketing. This is a more expensive strategy due to the lower margins and
higher marketing costs. The product manager should use a penetration strategy when the lead
in the market will likely be short-lived.

There are strategic advantages to being first in a market and establishing a strong position early,
consistent with a penetration strategy. Much empirical research shows that the first “mover”
(or, more precisely the first to achieve substantial market position) in a category has an advantage
(called not surprisingly, the first-mover advantage) in that it tends to maintain its lead through
the product life cycle. Some of this advantage is obvious. Early movers get first access to
distribution channels, establish awareness, and have the first opportunity to establish brand
loyalty and create preference. However, followers often overtake leaders, so first movement
itself is no guarantee of success.

Example: Illustrate the different core strategies available. Consumer electronics and
industrial product companies almost always pursue a skimming strategy. When VCRs,
camcorders, flat screen TVs, and similar products were introduced, they were priced high initially
and then fell in price overtime. Since usually only one brand was on the market for some
months and the early customers for such products (electronics nuts) are generally price insensitive,
there was little rationale for pricing low initially. In addition, the product needed word of
mouth to help spread information about their utility. Alternatively, penetration pricing is often
used for consumer packaged goods because market share is very important for retaining shelf
space in supermarkets. This is clearly evident in Internet strategies that give away the product
for free, hoping to recoup costs with advertising revenue and future sales.

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Notes

Task Discuss why the growth takes place slowly after growth stage.

5.3.3 Growth Strategies

The growth phase of the product life cycle encompasses two different kind of market behavior:

1. Early growth: The phase just following the introductory phase

2. Late growth: The phase in which the rapid increase in sales begin to flatten out.

The growth phase has several features beyond the obvious fact that product category sales are
growing. First, the number of competitors increases. This puts pressure on product managers to
hold distribution channels and changes the focus of sales and communications to the superiority
of the product over others in the category. As customers become more knowledgeable about the
product and the available options, this puts pressure on price. Finally, with the increased
competition, market segmentation begins to be a key issue facing product managers.

The general strategic options relate to the product’s position in the market, whether it is a leader
or a follower. The leader can choose either to fight, that is keeping the leadership position, or to
flee, which cedes market leadership to another product. If the leader chooses to fight, it can
attempt to either simply maintain the current position or keep enhancing the product or service.
Why would the leader flee? It is possible that the new entrants in the market are just too strong
and raise the stakes for competing to a level the incumbent cannot sustain. Witness Minnetonka,
which established the liquid soap category. When Lever Brothers and Procter & Gamble jumped
in, Minnetonka sold out. Exit is always an option. Other options are to attempt to reposition the
product so is can be strong number two or three brand, which can be accomplished through re-
segmenting the market, or to retreat to a specific niche.

The follower also has a number of options the choice of which depends on the strength of the
leader, its own strength, and market conditions. One option is to exit quickly and invest in some
product that has better long-term potential. A follower can also be content to be a strong
number two or three by fortifying its position. The riskiest move is to try to leapfrog the
competition. Some companies do this successfully often pure marketing muscle and an imitative
product.

Example: Johnson & Johnson often allows another company to establish the market and
then becomes number one through superior marketing. Specially in over-the-counter yeast
infection drugs: Schering-Plough established the market J&J followed with its Monistat 7 brand,
which quickly obtained more than half of the market.

Other companies attempt to leapfrog through technological innovation. A good example is

Docutel Corporation in the 1970s. Docutel was the first company to develop and market
automated teller machines (ATMs) to banks in the United States. The company was very small at
the time, with only $25 million in sales in 1974. The market for ATMs grew rapidly during the
1970s as banks discovered they use ATMs to differentiate themselves from other banks in a
geographical area. However, new competitors entered the market, including mainframe
computer manufacturers IBM, Burroughs, and NCR, as well as two firms in the bank vault and
security information business, Diebold and Mosler. In addition customers became more concerned
about cost savings from the machines as opposed to marketing advantages. Thus, Docutel, the
market leader, had to make a fight-or-flight decision. Fighting would mean making substantial
investments in marketing and product development, particularly in developing software
compatible with banks computer systems. In addition the company would have to decide which

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market segments to target. Alternatively, the company could be a strong number two or three Notes
given the potential size of the market. Unfortunately, Docutel did not make a clear decision to
pursue any strategy and was ultimately surpassed in the market by Diebold.

5.3.4 Maturity Strategies

The maturity stage of the life cycle is characteristic of most products particularly consumer
products. Product categories exhibiting fierce battles for market share and access to distribution
channels, large amounts of money spent on trade and customer promotion, and aggressive
pricing are often in this stage of the product life cycle.

In maturity the sales curve has flattened out and relatively few new buyers enter the market.
While some untapped market potential usually remains, it is difficult and/or expensive to
reach. Buyers are sophisticated and well versed in product features and benefits where differential
advantage can be obtained, it is usually through intangible benefits such as image or through
the extended product concept.

The general strategies in mature markets are similar to those in growth markets, and depend on
the relative market position of the product in question. A focus on key products and brands has
been the hallmark of P&G rejuvenation at the beginning of the 21st century. However, leaders
sometimes look at the time horizon for “cashing out” the product. If the product manager is
committed to a product for an extended time period, the objective is usually to invest just
enough money to maintain share. An alternative objective is to “harvest” the product, that is, set
an product of gradual share decline with minimal investment to maximize short-run profits.
Other firms have alternatives that depend on the leader’s strategy. If the leader is harvesting the
product, the number one position may be left open for an aggressive number two brand. If the
leader is intent on maintaining that position for a long time, the follower may choose to be a
profitable number two or to exit the category.

5.3.5 Decline Stage Strategies

In the decline stage of the life cycle, sales of the category are dropping. So is the number of
competitors. Markets reach the decline stage for a variety of reasons. Perhaps the most obvious
is technological obsolescence. The demise of the buggy whip is such a case. However, shifts in
customer tastes also can create declining categories. The decline of brown alcohol consumption
can be related to changing tastes for “white” alcohol such as gin and vodka, and subsequently
for wine and microbrewed beer.

Perhaps the clearest strategy is to try to be the last in the market. By being last, a product gains
monopoly rights to the few customers left. This, of course. Results in the ability to charge
commensurately high prices.

Example: Lansdale Semiconductor was the last firm making the 8080 computer chip
introduced by Intel in 1974. While most applications of computer chips are well beyond the
8080, the 8080 was still used in military systems that were typically built to last 20 to 25 years,
such as the Hellfire and Pershing 2 missiles and the Aegis radar system for battleships. Where
did the Department of Defense go when it needed 8080s? There was only one supplier: Lansdale.

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Notes Self Assessment

Fill in the blanks:

3. ............................ occurs even when most customers no longer buy the product, only few
loyal customers remain.

4. A ............................ is useful when the cost structure of the product is largely variable costs,
usually the case when the product is a manufactured good.

5. A ............................ is more appropriate when fixed costs are high.

5.4 Product Modification

Product Modification is an attempt by companies to extend the length of the Product Life Cycle
by making small, or big changed to a product to keep customers interested in the product, or
cause them to buy accessory items to keep the product popular.

Extending the Product Life Cycle two things you can do

Market Modification 1. Increase frequency of use by
present customers
2. Add new users
3. Find new users
Product Modification 4. Change product quality or packaging
Purpose to sell more product and cover original investment

In the first years of the new Millennium, we see a lot of examples of Product Modification.

What are the driving forces causing companies to seek new and weird ways to change the
product so they can keep selling more?

1. The intensity of competition: The Competitive Environment, – in a globalized community

of businesses all interlinked, it becomes easier and easier to copy other people’s products,
especially consumer electronics, so once you have launched a new product – there is a very
short time before someone else will make a knock-off copy, or even make a slight
improvement to capture your customers.

2. The continued advances in technology: The Technological Environment. Technology makes

it easier and easier to copy other products. Also, advanced in technology make it more
possible to have to features to add on to a product that is several months old.

3. The Economic Environment: The need for companies to make more money selling a product
(maybe because the cycle was too short).

4. The Social/Cultural Environment: After the product has been used by the early adopters,
it might the possible that other customer groups have slightly different uses, and this can
be accommodated if the product packaging or features are altered slightly to make it more
appealing to other demographics.

An important product strategy for firms in mature markets is value-adding modifications to

existing products. Marketing information that reveals consumers’ preferences, buying habits,
and lifestyle is critical for the identification of such product modifications. We consider two
types of value-adding modifications that are often facilitated by marketing information: retention-
type modifications that increase the attractiveness of a product to a firm’s loyal customers, and
conquesting-type modifications that allow a firm to increase the appeal of its product to a
competitor’s loyal customers. We examine two aspects of the markets for product modification

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information: (1) the manner in which retention and conquesting modifications affect competition Notes
between downstream firms, and (2) the optimal selling and pricing policies for a vendor who
markets product modification information. We consider several aspects of the vendor’s
contracting problem, including how a vendor should package and target the information to the
downstream firms and whether the vendor should limit the type of information that is sold.

The effect of modifications on downstream competition depends on whether they are of the
retention or the conquesting type. A retention-type modification increases the “effective,”
differentiation between the firms and softens price competition. Conquesting modifications,
however, have benefits as well as associated costs. A conquesting modification of low impact
reduces the “effective” differentiation between competing products and leads to increased price
competition. However, when conquesting modifications are of sufficiently high impact, they
also have the benefit of helping a firm to capture the customers of the competitor.

Self Assessment

Fill in the blanks:

6. A ............................ is the use of an established product’s brand name for a new item in the
same product category.

7. ............................ is a marketing strategy in which a firm marketing a product with a well-

developed image uses the same brand name in a different product category.

8. ............................ occurs when distribution has reached its planned or unplanned peak.

5.5 Product Line Extension

A product line extension is the use of an established product’s brand name for a new item in the
same product category.

The following seven important factors make companies pursue line extensions as a significant
element of their marketing strategies:

1. Customer segmentation

2. Consumer desires

3. Pricing breadth

4. Excess capacity

5. Short-term gain

6. Competitive intensity

7. Trade pressure

5.5.1 Customer Segmentation

Line extension is perceived by managers as a low-cost, low-risk way to meet the needs of
various customer segments, and by using more sophisticated and lower-cost market research
and direct-marketing techniques, they can identify and target finer segments more effectively
than ever before. In addition, the depth of audience-profile information for television, radio,
and print media has improved; managers can now translate complex segmentation schemes
into efficient advertising plans.

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Notes 5.5.2 Consumer Desires

There is widespread volatility in the consumer behaviour and brand loyalty has taken more or
less a back seat in many different categories of consumer goods and services. More consumers
than ever are switching, brands and trying products they’ve never used before. Line extensions
try to satisfy the desire for “something different” by providing a wide variety of goods under a
single brand umbrella. Such extensions, companies hope, would fulfill customers’ desires while
keeping them loyal to the brand franchise.

Moreover, according to studies conducted by the Point-of-Purchase Advertising Institute, USA,

consumers now make around two-thirds of their purchase decisions about grocery and health
and beauty products on impulse while they are in the store. Line extensions, if stocked by the
retailer, can help a brand increase its share of shelf spaces thus attracting consumer attention.
When marketers coordinate the packaging and labeling across all items in a brand line, they can
achieve an attention-getting billboard effect on the store shelf or display stand and thus leverage
the brand’s equity.

5.5.3 Pricing Breadth

Managers have found a novel way of increasing profitability through line extension. Managers
often tout the superior quality of extensions and set higher prices for these offerings than for
core items. In markets subject to slow volume growth, marketers can then increase unit
profitability by trading current customers up to these “premium” products. In this way, even
cannibalized sales are profitable – at least in the short run.

In a similar spirit, some line extensions are priced lower than the lead product.

Example: American Express offers the Optima card for a lower annual fee than its standard
card, and Marriotte introduced the hotel chain Courtyard by Marriotte to provide a lower-
priced alternative to its standard hotels. Extensions give marketers the opportunity to offer a
broader range of price points in-order to capture a wide audience.

5.5.4 Excess Capacity

Line extension helps in utilizing the excess capacity of the production facilities of the firm. In the
1980s, many manufacturing operations added faster production lines to improve efficiency and
quality. The same organizations, however, did not necessarily retire existing production lines.
The resulting excess capacity encourages the introduction of line extensions that require only
minor adaptations of current products.

5.5.5 Short-term Gain

Besides sales promotions, line extensions represent the most effective and least imaginative
way to increase sales quickly and inexpensively. The development time and costs of line
extensions are far more predictable than they are for new brands, and less cross-functional
integration is required.

In fact, few brand managers are willing to invest the time or assume the career risk to introduce
new brands to market. They are well aware of the following: major brands have staying power
(almost all of the 20 brands that lead in consumer awareness were on that list 20 years ago); the
cost of a successful new launch is now estimated at $30 million, versus $5 million for a line
extension; new branded products have a poor success rate (only one in five commercialized new

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products lasts longer than one year on the market); and consumer goods technologies have Notes
matured and are widely accessible. Line extensions offer quick rewards with minimal risk.

Senior executives often set objectives for the percentages of future sales to come from products
recently introduced. At the same time, under pressure from stock exchanges for quarterly earnings
increases, they do not invest enough in the long-term research and development needed to
create genuinely new products. Such actions necessarily encourage line extensions.

5.5.6 Competitive Intensity

Mindful of the link between market share and profitability, managers often see extensions as a
short-term competitive device that increases a brand’s control over limited retail shelf space
and, its overall demand for the category for new branded or private-label competitors and to
drain the limited resources of third and fourth place brands. Close-up and Colgate toothpastes,
for example, both available in more than 15 types and package sizes, have increased their
market shares in the last decade at the expense of smaller brands that have not been able to keep
pace with their new offerings.

5.5.7 Trade Pressure

The proliferation of different retail channels for consumer products, from club stores to
hypermarkets, pressures manufacturers to offer broad and varied product lines. While retailers
object to the proliferation of marginally differentiated and “me-too” line extensions, trade
accounts themselves contribute to stock-keeping unit (SKU) proliferation by demanding either
special package sizes to fit their particular marketing strategies (for example, bulk packages or
multipacks for low-price club stores) or customized, derivative models that impede comparison
shopping by consumers.

Example: Black & Decker offers 19 types of irons, in part to enable competing retailers to
stock different items from the line.


Case Study Volvo Case

V
olvo adopted a new design approach in the 1990’s. This update of the brand’s
product design, called “Revolvolution”, provided a remarkable boost to brand
perception. The influence of Revolvolution has been truly visible in the design of
the recent Volvo models that incorporate consistent, easily recognisable, design features.
But more than just focusing on a few details of the car, Revolvolution has concerned a
considerable shift in thinking towards a more distinctive Volvo identity.

The new Volvo design approach has a strong strategic basis. On the one hand, the new
design language marked a revolutionary shift in the Volvo design history from the era of
“boxy” design emphasising functionality – that had became a trademark of the brand – to
an approach stressing dynamical and emotional characteristics. On the other hand, and
most importantly, the new approach is still grounded on the prevailing Volvo core identity
attributes, safety and Scandinavian values, that have a long history and form a major part
of the perception of Volvo brand. The new approach is yet another evolutionary phase in
the Volvo design history.

Contd...

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Notes The design elements not only include physical references to certain historical Volvo models.
The new design approach seems to preserve the brand heritage well and thus strongly
maintain brand recognition. The corner stone of the brand, safety, has still been kept as the
main point of focus. The key concept of Volvo design, “emotion with safety”, is
communicated through various design features and characteristics. Consistently used and
strategy-driven design has strengthened the position of Volvo as one of the most distinctive
brands in the automotive industry.

Questions

1. What are the factors behind Volvo adopt a new design approach in 1990’s?

2. Emotional touch of consumer with the product will affect design and redesign of a
product.

Self Assessment

Choose the appropriate answer:

9. The sales curve has flattened out and relatively few new buyers enter the market

(i) Introduction (ii) Maturity

(iii) Decline (iv) All of the above

10. Out of the following which one is not the type of brand extension

(i) Product related extensions (ii) Recall extensions

(iii) Unrelated Extensions (iv) All of the above

5.6 Summary

 A product is an embodiment of technology, and the technology in fact satisfies the need.

 The introductory stages of a product are believed to be relatively slow, even after its
technical problems have been ironed out, due to a number of marketing forces and
consumer behaviour factors.
 The consumers who buy the product in the introductory stage itself are called innovators,
and those who buy later are called late adopters or laggards.

 The growth stage begins when demand for the new product starts increasing rapidly.

 Product decline occurs even when most customers no longer buy the product, only few
loyal customers remain.

 A skimming strategy is useful when the cost structure of the product is largely variable
costs, usually the case when the product is a manufactured good.

 Product Modification is an attempt by companies to extend the length of the Product Life
Cycle by making small, or big changed to a product to keep customers interested in the
product, or cause them to buy accessory items to keep the product popular.

 Line extension helps in utilizing the excess capacity of the production facilities of the firm.

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5.7 Keywords Notes

Adoption Process: The adoption process refers to the series of stages a prospective buyer goes
through in deciding to buy and make regular use of a new product.

Diffusion: Diffusion of a new product is the process by which the innovation is spread through
the marketplace over time.

Market Challenger: Market challenger is an organization that aggressively tries to expand its
market share by attacking the leader, other runner-up firms, or smaller firms in the industry.

Market Follower: A market follower is a runner-up organization that chooses not to rock the
boat, usually out of fear that it stands to lose more than it might gain.

Market Leader: A firm with the largest market share is known as the market leader.

Market Nicher: A market nicher is a smaller organization that chooses to operate in some part of
the market that is specialized and not likely to attract the larger firms.

Price Penetration: To set a low price in order to avoid encouraging competitors to enter the
market, and also to help increase demand of the product.

Price Skimming: To set a high price in order to recover developmental costs as soon as possible.

5.8 Review Questions

1. What are the strategic implications in maturity stage with highly sophisticated buyers?

2. How can firms keep gross margins high in the maturity stage?

3. When your product reach at decline stage as a product manager what’s your responsibilities?

4. What is product life cycle? What are its characteristics?

5. When organizations get more profit? Early growth stage or any other stage explain.

6. What is the difference between skimming and penetration strategy?

7. Discuss some important factors of product development strategies.

8. What are the social and cultural effects on the product modification?

9. Brand extension really helpful for capturing the market. Explain.

Answers: Self Assessment

1. (iv) 2. (iii)

3. Product decline 4. Skimming strategy

5. Penetration strategy 6. Product Line Extension

7. Brand Extension 8. Maturity

9. (ii) 10. (ii)

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Notes 5.9 Further Readings

Books Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand
Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Aaker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.

Online links www.en.wikipedia.org

www.web-source.net

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Unit 6: Extension Notes

CONTENTS

Objectives

Introduction

6.1 Line Extensions

6.1.1 Why Line Extensions

6.1.2 Line Extension Risks

6.1.3 Line Extension Trap

6.2 Brand Extensions

6.2.1 Why Brand Extension?

6.3 Types of Extensions

6.4 Brand Extendability

6.4.1 Extending a Brand

6.4.2 Making an Extension Successful

6.4.3 Pitfalls of Extensions

6.5 Summary

6.6 Keywords

6.7 Review Questions

6.8 Further Readings

Objectives
After studying this unit, you will be able to:
 Explain the concept of Line Extensions
 Describe Brand Extensions
 Identify the types of Extensions
 Discuss the Brand Extendability

Introduction

Hindustan Lever, the Indian marketing powerhouse, markets large number of brands. One of its
oldest brands, Lifebuoy, the original carbolic soap which promised to wash away dirt, germs
and bacteria ‘for health’ has evolved from being a ubiquitous 150 gm pink bar into a complete
portfolio.

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Notes
Example: The Lifebuoy brand now represents different products and variants:
Lifebuoy 150 gm

Lifebuoy Liquid (Dispenser) 250 ml. 125 gm

Lifebuoy Liquid (Refill) 250 ml. 75 gm

Lifebuoy Family 75gm

Lifebuoy Gold 75 gm

125 gm

Lifebuoy Plus 150 gm

100 gm

50 gm

Lifebuoy Total Lifebuoy Active Red

Lifebuoy Active Orange

Lifebuoy Active Green

Lifebuoy Plus

The Lifebuoy example illustrates the typical growth path a brand follows in the present day
market conditions.

Brand explosion was once upon a time a powerful trend in the global marketing scene. The era
now seems to be that of brand consolidation and brand leverage. Marketers are now finding it
extremely difficult to create new brands. The brand building costs tend to be simply too high to
afford. At the same time, developments on the demand side seem to create pressures on marketers
to fine tune their offerings as per the unique customer needs. Accordingly, brand variants seem
to be multiplying. The two trends which the Lifebuoy brand captures are: line extensions and
brand extensions.

6.1 Line Extensions

Let us look at what has happened to the Bisleri brand of bottled water. Bisleri is the pioneering
brand in the bottled water category. Originally, Bisleri used to come in a one litre bottle. It’s one
litre pack ruled the roost. Recently, Bisleri has exhibited a spate of innovations. The term
‘innovation’ generally conjures up an image of a product being made superior or more efficient.
But Bisleri innovations were more of the marketing type. The brand launched bottles of different
sizes or quantities. The Bisleri portfolio now includes one litre, half litre, 1.2 litre, 1.5 litre, and
5 litre bottles. The product line is now far more representative of customers’ varying quantity
needs of water. It suggests the presence of usage segmentation. That is, customers differ in terms
of their usage quantities. The brand has now filled the whole spectrum with products as per the
needs of various segments.

The Bisleri example suggests that the company has been vigorously pursuing the line extension
strategy, which involves making entries into a brand’s existing product category by using the
same brand. These entries can come in the form of varying product sizes, flavours, colours,
ingredients, forms, etc. The two things that remain constant in line extensions are: the brand
name and the product category. The following examples (Figure 6.1) exhibit different types of
line extension strategies followed by the marketers:

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Figure 6.1 Notes

Product Bisleri Bisleri Bisleri Bisleri Bisleri

sizes 1.1 Ltr .5 Ltr 1.2 Ltr 1.5 Ltr 5 Ltr

Sunsilk Sunsilk Sunsilk Sunsilk

Colour Orange
Pink Black Yellow

Rasna Rasna Rasna Rasna Rasna Rasna Rasna

Flavours Orange Mango Pine Apple
Rose Lime Gulab Cola

Colgate Colgate Colgate Colgate Colgate Colgate

Ingredient Total
CDC Tartar Fresh stride Herbal Strong Teeth

Vim Vim Vim

Form Liquid
Bar Powder


Case Study Hero Honda: Leadership through Extensions

T
he Hero Group joined hands with Honda Motor Co. on 13 April 1984. The company
started its first bike Hero Honda CD 100 with a strong value proposition ‘Fill it,
Shut it, Forget it’. This product established the Hero Honda brand firmly in the
Indian market, while the other competitors who also forged ties with Japanese motorcycle
giants struggled to find a toe-hold. Over the years, the Hero Honda brand name has
evolved. The brand has been extended to cover all possible segments in order to realize
the market potential:
Hero Honda Pleasure
Hero Honda Karizma
Hero Honda Super Splendour
Hero Honda Splendour +
Hero Honda Glamour
Hero Honda Passion Plus
Hero Honda CD Delux
Hero Honda CD Dawn
Hero Honda Achiever
Bajaj has been predominantly a two-wheeler scooter company. Its scooter brand ruled
Indian roads for many decades. As the scooters market exhibited a downturn, Bajaj
anticipated the future and gradually shifted to motorcycles. In a smooth switchover to
motorcycles, Bajaj has emerged as another key player in this market. Bajaj achieved segment-
by-segment victories by extending the product line gradually. Its motorcycle line once
comprised the following models:
Bajaj CT 100

Bajaj Platina
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Notes Bajaj Wind 125

Bajaj Discover
Bajaj Pulsar (150 cc and 180 cc)
Bajaj Avenger
Pursuant to the outstanding success of its Pulsar and Discover models, the other models
have been discontinued.

6.1.1 Why Line Extensions

Line extension strategy has enjoyed considerable support of the managers. In most of the product
categories including fast moving consumer goods, consumer durables and services, line extension
has been the name of the game. It is an expansionist move. The firms seem to seek growth more
vigorously. What lies behind the aggressive pursuit of line extensions? The following seven
prominent reasons could be identified as to why firms seem to favour line extensions.

Customer Segmentation: The key difference between the marketing of yesteryear and today is
that customer aggregation is becoming more and more difficult to hold and operate upon.
Marketers are forced to climb down from mass marketing orientation to individual customer
orientation.

That is, aggregate markets are now getting manifest into finer segments. It is relatively easier
now to find segments on a more sophisticated basis. The marketing research allows so, and
advances in marketing techniques allow easy operationalization of the same. In such a scenario,
marketers find it easy to meet the needs of various emerging customer segments by line
extensions. Line extension is a low cost and low risk strategy to more effectively meet the needs
of customer segments. For instance, Colgate is able to focus on the herbal and children segments
by launching Colgate Herbal and Colgate Strong Teeth (calcium) variants.

Notes HP’s Printer Line-Designed to Meet Requirements of Every Business

Product line = customer segments and product variants

Photo-smart Officejet Business Laserjet Laserjet MFP Color

Inkjet Laserjet
PSC 1410 ALL IN 1000 1020 3050 MFP 3800
(` 4999) ONE 4255 PRINTER PRINTER (` 15999) PRINTER
(` 5999) ( ` 8499) SERIES
(` 49999)
1608 ALL IN 5610 ALL OFFICEJE 1320 3052/3055MFP 3000
ONE IN ONE T PRO PRINTER (` 20999) PRINER
(` 69990) (` 99990) K550 (` 19999) SERIES
(` 7999) (` 59999)
PHOTOSAM 7208 ALL DESIGNJET 2420 3390/3392 4700
RT 3108 ALL IN ONE 110PLUS PRINTER MFP PRINER
IN ONE (` 15999) (` 59990) SERIES (` 36999) SERIES
(` 14999) ( ` 39250) (` 99999)
9110 ALL 500 SCANJET SCANJET SCANJET
IN ONE PRINER 4370 5590 8290
(` 24999) (A1/ AO PHOTOS DIGITAL DIGITAL
SIZE) SCANNER FLATBET ` 54990
(` 115999) ( ` 6990) SANNER
(` 26990)

Source: A HewlettPackard advertisement, Hindustan Times, April 17, 2006.

Contd...

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Notes
One of the Hewlett-Packard’s advertisements of HP exhorts the business managers to
‘choose from the world’s No. 1 range of printers and multi-functional products, specially
designed to meet the requirement of every business—big, small or micro. So go ahead,
give your office the best combination of black, inkjet and laserjet, personal and network
printer. And watch your productivity take off’.

Customer Need for Variety: The emergent market conditions are at work to promote consumer
promiscuity. Product standardization, and consistency in quality, is encouraging customers to
try new products or brands. It is the result of a desire to get stimulations and break away from
boredom. So if a customer has been using the Lux brand of toilet soap, he would now be tempted
to look for ‘something new’ in a bid to get stimulated. Accordingly, he or she would look for
‘something new’ that he has not been exposed to. In such a situation, a company is likely to
benefit which provides this customer with this option (‘new’), or else the customer would be lost
to competition. Line extensions come in handy to meet such challenges.

A firm by providing a number of variants under the same umbrella is better positioned to keep
their loyal customers by meeting their desires to try something new.

Example: A customer having got satiated with ‘Cinthol Lime’ may look out for ‘cologne’
fragrance. So ‘Cinthol Cologne’ would fill the need without losing this customer to competition.


Caselet Biscuits, and the Need for Variety

H
istorically, Britannia has been the market leader in the biscuit market in India. It
faced a fierce challenger in Parle. In the last couple of years, the market has
witnessed a lot action. On the one hand, various regional players are consolidating
their positions. These include Bisk Farm, Priya Gold, Anmol and Duke. While on the other
hand, big organized players have either made entry or are seriously contemplating it.
Some of the players in this group are HLL and ITC. Most players offer different types of
variants to keep a hold on the market. In some ways, experience shows that the biscuit
market can be segmented along rural-urban, kids-adult, ordinary-special occasion,
economy-premium, and household – business lines.

Most big players offer complete range or variety in order to keep hold or maintain their
presence across various segments of the buyers. The type of preference often varies with
use occasion, such as: tea accompaniment, food substitute, fills in- between meals snacks
to curb hunger, health supplement, entertaining kids or guests, and making a style
statement. This gives the marketers to launch biscuits to provide for variety of application.
Similarly one customer may seek variety within a biscuit type to break monotony. The
biscuits are therefore are marketed in the following variants, and each type tends to have
various varieties.

Glucose (milk, fortified)

Marie (ordinary, lite, favored, fortified)

Cookies (pineapple, coconut)

Creams (milk, orange, pineapple, chocolate)

Crackers (salty, sweet & salty, small & big, flavored)

Contd...

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Notes The emergent regional warrior of the North, Priya Gold, markets the following variants
of biscuits: Butter Bite, Crack N’n Cheers, Nice Day, Marie Lite, Kids.
Cream biscuits, Coconut Crunch, Glucose Extra, Magic Gold, Snacks Zig Zag, Cheese Bit,
Jeera Top, Cashew, Cheese Cracker, and Butter Bite.

The challenger Parle’s list of biscuits line include the following brands catering to the
need for variety: Parle G, Parle G Magix, Parle G Milk Shakti, Krackjack, Monaco, Hide &
Seek, Fun Centre, Monaco Bites, Jeffs, Sixers, Nimkins, Parle Cream, and Digestive Marie.

Pricing Breadth: Some time ago, Videocon launched ‘Bazoomba’ and BPL launched its ‘QPF’
series. What does this indicate? This exhibits marketers’ desire to ‘move up’ the customers to a
higher price point. Such a move allows the firm to generate more sales and profit per customer.
The conditions propelling these extensions are the slowing down of volume growth in the
colour television market. Hence, extensions provide excellent opportunities for profit increase
and revenue multiplication by launching products at higher price points. In the same fashion,
the marketer may launch a product at a lower price point than its core offering. For instance,
Videocon once had its ‘turbo’ range. The idea behind this kind of extension would be to make its
product available to customers in the lower price brand.

This kind of representation across various price brands is common in the credit card market. The
cards line would usually consist of Platinum, Gold, Silver and Classic. Line extension therefore,
provides greater pricing flexibility and opportunity to enjoy representation across a wider
spectrum of consumers.

Capacity Utilization: Sometimes, firms are driven by the economic logic of building plant
capacities which are efficient or world class. The investment in plant increases the fixed cost of
operations. Accordingly, pressures emerge to maximize plant utilization in order to quickly
recover the fixed costs and achieve efficient cost of operations. Sometimes marketers may seek
refuge in extensions as a means of utilizing excess capacity. By effecting minor changes in the
product and plant, the company can substantially improve its capacity and make up for the high
fixed cost element in its operations.

Quick Gains: Line extensions provide an opportunity to achieve quick gains in sales performance.
Launching a new brand may cost a firm five to six times the amount needed to launch an
extension. Moreover, creation involves a lot of uncertainty and risk. It is a long drawn out
process. Hence, managers see line extensions as a vehicle to generate more sales quickly and
relatively inexpensively. The path of line extension is far more predictable. Unlike brand creation,
line extensions depend less on cross functional integration.

Managers favour line extensions because dismantling or competing against existing brands is
difficult for the staying power they enjoy. The cost of new brand launches tends to be
phenomenally high; new brands have dismal success rates, and the technologies have matured
and are accessible to everybody. These perceptions favour line extension strategy to achieve
quick rewards without assuming the relatively greater risk of launching an entirely new product.

Competitive Reasons: A marketer with a more extensive product line up is usually in a better
position to get access to the shelf space. This is the case with Hindustan Lever. You walk into any
store and discover how much retail space is occupied by a brand which offers a number of
variants in different forms, shapes, sizes and flavours. This obviously comes at to the expense of
the competition: rival firms find it difficult to make their presence felt, putting their brand’s
future in jeopardy. Line extensions fill the whole spectrum. Under such conditions, new entrants
and smaller firms usually find it difficult to make a successful foray into the market. The price of
the minimum entry ticket goes up. The firm must offer some minimum line merely in order to
get noticed. This is sometimes beyond the reach of many existing or new players.

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Trade Demands: Marketing environment has seen the emergence of new forms of trade partners Notes
and retail channels. The trade partners often exert pressures on marketers to extend the line by
developing products which meet their unique marketing strategy needs. They may place demands
for bulk packages, multi-packages, customized and derivative models. For example, once channel
or store specialization occurs, a simple trouser manufacturer may be asked to develop different
items in the line to meet special needs of premium stores, mass stores, speciality stores, custom
stores line-ups, designer stores and frill-free (bargain basement) stores. The demand to extend
the line may stem from the trade partners.

Counter Competition: Sometimes, a firm may be forced to extend the line because of competitive
conditions. That is, extending the line may become imperative to counter competition. For
instance, when a company launches free flow or sodium free salt like Captain Cook, the other
company would need to counter this by adding these variations to its line or else it stands to
lose.


Caselet Countering Competition: The Nirma Way

K
arson Bhai Patel introduced Nirma washing powder in 1969 as a sole product. This
product created its own niche of economy value for money washing powders. The
company extended its detergent and soaps line to both as a launching offensive
and a defensive moves:
 In 1987, Nirma detergent cake was introduced in the territory that by and large
belonged to Rin.
 1990 saw another offensive move of Nirma when it debuted in the ‘Beauty’ benefit
category of bathing soaps dominated by HLL’s Lux.
 1990 was also witness to a direct assault on Rin when Nirma launched Nirma Super
detergent cake with premium positioning.
 Nirma Super variant was launched in 1992 to expand the category and thereby
preempt competition.
 In 1995 came Nirma Popular, with the same intention to cater to a different niche of
the washing powder market.
 Nirma Super washing powder was launched in 1995, that took the company portfolio
to a still a higher level. The product was launched in the premium segment with
intention the clear offensive intention of meeting Surf and Ariel’s challenge head
on.
 In 1998, the company took on arch rival HLL in the lime soaps category dominated
by Liril and Jai Lime. Nirma brand with lime variant was launched to wrestle
market share from the competition.
 1999 was witness to another offensive. Nima Rose arrived in the market to counter
HLL’s Breeze. In the sandal fragrance category dominated by Wipro’s Santoor, Nima
descended with its own sandal variant.

A spirit to counter competition by and large guides the existing proliferation of line extensions
in FMCG sector. In fact the moves tend to be so neck-to-neck that overnight variants are copied
with an intention to neutralize competition. Colgate added Colgate Gel in order to meet the
competitive challenge posed by the rising popularity of Close Up, and further it introduced
Colgate Herbal to counter HLL’s Aim.

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Notes Image Benefits: Line extensions can recharge the image of the brand. If there is danger associated
with unbridled extensions, there are gains which could be reaped by careful extensions. There is
very real opportunity to build a positive image and renew it. A well-managed extension can
bring enormous benefits. For example, Mercedes launched its 190 model in the ‘eighties. This
model allowed the company to reach the sub-luxury segment. Far from degrading the Mercedes
image, the extension imbued its entire line with excitement and youthfulness. Similar benefits
were achieved for Gallo name, when it introduced premium varieties under the same name.
Gallo’s original association with lower price did reduce the variety’s line appeal, but the new
line also rubbed off on Gallo positively.

6.1.2 Line Extension Risks

The lure of line extension has been so strong that managers push their lines beyond limits.

Example: Toothpastes like Crest (P&G) and Colgate (Colgate Palmolive) are available
in over 35 variants. Kimberly-Clark’s popular brand of tissue (Kleenex) has experienced a
barrage of extensions. It created over twenty varieties of Kleenex tissues. Does this imply that
line extension is a strategy free from any pitfalls? The answer is ‘No’. Line extensions carry their
own risks. There are several dangers associated with line extensions.

Line Confusion: Managers sometimes tend to be so enamored of line extensions that they add
products to their line without sound logic and reasoning. This creates situations of expanded
line but without any clear-cut role and goal being assigned to the products. This results in over
segmentation of the market and blurred product vision. In these situations, retailers tend to be
reluctant to carry the complete line. When some items are not carried, consumers get disappointed
that their product is not available. On the whole, line confusion leads to confused customers and
confused retailers, which may hurt the brand’s owner company in the long run.

Encourage Variety Seeking: Brand loyalty is every marketer’s dream. The essence of brand
loyalty is the committed customer who buys the brand repeatedly. Line extensions imply various
variations being attached to a brand. This may push the customer again to the cognitive thinking
mode and seek variety. Line extensions seem to serve promiscuous customers but they also
encourage promiscuity. Extensions encourage brand switching behaviours. Once that happens,
the chances that customers would go to rival brands are heightened. This is particularly true
when extensions diffuse the brand image by adding too many variants to the core brand. The
loyalty is thus weakened.

Success Myopia: Many times, an idea may be grand enough to be converted into a full-fledged
independent brand. But the lure of extension seems to be so strong that the ideas are brought
into the market as line extensions. This approach may tally perfectly with the short-term scheme
of things where managers are appraised on the basis of immediate performance, but it eventually
implies loss of a winning asset in the long-term.

Strained Relations: When lines expand, marketers tend to pressurize their trade partners such
as wholesalers and retailers to carry the complete line in accordance with their wishes. The
pressure appears to be applied more intensely at the retail level. The marketers seek adequate
shelf space, promotion and information. But at the retailers end, multiplying SKUs is not
something that is desirable. They bring confusion and chaos. The result: -strained relations
between the marketer and retailers.

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 Unit 6: Extension

Notes

Caselet Extensions Often Fail to Excite

M
any times, new SKUs are added to a product line without much strategic thinking
and contemplation. Every item added to the line must have solid customer and
competitive justification. Over-proliferated lines often act contrary to the very
strategy of line extension. Before an SKU is added, the manager must pen down the
customer and competitive opportunities and challenges providing stimulus to the extension
decision. What ends or goals the extension seeks to achieve must be articulated, circulated
and debated with marketing experts.

Managers often fall victim to the ‘trend’ towards brand extensions. Variants are added not
because market gap demands it, but because managers tend to be overactive. This hyper
approach to managing a product can act as a serious drain on company resources besides
creating other risks.

Many FMCG companies’ adventures in launching variants have left them anything but
excited. The line extensions of their popular brands did not work as expected. These
fatalities include the Lux Chocolate Seduction, Palmolive Aroma Therapy, Pepsi Café
Chino, Vanilla Coke and Strawberry and Coconut Perk (now withdrawn).

The often-cited reasons for extensions of this type are: to keep the excitement and interest
alive in the main brand, and secure shelf space on the retailing front. But experts opine that
the failure to craft true identities for these variants is the prime reason for such lackluster
market response. The fear of main brand cannibalization also causes the worry.

Source: Suchi Vyas, ‘FMCGs’ brand variants lack teeth’, The Economic Times, May 12, 2006, p. 5

Line extensions do not seem to have positive effect on category demand creation. That is, the
category demand remains more or less the same. For instance, customers do not brush their
teeth more, nor do they buy or wear more clothes. The primary demand is not expanded. It
simply creates a churn within the category. Further, the gains from the line extensions tend to be
short lived. The status quo is quickly achieved. Finally, there are a lot of invisible costs associated
with line extensions which are ignored by the managers. These include: effort fragmentation,
image dilution, production complexity, distraction in research and development efforts.

One of the most powerful criticisms of line extensions comes from Al Ries and Jack Trout. Their
argument is that line extensions make perfect sense from an insider’s point of view. But line
extensions do not gel with consumers’ logic. They damage the brand by making it weak and
vulnerable. This is what they refer to as the “line extension trap”.

6.1.3 Line Extension Trap

Why do firms jump on to line extension bandwagon? The reasons are primarily economic.
When customers prefer a brand, they would be just as willing to buy a different product carrying
the same name. For instance, if customers prefer Lucas car electricals, they would be equally
willing to patronize Lucas inverters, if the company started to manufacture them. Similarly,
Exide is the market leader in batteries; the line extension logic would justify the launch of say,
Exide inverters, or Exide automotive electricals. But the evidence in the marketplace proves the
contrary. What appears to be logical to the managers performing these adventures tends to be
illogical in the perception of customers. This is the reason why line extensions do not create
mega successes.

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Notes Line extensions do not work because they tend to go against the fundamental aspect of positioning.
The core brand holds a strong position inside the prospect’s mind.

Example: Exide is an automotive battery and Duracell is an alkaline battery.

Sometimes the position of the brand name is so strong that it becomes generic for the product.
“From the prospect’s point of view, line extension works against the generic brand position.
It blurs the sharp focus of the brand in the mind.” Line extensions tend to educate customers that
product and brand are two different things. It is a fallacy that a brand is just a name that can be
put on any product. This is a great mistake. It undermines and destroys the brand in a prospect’s
mind.

Marketers do great disservice to their most valuable and painstakingly cultivated assets by
reckless extensions. One such move is to hang many of the similar products (within category) on
the same name (Scott Towels, Scot Tissues, Scotties, Scotkins, BabyScott, etc). Scott perhaps
began with a strong position but extensions diluted it. What does it exactly stand for now? The
second is to use an existing brand name to promote a product in a different category, as Wills has
done for instance, by moving into the readymade casual wear line. This is called brand extension.
Brand extension strategy has attracted a lot of interest from marketers over the past decade.
Marketers now seriously check out the path to grow by extending their brands.


Caselet Line Extensions: Successes and Blunders

I
n 1992 HLL introduced 16 new products. Twelve of these were line extensions. Godrej
soaps introduced twelve products; all of these were line extensions except two new
brands- Ganga and Evita. The cost of launching a new product is forcing companies to
rely on the extension route to enter into new market segments and fortify existing brands.
The extension route can save as much as one third of the cost incurred in market entry.
Godrej soaps saved about 33 per cent of the ` 3 crores proposed budget by extending the
brand into Cologne lime variants as extensions.

Line extensions can arrest the declining market of a brand. Horlicks’ brand was extended
to Chocolate Horlicks. By this extension, SmithKline was able to move its market share up
from 43 per cent to 46 percent in the highly competitive beverages market. The line
extension solved a peculiar problem of the company. Horlicks, being a white beverage,
was under considerable stress as the market for white beverages has been experiencing
negative growth rate of about 7 per cent. It was not that the brown beverage market was
growing rapidly. It also had a slow grow rate. But by this extension, the company was able
to offset the decline of the parent brand.

Sometimes, line extensions become an imperative to counter the competition. J&J has
always dominated the sanitary napkins market. It once sat on about 70 per cent market
share. It offered two variants of its brand Carefree-belted and beltless category. J&J’s
strategy has been to cover various niches of the market by different extensions. It offered
Stayfree in Regular, Compact, Double, Deodorant and Super varieties. Looking at the
niche uncovered by J&J, P&G launched Whisper with ‘dry feel’ benefit. J&J has ignored the
technology aspect in its products. The result: erosion in its market share. Whisper became
a runaway success. To counter Whisper, J&J launched Stayfree Silky Dry head on against
Whisper. It was successfully able to counter Whisper’s movement. On the whole, J&J was
able to protect its market share.
Contd...

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 Unit 6: Extension

Line extension can be employed to rejuvenate a mother brand which may be stagnating. Notes
Cinthol has always been a deodorant soap. But after the launch of Liril in the early ‘eighties,
it began to lose its market share. Liril - with its freshness image - was able to corner over
26 per cent of the premium soaps market. And it showed no signs of stopping. Godrej
planned to enter in the premium market but not by launching a new brand because success
was uncertain and costs would be very high. Cinthol was chosen for line extension. Its
wrapper changed to green, product colour to a yellow green soap tablet, a new perfume
was added and the image was transformed. Cinthol lime was born.

Cinthol was able to carve out substantial market share at the cost of Liril. Further, the
brand was extended in cologne and sandal fragrances. Though sandal did not do well,
cologne gave further fillip to the umbrella brand. The Lime version jerked Cinthol out of
its stupor and made it a close competitor of Liril.
Line extensions do not always pay off. Sometimes, wrong extension decisions leave
marketers nursing their wounds. Lack of consistency between the parent and the extension
often causes failures. Cibaca (formerly Binaca, before Ciba-Geigy acquired the brand) was
once an important player in the toothpaste and toothbrush market. It had strong associations
with small animals and other cute little things which came in the pack as medallions.
Ciba-Geigy decided to enter into the gel segment. Colgate Gel came in blue, Close Up in
red. In order to differentiate, Cibaca chose green. Since green found associations with
lime, the product was positioned as a squeaky new mouth wash. The result: not finding
any consistency with the parent brand, the product bombed in the marketplace. The synergy
between the parent brand and extension is not only important, it’s crucial.

Unplanned extensions often end up leaving consumers confused. Colgate Palmolive

ventured into the toilet soap business with Palmolive Extra Care and regular varieties.
Palmolive Extra Care came in three colour variants depending upon skin type: white,
pink and green for normal, dry and oily skins. Palmolive Extra Care carved out a niche for
itself. As usually happens, competitor HLL reacted by launching Lux International extension
in three colour variants, again based on skin types. Palmolive, in panic downgraded its
Palmolive Regular in the popular segment to appeal to the masses. But surprisingly, it
followed the same skin types to create three variants. The result: Palmolive Regular with
three skin type variants left the customer confused. It was difficult to distinguish the two
lines. Accordingly the brand suffered a setback.

Source: Nandini Lakshman, “Stretching the Leader Brands”, The Strategist Recollected 1993-1994.

Task Line extensions are done to overcome barriers that prevent a product from finding
acceptance in other segments of a market. Collect examples of firms or brands that have
overcome these barriers by modifications of:

1. Colour

2. Form

3. Size

4. Fragrance

5. Packaging

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Notes Self Assessment

Fill in the blanks:

1. The two things that remain constant in line extensions are: the …………………………and
the ....................................

2. ………………tend to educate customers that product and brand are two different things.

6.2 Brand Extensions

Line extension strategy involves launching various product variants in the same category under
the same brand name. The brand extension, on the other hand, involves using an existing brand
name to launch a product in a different category. The key difference between the two strategies
is the product category. In the extensions, product category remains constant whereas in brand
extensions product category is a variable. This is evident in the examples (Figure 6.2) given
below.
Figure 6.2

Cold Toilet Shampoo Tooth Moisturising Talc Face

Cream Soap Paste Lotion Wash

Ponds Ponds Ponds Ponds Ponds Ponds Ponds Ponds

Televisions Refrigerators Computer Microwaves Airconditioners Washing Sunsilk

Monitors Machines Black

LG LG LG LG LG LG LG LG

Shirts Shaving Jeans Belts Perfumes Soap Razor

Cream

Park Park Park Park Park Park Park Park

Avenue Avenue Avenue Avenue Avenue Avenue Avenue Avenue

The companies in the western part of the world differed from their eastern counterparts, especially
Japanese and South Korean with respect to branding policies. Procter & Gamble, Hindustan
Lever and Reckitt & Coleman, etc., all favoured the branding policy by which individual products
carried their own names. It was a product-branding strategy, whereas eastern companies seemed
to favour some sort of umbrella branding. This involved launching different products under a
common banner. Companies favouring this policy included Japanese giants like Mitsubishi,
Toyota, Honda, and Korean Companies like Samsung, and Lucky Gold Star (now LG). But now
the companies which followed product branding seem to be moving towards a policy of hanging
products belonging to different categories on one brand name peg. Once supreme examples of
product branding, Hindustan Lever and Procter & Gamble seem to have jumped onto the brand
extension bandwagon.

Did u know? Brand Extension: The Amul Way

Amul is perhaps the greatest success story in the history of cooperative movement.
Currently at ` 2258 crores, the Gujarat Cooperative Milk Marketing Federation has grown
by leaps and bounds in its over 50 years of existence. Starting off with the basic dairy or
milk products, the Amul brand now hangs on a variety of products. Initially concentrating
on its main line milk products business, the brand is now being taken to non-dairy products.
These include pizza, confectionery and coffee. It raises some fundamental questions: is it

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 Unit 6: Extension

right to extend a brand to unrelated product categories? Would these moves strengthen or Notes
weaken the Amul brand name? The current product portfolio of the Amul brand is as
follows:
Figure 6.3

Amul Butter
Ice Cream
Chocolate/Confectionary
Infant Milk Substitute/Weaning Cereals
Curd
Liquid Fresh Milk
Dairy Whiteners
Sweetened Condensed Milk
Cheese
Cottage Cheese (Paneer)
Milk Additives
Pizza
Various authors tend to use different expressions to convey the essence of brand extensions. For
instance, brand extension is defined as “the use of a brand name established in one product class
to enter another product class.” Another expert in the field views brand extensions as category
extensions. And accordingly, the category extensions refer to a situation when the parent brand
is employed to make an entry into a different product category. The new product category needs
to be different from the category presently served by the brand.

The evidence that managers favour extension strategy is fast becoming bold and clear. There is
an unambiguous shift towards leveraging the brand strategy both for seeking growth within
the category and outside. In the United States, between the year 1977 and 1984, each year 120 to
175 brands were launched in supermarkets. Throughout these launches, approximately 40 per
cent were in the form of brand extensions. That is, a substantial portion of new launches came in
as extensions of existing brands. The 1990 evidence shows that 63 per cent of new product
launches were line extensions and 18 per cent were category or brand extensions. This trend is
indicative of potential advantages that managers are able to reap by brand extension strategy.

6.2.1 Why Brand Extension?

Brand extension strategy has found favour in the modern marketing world because of the
advantages it has over the other new product launch options. The important benefits that it
promises to deliver are as follows:

Cost of New Launches: The marketing environment of today is characterized by ups and downs.
These shifts necessitate frequent introductions in the marketplace both as a defense against
competition and desire to grow. A new brand costs anywhere between 50 to 100 million dollars
to develop, hence the huge investments required to develop and launch a new brand act as a
major deterrent. Brand extensions, therefore, present irresistible options in such situations. By
extending a brand, the marketer can bring the costs down substantially while increasing the
probability of success.

Promotional Efficiency: What happens when a company needs to support a large number of
individual brands? Its promotion cost structure goes up. Also, investment in one brand does not
help the other brands. When the Dettol brand of soap is advertised, it indirectly benefits other
brands which share the same name. The extensions enhance promotional efficiency.

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Notes Besides, at the time of new product launches, the marketer’s task is reduced because the name
awareness already exists. The brand awareness allows easy access to the mind, whereas when
one needs to launch a brand name, the task is more difficult and complex. Evidence suggests that
brand extensions need less advertising support in comparison with new brand launches.

Consumer Benefits: From the customer’s point of view, brand extensions offer a less risky route
to a new product category. What happens when a customer is familiar with a brand, e.g.,
Kelvinator? In such situations, the customer knows what to expect from the brand and can easily
conclude the likely make up and performance delivery of the brand. This is based on what the
customers already know about the brand. So when Kelvinator launches a new product, e.g., a
microwave oven, customers would be more comfortable in the context of information,
expectations and inferences. Familiarity with a brand name reduces the risk perceived by the
prospect in a brand buying situation. Accordingly, customers may be more predisposed to
typing a brand extension than a completely new brand.

Feedback Effects: Brand extensions are justified not only for what they deliver in terms of
promotional efficiencies and consumer benefits, they also help the parent brand in many ways,
the first benefit being the clarity in brand meaning that an extension can bring. Extension can
broaden the product meaning.

Example: J&J is not about baby shampoo, it is about baby care. Similarly, IBM once
claimed that it is not in the computers business but in the customer solutions business.

Extensions can resolve definitional issues and avoid the firm from being trapped in myopic
tunnel vision. Secondly, extension can contribute to the parent brand’s associations by either
adding or strengthening these associations.

Example: Reebok watches may reinforce the image of professionalism in sports.

Returns: Over time, many brands, from being initially mono-product or mono-activity have
evolved into a diversified structure.

Example: Walt Disney was focused on animation films for children during the ‘fifties,
but now it has branched into highly heterogeneous businesses.
These include publishing, films, television, theme parks, and cruises. A study9 exploring the
returns connected with the brands found that strong brands are able to generate returns to
shareholders 1.9 per cent above the industry average. Return comparison between focused and
diversified brands revealed that focused brands like Dell and Levi’s manage to earn merely 0.9
per cent higher than the industry average while diversified brands like GE, Disney, etc., earn no
less than 5 per cent more than the industry average. These figures clearly demonstrate superior
returns generating process of diversified brands.

What are the underlying factors that enhance ROI of diversified brands? Three factors probably
drive the superior economics of such brands. First, leveraged brands are able to divide their
support costs over a number of products. Second, the ‘convergence’ is throwing up new
opportunities in many industries. Finally, the rising importance of relationship benefits for
customers. Companies seem to work through loyalty programmes, better customer
understanding and customers. Accordingly, leveraging a brand makes more sense in these
conditions.

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 Unit 6: Extension

Notes

Task Choose a product category and find the firms that have predominantly banked
upon a strategy of:

1. Line extensions

2. Brand extensions

3. Mix of both strategies

4. One brand

Self Assessment

Fill in the blanks:

3. The ………………………..involves using an existing brand name to launch a product in a

different category.

4. The ………………..refer to a situation when the parent brand is employed to make an

entry into a different product category.

6.3 Types of Extensions

Brand extension essentially involves leveraging an existing brand to promote a product into a
different category. The product category definition must be customer-perception based. If the
extended product is perceived to be part of the existing brand category, the extension
classification would change accordingly. The brand must venture into an unrelated category
from a customer’s behaviour point of view in order to qualify as brand extension. Brand extension
can come in many forms. Some of them are given below:

Product Form Extension: A product launched in a different form usually means line extension
rather than brand extension. But if a different product form constitutes an entirely different
product category, it would be called a brand extension from a customer behaviour perspective.

Example: Liquid milk and dried milk may not be perceived as members of the same
product category.

Similarly, chocolate bars and chocolate powder belong to different categories.

Amul
Amul Milk
Condensed Milk

*
Real
Real Juices
Juice Concentrate

* hypothetical

Companion Product: Brand extensions in the form of companion products are perhaps the most
common. The idea perhaps is to capitalise on product complementarity. The consumer may
view both products jointly and hence, provide scope for launching brand extension.

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Notes
Colgate Colgate
Dental Cream Tooth Brush

Gillette Gillette
Gillette Razors
Shave Foam After Shave

Customer Franchise: A marketer may extend a product range in order to meet the needs of a
specific customer group.

Example: A company may launch a variety of products meant for, say, nursery school
children.

The focus here is not customer base but the diverse needs of customers.

Johnson & Johnson Johnson & Johnson Johnson & Johnson Johnson & Johnson
Baby Shampoo Baby Talc Baby Oil Baby Diapers

Company Expertise: Brand extensions often come in the forms of different product category
introductions using a common name but emanating from a common expertise pool. This strategy
is particularly seen in Japanese companies.

Honda Honda Honda Honda

Cars Gensets Scooters Lavnmovers

Brand Distinction: Many brands achieve distinction in the form of a unique attribute, benefit or
feature which gets uniquely associated with the brand. In these situations, a company can work
backwards to launch different products which essentially cash in on this distinction.

Example: Parachute may have expertise of ‘coconut nourishment’ in customers’ minds

over time. This would give Marico Industries, the brand owner, the opportunity to launch a
variety of products exploiting this distinction.

Parachute
Parachute Parachute Parachute Parachute
Coconut
Hair Oil Shampoo Cream Cooking Oil*
Expertise

Brand Image or Prestige: A brand extension may involve a foray into unrelated product categories
based on a brand’s exclusive image or prestige value. Brand exclusivity or prestige bestows
great extension opportunities. This is particularly true of designer and haute couture brands.

Example: Cartier.

Cartier Cartier Cartier Cartier

Jewellery Watches Purses Pens

Distinctive Taste, Ingredient or Component: A brand may develop equity based on any and/or
combination of taste, ingredient or component. When such a close association develops, a
marketer can make entries into unrelated product categories capitalising on these properties.
For instance, Nescafé enjoys proprietary association of distinctive taste. Accordingly, the brand
could be leveraged in other product fields:

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Notes
Nescafe
Nescafe Nescafe Nescafe Nescafe
Cold Coffee
Coffee Chocolate Biscuits Milk Supplement
(bottled)

Good, Bad and Ugly Extensions: The primary lure of using a well established brand name to
promote a product belonging to a different category is to exploit/leverage what the brand name
stands for in the mind of the customer. A brand is nothing but a network of associations which
drive consumer buying. The logic of brand extension is to transfer these associations in the
extension context so that the desired outcome is brand equity. However, brand extensions do
not always create desired outcomes. Five possibilities exist: the good, the better, the bad, the
ugly…and the more ugly.
The Good Extensions: When the parent brand contributes positively to the extended product, it
is called good extension. The parent brand can help the extension by providing brand associations,
quality associations and recognitions and awareness to the extended brand. Making a foray into
the toilet soap market is quite difficult because of overcrowding, consumers’ low involvement,
and product similarity. Dettol’s extension into toilet soaps illustrates how the extension acquired
Dettol’s associations and became a successful soap. The parent brand may also help extension by
providing quality rub off. Brands can bestow quality perception to extension. The Tata name in
India stands for a fairly acceptable level of quality, if not exceptionally high quality. Extending
the Tata name to its small car, Indica, meant that the car benefited from a quality rub off. Brand
name awareness and recognition play a very crucial role in marketing under low involvement
conditions. Brand extensions in such situations build awareness and recognition very efficiently
for the extended product.

Example: Nirma gained in terms of these dimensions when it extended its name to toilet
soaps.
More Good Extension: Sometimes, it is not just that the parent brand helps the extension; rather
the extension also aids the parent brand by way of positive feedback. That is, the extension may
enhance and strengthen the parent brand by increasing the brand visibility and supporting the
core associations.

Example: The core associations of Dettol Brand are strengthened by launching products
which are antiseptic oriented like plaster, shaving cream and toilet soap.
The Bad: It is not that the use of a brand or a product belonging to a different category is always
a beneficiary. Sometimes the name does not help the extension. This may happen on account of
two reasons: first, when the name does not add value and second, the name passes on negative
associations to the extension.

Example: The Pierre Cardin name does not add value to its range of writing instruments.
The Ponds name also failed to add any value to its toothpaste extension. Similar was the fate of
Nirma’s foray into toothpastes. The value addition did not take place because these names do
not have any expertise and credibility in the extension context. Also, extension may stimulate
negative attribute associations. This happened when Levi’s launched their tailored classic line.
Tailored classics and Levi’s strong association with off-the-shelf casual clothing conflicted
violently.
The Ugly: Sometimes, the extension succeeds but its success comes at a cost. The extension
damages the brand name by creating undesirable attribute associations, hurting quality
perception, and altering its existing associations. All these indicate negative feedback to the
parent brand by an extension which succeeds in the marketplace.

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Notes An extension would create its own associations. But some of these associations may damage the
brand.

Example: If a premium brand like Rolex enters into the mid-priced clothing line, it
creates undesirable associations and hurts the parent brand.

However, the reverse transfer of associations is less likely if the parent brand associations are
strong and there is distinct difference between parent and the extension. Brand extensions may
also sometimes weaken the associations (making associations fuzzy and blurred). This problem
can arise particularly when the brand’s core associations are class related.

Example: Bisleri’s water, or Amul’s milk products

So when the brand is extended beyond its product class, its core brand association may get
weakened. Imagine Amul launching aerated soft drinks! Further, brand extension may hurt the
brand by affecting its quality image.

Example: Louis Philippe enjoys a quality image in India, but what would happen if it
allows its name to be used on inexpensive, low quality toiletries for men?

Brand extension is a common route followed by the marketers. But commonness does not mean
that extension is also a quick shortcut to launch new products and services. The above discussion
clearly spells out the potential dangers associated with unplanned extensions. By simply putting
a successful brand name to any product one cannot be assured of success. Instead, the brand
extensions can backfire. This necessitates that the manager while planning for brand extensions,
must systematically analyze the possible opportunities.

Task Visit the websites of various companies and identify the examples of extensions
that could be classified as:

1. Good

2. Bad

3. Ugly

4. More good

Self Assessment

Fill in the blanks:

5. Many brands achieve ……………….in the form of a unique attribute, benefit or feature
which gets uniquely associated with the brand.

6. A brand extension may involve a foray into unrelated product categories based on a
brand’s ……………….

6.4 Brand Extendability

Extensions involve transfer of associations from the parent brand to the extension. The nature of
the parent brand is, therefore, a critical determinant of extension success. The question that
strikes is whether all successful brands lend themselves to brand extensions? For instance, do

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the brands like Cherry Blossom, Captain Cook and Raymond have similar extendability? Or is Notes
it that the nature of the parent brand determines the extendability? When one thinks of extension,
the strategist has to explore as to how ‘different’ or remote a product the brand can support. An
observation of the marketing scene reveals that in some cars, the brands are extended within the
narrow or immediate proximate brand boundaries, whereas in other cases the brands are
successfully extended into far off remote product categories. The issue is what makes it possible?
Why, in some instances, is a brand barely able to support products successfully in its ‘cousin’
categories while in other cases, the extension tends to be a hit in even other species categories?

A brand’s extendability depends on its character. There are five types of brands. These are:
product brand, formula brand, know-how brand, interest brand, philosophy brand.

The Product Brand: It is a situation where there is very little difference between the brand and
the product. Brand is a close approximation of the product. Passively, the brand is used to
identity the product, maybe for internal purposes. The brand does not play any role from the
customer’s point of view.

Formula Brand: Formula means a set procedure. A brand which comes in the formula category
simply implies that a standard procedure has been used to make the product. This type of brand
may be found in cooking oil categories (e.g., Kanodia brand of mustard oil once enjoyed a
reputation for aroma and purity), food (a set procedure used to cook a particular cuisine), and
pickles (a pickle formulation is used to give food a unique taste).

Know-how Brand: Know-how is an expertise that a firm develops in a specialized area of

activity. Example: Sony is known to have expertise in miniaturization and robotics. Honda has
know-how in engines. Amul has developed expertise in milk processing.

Interest Brand: A brand may be defined by its centre of interest. It may reflect its core spirit.

Example: Gillette brand maintains its focus on men’s grooming in all its brands. They all
are designed to make ‘the best a man can get’. Nike’s focal point is winning, i.e., to be on the
cutting edge. Whirlpool’s centre of interest is the home (‘homemaker’).

Philosophy: The brand at this level acquires more intangible character and orientation. The
philosophy transforms the product in a realm altogether different from its physical reality. This
generally happens in case of designers and artists.

Example: The Armani signature on the product completely transforms it to give it a

higher philosophical meaning - a meaning proudly expressed in Armani’s creatively styled
products.

This categorization of brands has powerful lessons for extensions. Product, formula or know-
how brands have limited flexibility in supporting dissimilar products.

Example: A formula brand like Kanodia mustard oil can be extended to the oil category
only where the formula seems appropriate and valuable, whereas know-how brands have far
greater flexibility.

The know-how can be appropriate across a variety of applications.

Example: The engine is a key component in a number of products like lawnmowers,

outboard motors, motorcycles, scooters, cars, etc.

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Notes Therefore, know-how brands have greater territorial expanse over which to support extensions.
The ultimate extension capability lies with brands which have greater depth. The philosophy
brand can support highly dissimilar products. It is for this reason that designer labels are often
able to lend credibility and support to a variety of products which apparently do not have
anything in common-provided that the underlying philosophy is closely hewed to. But what
may ultimately bind philosophy brands together is the creative style or ‘impression’ of the
artist.

Figure 6.4: Extendibility of a Brand

Philosophy Brand
Cartier
Watches

Interest Brand
Toys
Disney (entertainment) Jewellery
Theatre

Know-how Brand Movies

OTG
Bajaj (Electrical) Theme
Irons
Parks
Fans Bags
Formula Brand Pickle Music
Coolers
Mother’s receipes Lemon
Pickle Clothes
Mango Mixers
Access-
Product Brand Pickle ories
Flour Toasters Pens
Rose Brand Mixed Games

Product dissimilarity

Figure 6.5

Amulishness
Drinks?
Energy
Bar?
Amul Symbol Energy Tabs?
Personality- Milk Cakes?
Lovable Biscuits?
Indianness
Amul Taste
expertise in Fun
Trustworthy
milk Value Good
processing: Health
Amul Milk Milk, Ghee, Ice Cream
Type I Butter, Cheese
Milk Additive
II Condensed
Chocolate.
Milk
Amul III
Milk
Time/Brand’s
Product Formula/ Expertise/ Interest Philosophy Evolution
Brand Recipe Know-how

Brand identifies Products are

the product manifestations of brand

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The conventional role of a brand name is to designate or identify a product. Many brands start Notes
as product brands. A product is developed and then a word is assigned to it so that it is
differentiated from others and also its creator or manufacturer is identified. At this level, the
brand is limited to a single product. It cannot be used on other products. Over time, the product
brand goes on to become the formula brand. The product brand may begin to signify a unique
formula that goes into the making of a product. At the formula level, the brand enjoys the luxury
of some degree of latitude in producing variants (type I, type II). The brand exhibits some line
extension possibilities. Further the brand may begin to signify expertise in a particular field.
This expertise may lend itself to related products. Accordingly, the brand could be extended into
products related with its field of expertise or know-how. Up to this stage, the brand performs its
conventional function. It merely acts as an identifier.

Sustained investments in the brand endow it with intangibles that accumulate around it. It
acquires a character, a style, a way of existence. It begins to transcend the product boundaries. It
emerges as an identity in its own right. At this level, the brand’s relationship with the product
is reversed. Rather than the brand being the conveyor of the product, the products become the
manifestations of the brand. The brand becomes a ‘transformer’. It can lend character, style,
image and ‘soul’ to products which carry its name. At this level, when a brand has completely
broken away from product limits, it enjoys great flexibility in terms of extension opportunities.

Brand extendability is a function of connections it enjoys in the minds of the customers. Some
brands are too product focused. That is, the product drives the brand. The prospects may see
little of the brand and more of the product. In such situations, the brand is not able to carve out
an identity of its own. This is not to suggest that the brand is weak with fuzzy knowledge
structures. Rather, the brand is well defined, concrete and tangible. But the issue is: what are its
associations? The associations are product oriented. The attributes dominate the associative
network. What happens when you think of ‘MDH’? It is masala. What is ACC? It is a bag of
cement. What is Harrison? It is a lock brand. Think of ‘Vim’, ‘Ajanta’, ‘Maxima’, ‘Persil’, ‘Cherry
Blossom’, or ‘Add’. All these brands are product confined. Their area of scope is limited. The
brands have strong product connections. The product brands tend to be less flexible in terms of
going beyond their narrow areas. Line extensions are a superior possibility. Brand extension
possibilities could exist, but would be limited to the product category or attributes which may be
relevant in a different product category.

Many brands break away from product orientation to reflect their customers. These reflections
may consist of aspirations, images, emotions, values and experiences. What does a brand like
‘The Body Shop’ connote? The Body Shop is not a cosmetics brand. It is a powerful philosophy.
Customers buy Body Shop products not because of their cosmetics but for the ideology behind
the products. The connection here is one of intangible value. The brand could be extended into
dissimilar categories. The ‘Raymond’ brand in India signifies ‘The complete man’. As of now, it
markets fabrics for ‘the complete man’-and which man doesn’t want to be one? The brand could
begin to offer toiletries, furniture, writing instruments, books, even houses for the ‘complete
man’. The extension possibilities are greater in this case. But the key caveat is that the brand
must not dilute its core essence. It must carry over its philosophy to different product categories
with elegance, style and sophistication worthy of the image the brand enjoys in the public eye.

What is common between ‘Benetton and Nike’? Are these brands about clothes and athletic
shoes respectively? To view these brands in this manner is to miss their meaning. These are both
brands with ‘an attitude’. They present their customers with a new looking-glass. Brands connect
with the inner urges of their customers. These brand types permit extensions into dissimilar
categories. Such brands offer greater leverage flexibility; they can reach out to categories not
lying within the narrow proximity of their traditional product domain if they reflect the
customer. Benetton tackles age old conventions head on, and demonstrates how hollow they can
be at times. A lot of people identify with ‘Benetton’s irreverent attitude.

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Notes
Figure 6.6: Product Category


Caselet From Wills to Wills Sport

W
ills has been in the cigarettes business for over three decades. It is one of the
hottest selling cigarette brands in India from the ITC stables. The ‘Made for
Each Other’ line is so closely tied to the brand that it gives the brand very high
recall. In terms of visuals, Wills conjures up images of a couple-young and sporty (now)-
in perfect harmony. The brand’s advertising has always been driven by the projected
lifestyle of the user. The Wills advertisements portray the couple in their moments of
pleasure and happiness. In fact, if one removed the Wills cigarette pack from the
advertisement, it could easily pass off as an advertisement for a brand of casual wear.
Wills people always wore pastels - semantically balanced with the pack of cigarettes.
Wills all along invested in brand property, not creating associations around the product it
sold or its attributes, but around the typical Wills smoker - what he looked like, what
activities he enjoyed, how he or she carried himself or herself, what their moment of
happiness together were all about. Over time, Wills cultivated an image which was not
product dominated but user oriented. It signified a polished, sporty, educated user image
profile.

Globally, the cigarette industry is under strong pressure. Along with red meat, the cigarette
industry seems to be racing downhill. With pressures from social and health activist
groups, mounting worldwide, cigarette marketing and manufacturing is being subjected
to harsh regulations. The campaign against cigarette smoking is making many people
quit the habit. Also, cigarette smoking is no longer macho today. No more do stars in the
cinema world rely on cigarettes to exude confidence and charm. In fact, in India, they are
no longer allowed to do so, giving cartoonists, cynics and cigarette addicts much grist for
their mills. Gone are the days of Humphrey Bogart, Marlon Brando or Gregory Peck
smoking their favourite brands to convey a style which stole the hearts of many. Non-
smoking is in. It is the health wave which is descending on the globe. For the new health
conscious youth, cigarettes are no longer a symbol of either power or machismo.

Relying on the tremendous equity of the Wills brand, ITC launched Wills Sportswear in
July 2000. The brand conveyed comfort, bright colours, typical Wills user activities, and an
Contd...

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Notes
aura of spottiness. The result: within two weeks of launch, the stocks at New Delhi’s Wills
Sport outlet completely vanished. So phenomenal was the response that the company
actually had to stop advertising. It demonstrated the power of a brand. If extended with
care, a brand can draw from its equity to push a product which is far removed for its
original category. Cigarettes are not in any way similar to apparels. Wills association
with sports has been age old. The brand always appeared on shirts that the Indian cricket
team wore. Also, the brand has to its credit the ‘Wills Book of Cricket’ which records the
celebrated moments in Indian cricket history. Taking a cue from its heritage, the Wills
Sport advertisement ran with head lines like ‘soccer’, ‘goal keeper’, ‘warm up’, ‘ team
spirit’, ‘rely’. One of its early ads showed a visual of a young, urban, educated and smart
man in a typical hitting-the-ball situation against the backdrop of (not playfield) an urban
square with pigeons sitting on the pavement and people on the railings looking at the
man. The ad copy ran ‘fibre to fashion’ as its headline, and a message reading, “A unique
Wills sport philosophy that involves selecting the right grade of fibre, impeccable garment
construction, comfort engineered fits and trend-spotting, to stay in touch with world
fashion…ensuring that every single stitch adds to the joy of stretch - bend - jumping
living’. The signoff read: ‘Introducing Wills Sport, for men and women. Active relaxed
wear that plays along with you!”

The brand communication and physical campaign used the sports lingo against the
backdrop of a typical urban setting with typical urban people, both men and women. For
instance, the ad with the headline ‘rely’ shows a woman crossing the street in a hurry
(virtually running), while speaking on her cell phone and a young man passing on a
packet to her (also on the move). The body text read “Work wear gets into stride as Wills
Sport introduces professional chic. Streamlined fits, flat fronts and neat pleats make a
compelling presentation. In polyester/viscose/spandex that stretches beautifully from
nine to five and beyond”. The brand urged its intended audience to ‘be a sport’.

The Wills Sport campaign beautifully leveraged Wills brands sports associations into the
apparel category by drawing a parallel between sports and modern living. The apparels
are not designed as sportswear. Rather, they are demonstrated to have properties which
would make the sport easy and joyful. But mind you, the sports here is not sports in the
dictionary sense of the term. Rather, it is living in the modern environment-a jet set life
style. The brand found a great connect with the people whose internal dreams to excel in
sports perhaps could not be realized, the ones who appreciated sports only in their drawing
rooms and office discussion, for their lives left very little time for actual ‘sporting’. The
brand subliminally provided them with an option to be sportsmen at last (!) and satisfy
their much suppressed desires and urges, if not at a playfield, at the workplace. In fact,
sportsmanship just got extended way beyond its traditional boundaries!

6.4.1 Extending a Brand

The increasing cost of creating a successful brand is making marketers look at the established
brands in their portfolio to reach out to unrelated product categories. Brand extension is not as
simple and straightforward as putting an established brand name on a new product and watching
its soaring market take off. Brand extension is a route filled with risks. A misadventure may
leave the brand damaged beyond repair. Moreover, when an extension misfires, the brand
equity of the parent may also suffer irreparable damage. The risk is not just that some money
would be lost in extension which fails to take off. Rather the grave danger is it may send reverse
feedback, eroding the original brand’s equity. Equity creation is not an overnight job. Some
brands are what they are because of painstaking hard work spanning decades. Rome and Tatanagar
were not built in a day.

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Notes Some time back, Ponds India ventured into the toothpaste market by extending its Ponds brand
name. This was way back in the ‘eighties. The markets in India were not very competitive.
Supply still ruled over demand. Brands on the shelf were few, and competition was not all that
intense. The struggle to woo away the customer was not pressing. But despite pro-marketer
conditions, the Ponds toothpaste sank in the marketplace without a trace. All this did not take
much time. Customers were simply not interested. The result: the brand attracted very few trials
and still fewer repeat purchase. What happened? Though toothpaste buying is characterized by
low personal involvement and brand switching behaviours, customers simply refused to
acknowledge its existence.

Extensions are not as simple as they appear to a layman. Consumers reject extensions when they
do not make sense. That happens when the idea of a brand does not fit in the extension context.
Here, the brand Ponds (what it stands for in the customer’s mind, probably Cold Cream) did not
fit the extension product category, toothpaste. The brand and product category perhaps brought
together two irreconcilable associations creating dissonance. Customers escaped the cognitive
inconsistency that Ponds toothpaste as a concept created, by simply refusing to confront the
stimulus, leave alone buying. Brand extension is not a physical act of merging two products. It
is a tough process involving marrying two cognitive or perceptual concepts in order to create a
consistent entity. Therefore, it must begin with exploring the brand in a prospect’s mind and
meshing it together with a suitable category.

In order to uncover extension opportunities for a brand, the first step is to discover the brand
itself. Brand has been defined in many ways but the core to any brand is the knowledge network
that exists in people’s mind. Brand is a central node to which various other nodes tend to be
connected with varying degrees of strengths. Exploring the brand involves seeking answers to
the following questions both qualitatively and quantitatively.

 What is a brand’s awareness level?

 What are its recall and recognition levels?

 What are different attributes associated with a brand?

 What benefit associations are connected with a brand?

 What are a brand’s personality associations?

 What are the symbols associated with the brand?

 What are a brand’s user associations?

 What is the perceived essence of the brand?

 What is a brand’s philosophy?

Assessment of a brand’s perceived reality is an essential and very crucial starting point. Answers
to all the above questions help the managers define what the brand is. A brand’s tangible and
intangible reality must be captured. Many times, a brand strategist may be tempted to take a
shortcut by assuming that his personal assessment of a brand corresponds to the external reality.
But this fiction may seriously jeopardize extension attempts. A manager’s construction of a
brand generally tends to be more rational, physical and technical. The lens through which the
external public views and interprets the brand makes its reality considerably different from the
concept held by insiders.

Example: The associations connected with the Ponds name could be given in the
Figure 6.7.

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Figure 6.7: Strength of Associations—Ponds Notes

Once the brand associations and their strengths are determined, the next task is to identify
product areas where the brand could be extended. At this moment, the firm-specific marketing
factors which might signify constraints should not be included in the analysis. That is, the
analysis must proceed to identify extension opportunities with the assumption that the firm has
no marketing, financial or human resources or any other constraint. The essential task at this
stage is to generate a list of product categories which seem consistent with the brand’s associations.
At this point again, customer - manager dichotomy may set in. It is, therefore, preferred that
extension candidate list is generated separately both by the customers and the managers. The
key question to be asked at this stage is:

 Given this association (e.g., cream) what all product categories seem consistent with the
brand? Or

 If the brand were to offer other products, what would these other products be?

For instance, if Horlicks has nourishment properties associated with the brand, the customers
may be asked to state products which seem consistent with this association. The suggestion may
come in the form of nourishment tablets, nourishment drinks, nourishment foods, nourishment
ice-creams, nourishment soups, nourishment biscuits. Hindustan Lever’s Rexona has strong
associations with ‘deodorizing’. The brand can find extensions in product categories where
deodorizing could be an important ingredient. A simple ‘associations’ survey would reveal

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Notes consistent products like soap, room spray, detergents, deos and perfumes. The product category
list so generated at this stage tends to be tentative. It must be subjected to more systematic
analysis so that categories which enjoy superficial consistency are pruned.

The extension list of products needs to be examined from the firm’s resource point of view. Does
the firm have – or can the firm develop – the required skills, competencies and resources to
make a debut in a different product market. It is more of an issue of resource assessment. Simply
finding a product category consistent with the brand does not become an opportunity realized.

For instance, Ponds may be in a products category favoured by women, but it may not have
sufficient resources, nor be able to flex its resources successfully enough so as to market intimate
apparel for women-a very different ball game. Sometimes, the market to be ventured into tends
to be far removed from the assets and skill pool that a firm has generated over time. Managers
must avoid euphoria. Emotions must be taken off the process. The assessment must be done on
an objective basis.

The pruned list of products must be subjected to systematic customer analysis. The concern here
is to firmly establish a product’s suitability before it really goes on to the marketing stage. This
can be done by directly probing the target market whether the proposed product fits with the
brand in question. The researcher must attempt to explore below the surface responses for
possible inconsistencies. The customer’s response could be gauged by the following questions:

 Do you think it’s okay if this brand offered product X?

 How would you react if this brand offered product X?

 What comes to your mind when you see this brand extension?

The above questions help the researcher establish the probable market response to an extension
candidate. Sometimes, a marketer can even ask the prospects to name various products that a
particular brand offers. The list so generated may reveal products which are not currently
offered by the brand but when customers mention them, it reveals their perceived suitability.
The sheer fact that customers mentioned these products signifies perceived product consistency
with the brand.

Task Use the procedure recommended for generating extension opportunities for the
following brands. Find out which brand can be extended far from its present product and
which can just about move in the immediate boundaries. Present your findings in the
form of a report:

 Old Spice

 Maxo Coils

 Calvin Klein

 Fast Track

 Pearl Pet

 6.4.2 Making an Extension Successful

Aaker and Keller propose that there are many assumptions about consumer behaviour which
are fundamentally responsible for the success of a brand extension. These are:

 The parent brand enjoys positive beliefs and favourable attitude in customers memory.

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  It is these preexisting beliefs and attitudes which help in the formation of positive beliefs Notes
and favourable attitude toward the brand extension.

  The negative associations are not transferred to the brand extension; also, these are not
created by the brand extension.

The role of brand beliefs and attitude is critical in determining the fate of the brand extension.
At the heart of this transfer is the concept of fit. The proposed extension must fit with the parent
brand. And if the fit is perceived to be poor, the probability that associations would not get
transferred is very high.

What would happen if a brand like Omega is attached to products like refrigerators or ice
creams? Would the brand beliefs and attitude get transferred on to extensions? Right at the
outset, the extensions seem not only jarring but quite ridiculous. The proposed product categories
and the brand name do not seem to combine into a consistent, mutually reinforcing entity.
Rather, they appear to be items imbued with mutually repulsive forces that are being forcibly
brought together, ready to fly apart again at the earliest opportunity. The extension sends not-
so-subtle signals of highly unpalatable combinations. The strategist must shun such
misadventures. The fit between the brand and the extension must be firmly established.

A study found that transferability of skills and assets of the parent brand and complementarity
between the extension and parent brand are two important fit variables. The complementarity
indicates the extent to which consumers view brands and the extensions as complements (e.g.,
toothbrush and toothpaste). The transferability implies perceived ability of the brand
manufacturer in making the extension product.

Example: HLL, the maker of Lux, also make Rexona

The study also included a third dimension: substitutability—the extent to which consumers saw
two products as substitutes. Of the three variables, transferability and complementarity turned
out to be the most important fit variables. That is, they are more important variables in explaining
the variation in consumer attitude to the brand extension.

The implication of the above study is that the extension and the parent brand must enjoy a good
fit. The perceived fit is the basis of transfer of brand beliefs and attitudes to extension. Besides
transportability of skills and assets and complementarity, the fit can as well be based on functional
or brand performance attributes on intangible associations. For instance, a brand which has
strong attribute association, e.g., Bata for durability or HMT watches for enduring performance,
could be extended into product categories which are consistent with the associations of durability
and enduring performance (e.g., Bata tyres and machine tools). The intangible association could
as well provide extension opportunities into product categories consistent with them.
For instance, a brand like Cartier has strong associations with prestige, status and opulence.
It successfully goes with a variety of products not related with one another functionally.

Did u know? Dettol: Extensions that Mutually Reinforce Each Other

Dettol provides perhaps the best Indian example of brand extension. It demonstrates how
a product which is not something delightful to have in your home could be extended to
reach out and achieve higher targets. Dettol is a product that is over a half-century old.
People all over the globe have grown up experiencing the pungent and burning sensation
that it gave them on wounds and cuts one suffered in childhood. Its unique smell, colour,
bottle and lettering is firmly imprinted in the minds of people. There is no other product
which can compete for the place that Dettol occupies. This long-time association gives

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Notes Dettol an advantage which is difficult to match up against. Dettol is trusted protection
against germs.

Dettol, being a strong brand in every sense of the term, has been constrained by its
volume sales and profitability. It is not something which one would like to use more
prodded by volume generation communication. The brand was not amenable to move
volume or frequency based strategies. This led the firm to look for opportunities outside
its antiseptic categories. Consequently, the brand has seen the following extensions over
time:

Dettol Soap: It was originally launched as a family soap in the early ‘eighties. But its
positioning did not fall in line with Dettol’s core property: fighting germs and protection.
The Result: Dettol soap bombed in the marketplace. The company soon realized its mistake
and corrected its position in line with its essence. The brand was relaunched as a ‘100%
bath’ soap. Brand communication stressed effectively on the need to have a cent per cent
bath, not a superficial one, because of dirt and grime to which one is exposed in daily life.
The result: Dettol soap became one of the top selling soaps in India.

Dettol Plaster: The self-medicating plaster market in India is dominated by J&J’s ‘Band
Aid’. The product is so firmly entrenched that it has become generic. Undeterred by Band
Aid’s might, Dettol ventured into the plaster market. The plaster market is not very big in
India. But Dettol’s foray into this market appeared synergistic with Dettol’s properties.
The brand could easily be leveraged into the nicks and cuts market which children often
have and the first remedy that mothers often use is Dettol antiseptic. Why not provide the
Next Solution: the cover up plaster to protect the wounds from germs? Despite low profile
marketing, Dettol plaster managed to get around ten per cent of the market.

Dettol Shaving Cream: What happens when one suffers a minor nick while shaving? The
immediate reaction is to apply an antiseptic. Keying on this idea, Dettol’s latest extension
is into the shaving cream market. This launch is completely in tune with what the mother
brand stands for. Again, through the total market for shaving creams is small, Dettol has
managed to carve out a niche for itself.

Dettol Talc: The last extension that Dettol brand has witnessed is in the talcum powder
category, the talc has been positioned as a solution to dermatological problems which are
often caused by germs in hot and humid conditions. The advertisements specifically convey
the idea that Dettol talc is for occasions when ordinary talc proves insufficient. It is too
early to predict the fate of the product. But it does seem to exploit the expertise that Dettol
as a brand seems to signify: protection against germs.

6.4.3 Pitfalls of Extensions

Brand extension, despite being a very popular strategy in the current marketing environment,
is not without its faults. There are several dangers associated with brand extensions.

As already discussed, brand extensions may fail to take off. When extensions fail they drain a lot
of precious resources. Companies can always recover from the financial downturns. But
sometimes, extensions cause greater damage by hurting the parent brand. It happens when the
extension sends negative feedback. Greater the fit between the parent and extensions, higher is
the possibility of straight feedback. This was experienced by General Motors, when they launched
Cadillac Cimarron. The car was aimed at customers lower in the hierarchy of car buyers who
could not afford Cadillacs. The Cadillac name which was used to promote Cimarron failed to
give it the much needed boost. Not only did the product fail but it also frustrated the typical
Cadillac buyer. Moreover, by associating with Cimarron, the brand suffered in terms of its
equity and image. Many Cadillac buyers distanced themselves from the brand. The brand franchise

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was hurt. Apple’s much hyped Newton failed to take off. It did put Apple’s competencies to Notes
question. There has been a setback to its image.

Al Ries and Laura Ries suggest that “the easiest way to destroy a brand is to put its name on
everything”. They question why most of the new launches are in the form of brand extensions.
It is because the existing managements only measure the results of brand extension with the
wrong end of the ruler. Only success is measured. The erosion of the brand’s core is not measured.
Most of the line extended brands, quite contrary to notion, enjoy much less market shares.
Budweiser, Marlboro and IBM all have been line extended to death. Their market shares are 30,
30 and 10 per cent respectively. Over extended brands lose their meanings. Brands end up not
being able to identify with even a single product. Gucci was once known for luxury and prestige.
But the brand’s name is stretched on to over twenty thousand items. The result: Gucci has lost
what it used to symbolize. The brand has suffered setbacks from over extension. It has lost the
most important asset it used to enjoy-brand equity. It no longer figures in the shopping list of
the prestige shopper. It is now kitsch.

Task Visit the websites of the following companies and collect the names of the products,
brands and variations that they market. Identify the strategy that the firms have been
following and present the reasons thereof to the students pursuing a course in Brand
Management:

 Citibank

 Parle

 Fedex

 Apollo Hospitals

 Pidilite Industries

Self Assessment

Fill in the blanks:

7. The ………………implies perceived ability of the brand manufacturer in making the

extension product.

8. The ……………..brand enjoys positive beliefs and favourable attitude in customers

memory.

6.5 Summary

 The brand building costs tend to be very high. At the same time, developments on the
demand side are creating pressures on marketers to fine tune their offerings as per the
unique needs of target customers.

 In order to cope with demand pressures and cost constraints, the firms are taking the
extension route to growth.

 Line extensions refer to the strategy of introducing new variants of a product. It is propelled
by reasons such as customer segmentation, need for variety, pricing breadth, capacity
utilization and competitive pressures.

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Notes  The line extensions also involve some risks. These include line confusion, variety seeking
behaviour, strained intermediary relations and myopia. Firms often suffer due to falling
into the line extension trap.

 Brand extension strategy is pursued very vigorously by marketers these days. It involves
using an existing brand name to launch a product in a different category. Here, the brand
remains constant but product category tends to be variable.

 Brand extensions are justified on the basis of promotional efficiency, savings on product
launches, consumer benefits and returns. Various types of extensions could be identified
such as product form, companion product, expertise, customer franchise, and brand image
type.

 An extension can be good when extended product succeeds and if the parent brand benefits.
A bad extension is one which fails to lift off, while an ugly extension not only fails to lift
off, it also damages the parent brand.

 Extensions involve transfer of parent brand associations to the extensions. The nature of
the parent brand is a crucial determinant of extension success. Therefore, before embarking
upon extension programme, a brand’s extendability must be judged.

 A brand’s extendability depends upon its character, whether the brand is a product brand,
formula brand, know-how brand or an interest brand. Brands which are symbolic and
philosophical are easier to extend into unrelated product categories.

 The product or know-how brands have a narrow zone of extension. The parent brand and
the extension must enjoy a good fit. In the absence of fit, the brand beliefs and attitudes are
unlikely to be successfully transferred to the extension candidate.

6.6 Keywords

Brand Distinction: Many brands achieve distinction in the form of a unique attribute, benefit or
feature which gets uniquely associated with the brand.

Brand Extension: The brand extension, on the other hand, involves using an existing brand
name to launch a product in a different category.

Extensions: Extensions involve transfer of associations from the parent brand to the extension.

Formula Brand: Formula means a set procedure. A brand which comes in the formula category
simply implies that a standard procedure has been used to make the product.

Line Extension Strategy: Line extension strategy involves launching various product variants in
the same category under the same brand name.

6.7 Review Questions

1. What is Line Extensions?

2. Briefly explain the Line Extension Trap.

3. What is Brand Extensions? Discuss Brand Extension is important.

4. Write down the types of extensions.

5. Explain the concept of Brand Extendability.

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Answers: Self Assessment Notes

1. Brand name, product category 2. Line extensions

3. Brand extension 4. Category extensions

5. Distinction 6. Exclusive image or prestige value

7. Transferability 8. Parent

6.8 Further Readings

Books Aaker, David A, Brand Managing Equity, N Y, Free Press, 1991.

Aaker, David A. and Kevin Lane Keller, ‘Customer Evaluations of Brand
Extensions’, Journal of Marketing, Jain 1990, pp. 27-41.

Aaker, David A, ‘Brand Extensions: The Good, the Bad, the Ugly’,Sloan Management
Review, Summer 1990, p. 42.

Biel, Alexander; response in ‘The Logic of Product Line Extensions’, Harvard

Business Review, Nov-Dec, 1994, pp. 58-59.

Court, David C, Mark G Leiter and Mark A Loach, ‘Brand Leverage’ The McKinsey
Quarterly, No-2, 1999, pp. 101-109.

Farquhar, Peter, ‘Managing Brand Equity’, Marketing Research, Sept 1989, pp.
24-33.

Ibid. p. 103.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Op.cit, Aaker, 1990.

Quelch, John A and David Kenny, ‘External Profits not Product Lines’, Harvard
Business Review, Sep-Oct, 1984.

Ries, Al and Jack Trout, Positioning: The Battle for Your Mind, N Y, Warner Books,
1986, pp. 101-114.

Ries, Al and Laura Ries, The 22 Immutable Laws of Branding, N Y, Harper Collins,
1988, p. 73.

Sullivan, Mary W, ‘Brand Extensions: When to use them?’, Management Science,

June 1992, pp. 793-806.

Tauber, E M, ‘Brand Leverage: Strategy for Growth in a Cost Controlled World’,

Journal of Advertising Research, Aug-Sep, 1988, pp. 26-30.

Yovovich, B G, ‘Hit and Run: Cadillac’s Costly Mistake’, Adweek’s Marketing Week,
Aug. 8, 1988, p. 24.

Online links http://www.brandextension.org/definition.html

http://www.managementstudyguide.com/brand-extension.htm

www.brandxpress.net/category/brand-extension/

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Notes Unit 7: Brand and Brand Management

CONTENTS

Objectives

Introduction

7.1 Concept of Brand

7.2 What is a Brand?

7.3 Evolution of Brands

7.4 Characteristics of Brands

7.5 Brand Management

7.6 Selecting a Brand Name

7.7 Branding Challenges and Opportunities

7.7.1 What is Branding?

7.7.2 Branding Challenges

7.8 Summary

7.9 Keywords

7.10 Review Questions

7.11 Further Readings

Objectives
After studying this unit, you will be able to:
 Explain the Concept of Brand
 Discuss the Evolution of Brands
 Identify the Characteristics of Brands
 Describe the Brand Management
 Provide insight in to Branding Challenges and Opportunities

Introduction

Brands have been around for many years. They existed silently. Managers thought about branding
once the product was developed, priced, and packaged. Branding was an after decision-not much
significant for the marketers who felt that the product was more important. The tangible aspects
caught more attention. Branding meant passively assigning names to pre-manufactured products.
But in the last two decades the brands have got out of their slumber. They are the hot spots in
total marketing process. Among the manager’s chief concerns, brands reign at the top. Brands
are not universally acknowledged as drivers of financial performance of a company. Not any
more are they cynosures of marketing people; they constantly figure in financial strategy and
valuations. When brands are so important, branding becomes even more important.

The star brands which rule the roost in the global markets are the objects of desire for marketers
who still lack powerful brands. Brands like Marlboro, Sony, Kodak, Coca Cola, BMW leave the

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managers drooling. These brands are outcomes of careful and well crafted branding strategies. Notes
To achieve this end, the managers need to approach branding cautiously and with dedication.
But the process of branding cannot be approached correctly if confusion surrounds the concept
of brand. The need is to confront the critical issue: What is a brand and what it is not.

7.1 Concept of Brand

The concept of brand in its present form is recent. Creating brand is the ultimate aim of marketing
endeavour. The AMA defines it as: “A brand is a name, term, sign, symbol, or design, or a
combination of them, intended to identify the goods or services of one seller or group of sellers
and to differentiate them from those of competitors.” There are three aspects of this definition.
Firstly, it focuses on ‘What’, of the brand. Secondly, it emphasises on what the brand ‘does’. A
brand can be any combination of name, symbol, logo or trade mark. Brands do not have fixed
lifetimes. Under the trade mark law, the users are granted exclusive rights to use brand names
in perpetuity. The economists view of branding “various brands of a certain article which in fact
are almost exactly alike may be sold as different qualities under names and labels, which will
induce rich and snobbish buyers to divide themselves from poorer buyers.”
A brand name is used by the marketers because of the roles it can perform. It identifies the
product or service. This helps consumers to specify, reject or recommend brands. This is how
string brands become part and parcel of a consumer’s life. Secondly, brands help in
communication. Brands communicate either overtly or subconsciously. For instance, the brand
‘Fair and Lovely’ communicates what the product does. Similarly, a brand like Johnson and
Johnson is a symbol of expression of a mother’s love. Finally, a brand becomes an asset or
property which only the owner has the right to use. The brand property is legally protected. All
the registered names are the valuable assets of the owners. Coca-Cola brand name is perhaps the
most valued asset of Coca-Cola Corporation.
Conventionally brands were viewed myopically. They were seen to perform identification and
differentiation functions. But mere identification may not be a sufficient condition for survival
in a competitive marketplace. For instance, the brand Premier identified the automobiles with
the Premier Automobiles Limited very well. At the same time the ‘Premier’ brand distinguished
these cars from rest of the competitors like Hindustan Motor’s Ambassador, Maruti, and others.
Yet the brand went out of the market. Now Premier cars are not even manufactured. What is
essentially missing in the conventional brand concept is consumer. Brands do not exist for the
sake of identification and differentiation.

Box 7.1: What a Brand is and What it does?

A brand is a name, symbol, design or a combination thereof.

McDonald’s: is a name
Golden Arches: is a symbol or sign
which is trade marked (it is the
exclusive property of McDonald
McDonald’s Corporation)
Combination: A unique art work that
TM combine all elements of brand

Any outlet that displays this sign achieves two objectives immediately in the prospects
mind:

1. The prospect is easily able to identify that this outlet is McDonald Corporation.
Hence he knows what to expect from this outlet.

2. The brand differentiates. The prospect upon seeing the above sign is able to
differentiate this outlet from the others which also sell similar kind of products or
services (it is not Wimpy’s).

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Notes They exist because of and for customers. The value dimension is key to any kind of brand to be
there in the marketplace. Branding must not be confined to the process of passively assigning a
name or symbol to a product. Branding done in this manner may not be able to lift the product
into a higher plain. The product may be equal to brand and brand may be equal to product. The
purpose of branding is to transform the product. It must add value that consumers covet.
Transforming a commodity like product into customer satisfying value added propositions is
the essence of branding.

Self Assessment

Fill in the blanks:

1. A ............................ a name, term, sign, symbol, or design, or a combination of them.

2. Under the……………….., the users are granted exclusive rights to use brand names in
perpetuity.

7.2 What is a Brand?

According to American Marketing Association (AMA) a brand is a “name, term, sign, symbol or
design or a combination of them, intended to identify the goods and services of one seller or
group of sellers and to differentiate them from those of competitioners”.

A brand in short is an identifier of the seller or the maker. A brand name consists of words,
letters and/or numbers that can be vocalized. A brand mark is the visual representation of the
brand like a symbol, design, distinctive colouring or lettering. Mercedes Benz is a brand name
and the star with it is a brand mark.

Essentially, a brand is a promise of the seller to deliver a specific set of benefits or attributes or
services to the buyer. Each brand represents a level of quality. Irrespective of the fact from
whom the brand is purchased, this level of quality can be expected of the brand. A brand is much
more complex. Apart from attributes and benefits, it also reflects values.

!
Caution Before reading the brand concept student’s please check how many brand available
nearby you.

7.3 Evolution of Brands

Brands start off as products made out of certain ingredients. Over a period of time, brands are
built through marketing activities and communications. They keep on acquiring attributes, core
values and extended values.
Branding makes it easier for consumers to identify products and services. Brands ensure a
comparable quality when products are repurchased. Brands simplify a consumer’s shopping.
Choosing a commodity is far more complex than choosing a brand. The firms find that brands
can be advertised. The firms also get the advantage of recognition when brands are on the
shelves of the retailers. There is no confusion between branded products amongst consumers.
Branding makes price comparisons difficult. Good brands help build a corporate image. Branding
gives added prestige to the marketer. Branding also gives legal protection to the seller. Brand
loyalty protects a firm against competition. Branding enables a seller to segment the market.
The distributors prefer branding as an identification tool for vendors, as a convenient tool to
handle the products. These are some of the factors which encourage the sellers to brand their
products.

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Figure 7.1: Brand Evolution

Notes

Extended value
Core value

Attribute:
Category Association
Products Ingredients

Time

Brand evolution has interesting history. In ancient Roman and Greek society, shopkeepers hung
pictures above their shops of the products they sold. There was a high degree of illiteracy in
those days; the pictorial representation did help the buyers. Each retailer then started developing
symbols to represent his speciality. This led to the development of brand logos. Logos are
shorthand device indicating capability of a brand. The trend is continuous even now.
In medieval times, craftsmen put their marks on products to indicate the skills which went in to
making them. Branding based on the reputations of craftsmen has existed over the centuries.
Thus suppliers started distinguishing themselves. Branding was used as a guarantee of the
source of the product. Later it came to be used for legal protection against copying and imitation.
Trademarks now include works, symbols and package design, and are registerable.
Branding was associated with the mark put on cattle by red hot iron as a proof of ownership, and
this must have influenced Oxford English Dictionary’s lexical meaning of a brand as an indelible
mark as proof of ownership, as a sign of quality or for any other purpose. Ranchers in the old
west used brands to identify their cattle. As fencing was not invented, this was the only way to
mark their valuable property. Brands thus became differentiating devices, and remain so even
today. They identify the products of one seller or group and competitors. Brands can be a name,
term, sign, symbol or design or any combination of them.
Classical brand management developed in the retail grocery stores. Manufacturer-retailer
relationship underwent transformation in the wake of the Industrial Revolution. Wholesalers
were a dominant force then. Manufacturers sold unbranded products to the wholesalers and had
little contact with the retailers. But technological advances enabled manufacturer to mass produce
goods in anticipation of demand. They questioned their reliance on wholesalers. They tried to
protect their investment by branding their products, and by patenting them. They tried to
bypass the wholesalers by advertising these brands directly to the consumers. Advertising then
focused on creating awareness of a brand, emphasising its reliability, and guaranteeing that
branded goods were of a consistent quality.
Manufacturers also began to appoint their own salesmen to deal directly with the retailers. All
this happened by the second half of the 19th century.
The power shifted from the wholesalers to the manufacturers thanks to the branding process.
Manufacturers took efforts to create brand awareness, and to make their brands different from
those of the competitors. They also strove to maintain a consistent quality level. Brands came to
have three dimensions-differentiation, legal protection and functional communication.
After the World War II, the consumers hankered after the goods which were short since resources
were diverted to the war efforts. People started life afresh and wanted security. Family provisions
were a desirable objective. It augured well for the manufacturers. Many of today’s great brands
emerged in this period. Brand management became a respectable subject.

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Notes In the last century, brands came to acquire an emotional dimension also. They made personality
statements and represented buyer moods.

Task Can you explain how a normal product change in a successful brand e.g. P.V.R.
group of cinema.

Self Assessment

Fill in the blanks:

3. Over a period of time, brands are built through marketing activities and ………………….
4. Branding makes ……………….comparisons difficult.

7.4 Characteristics of Brands

Brand can be considered in terms of four levels:

Generic: It is the commodity level which satisfies the basic needs such as transportation. It is so
easy to imitate a generic product. A brand continues to add values so as to reach the expected
level.

Expected: A generic is modified to satisfying some minimum buying conditions such as functional
performance, pricing, availability, etc.

Augmented: Brand is refined further by adding non-functional values along with the functional
ones. We may direct advertising to the social prestige, the possessor of the brand is likely to
enjoy.

Potential: As brands evolve, we become more critical. Creativity plays an important role to
grow up the brand to its full potential. If no creative effort is taken, there is danger of the brand
relapsing to its augmented or expected level.

7.5 Brand Management

Brand Management is the application of marketing techniques to a specific product, product

line, or brand. It seeks to increase the product’s perceived value to the customer and thereby
increase brand franchise and brand equity. Marketers see a brand as an implied promise that the
level of quality people have come to expect from a brand will continue with future purchases of
the same product. This may increase sales by making a comparison with competing products
more favorable. It may also enable the manufacturer to charge more for the product. The value
of the brand is determined by the amount of profit it generates for the manufacturer. This can
result from a combination of increased sales and increased price, and/or reduced COGS (cost of
goods sold), and/or reduced or more efficient marketing investment. All of these enhancements
may improve the profitability of a brand, and thus, “Brand Managers” often carry line-
management accountability for a brand’s P&L profitability, in contrast to marketing staff manager
roles, which are allocated budgets from above, to manage and execute. In this regard, Brand
Management is often viewed in organizations as a broader and more strategic role than Marketing
alone.

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The discipline of brand management was started at Procter & Gamble PLC as a result of a famous Notes
memo by Neil H. McElroy. A good brand name should:
1. be protected (or at least protectable) under trademark law
2. be easy to pronounce
3. be easy to remember
4. be easy to recognize
5. be easy to translate into all languages in the markets where the brand will be used
6. attract attention
7. suggest product benefits (e.g., Easy-Off) or suggest usage (note the tradeoff with strong
trademark protection)
8. suggest the company or product image
9. distinguish the product’s positioning relative to the competition
10. be super attractive
11. stand out among a group of other brands < like that one compared to the others.

7.6 Selecting a Brand Name

Criteria for choosing a name:

1. Easy for customers to say, spell and recall (inc. foreigners)
2. Indicate products major benefits
3. Should be distinctive
4. Compatible with all products in product line
5. Used and recognized in all types of media
6. Single and multiple words Bic, Dodge Grand Caravan, IBM PC (letters), or a combination
Mazda RX7
7. Availability, already over 400 car “name plates”, this makes it difficult to select a new one.
8. Use words of no meaning to avoid negative connotation, Kodak, Exxon
9. Can be created internally by the organization, or by a consultancy.
Service-usually the company name must be flexible enough to encompass activity of current
services as well as new ones in the future (Southwest Airlines).
Frequently use symbols, AT&Ts globe, Travellers insurance umbrella.
Naming process goes from idea generation to idea evaluation to legal evaluation. Should define
objectives–what value to the product should the name provide.

Self Assessment

Fill in the blanks:

5. ............................ is the application of marketing techniques to a specific product, product

line, or brand.

6. Naming process goes from …………………to idea evaluation to legal evaluation.

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Notes 7.7 Branding Challenges and Opportunities

Although brands may be important as ever to consumers, brand management may be more
difficult than ever. The challenges for brand managers are discussed below:

1. Savvy Customers: Increasingly, consumers and business have become more experienced
with marketing and more knowledgeable about how it works. A well-developed media
market has resulted in increased attention paid to the marketing actions and motivations
of companies. Many believe that it is more difficult to persuade consumers with traditional
communications than it was in years gone by.

Other marketers believe that what consumers want from products and services and brands
has changed. For example, Kevin Roberts of Saatchi and Saatchi argues that companies
must transcend brands to create “trust marks”- a name or symbol that emotionally binds
a company with the desires and aspirations of its customers.

2. Brand Proliferation: Another important change in the branding environment is the

proliferation of new brands and products, by the rise in line and brand extensions. As a
result, a brand name may now be identified with a number of different products of varying
degrees of similarity. Procter & Gamble’s original Crest toothpaste, has been joined by a
series of line extensions such as Crest Mint, Crest for kids, Crest Baking Soda, Crest Multi
care Advanced Cleaning.

3. Media Fragmentation: An important change in the marketing environment is the

fragmentation of traditional advertising media and the emergence of interactive and non
traditional media, promotion and other communication alternatives.

The commercial breaks on network TV have become more cluttered as advertisers

increasingly have decided to advertise with 15 second spots rather than the traditional
30 or 60 second spots. Marketers are spending more on non traditional forms of
communication and new emerging forms of communication such as interactive, electronic
media, sports and events sponsorship, in -store advertising, mini bill boards in transit
vehicles and in other locations.

4. Increased Competition: Both demand side and supply side factors have contributed to the
increase in competitive intensity. On the demand side, consumption for many products
and services has fattened and hit the maturity stage, or even the decline stage of the
product life cycle. As a result, sales growth for brands can only be achieved at the expense
of competing brands by taking away some of their market share.

5. Increased Costs: As the competition is increasing, the cost of introducing a new product
has also increased. It makes it difficult to match the investment and level of support that
brands were able to receive in previous years.

6. Greater Accountability: Stock analysts value strong and consistent earnings reports as an
indication of the long-term financial health of a firm. As a result, marketing managers
may find themselves in the dilemma of having to make decisions with short-term benefits
but long-term costs.

Moreover, many of these same managers have experienced rapid job turn over and promotions
and may not anticipate being in their current positions for very long. These different
organizational pressures may encourage quick-fix solutions with perhaps adverse long-run
consequences.

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7.7.1 What is Branding? Notes

Branding is the business process of managing your trademark portfolio so as to maximize the
value of the experiences associated with it, to the benefit of your key stakeholders, especially
current and prospective:

1. Employees

2. Customers

3. Stock/share holders

4. Suppliers

5. Intermediaries
6. Opinion leaders

7. Local communities

8. Purchasers and licensees

Experts argue as to which stakeholders should be the main focus of the branding process, but
this is probably the wrong question as their experiences are all interrelated:

Employees: The more your employees value your brands and understand what to do to build
them, the more your customers, suppliers, local communities and opinion leaders will value
them. The more attractive your brands are to potential employees, the more they are likely to
want to work for you.

Customers: The more your customers value your brand, the more they will buy your products
and services, and recommend them to other people. They will also pay a premium for them and
make the lives of your employees easier. This, in turn, will enhance the value of your brands to
prospective purchasers and licensees. Research has shown that strong brands are more resistant
to crises of reputation.

Stock/share holders: Strong brands multiply the asset value of your company (90% of the asset
value of some major corporations lies in their intellectual property), and assure them that your
company has a profitable future. They also allow you to afford to give competitive dividends to
your current stock/share holders.
Suppliers: Suppliers like to be associated with strong brands as this benefits their own reputation
in the eyes of other current or potential customers. You are therefore likely to get better service
at a lower total acquisition cost.

Intermediaries: Retailers, distributors and wholesalers value strong brands as they improve
their own profit margins. They are likely to give you more “air time” and shelf space, thus
enhancing further the value of your brands in the eyes of your current and prospective customers.

Opinion Leaders: The media, politicians and non-government organisations are more respectful
of strong brands.

Local Communities: Supportive local authorities can make your life easier in many ways, and
offer you better deals, if you have prestigious brands. Your local communities provide you with
your work force and can be highly disruptive if they perceive you as damaging their environment.

Purchasers and Licensees: The question prospective purchasers and licensees ask is “how much
more profit can I get for my products and services sold under this brand than under any brand
I might build?” Strong brands can be spectacularly valuable.

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Notes 7.7.2 Branding Challenges

There are many challenges faced by the organizations and companies according to the branding
scenario and these are:

(a) Reactive Approach to Brand Development: Often, an event triggers brand development
or re-branding. Signaling comments include, “We have a major tradeshow coming up. . .”
or, “We’re being featured in a major publication and want to place an ad, but we don’t
know how to position ourselves.” With neither a plan nor procedures, your company
simply “reacts” to opportunities for exposure.

(b) Branding Initiatives Lack Accountability (Return on Branding Investment, ROBI): No

formal metrics are in place to determine the effectiveness of branding initiatives, which
may include advertising, direct marketing, public relations, and web activity. Often, the
basis for continuing an initiative resides in gut instinct, and the effectiveness of branding
initiatives is weighed after the fact. Without metrics, you can’t tell whether the result was
good, bad, or average. All you know is that you invested “X,” the sales result was “Y,” and
in the short-term, you’re happy.

(c) Can’t Bring Branding Initiatives to Conclusion: Many companies make a series of false
marketing starts, or start strong and lose focus, which leads to comments like, “We have
a website in development . . .”, or “We’re working on a new corporate brochure . . .” The
senior executive may be too involved in the process, or the project may have been delegated
to an unqualified staff person. I’ve had a number of great interns at Delia Associates, some
of whom I hired, and others who have moved on to promising marketing careers
elsewhere. No matter how bright these individuals were, they were not qualified to
develop and deliver a company’s online brand single handedly, and it would have been
unwise to expect them to do so.

(d) “Who are we Today” Syndrome: If you haven’t constructed a core brand foundation, each
branding initiative represents a “re-invention of the wheel” that requires rethinking of
your company’s position, key values, image, and core focus. What should be a simple new
product announcement turns into a debate about the company’s past, present, and future
with everyone asking, “Who do we REALLY want to be when we grow up?”

(e) Competition “Stole” the Business away from Us: We frequently get calls from companies
that have lost a major piece of business, often to a direct or emerging competitor. The top
executive will complain that the competitor is inferior, yet stole the customer. What
companies in these situations fail to realize is that branding has more to do with perception
than with reality. If a customer believes a competitor is better than you, it’s true, pure and
simple.

(f) “We’re in a Commodity Business”: Due to competitors using price-cutting tactics essentially
to buy market share, perceived value is being driven out of the business. As a result, you
may be forced to drop prices or add value simply to hang onto existing business.
Meanwhile, branding takes a back seat. In truth, every company, by virtue of its existence,
is remarkable in some way. And every industry sector has a value curve of companies,
from true commodity suppliers to industry innovators. Who do you think is making
more money?

(g) “Branding Doesn’t Work in Our Industry”: This statement is often paired with, “Branding
is a necessary evil.” These comments are usually spoken by casualties of poorly executed
marketing or bad marketing advice. The speakers have been stung once and won’t be so
easily stung again. The truth is, branding does work, as evidenced by the successes achieved
by companies that have achieved brand status.

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(h) “Everybody Knows Us.”: Any company in business for ten years or more has name Notes
recognition, especially if it services a well-defined industry. The better question is, “What
do people THINK about you?” Your customers know you for what you do for them, but
they may not know your full range of capabilities, or how to make qualified referrals on
your behalf. Your customer contacts may disappear, or customers may simply forget to
call you in a time of need.

(i) Unrealistic Expectations: “We sent out a mailing and nothing happened.” This common
complaint gets back to accountability and ROBI. What did you expect from a single mailing?
The biggest reason for branding failures is that companies lack the tenacity to stay the
course. They bail out prematurely and cite failure. The truth is that it takes, on average,
seven brand impressions to get on the radar of a qualified prospect, let alone convert that
prospect into a customer.

(j) “Nobody Knows Us”: Many organizations place more emphasis on selling than on branding.
With a highly capable sales team to drive opportunity, an organization will grow, but that
won’t replace the power of branding. If you’re a $10 million company with about 100 key
clients, your brand is very important to those 100 customers. But the rest of the world
could care less, until you give them a reason to care.

(k) “We Don’t Have the Budget”: Nearly every company we’ve talked to IS spending money
on its brand. Companies may not be tracking it or considering it a brand investment, but
they are investing all the same. Golf outings, client dinners, company gifts, sporadic ads,
tradeshow appearances, presentations, hats, t-shirts, new brochures, updating the company
website-that’s all spending on a brand.

Self Assessment

Fill in the blanks:

7. ............................ is the business process of managing your trademark portfolio so as to

maximize the value of the experiences associated with it, to the benefit of your key
stakeholders.

8. ............................ represents ‘the total accumulated value or worth of a brand’.

To make the most of marketing investments, you need to start tracking your spending on these
activities. Next, determine whether you would be better served by investing differently. If you
don’t have a budget, establish one for next year. Business-to-business companies spend an
average of 2-3% of annual sales on branding. Business-to-consumer organizations tend to spend
5% or up to 10% if they are in serious growth mode. Retailers spend even more because they rely
completely on branding efforts to create selling opportunities. Averages are a good starting
point for determining how much you should allocate to branding next year.

The battle for a share of the consumer’s wallet and cut throat competition for every bit of market
space has resulted in search for a powerful weapon that delivers sustainable competitive
differentiation. In the beginning itself it is of great relevance to quote Philip Kotler, marketing
guru about his perception on brands, “Branding is expensive and time consuming and it can
make or break a product.” But even then, today, branding is such a strong force that hardly
anything goes unbranded. No one had thought that commodities like “Aata”, & “Rice” would
be branded. Today, one does not go to the shop and ask for just salt but will ask for Tata Salt or
Captain Cook Salt or Annapurna Salt. These brands have become part of our daily life. Developing
of an effective brand allows the organization to create a distinctive presence in the market and
compete more effectively by leveraging its organizational strengths. In the current competitive

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Notes market, brands are identified as an intangible asset that can be revenue generating in the long
run.

Distributors and retailers want branded products because brands make the product easier to
handle, hold production to certain quality standards, strengthen buyer preferences, stimulate
repeat purchases, facilitates promotion efforts, makes it easier to identify suppliers and stabilizes
market share. On the other hand, consumers prefer branded products because it gives them an
assurance of quality, differentiate from competitive products and help him in efficient shopping.
That is why, Philip Kotler has said, “Developing a successful brand creates customer loyalty
through the provision of added value, for which the customer is prepared to pay premium price,
and which the competition find difficult to copy.”

Today most of the markets are saturated with competitors and offerings. Take the example of
bathing soap market. Even in this market, one can distinguish between different age segment,
income segment, preference segment, beauty conscious segment and so on. One can create a
niche offering for a very special group but this would not lead to large sales & resultant profit.
On the other hand, if you target the mass market, you find it difficult to define the superior
offering because you find existence of lots of variety seekers who would try Cinthol one day, the
next time a Pears & still next time a Dove. Therefore the challenge for the mass marketer is to
develop a strong, well known brand focusing on what everyone wants.

In branding there are two extreme errors. One is to create a fixed brand image to be used
everywhere without exception. The other is to change the meaning of the brand in every market.
Like McDonalds doesn’t believe in a strong fixed positioning. McDonalds take different meanings
in different countries. It serves different versions even in different places within each country.
McDonald is a global brand which is available globally but marketed locally. Even though
customers are aware that it is a global brand but when companies make it a glocal brand, the
customer feel close and develops a sense of belongingness, and it is this, rather than its universal
availability, that enhances its equity. It is rightly said that “a brand is said to have personality,
an emotional bond to the customer that grows out of the perceived characteristics.” Through its
recent advertisement theme “I’m Lovin’ it”, McDonald’s have succeeded in developing an
emotional bond between McDonald and its customers across 100 countries. Therefore any
effective & well-managed brand can add tremendous value to its customers only when it is
communicated effectively.

Again, according to the maturity of the product, geographical markets and the brand itself, the
brand image should carry different image. The companies need to continuously evaluate the
brand position otherwise they run the risk of seeing their brands degenerate into mere
commodities that customers shop for need fulfillment. Brand rejuvenation is a must for products
reaching the maturity stage. Companies need to periodically audit their brands strengths and
weaknesses and rejuvenate if necessary. Brands need to be repositioned with the changing
customer preferences and entry of new customers.

Any newcomer, who is entering the market, should not be a copycat but should identify the
week points of the existing brands or something which is missing from the market and try to
penetrate the untapped market. They should be able to offer a combination of quality, reliability,
availability and low price. The most winning strategy for branding is “define a target audience
and direct a superior offering (vs. competitor) at that target market.”

The brand managers are today facing the twin challenges of localization versus globalization
and individualization versus homogenization. They should be very sensitive to the environment
while taking decision about whether, when, where and how to globalize or localize the brand.
The most distinctive skill required in a brand manger is to create, maintain, protect and enhance
its brands. He should be able to create a product difference, real or symbolic. Though this tactical

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work is carried out by the brand managers, but in reality the brands ultimate success will Notes
depend on everyone in the company accepting and living the brand’s value proposition.

Self Assessment

Choose the appropriate answer:

9. Out of the following which one is not a brand.

(i) Coca Cola (ii) Microsoft

(iii) Company (iv) None of the above

10. Which one are not the characteristics of a brand.

(i) Expected (ii) Augmented

(iii) Potential (iv) General


Case Study Brand Extension Strategy
Old Spice Cosmetics for Men

Old Spice has been a long standing global brand of cosmetics for men. Their range includes
after-shave lotion, lather shaving cream, talcum powder, shampoos and hair cream.
In India the first and most successful product launched was after-shave lotion.

In the year 1986, the market share of Old Spice products in India was as follows:

 After-shave lotion – 65%

 Lather shaving cream – 9%

 Talcum powder – 1%

 Shampoo trace

 Hair cream trace

Colfax Lab. Ltd. The manufacturers had been marketing the products in the west through
departmental stores. They planned a strategy to boost their products sale in India in 1987
and decided to reduce reliance on after-shave lotion and promote other products as well,
as they had found there was good market for other products too.

 Shampoo: As Colfax had only one type of shampoo, whereas competitors had several
types, they decided to lie low on this product.

 Talcum powder: As talcum powder was purchased mostly by women, and Old Spice
was a brand for men, the sale was restricted.

Hence it was decided to promote lather shaving cream along with after-shave lotion as the
two products complemented each other.

A market survey gave the following figures of use of cosmetics by men:

 Shaving cream is used by 94% men

 After-shave lotion by 79%

Contd...

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Notes
 Hair cream by 33%

 Talcum powder by 86%

 Shampoo by 63%

Advertising Plan

Advertising budget was not enough for undertaking a full-fledged multi-product campaign.

After-shave lotion to be the umbrella product and from 1985 the Surfer Ad campaign was
launched. The advertisement gives a masculine Macho image to the product. It gave a
fillip to the after-shave lotion and had marginal impact on other product sales.

 40 towns with 70% business were selected for the campaign.

 TV was taken as the primary medium.

 Product differentiation was through package size, with introduction of 50 ml pack

with atomiser.

Objectives of the advertising plan were to increase awareness of the product in customer’s
minds and encourage trial usage of lather shaving cream.

Strategy was to keep the brand personality of lather shaving cream same as that of after-
shave lotion, that of a masculine macho man and gradually increase focus on lather shaving
cream without decreasing importance of after-shave lotion.

Since the lather shaving cream was a superior product as compared to other shaving
creams, keeping advertisements of both the products, lather shaving cream and after-
shave lotion consistent, improved the brand image of both the products.

The product was targeted towards 25 plus men with income of ` 10,000 per month.

Research had shown that as the brand image is most important, brand character had to be
clearly defined too.

Old Spice man is adventurous with a devil-may-care attitude. His activities and sports
have a touch of danger. He thrives on risks and women pine for him.

Creative strategy lead to making of the Polo film, horses symbolising the machos in men,
who are irresistibly attractive to the elitist women. Polo is intrinsically adventurous and
full of risks.

Medium had to be elitist i.e. TV which provides the following:

 Maximum excitement to brand for large target audience.

 High reach

 Quick building of sales

 Cost effective

Three spots a month were given of 20 seconds duration on the national network.

Evaluation: The figures given are enough evidence of the success of the campaign-

1986 1987 1988 1989

Volume 100 131 158 213
Value 100 134 180 277

Contd...

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Notes
The market share also improved as can be seen from the next table (given in percentage)

Year/% 1988 1989 1990 1991 1992

Old spice 13.1 16.2 19.2 26.8 33.5
Palmolive 34.5 33.4 36.9 35.5 33.6
Godrej 19.5 20.2 18.7 18.6 19.3

Old Spice brand has remained one of the most respected brands worldwide. In 1988 lather
shaving cream advertisement was among top 10 advertisements in the world*.

Questions:

You are the new Managing Director of Prince, the company, which is introducing a new
brand of Scooters Vogue when their Motorcycles Voyager is having the largest market
share of 23%.
Focus: You have to focus your attention on the following:

 Should you take a piggy ride on your Mo-bike while launching the scooters?

 Should you do hard selling to eat into competition or get new customers?

As you set about planning your campaign write a note of one page, maximum of 300
words to your advertising agency briefing them about what you want them to do and
what are your objectives for the campaign.

7.8 Summary

 A brand is a “name, term, sign, symbol or design or a combination of them, intended to

identify the goods and services of one seller or group of sellers and to differentiate them
from those of competition”.

 The characteristics of a brand can be given in four levels and they are generic level,
expected level, augmented level and potential level.

 Brands are treated as perceptions in the consumers’ mind. In the purchase process, consumers
seek values of the brand’s capability. They evaluate a brand perceptually against criteria
such as reliability, feel-good factor, superiority to other competitive brands, etc.

 A brand is a product, but one that adds other dimensions that differentiate it in some way
from other products designed to satisfy the same need.

7.9 Keywords

Brand: A brand is a “name, term, sign, symbol or design or a combination of them, intended to
identify the goods and services of one seller or group of sellers and to differentiate them from
those of competition”.

Brand Evolution: It has an interesting history. In ancient Roman and Greek society, shopkeepers
hung pictures above their shops of the products they sold. There was a high degree of illiteracy
in those days, the pictorial representation did help the buyers. Each retailer then started
developing symbols to represent his speciality.

Brand Logo: Logos are shorthand devices indicating capability of a brand.

Creativity: It plays an important role to grow up the brand to its full potential. If no creative
effort is taken, there is danger of the brand relapsing to its augmented or expected level.

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Notes 7.10 Review Questions

1. Suppose you are a manager in your organization what type of challenges you face before
launching a product into the market.

2. How a brand makes an image in the mind of customer? Give a suitable example.

3. What are the factors behind for choosing a brand name?

4. Branding is a good thing for company or it’s a syndrome for the company. Give your
suggestion.

5. What is the difference between brand awareness and brand loyalty?

Answers: Self Assessment

1. Brand 2. Trade mark law

3. Communications 4. Price

5. Brand management 6. Idea generation

7. Branding 8. Brand equity

9. (iii) 10. (iv)

7.11 Further Readings

Books Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand
Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Asker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.

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Notes

Online links www.en.wikipedia.org

www.web-source.net

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Notes Unit 8: Brand Equity

CONTENTS

Objectives

Introduction

8.1 Defining Brand Equity

8.1.1 Value to Customers

8.1.2 Value of Marketer

8.2 Brand Equity at Different Hierarchical Levels

8.2.1 Brand Loyalty

8.2.2 Brand Awareness

8.2.3 Perceived Quality

8.2.4 Brand Associations

8.3 Brand Image Constellation

8.4 Brand Image Dimensions

8.4.1 Customer based Brand Equity

8.5 Brand Personality

8.6 Summary

8.7 Keywords

8.8 Review Questions

8.9 Further Readings

Objectives
After studying this unit, you will be able to:
 Define the Brand Equity
 Discuss Brand Image Constellation
 Explain Brand Image Dimensions
 Recall Assets and Liabilities
 Describe Brand Report Card

Introduction

Brand equity represents ‘the total accumulated value or worth of a brand’. Konapp (2000) considers
brand equity as “totality of brand’s perception”. He includes the feelings of consumers, employees
and all stakeholders while measuring the brand equity.

Keller (1993) defines brand equity in terms of marketing effects whereby certain outcomes occur
as a result of brand name.

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Aaker calls brand equity a set of assets associated with a brand, and which add to the value Notes
provided by the product/service to its customers.

Brand equity relates to the fact that different outcomes result from the marketing of a product or
service because of its brand than if the same product or service had not been identified by that
brand.

Branding is all about creating differences. Most marketing observers also agree with the following
basic principles of branding and brand equity:

1. Differences in outcomes arise from the “added value” endowed to a product as a result of
past marketing activity for the brand.

2. This value can be created for a brand in many different ways.

3. Brand equity provides a common denominator for interpreting marketing strategies and
assessing the value of a brand.

There are many different ways in which the value of a brand can be manifested or exploited to
benefit the firm.

8.1 Defining Brand Equity

Brands are valued for their equity. Brands add value. Everyone in the marketing profession
agrees that brands can add substantial value. It is also true, sometimes, that brands become a
burden. The brand can be both a value enhancer and a decreaser. A variety of opinions exist
about brand equity. Some of these are as follows:

“Brand equity can be thought of as the additional cash flow achieved by associating a brand with
the underlying product or service”.

“Brand equity consists of differential attributes underpinning a brand which gives increased
value to the firm’s balance sheet”.

“Brand equity is a set of brand assets and liabilities linked to a brand, its name and symbol add
to or subtract from the value provided by a product or service to a firm and/or to that firm’s
customers”.

“The brand “equity” (is) the total accumulated value or worth of a brand; the tangible and
intangible assets that the brand contributes to its corporate parent, both financially and in terms
of selling leverage.”

“Brand equity is the totality of the brand’s perception, including the relative quality of products
and services, financial performance, customer loyalty, satisfaction and overall esteem toward
the brand. It is all about how consumers, customers, employees and all stakeholders feel about
the brand.” (Konapp, 2000).

“Brand equity is defined in terms of marketing effects uniquely attributable to the brands.

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 the
name”. (Keller, 1993).

“Broadly stated, brand equity refers to the residual assets resulting from the effects of past
marketing activities associated with a brand”.

“Brand equity can be measured by incremental cash flow from associating the brand with the
product”.

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Notes “Brand equity is the added value that is attributable to the brand name itself which is not
captured by the brand’s performance on functional attributes”.

What is Brand equity?

Did u know?

The marketing literature is laden with works which explore, interpret, and ‘demystify’ the
concept of brand equity. The advantages of brand equity direct academic and managerial
attention to its measurement and management. It is something which cannot be taken
lightly. The marketers who dare to take it in lighter vein would do so at their own peril.
There appears to be a broad consensus on the value of brand equity but it comes with a
slight area of darkness around it. At the most fundamental level, differing views guide
our understanding as to what it is.

Brand equity definitions more or less converge on some crucial points. There are similarities
beneath apparent divergence in thoughts. However, three types of leanings seem visible: the
brand, the customer and the financial value. Two thoughts that make brand the centres of their
definitional focus are: “…consists of differential attributes underpinning a brand…” (Chernatony
and McDonald) and “… is a set of brand assets and liabilities linked to a brand…” (Aaker 1991).
The customer centered conceptualisation of brand equity lays stress on customer cognitive
process: “…as the totality of brand’s perceptions…” (Knapp, 2000) “…the differential effect that
brand knowledge has on consumer response…” (Keller, 1998); However, most of the views
seem to concentrate on outcomes. It is the behavioural outcome that a customer exhibits which
ultimately leads to the financial value: “…can be thought of as additional cash flow achieved…”
(ibid, 1992); “… is the added value that is attributable to the …” (Sikri, 1992). “…the total
accumulated value of worth of a brand …” (Upshaw).

How can these differing views be integrated? The best way of achieving this is by conceptualising
the brand equity in terms of the input-throughput-output model. The product and its attributes
– both tangible and intangible – are the inputs to the equity model. It is the brand which is the
basis of equity or value. In the absence of a brand, achieving equity is impossible. It is the
fundamental core/block. The value that a brand generates is not itself generated. How does a
brand generate more value? It is through the discriminating response that customer’s exhibit in
favour of a brand, or the willingness to pay more for a brand. All these are outcomes. It is
monetisation of these that is called financial worth or value that is added by the brand. But the
most crucial link between the input and output is the consumer – the consumer’s mental
framework, to be more precise. It is the consumer’s knowledge structure, or image or perceptions
that a customer has about the brand that drive the outcomes. Operationally, it is the brand and
its constellation of knowledge structure in a customer’s mind that a brand manager needs to
manage to achieve desired equity.

A brand’s ability to draw customers again and again and command premium is directly related
to what it stands for in a customer’s mind. The brand perception or image is the key driver of
brand pull and push away. A brand’s strength lies in this intervening variable.

Notes A powerful brand symbolises a loyal customer base. It is this which leads to financial
benefits and reduced costs. At the heart of brand equity is customer equity – an unwavering
customer franchise which stands by the brand.

A brand adds value in a number of ways. According to Aaker, brand equity creates value both
for the marketer and the customer.

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8.1.1 Value to Customers Notes

Brand equity assets can enhance or decrease value for customers. A brand’s equity is valuable to
customers because:

1. It helps customers in information processing. A brand is useful in aiding customers in

interpreting, processing, and storing information about products and brands. It simplifies
this process. Brands are taken by customers as chunks of information which are easily
decoded (drawn meaning thereof) and stored in a proper order (classification).
It considerably reduces chaos possibilities that may occur in the absence of branding.
Brands allow customers to store great quantities of information about brands without
getting confused.

2. A brand’s assets enhance customer confidence in the purchase decision. One feels more
confident in purchasing a brand (imagine buying an unbranded product, e.g., like tooth
paste). It happens because of familiarity with a brand. Familiarity creates confidence.
Brand stands for consistency and assurance. It provides guarantee of promised delivery.

3. The final value to the customer comes in the form of usage satisfaction. For instance,
satisfaction from drinking Nescafé is different from drinking an unbranded coffee. Brands
transform customer experience. The brand associations and quality move the product
beyond its ‘thingness’ boundary enveloping it with images that customers value and
identify with.

8.1.2 Value of Marketer

Brand equity also plays a critical role in enhancing value for the marketer. A firm benefits from
the equity in the following ways:

1. The effectiveness and efficiency of marketing programmes is increased by brand equity

assets. The expenditure associated with a brand to achieve a goal generally tends to be less
than an unbranded product aiming to achieve the same goal. For instance, retaining a
customer is much less costly than retention when a product is unbranded, it may partially
happen due to lack of brand loyalty and preference. Similarly, launching of a new product
with extension may be much simpler, easy and less costly.

2. Brand equity dimensions allow a firm to have greater customer loyalty. The customers
can exhibit preference and commitment to a brand only. A greater number of loyal
customers in the basket automatically reduces the expenditures that need to be incurred in
maintaining a customer base. Fewer customers would need to be replaced. Accordingly,
the expenditure would be lesser.

3. Brand equity allows a firm to charge premium. That is, a customer may willingly support
a brand in spite of greater sacrifice that needs to be made. In fact, brands with premium
pricing are the ones which enjoy strong equity in the market.

4. Brand equity provides great opportunities for growth. In fact, most firms now rely on
brand extensions to achieve growth rather than launch new brands. Brand equity makes
growth easier for the firms. It is how the value is added. For instance, RCI has grown into
many product categories by relying on the brand equity of ‘Dettol’. Dettol soap is a very
strong player in a highly competitive bathing soap market.

5. Brand equity is a good source of achieving leverage in distribution channels. It is easier to

get access in the distribution chain when the brand has equity. Trade partners exhibit
skepticism in dealing with a brand without equity because of the uncertainties it brings
along with it. Brand equity is an implicit assurance of success. Therefore, channels welcome

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Notes brands with equity and give access to point of purchase displays, shelf space, etc. Channel
cooperation is achieved easily when the brand enjoys equity.

6. Finally, brand equity is a provider of competitive advantage. It imposes barriers on the

entry of competitors. Brands can build equity occupying positions and attribute associations
in a preemptive fashion. Once these become proprietary to a brand, other brands are at a
disadvantage.

Example: ‘Dettol’ has so strongly entrenched itself with ‘antiseptic’ that other competitors
are just not able to make a dent in its market. Johnson & Johnson’s ‘Savlon’ is hardly able to
compete in the market. The same may be true for ‘Fair & Lovely’ in the fairness cream market.
A brand blocks entry of rivals in a customer’s mind on the same turf.

Brand equity holds immense potential to create economic value for the markets. The advantages
listed above make compelling reasons in favour of creation, protection and enhancement of
equity of a brand. It can only be done once it is understood what drives brand equity.

Task Brand value to customer is more important or value to marketers. Discuss briefly.

8.2 Brand Equity at Different Hierarchical Levels

Now let us understand the Brand Equity at Different Hierarchical Levels:

8.2.1 Brand Loyalty

What happens when customers pay very little or no attention to a brand and buy on the basis of
other considerations? It suggests that a brand lacks hold on the customers. This indicates that the
brand is not the basis on which buying is done. A situation like this exhibits no equity creation
by the brand. Brand loyalty is one of the important bases of equity creation. When customers
show allegiance to the brand, it creates equity. Loyalty is at the heart of equity and is one of the
important brand equity assets.

Brand loyalty has always been one of key concerns of marketers. A brand is valued for its ability
to have a dramatic impact on a firm’s marketing performance. Loyalty provides insulation
against competitive assaults. It also allows the opportunity to command a premium. Earlier,
brand loyalty was viewed purely from the angle of a customer’s response or behaviour. Now,
behavioural angle is combined with attitudinal dimension in defining loyalty. “Brand loyalty is
the biased (i.e., non-random) behavioural response (i.e., purchase), expressed over time by
some decision making unit, with respect to one or more alternative brands out of a set of such
brands, and is a function of psychological (decision making, evaluative) processes”. Another
definition of loyalty is proposed as “consisting of repeated purchases prompted by a strong
internal disposition”. Thus loyalty has both behavioural and attitudinal dimensions to it.

Brand loyalty is not a dichotomous construct. It may operate at different levels. Five levels of
brand loyalty can be distinguished, extending from committed buyer at one extreme to switcher
or indifferent buyer at the other extreme. The other three are in-between states.

Each state implies a different type of brand equity asset and different types of marketing challenges.
At the lowest level, the indifferent buyer does not attach any importance to the brand. The
buying is done on a basis other than brand, like availability or price. These buyers are switchers
and are indifferent to the brand. The second category of buyers comprises the ones satisfied with
the brand (absence of dissatisfaction). These buyers have no reason to switch but may actually

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switch given the stimulations from the competitors. These can be called ‘habitual buyers’. They Notes
are vulnerable and can succumb to benefits offered by the competition. The third category of
buyers is satisfied with the brand, though they have switching costs in terms of time, money,
and risk. This category is somewhat safe because they would switch only when competition is
able to overcome switching costs for them. This set can be called ‘switching-cost loyal’ customers.
In all these categories of customers, a virtually negligible element of attitudinal commitment to
the brand is visible. They all signify different shades of behavioural loyalty.

The fourth category of loyalty implies that the buyers like the brand. They tend to have some
sort of emotional attachment to the brand. This attachment may get developed as the result of
prolonged relationship (usage over a long period of time) or use experience or perceived high
quality. People in this category consider a brand as a friend. It is an affect driven loyalty. At the
next level of loyalty, the customers tend to be committed to the brand. The commitment is “an
enduring desire to continue the relationship and to work to ensure its continuance”. Customers
get committed to a brand when the brand achieves personal significance for them. It happens
when buyers perceive it to be a part of themselves. They identify with the brand. It becomes a
vehicle of self expression. The strong identification may be based on functionality or images/
symbolism that it signifies. A case in point could be Coke as a ubiquitous symbol of what
America is all about, or Harley-Davidson which portrays something about the Harley rider
which words cannot express. The committed buyers are not usually available to the competition.
They are a solid asset base. The committed buyers spread a lot of good word-of-mouth publicity
around about the brand and thereby generate a market for it.

Loyalty implies customers who would continue to buy the brand. It represents a future revenue
stream. It also implies lesser loss of customers by way of defection or attrition. Hence, firms
with a greater proportion of loyal customers would have relatively lesser marketing costs
(lower advertising costs) and greater revenue (from increased purchases, price premiums).
Brand loyalty is generally a function of product usage experience whereas other brand equity
assets like awareness, associations, and perceived quality may not be related with usage
experience. However, these dimensions also contribute to loyalty. All brand equity dimensions
tend to have causal relationships among each other. One may cause the other (e.g., perceived
quality may be based on associations or association with a symbol may affect the awareness).
The key premise is that for brand equity to exist the customers remain loyal to the brand. When
customers are not loyal to the brand, the equity is not likely to exist.

Customer loyalty is of strategic importance to the firm. It is an asset. Loyalty adds value in four
ways. First, loyalty reduces marketing costs of the firm because it costs much less to do business
with repeat customers than attracting new ones. Loyalty also imposes entry barriers on potential
players as customers are not easily available to be captured. Secondly, loyalty provides trade
leverage. It is much easier to gain shelf space, trade cooperation, etc., when a brand has a loyal
customer base. Thirdly, it allows a marketer to attract new customers because loyal customers
signify assurance, confidence and faith in the brand. A prospect can more easily be converted
into a customer when a brand has loyal followers. Finally, loyal customers provide the firm
with lead time to respond to competitive moves (e.g., product improvement). Loyal customers
do not move quickly to such competitive endeavours, giving the firm the much needed time to
effectively counter competitive moves.

8.2.2 Brand Awareness

Brand awareness is the second brand equity asset. It includes brand recognition and brand recall.
Brand recognition is the ability to confirm prior exposure (Yes, I’ve seen it earlier) and recall is
the ability to remember the brand when a product category is thought about. This sort of
awareness is essential for a brand to be able to take part in the decision process. Brand awareness
may exist at three levels: brand recognition, brand recall and top-of-the-mind recall.

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Notes Brand recognition is at the bottom level of the awareness pyramid. When a person is able to
confirm prior exposure, the brand is said to have been recognised. It is gauged by aided recall
measures. Brand recognition is particularly important under low involvement buying situations,
especially when the decision is taken in stores or at the point of purchase. Recognition means
some sense of familiarity, which is sometimes sufficient in choice decision. Still higher level of
awareness is reflected in a person’s ability to recall a brand without any aid when a cue about a
product class is given. (e.g., “mention brands of tyres”). It indicates stronger brand position in
the mind. At a still higher level of awareness is the top-of-the- mind recall: the brand that comes
first to mind.

The top-of-the-mind awareness indicates the relative superiority a brand enjoys over others.
Sometimes, a brand is able to achieve such a dominant position that it becomes the only recalled
brand in the product category. Brand dominance, competitively, is a coveted state which every
marketer would like to achieve. A dominant position prevents other brands from getting in the
buyer’s mind. Hence, dominant brand is the only one that is considered while making a purchase.
Very few brands are able to achieve dominance. The cases may include Johnson & Johnson baby
powder, Dettol antiseptic, and Band Aid. Once upon a time, Dalda and Colgate also enjoyed this
status.

How does brand awareness create value? It does so in at least four ways. First, brand name acts
as the central node to which other associations can be attached. It is, therefore, the first
communication task. Brand recognition must be created first, without which other associations
cannot be established. Brand awareness allows easy access to these associations. Awareness acts
as an anchor to which other associations can be attached (e.g., attributes and benefits). It is for
this reason that marketers first establish a brand name and then expand its scope by incorporating
various attributes and benefit associations. Second, recognition – confirmation of prior exposure
– implies familiarity, which sometimes leads to liking. Brand recognition is particularly important
in low involvement conditions when the customer is not motivated to engage in extensive
product evaluation. Brands may simply be bought on the strength of familiarity. Third, awareness
also acts as a surrogate for a firm’s commitment and substance.

A brand which enjoys recognition may imply extensive advertising support, long standing of
the firm, brand success, etc. It suggests that a brand is supported by a firm. The perception of
substance and commitment of the firm to the brand sometimes influences buying in high
involvement conditions. Final source of value from awareness is a brand’s ability to be considered
in the decision process. Brand awareness is a crucial determinant of its participation in the
consideration or evoked set. Generally, when a brand is not able to get recall, it is not included
in the consideration set. Recall is essential for finding membership in the evoked set. Recall
sometimes may also be an adequate condition to survive, especially in low involvement buying.
The mind share (top-of-the-mind recall) often leads to market share.

8.2.3 Perceived Quality

The quality can be objective or perceived. The objective quality means the actual superiority of
product or service. However, the perceived quality is perception of superiority of a product or
service with respect to its intended function. Perceived quality is customer based. Different
people value different things. It involves judgement about what is valued by the customers.
Quality also needs to be distinguished from satisfaction. A customer may still be satisfied with
poor quality. Satisfaction is determined by expectations. On the whole, perceived quality is an
overall feeling that a customer tends to have about a brand. It is generally based on some
underlying quality dimensions (product attributes or benefits) on which the customer perceives
the product’s performance or delivery.

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There are various ways in which perceived quality generates value. Firstly, perceived quality Notes
gives a powerful reason to the customer to consider and buy a specific brand. Only brands that
are perceived to be of quality are considered in a purchase decision: the rest are all eliminated.
It is particularly important when a buyer is not motivated to collect information to determine
quality objectively, where information is not available and the customer does not have the
ability to obtain and process brand information. A customer relies on perceived quality and
makes the purchase decision. Second, perceived quality allows a brand to acquire a position or
differentiation. Brands are differentiated on the basis of their position on the quality spectrum.
Top-of-the-line brands are differentiated on the basis of perceived quality.

Brands with higher quality perception can afford to charge price premiums. The premium can
be further deployed in brand building efforts like research and development, awareness
enhancement, and strengthening association. Selling a quality brand at competitive prices
enhances value perceptions. This would further contribute to brand loyalty, increased customer
base, and improvement in marketing effectiveness and efficiency. Brands with higher perceived
quality find greater acceptance from trade partners and they are willing to carry such brands.
Finally, it can be the basis to leverage brands into launching extensions. A brand with strong
quality perceptions is likely to be extended further and has a greater probability of success.

8.2.4 Brand Associations

As has been discussed in earlier sections, a brand node may be connected with other information
nodes. Whatever a brand is connected with forms part of the brand association network. For
instance, a brand may have connected associations of feelings, character, symbols, life-style,
user, etc. Associations tend to have strength. Some associations linked to the brand may be
strong, while others could be weak. Brand image is how a brand is perceived by the prospects in
terms of these associations. Brand image may represent perception, but may not reflect reality.

From the equity point of view, brand association can create value in a number of ways. Brands
are bought for what is associated with them. Customers also exhibit loyalty for the same reasons.
Associations form an information chunk representing what the brand is. Information in chunks
is relatively easy to process, store, and retrieve. Associations, in fact, also help in interpretation
(e.g., visual of LIC – palms protecting the lamp) by providing the context. Associations also
influence recall of information. This is especially important during decision making. For instance,
‘Dart’ symbol helps recall the related information about the Blue Dart courier service.
The other ways in which associations create value, is by becoming the basis of differentiation.
Brands are differentiated essentially on the basis of associations e.g., Taj Tea and Tata Tea.
Associations that represent product attributes or benefits give consumers reason to buy (e.g., All
Clear shampoo with ZPTO, the agent that kills microbes which cause dandruff). Associations
also stimulate positive feelings. These feelings, in turn, are transferred to the brand. (e.g., Amul
girl symbol, celebrity endorsement by someone like Salman Khan for Thums up, a slogan like
“We bring good things to life”, all generate positive feelings). The feelings transform the use
experience for customers. Finally, associations provide basis for extending the brand into new
product categories (Pepsi into Pepsi Urbanwear).

A brand is an asset. It is a source of value generation. A brand’s equity is determined by a set of

assets and liabilities that are associated with it. These are brand associations, perceived quality,
loyalty, awareness and other proprietary assets.

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Notes

Case Study Brand Equity in Acid Reflux

A
targeted effort that supported the 2001 launch of AstraZeneca’s gastroesophageal
reflux disease (GERD) treatment Nexium (esomeprazole) struck a fine balance in
building brand equity while encouraging appropriate use of the new medication.
Nexium succeeded Prilosec (omeprazole), the long-time market-leading proton pump
inhibitor (PPI) that achieved US sales of $3.7 billion in 2001. Research showed that patients
could benefit from another treatment alternative. Nexium was launched to the medical
community on the strength of data comparing it with Prilosec.

Nexium hit the market with support befitting a potential megabrand-extensive direct-to-
consumer television and print campaigns, along with direct communication with self-
identified frequent heartburn sufferers who previously requested information from
AstraZeneca about treatment options. To accelerate long-term growth, the marketing
team sought to build a documented brand presence among others who may suffer from
GERD and collaborated with Reader’s Digest to reach 380,000 US households whose
residents meet that criterion.

The goal was to give a concentrated group of chronic heartburn sufferers an early
introduction to Nexium and imprint them with a favorable image of the brand. It was
significant that recipients had requested those communications from a trusted publication,
“Viewpoints on Health,” a custom information source that Reader’s Digest sends to
subscribers who have requested specific information-diagnosis, treatment, products-about
ailments suffered by a member of their household. The magazine’s database includes
subscriber households reporting more than 30 ailments, with total ailments ranging from
250,000 to more than 1.5 million.

“Heartburn households” received two 16-page “Viewpoints on Health” booklets inside

their July and August 2001 issues of Reader’s Digest. Content created by the Digest creative
services department educated readers about the implications of recurring heartburn,
treatment options, and health tips ranging from diet to meditation. In each booklet, a
four-page advertising insert described the potentially serious nature of acid reflux disease
and emphasized that only a doctor can diagnose it. The insert included a free seven-day
trial certificate-requiring an accompanying prescription for pharmacy redemption-to
encourage patients to discuss with their doctors whether Nexium might be the right
treatment for them.

To gauge the project’s impact, Reader’s Digest studied recipients’ involvement with the
material. Their analysis revealed that approximately 90 percent of recipients recalled the
booklets, two-thirds reported that they read most of the content, and of those, 83 percent
rated the content good or excellent. Fully two-thirds of recipients recalled the product ads
and 47 percent confirmed that the association with Reader’s Digest added to their credibility.

Trustworthy consumer information is the cornerstone of pharma marketing. Judging

from the substantial consumer feedback, a helpful booklet helped connect credible content
with Nexium as a treatment option for acid reflux disease. AstraZeneca’s collaboration
with a respected publication enhanced the brand’s reputation with heartburn sufferers.
That’s the essence of all successful advertising.

Contd...

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Questions Notes

1. Analyze how Nexium developed its brand equity in acid reflux.

2. Analyse the role of Reader’s Digest in establishing the brand equity for Nexium.

Source: pharmexec.findpharma.com

Self Assessment

State whether the following statements are true or false:

1. Brand equity also plays a critical role in enhancing value for the marketer.

2. Brand equity is not a good source of achieving leverage in distribution channels.

3. Brand loyalty has always been one of key concerns of marketers.

4. Brand recognition is the ability to confirm prior exposure.

8.3 Brand Image Constellation

Brand equity is the value side of the brand. Most often, this value is monetized and defined in
economic terms: the incremental cash flows which could be traced to the brand name. How can
brand name alter the nature and quantum of cash flows associated with a product? So long as a
brand is taken as a label or a name passively, it does not offer much opportunity for value
enhancement. A brand needs to be taken as more than a name. A brand is a constellation of
meanings and associations. These are not in the product that a brand enrobes; rather, they are all
engineered in the prospect’s mind. They live, grow and die in the mind. They also add or
subtract value. A brand is what it stands for in the consumer’s perceptual space. It is an identity
which is at the core of equity creation. Brand name is just a cue. A subtle trigger makes a brand
surface in the mind. The key concept between the brand and the equity is the brand image. It is
an intervening variable. As depicted in Figure 8.1, the perception of a brand can adjust brand
value upwards or downwards. For instance, a bottle of white petroleum jelly commands some
monetary price that customers would be willing to pay. Now put a label on the bottle indicating
‘Vaseline’. It would immediately adjust the jelly’s worth upwards. What causes this alteration?
It is the brand name. Upon getting the cue (name), a constellation of visual and verbal dimensions
springs up in the customer’s mind that acts as an intervening concept, causing the value to move
upwards.
Figure 8.1

Brand image

All non-image factors Market value

Brand equity
contributing to brand equity of a brand

Source: Biel, Alexander, L. “How Brand Image Drives Brand Equity”, Journal of Advertising Research, Nov-
Dec 1992, P.Rc-7.

Strong brands perform radical alterations while weak brands do marginal ones. Imagine radical
value enhancements that brands like Rolex, Cartier, Mont Blanc and Armani create. What drives
their value? These alterations are affected by their image in the customer’s mind. The brand
image is the driver of brand equity. Imagine a customer who is not familiar with a brand like

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Notes Rolex. This customer would assess the brand’s worth on the basis of ‘thing’ rather than a brand.
It is so, because ‘Rolex’ represents nothing and hence, does not alter this valuation much. It does
not exist as a perceptual entity. There is no intervening variable between the brand and the
valuation. Brand image is a customer concept. It is what drives customer behaviour.

Brand equity is based upon the attitudes that customers hold about a particular brand. Attitude
is a very important concept in consumer behaviour. The movements in a brand’s performance
signal attitudes that customers have toward it. For instance, a brand which is experiencing
declining sales indicates that customers are not holding a good attitude towards it. Attitude
represents our evaluations of brand. The word ‘attitude’ has come from the Latin word for
“posture” or “physical position”. “Attitudes are learned predispositions to respond to an object
or class of objects in a consistently favourable or unfavourable way”. Attitudes determine how
a person would behave. They are antecedents to action. Consumers hold attitudes towards
product categories.

Example: “I do not like potato wafers”.

Consumers also hold attitudes towards brands: “I like to buy Pepsi whenever I feel like having
a soft drink”. It is this hidden attitude that determines whether a customer would steer toward
or away from the brand in question.

In the context of brand management, customer behaviour or action tendencies have typically
engaged brand marketers. The feelings and evaluations that customers hold about a brand are
critical. The feelings and evaluations cannot occur in vacuum. That is, how a customer evaluates
or feels about a brand depends on the knowledge he or she has about the brand, how the brand
is placed in cognitions. “From the customers perspective, brand equity involves a strong, positive
brand attitude (favourable evaluation of the brand) based on consistent meanings and beliefs
which are accessible in memory (easily activated)”. Therefore, the beliefs or cognitions – what
a customer thinks about a brand – are determining variables. A customer may think about a
brand in terms of its attributes, benefits, ingredients, uses, etc. The issue is: what is associated
with the brand in the customer’s mind? This is the fundamental driver of brand equity.

In order to evoke positive feelings and customer patronage, marketers connect their brands
with a variety of concepts or associations. This is done with an assumption that these set of
associations are related with customer loyalty, customer beliefs about positive brand value and
a willingness to search for a brand. A positive image makes customers favourably inclined
towards brand promotions and resist competitive activities. A closer look at marketing efforts
like advertising, promotions, distribution, event sponsorships, etc., would reveal a brand
manager’s design to create appropriate sets of associations linked to the brand. The brand equity
which implies greater profits, more cash flows and market share hinges on brand image that
resides in the customer’s mind and drives behaviour.

Brands reside in a customer’s memory in the form of a network of associations. Brand name
represents the central mode to which a variety of informational nodes are connected. The nodes
connected to brand name store information about attributes, benefits, typical user profile, etc.
Hence, the brand name is more than simply a label employed by the marketer to differentiate a
product among a plethora of others. “It is a complex symbol that represents a variety of ideas
and attributes. It tells the consumers many things, not only by the way it sounds (and its literal
meaning, if it has one) but more important, via the body of associations it has built up and
acquired as a public object over a period of time”. Thus, brands acquire public image – a
façade – which resides in a customer’s mind and which may be more important for the overall
market performance of the brand than the technical aspects of the product. The meaning or
perception that is contained in this memory network determines buyer behaviour towards a
brand.

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Brand image can be defined as “perceptions about a brand as reflected by the associations held Notes
in consumer memory”. It can also be conceptualized as “culture of attributes and associations
that consumers connect to the brand name”. Brand image is the totality of associations that
surround the brand. It is a perceptual concept. What is contained in a brand’s image may or may
not be a result of marketing efforts. It represents how a brand lives in a customer’s very personal,
subjective world. A consumer may develop a set of beliefs about a brand as to where it stacks up
in terms of, e.g., attributes or benefits. It is this set of beliefs that a customer holds about a brand
that make up the brand image.

The image that consumers hold about brands does not tend to be uniform. Brand image is a
perceptual construct. It varies depending upon the receiver’s (customer’s) own ‘looking glass’ or
perceptual fitter. Accordingly, image may not be as intended or not as clear. According to
Gardner and Levy, “The image of a product associated with the brand may be clear cut or
relatively vague; it may be varied or simple; it may be intense or innocuous.

Sometimes, the notions people have about a brand do not even seem very sensible or relevant
to those who know what the product is ’really’ like. But they all contribute to the customer’s
decision whether or not the brand is the one “for me”.”

Self Assessment

Fill in the blanks:

5. …………..is the value side of the brand.

6. There is no intervening variable between the brand and the………….

7. Brand equity is based upon the ……………….that customers hold about a particular brand.

8.4 Brand Image Dimensions

A brand in a customer’s mind is a complex network of associations. Biel proposes that these
associations can be of two types: hard and soft. And brand image has three components: image
of provider, image of user and image of the product.

 Hard Associations: Hard associations refer to the perception of tangible/functional

attributes of a brand.

Example: Hard associations in case of a car brand may revolve around speed, price, fuel
economy per litre of petrol and colour.

 Soft Associations: The soft associations are more emotional. A car brand can be visualized
as exciting, vibrant and youthful.

Example: Maruti is attempting to associate its ‘Alto’ cars with youthfulness, excitement,
attractiveness. The soft association can be negative.

For instance, the public air carrier – Indian Airlines – is associated with inefficiency, dull, old,
unchanging and cold.

A brand’s image is a composite concept. It carries with it other sub images. The three contributing
sub images in a brand are: the image of product or service provider (corporate image); the
image of the user and the image of the product or service.

 Image of the Company: Every brand carries an invisible shadow of its manufacturer. Like
brands, companies also live in customers’ minds as a network of associations.

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Notes
Example: What does the name ‘DCM’ spell in mind? Nothing much would get connected
with DCM. It suggests DCM to be a weak node in memory. At the same time, many terms like:
old, cloth, conventional, unchanging, vegetable oils, Rath, dull, unexciting, etc., might surface.
Contrast it with a company like WIPRO. The associations surrounding WIPRO node may be
leader, technology savvy, modern, innovations, cash rich, diversified, growth, etc. An
inappropriate corporate image may act as a burden on an otherwise good product. It is capable
of providing both strength and weakness to a brand. It is for this reason that good companies
always keep track of their image in the public eye. As and when the need arises, they perform a
marketing communication exercise to keep it relevant so that it provides a lift to the company’s
brands rather than becoming a burden on them.

 Image of the User: What comes to mind when one thinks of Pepsi? It clearly spells a profile
of the user. The brand has an unambiguous definition of its users. The brand user profile
may contain signals about a user’s sex, age, occupation, life style, activities, mindset, etc.
The user image in case of ‘Pepsi’ is embodied in its slogan ‘choice of the new generation’
or ‘Generation Next’. Similarly, the user image of P&G brand ‘Whisper’ is clearly spelt out.
The brand connects with young, educated, urban, upwardly mobile and confident users.

 Product Image: A brand’s image is also determined by the image of the product it carries.
All products have dimensions like functionality and emotionality, technology
intensiveness, old and young, inherent to them.

!
Caution Products like perfumes, chocolates, champagne, whiskey, high end clothing tend
to be associated with emotions and a lot of symbolism.

On the other hand, products like house cleaners, headache remedies, dishwashing liquids and
domestic insecticides tend to be driven by functionality and reason. The brand image, therefore,
has to take shape within the boundaries of structural limits imposed by the product image. This
is not to suggest, however, that a brand image would always have to fall in line with the product
image.

The user component of a brand translates into brand personality. Customers tend to ascribe
various personality–like traits to brands.

!
Caution A brand may be taken as feminine. This gender based classification may even
operate at a product level.

For instance, beer, car, cigarettes, coffee, credit card, hair cut, legal services, sneakers, scotch,
toothpaste were found to be masculine products in a study. Products which were perceived to be
feminine included bath soaps, clothes dryers, dishwashing liquid, shampoo, dishwasher, and
facial tissue. Brands acquire personality characteristics by the way they are promoted. The
importance of brand personality lies in its capacity to influence buyer behaviour. “Brands are
bought for who they are as well as what they are”. Customers are seekers of consistency.
Accordingly, they are attracted towards brands which implicitly possess personality which is in
sync with the user.

Besides personality, brands also tend to possess visual components: images or symbols that
spring up in the mind once a cue about the brand is confronted. Most of the world’s strong
brands have strong visual imagery associated with them. Sometimes, these images are taken
directly from the visuals that are promoted in the brand’s communication. For instance, Marlboro’s

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unchanging continuous campaign showing a cowboy has so strongly got connected with the Notes
brand that the name and visual are inseparable from one another in a prospect’s mind. In the
Indian marketing scene, ‘Amul’ has a very powerful symbol in the form of the ‘Amul girl’.

Brands also become symbols. They begin to stand for something which is much more than what
the product is and what it does. Brands often transcend the meaning that is denoted by their
product class. Brands acquire character and meaning which is not directly associated with the
actual product. It is often the key to customer franchise. Rolls-Royce, Brooks Brothers, Ferrari,
Mont Blanc, do not mean what is generally conveyed by the product they are built on. Their real
worth lies behind the product; it requires decoding to get to their real meanings. People buy
brands not only for what they can do, but also for what they signify. Brands are powerful
signifiers of meanings. “In this sense, all commercial objects have symbolic characters, and
making a purchase involves an assessment – implicit or explicit – of this symbolism, to decide
whether or not it fits”. Consumers would sacrifice money and other efforts on brands when they
are perceived to be appropriate symbols, otherwise these would be denied.

Figure 8.2: Brand Image Components/Dimensions and Brand Equity

Brand equity, as discussed earlier, is the financial side of the brand. It signifies the value addition
that a brand makes. Brand equity is determined by customer behaviour. The key driving force
of customer behaviour is the image. That is how the brand is perceived. Accordingly, the challenge
for the brand manager is to assess brand image on an ongoing basis so that brand equity is
maintained and enhanced. Figure 8.2 depicts the relationship between brand image components
and brand equity.

8.4.1 Customer based Brand Equity

Keller’s views on brand equity are customer oriented. Brand equity is seen from the perspective
of the customer. Figure 8.3 depicts that the customer based brand equity is conceptualized as the
‘differential effect’ of ‘brand knowledge’ on ‘consumer response’ to marketing of a brand. At a
more general level, equity is seen as the marketing effects – customer’s perception of value/
behaviours/preference – that occur due to brand name, which otherwise would not occur if
brand name is missing. It is the differential in marketing effect which could be attributed to a
brand name. The differential that a brand name brings determines the brand worth of value.
Strong brands embody a kind of brand power which dramatically enhances the marketing

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Notes effects while the weaker brands are unable to achieve this feat. It is for this reason that strong
brands command huge financial value.

Figure 8.3: Differential Effect of Brand Knowledge

Brand Brand
Name Value
+

(–)
Marketing Product
Product Effects Value

These are three key elements in Keller’s framework of brand equity:

(i) Differential effect

(ii) Brand knowledge

(iii) Customer response

Consider the situation when a product without any brand name is marketed. It is a generic
commodity. In such a situation, a consumer is likely to exhibit a particular kind of behaviour
pattern both in terms of liking, preference and perception of value. These are marketing effects
that are attributable to the commodity marketed in question. If the brand name is now attached
to the product, it acts as a moderator between marketing efforts and marketing effects. The
brand name may bring along with it a knowledge structure – associations tied to a brand
node – creating a change in the marketing effects. This differential is brand equity, the source of
which is brand knowledge structure. The differential effect can be both positive and negative.
A brand name, if it signifies associations that are not favourable, could create negative differential
effect in the form of consumers disliking, and valuing the brand less than the generic product.
Accordingly, customers may prefer to stay away from the brand.

This view of brand equity as differential effect caused by brand knowledge structure is particularly
useful in conducting operational decisions. Given the pressures that marketers are experiencing
about raising effectiveness and efficiency of decisions, this consumer oriented framework may
provide help in pin-pointing exactly what needs to be done in order to achieve desired results.
In the absence of this framework, marketers have to rely on aggregate indirect measures like
sales as a guide to decisions. The performance of a brand is directly influenced by the knowledge
structure it has. Accordingly, a marketer can explore the content and structure of brand knowledge
to arrive at the attending challenges that must be taken care of by the marketing efforts.

In this framework of customer based brand equity, brand knowledge is the key concept. It is
important to understand what kind of structure the brand knowledge has in the customer’s
mind. That is, when a customer is confronted with a brand name, what kind of associations
spring up. Whatever is connected to the brand name is a crucial determinant of customer
behaviour. As discussed earlier, a brand tends to form an associative network of nodes and
connections. The nodes signify concepts or information chunks which are linked to other nodes.
The links or connections may vary in their strength. A weak link would mean difficulty in
spreading activation, while a strong link suggests quick spreading of activation. The links
determine the speed at which other nodes would be activated and what would be recalled.
Activation spreads from one node to another. Thus, strength of link or connection is an important

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concept. The recall of information contained in a node depends on its level of activation. Only if Notes
activation exceeds a threshold level, is information recalled.

A brand in the memory is a node which is connected with other nodes signifying various
associations. It is this network which refers to brand knowledge. The structure and content of
brand knowledge influences consumer behaviour. It is what resides in the consumer’s mind in
the form of knowledge structure that determines brand equity. The knowledge structure is the
source of brand equity. Brand knowledge structure has two components: (i) brand awareness
and (ii) brand image.

Brand Awareness: Brand awareness is the ability to identify a brand under different conditions.
The ability is determined by the strength of the brand node in memory. When there is no trace
in memory, a brand cannot be identified. However, when this memory trace is strong, the brand
is immediately identified.

Notes How many of us would be able to identify the brand ‘Ovaltine’. Very few, because
the brand node is either non-existent or it is very weak. Brand awareness consists of recall
and recognition.

Brand recall refers to the ability to retrieve the brand from the memory when some cue is
provided. For instance, when one thinks of soft drinks, which brand surfaces in the consumer’s
mind? Most people would be able to recall ‘Pepsi’ because of the strong link that it has established
in the Consumer’s mind. Brand recognition is the consumer’s ability to confirm prior exposure
when brand is given as a cue. Brand recognition necessitates that a consumer is able to discriminate
the brand as having been seen or heard before.

Brand awareness is an important concept. It plays an important role in consumer decision

making. As we have explored earlier, a brand would be able to take part in a choice decision
only when a consumer is aware of it. It must become a part of consideration or the evoked set.
Unknown brands get eliminated from the decision process. Simple awareness may just be
sufficient in causing a brand to succeed, under low involvement buying conditions. Mind share
leads to market shares in such situations. As could be observed, marketers strive to achieve ‘top-
of-the-mind’ recall and build brand familiarity (colour, images, symbols) by frequency based
advertising in order to succeed in low involvement buying situations.

Brand awareness may not be sufficient under conditions of high involvement. Consumers are
motivated to perform complex analysis based on attributes and benefits as a means to optimize
satisfaction. This necessitates creation of brand attributes and benefit associations linked to
brand node. For all this to happen, establishment of brand node is essential. Therefore, brand
node is a precondition for the creation of image. Brand awareness influences decision making
by affecting the formation and strength of associations in the brand image.

Brand Image: The image of a brand is how it is perceived by the consumer. The totality of
associations that are held in a consumer’s mind and connected to a brand is brand image. It is a
perceptual construct. The associations are held in the memory as information nodes connected
to the brand node. This total network contains the meaning of the brand. Consumers act upon
images held by them of different brands. In fact, it is these associations which differentiate one
brand from another in the mind.

!
Caution The product part of Coke and Pepsi may just be same, but they seem highly
differentiated brands in the marketplace – or perceptual space.

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Notes Brands are distinguished in terms of knowledge structures they create. It is these knowledge
structures that drive differential response of customers to marketing efforts and thereby create
equity. “The favourability, strength and uniqueness of brand associations are the dimensions
distinguishing brand knowledge that play an important role in determining the differential
response that makes up brand equity, especially in high involvement decision settings”. The
image of a brand may contain different types of associations in the memory: attributes, benefits
and attitudes.

Attribute Associations: Attributes are descriptive features which are used to characterize a
product or service.

How is a refrigerator described?

Did u know?

It can be described as a cooling machine, normally available in white colour, comes in

different sizes, meant for homes or offices, expensive, runs on electricity, has a compressor,
etc.

The attributes could be distinguished on the basis of how directly they are related to product or
service performance.

Figure 8.4: Attribute Associations

The product related attributes are ingredients necessary for a product’s performance. They
relate to the physical make up of the product. For instance, compressor, shelves, body, condenser
coils, etc., are product related attributes in a fridge, while the external aspects are considered to
be non-product related attributes. Four types of non-product related attributes are distinguished
in Figure 8.4. These are: price information, product appearance or packaging, user imagery (the
type of person who uses the product) and usage imagery (indicating the situations where the
product is used).

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Benefit Associations: Consumers are not as much interested in product attributes as they are in Notes
benefits. For instance, if an air-conditioner has four condenser coils instead of two, it matters
little. But this attribute would become valuable once it is established what it would do for the
consumer, e.g., faster cooling (Samsung). Benefits are suggestions as to what a product or service
can do for them.

The functional benefits are the outcomes of functions performed by a product or service. These
are intrinsic advantages of consuming a product or service. For instance, the functional advantage
of a fridge is that it prevents food from getting spoilt. Functional benefits are fairly basic in
nature and pertain to lower order motivations like physiological or safety needs. The second
category of benefits is ‘experiential benefits’. These benefits accrue to the user in the form of
feelings. Consumers have experiential needs for variety, sensation and cognitive stimulation.
Participating in a game or eating a favourite dessert provides satisfaction of experiential needs.
Participation in a game like chess may provide benefits of cognitive stimulation, while dessert
provides sensory benefits. The last category of benefits is symbolic. These are not intrinsic to the
product and correspond to non-product related attributes. The products or services often deliver
sign value – symbolizing benefits like esteem, class or prestige. The products of conspicuous
consumption are often branded to deliver strong symbolic benefits.

Figure 8.5

The product related attributes are ingredients necessary for a product’s.

Attitude Associations: Attitude is an important psychological construct. Attitudes determine

buying decisions. Attitude refers to overall evaluation of a concept like, person, product, object
or a brand. There are three components in attitude: the cognitive, affective and conative
component. The cognitive component is the knowledge perception that a person has about a
brand. These are acquired from direct experiences or information from other sources. The
knowledge and resulting perception take the form of beliefs. The affective component consists
of emotions or feelings that someone has toward a brand. This is an evaluative component.
Finally, the conative component is behavioural or action oriented. It refers to the intention to
behave in a particular manner, e.g., the likelihood of buying the brand.

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Notes Figure 8.6: Attribute belief Associations

A brand exists as brand knowledge structure in the consumer’s mind. As has been discussed in
the preceding pages, the brand knowledge has two dimensions: brand awareness (brand recall
and brand recognition) and brand image. The brand image component contains a variety of
brand associations: attributes (product related and non product related), benefits (functions,
experiential and symbolic); and attitudes. It is this knowledge structure that is the source of
customer based brand equity. Brand knowledge determines the consumer ’s response to the
marketing efforts. However, what is to be noted at this point is that the nature of brand
associations needs to be explored. Brand association alone may not be sufficient for equity
creation. The association needs to be favourable, strong and unique.

In the past, lime drinks in India were found to contain BVO, a chemical supposed to have
harmful effects. It was attribute association. All brands like Limca, etc., were perceived to have
BVO. The result: consumers began to dislike lime drinks and sales plummeted. Thus, brand
association would produce positive equity only when attribute associations are favourably
evaluated by the customers. All brand associations – attributes and benefits – need to be favourably
evaluated. This would happen when a brand is perceived to have attributes and benefits that
satisfy needs. The attributes or benefits may vary in their importance to a consumer. Some
attributes are more important and some are considered to be less important. The brand must be
favourably evaluated on important attributes or benefits. An unimportant attribute is unlikely
to be evaluated as either, very good or very bad. They do not come into the reckoning. Less
important attributes pose great difficulty in creating favourable associations. Thus, it is only
important attributes on which favourable associations must be built. A marketer must focus on
creating very favourable associations for important attributes. The key concepts here are
‘favourable evaluation’ and ‘attribute importance’.

The second important element in associative memory framework is the strength of connection
between an association and brand node. The strength of connection signifies how easily the

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association would be recalled or retrieved when brand node is activated or vice versa. The Notes
strength of association is determined by both the quantity and quality of processing the
information one gets. The quantity implies ‘how much’ a prospect thinks and ‘the manner’ in
which the thinking is carried out. When information is actively processed and its meaning is
elaborated upon, stronger associations are formed in the memory. This strength implies that
this information would be accessible and recalled easily. The information nodes connected to
the brand must be recalled by spreading activation. A weak link would prevent a node from
getting activated, adversely affecting its recall.

The presence of strongly held, favourably evaluated association is a necessary, but insufficient
condition for achieving success. The last essential that a brand must have is strongly held,
favourably evaluated, unique associations…the associations that a brand shares with competition
provides a brand with competitive edge over rivals – it is the brand’s unique selling proposition.
The shared associations can be more direct attribute associations (e.g., a car’s bhp and passenger
capacity). This defines the brand’s direct competition. A brand may also share some abstract
associations (e.g., car transports) with products not within the category. It defines the brand’s
indirect competition (airways).

The consumer based brand equity framework lays stress on building brand knowledge structure
so that consumers respond favourably to the marketing efforts for the brand. The challenge for
brand marketers is to establish appropriate brand knowledge structure so that a favourable
consumer response is elicited. The assumption on which this model is based is that brand
knowledge structure is a crucial determinant of consumer behaviour to the marketing of a
brand. Accordingly: “a brand is said to have positive (negative) customer based brand equity if
consumers react more (or less) favourably to product, price, promotion, or distribution of the
brand than they do to the same marketing mix element when it is attributed to a fictitiously
named or unnamed version of the product or service.”

The favourable consumer response and positive brand equity bestows on a brand the power to
generate greater revenues and profits at relatively lower marketing costs. A brand with positive
equity generates more revenues and profits for per rupee spent as marketing costs. It is this
effectiveness and efficiency that drive market valuation of a brand.

Kellers’ framework of brand equity defines it as the differential response that brand knowledge
creates on the consumer’s response to the marketing of a brand. Brand equity is enhanced when
consumers respond more favourably to a brand’s marketing efforts. Brand knowledge is the
crucial intervening variable between response and marketing efforts. Therefore, the challenge
is to build and maintain the right knowledge structure – strong, favourable and unique brand
associations.

Self Assessment

Fill in the blanks:

8. A brand in the memory is a node which is connected with other nodes signifying various
associations. It is this network which refers to ...................................

9. .............................. is the ability to identify a brand under different conditions.

8.5 Brand Personality

It is a comprehensive concept, which includes all the tangible and intangible traits of a brand,
like, beliefs, values, prejudices, features, interests, and heritage. Brand Personality is a set of
human characteristics associated with a brand. In general, it expresses how the brand behaves.

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Notes It may include a brands gender, age, socio-economic class, psychographic, emotional
characteristics.

Example: IBM is ‘older’ while Apple is ‘younger’

India Today is ‘old-fashioned’ while Outlook is ‘trendier’

Coke is ‘conforming’ while Pepsi is ‘irreverent’

A brand personality makes it unique. Like human personality, a brand personality is both
distinctive and enduring and is built over a period of time. It refers to the outcome of all the
consumer’s experiences with the brand. In other words, the brand’s personality is the weighted
average of previous impressions. In consumer’s mind, these impressions merge to form an
overall concept of what to expect from brand.

Brand personality is seen as a valuable factor in increasing brand engagement and brand
attachment, in much the same way as people relate and bind to other people. Brand Personality
is eagerly searched by brand strategists and researchers to find out differences in responses by
different consumers provide useful insights.

Example: Users of a product will perceive a brand different from non-users

In essence, it can be said that ‘Personality traits are what the brand will live and die for’.

Examples:
1. Axe- Seduction, masculinity, individuality, unconventionality

2. Levi’s -Rebellion, sensuality, being cool

3. Spinz -Young, Modern, Active, Outdoor, Cheerful, Friendly

The concept of brand personality is useful because of following reasons. It:

1. enriches understanding

2. helps gain an in-depth understanding of consumer perceptions of and attitudes towards

the brand
3. can provide more insight than is gained by asking about attribute perceptions

4. contributes to a differentiating identity

5. can differentiate brands especially where brands are similar in product attributes

6. in fact, can define not only the brand but the product class context and experience.

Example: Mercedes vs BMW

Clinic Plus vs Pantene

1. Guides the communication effort

2. Communicates the brand identity with richness and texture

3. If the brand is specified only in terms of attribute associations, very little meaningful
guidance is provided.

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Notes
Example: Is Nike shoes or sports, performance and attitude?
1. Creates brand equity

2. Builds long-term brand equity

3. Differentiates the brand and makes it distinct from other competitive offerings

4. Serves as a powerful relationship device

Self Assessment

Fill in the blanks:

10. ……………….is a set of human characteristics associated with a brand. In general, it

expresses how the brand behaves.

11. Brand personality is seen as a valuable factor in increasing ……………and brand attachment,
in much the same way as people relate and bind to other people.

8.6 Summary

 Brands are valued for their equity. Brands add value. Brand equity relates to the fact that
different outcomes result from the marketing of a product or service because of its brand
than if the same product or service had not been identified by that brand.

 Brand loyalty has always been one of key concerns of marketers. A brand is valued for its
ability to have a dramatic impact on a firm’s marketing performance. Loyalty provides
insulation against competitive assaults.

 A brand in a customer’s mind is a complex network of associations. Biel proposes that

these associations can be of two types: hard and soft.

 A brand personality makes it unique. Like human personality, a brand personality is both
distinctive and enduring and is built over a period of time. It refers to the outcome of all
the consumer’s experiences with the brand.

8.7 Keywords

Brand Awareness: Brand awareness is the second brand equity asset. It includes brand recognition
and brand recall. Brand awareness is the ability to identify a brand under different conditions.

Brand Equity: Brand equity is the added value bestowed on the product by the brand name.

Brand Recognition: Brand recognition is the ability to confirm prior exposure (Yes, I’ve seen it
earlier) and recall is the ability to remember the brand when a product category is thought
about.

Brand Image: The image of a brand is how it is perceived by the consumer. The totality of
associations that are held in a consumer’s mind and connected to a brand is brand image.

Brand Personality: It is a comprehensive concept, which includes all the tangible and intangible
traits of a brand, like, beliefs, values, prejudices, features, interests, and heritage.

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Notes 8.8 Review Questions

1. What is Brand Equity?

2. Briefly explain the Brand Image Constellation

3. Write down the Dimensions of Brand Image

4. Briefly explain the Brand Report Card

Answer: Self Assessment

1. T 2. F

3. T 4. T

5. Brand equity 6. Valuation

7. Attitudes 8. Brand knowledge

9. Brand awareness 10. Brand Personality

11. Brand engagement

8.9 Further Readings

Books Aaker, David A, Brand Managing Equity, N Y, Free Press, 1991.

Aaker, David A. and Kevin Lane Keller, ‘Customer Evaluations of Brand
Extensions’, Journal of Marketing, Jain 1990, pp. 27-41.

Aaker, David A, ‘Brand Extensions: The Good, the Bad, the Ugly’,Sloan Management
Review, Summer 1990, p. 42.

Biel, Alexander; response in ‘The Logic of Product Line Extensions’, Harvard

Business Review, Nov-Dec, 1994, pp. 58-59.

Court, David C, Mark G Leiter and Mark A Loach, ‘Brand Leverage’ The McKinsey
Quarterly, No-2, 1999, pp. 101-109.

Farquhar, Peter, ‘Managing Brand Equity’, Marketing Research, Sept. 1989,

pp. 24-33.

Ibid. p. 103.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Op.cit, Aaker, 1990.

Quelch, John A and David Kenny, ‘External Profits not Product Lines’, Harvard
Business Review, Sep-Oct, 1984.

Ries, Al and Laura Ries, The 22 Immutable Laws of Branding, N Y, Harper Collins,
1988, p. 73.

Ries, Al and Jack Trout, Positioning: The Battle for Your Mind, N Y, Warner Books,
1986, pp. 101-114.

Sullivan, Mary W, ‘Brand Extensions: When to use them?’, Management Science,

June 1992, pp. 793-806.

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Tauber, E M, ‘Brand Leverage: Strategy for Growth in a Cost Controlled World’, Notes
Journal of Advertising Research, Aug-Sep, 1988, pp. 26-30.

Yovovich, B G, ‘Hit and Run: Cadillac’s Costly Mistake’, Adweek’s Marketing Week,
Aug. 8, 1988, p. 24.

Online links http://www.brandextension.org/definition.html

http://www.managementstudyguide.com/brand-extension.htm

www.brandxpress.net/category/brand-extension/

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Notes Unit 9: Strategic Brand Management Process

CONTENTS

Objectives

Introduction

9.1 Brand Management

9.2 Strategic Brand Management

9.3 Strategic Brand Management Process

9.3.1 Identifying and Establishing Brand Positioning and Value

9.3.2 Planning and Implementing Brand Marketing Programs

9.3.3 Measuring and Interpreting Brand Performance

9.3.4 Growing and Sustaining Brand Equity

9.4 Strong Indian Brands

9.5 Summary

9.6 Keywords

9.7 Review Questions

9.8 Further Readings

Objectives
After studying this unit, you will be able to:
 Explain the concept of Brand Management
 Discuss the Strategic Brand Management
 Identify the Strategic Brand Management Process
 Discuss Strong Indian Brands

Introduction

Most of the consumers buying decisions are influenced by the image they have of the product.
Consumers buy the functional, psychological and aspirational values delivered by a product.
The product image is the sum total of all the information the consumer has about it, and the
impressions he has formed about it.

The strategic brand management process starts with a clear understanding as to what the brand
is to represent and how it should be positioned with respect to competitive brands. The aim is to
identify and establish brand positioning which will reflect the benefits that an enterprise could
maximize.

In this competitive world, most products are identical. So the consumer preference is developed
through brand image. A brand is invested with a set of associations, favourable connotations
and psychological over tones. The brand that closely matches the consumer’s desired image can
get the favour from those consumers.

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9.1 Brand Management Notes

Brand Management is the application of marketing techniques to a specific product, line, or

brand. It seeks to increase the product’s perceived value to the customer and thereby increase
brand franchise and brand equity. Marketers see a brand as an implied promise that the level of
quality people have come to expect from a brand will continue with future purchases of the
same product. This may increase sales by making a comparison with competing products more
favorable. It may also enable the manufacturer to charge more for the product. The value of the
brand is determined by the amount of profit it generates for the manufacturer. This can result
from a combination of increased sales and increased price, and/or reduced COGS (cost of goods
sold), and/or reduced or more efficient marketing investment. All of these enhancements may
improve the profitability of a brand, and thus, “Brand Managers” often carry line-management
accountability for a brand’s P&L profitability, in contrast to marketing staff manager roles,
which are allocated budgets from above, to manage and execute. In this regard, Brand Management
is often viewed in organizations as a broader and more strategic role than Marketing alone.

The discipline of brand management was started at Procter & Gamble PLC as a result of a famous
memo by Neil H. McElroy. A good brand name should:

1. be protected (or at least protectable) under trademark law

2. be easy to pronounce

3. be easy to remember

4. be easy to recognize

5. be easy to translate into all languages in the markets where the brand will be used

6. attract attention

7. suggest product benefits (e.g., Easy-Off) or suggest usage (note the tradeoff with strong
trademark protection)

8. suggest the company or product image

9. distinguish the product’s positioning relative to the competition

10. be super attractive

11. stand out among a group of other brands < like that one compared to the others.

9.2 Strategic Brand Management

Strategic brand management involves the design and implementation of marketing programs
and activities to build, measure, and message brand equity.

Strategic brand management process is important for creating and sustaining brand equity.
Developing a strategy that successfully sustains or improves brand awareness, strengthens
brand associations, emphasizes brand quality and utilization, is a part of brand management.
The brand strategy means permanent investment in research and development, publicity, and
customer services. The activities of measuring and controlling brand effects are also important.

The strategic brand management process starts with a clear understanding as to what the brand
is to represent and how it should be positioned with respect to competitive brands. The aim is to
identify and establish brand positioning which will reflect the benefits that an enterprise could
maximize. This includes establishing the essence of brand as the set of imagined associations
(attributes and benefits) that are characteristics of brand and choosing the way for its presentation.
It is about defining “heart” and “soul” of the brand.

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Notes There are only few enterprises that apply the formalized methodology which helps them to find
a way for reducing their efforts and make brand management more efficient Strategic brand
management is more successful if it is based on planning brand portfolio. A brand portfolio of
enterprise, in partner relationships, often consists of brands of several enterprises. Some authors
have developed a model called “molecule of brand”, where each brand is described as an atom
and its size indicates the role of brand. The greatest atom indicates leading brand, the atom of
middle size indicates strategic brand, and the smallest atom indicates supported brands.

The starting point in strategic analysis for the needs of decision-making is brand hierarchy.
A brand hierarchy is based on premises that a product can be branded in different ways depending
on how many new and existing brand elements are used and how they are combined for any one
product. Since certain brand elements are used to make more than one brand, the hierarchy can
be constructed to represent how products are nested with other products because of their common
brand elements. Keller has differentiated four potential levels in hierarchy. The highest level of
hierarchy is a corporate (or company) brand. A family brand is the next-lower level and it is
defined as a brand that is used in more than one product category, but is not necessarily the
name of the company. The third level is an individual brand. It is the brand that has been
restricted to essentially one product category, although it may be used for several different
product types within the category. The latest level is so-called a modifier which is a means to
designate a specific item or model type or a particular version of configuration of the products.

Task How brand management differ from strategic brand management?

Self Assessment

Fill in the blanks:

1. ............................ is based on premises that a product can be branded in different ways

depending on how many new and existing brand elements are used and how they are
combined for any one product.

2. ............................ is important for creating and sustaining brand equity.

9.3 Strategic Brand Management Process

Strategic brand management involves the design and implementation of marketing programs
and activities to build, measure, and manage brand equity.

Strategic brand management process is defined as involving four main steps:

1. Identifying and establishing brand positioning and values

2. Planning and implementing brand marketing programs

3. Measuring and interpreting brand performance

4. Growing and sustaining brand equity.

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Figure 9.1: Strategic Brand Management Process

Notes

Steps Key Concepts

Mental maps

Identify and Establish Brand Competitive frame of reference

Positioning and Values Points of parity and points of difference
Core brand values
Brand mantra

Mixing and matching of brand elements

Plan and Implement Brand
Marketing Programs Integrating brand marketing activities

Leverage of secondary associations

Brand value chain

Measure and Interpret
Brand audits
Brand Performance
Brand tracking
Brand equity management system

Brand - product matrix

Grow and Sustain Brand portfolio and hierarchies
Brand Equity Brand expansion strategies
Brand reinforcement and revitalization

9.3.1 Identifying and Establishing Brand Positioning and Value

The strategic brand management process starts with a clear understanding as to what the brand
is to represent and how it should be positioned with respect to competitors. Kotler defines
brand positioning as the “act of designing the company’s offer and image so that it occupies a
distinct and valued place in the target customer’s mind”. The goal is to locate the brand in the
minds of consumers such that the potential benefits to the firm are maximized. Competitive
brand positioning is all about creating brand superiority in the minds of customers, fundamentally,
positioning involves convincing consumers of the advantages of a brand vis-à-vis competitors,
while at the same alleviating concerns about any possible disadvantages.

Positioning often involves a specification of the appropriate core brand values and brand mantra.
Core brand values are those set of abstract associations (attributes and benefits) that characterize
a brand. To provide further focus as to what a brand represents, it is often useful to define a
brand mantra, also known as a brand expression of the most important aspects of a brand and its
core brand values. It can be seen as the enduring “brand DNA” the most important aspect of the

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Notes brand to the consumer and the company. Core brand values and a brand mantra are thus an
articulation of the heart and soul of the brand.

Determining or evaluating a brand’s positioning often benefits from a brand audit. A brand
audit is a comprehensive examination of a brand, involving activities to access the health of the
brand, uncover its sources of equity, and suggest ways to improve and leverage that equity. A
brand audit requires understanding sources of brand equity from the perspective of both the
firm and the consumer. The conceptual foundation of competitive brand positioning and provides
detailed guidelines on how to develop such positioning strategies. Once the brand positioning
strategy has been determined, the actual marketing program to create, strengthen, or maintain
brand associations can be put into place.

9.3.2 Planning and Implementing Brand Marketing Programs

Building brand equity requires creating a brand that consumers are sufficiently aware of and
with which they have strong, favorable, and unique brand associations. In general, this knowledge-
building process will depend on three factors:

1. The initial choice for the brand elements or identifies making up the brand.

2. The marketing activities and supporting marketing program and the manner by which
the brand is integrated into them.

3. Other associations indirectly transferred to the brand by linking it to some other entity
(e.g. the company, country of origin, channel of distribution, or another brand).

9.3.3 Measuring and Interpreting Brand Performance

To understand the effects of brand marketing programs, it is important to measure and interpret
brand performance. A useful tool in that regard is the brand value chain. The brand value chain
is a means to trace of the value creation process for brands to better understand the financial
impact of brand marketing expenditures and investments.

Figure 9.2: Measuring Customer-based

Brand Equity

1. Brand Audit
A. Brand inventory
B. Brand exploratory

2. Brand Value Chain

A. Brand equity sources
B. Brand equity outcomes

3. Brand Equity Management

System
A. Brand equity charter
B. Brand equity report
C. Brand equity responsibilities

The brand value chain helps to direct marketing research efforts. Profitable brand management
requires successfully designing and implementing a brand equity measurement system. A brand

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equity measurement system is a set of research procedures designed to provide timely, accurate Notes
and actionable information for marketers so that they can make the best possible tactical decisions
in the short run and the best strategic decisions in the long run. Implementing such a system
involves two key steps conducting tracking studies and implementing a brand equity
management system. Figure 9.2 provides a schematic overview of key concepts in measuring
brand equity.

9.3.4 Growing and Sustaining Brand Equity

Through the skilful design and implementation of marketing programs that capitalize on a
well-conceived brand positioning, strong brand leadership positions can be obtained. Maintaining
and expanding on that brand equity. However, can be quite challenging. Brand equity
management concerns those activities that take a broader and more diverse perspective of the
brand’s equity understanding how branding strategies should reflect corporate concerns and be
adjusted, if at all, over time or over geographic boundaries or market segments. Managing
brand equity involves managing brand within the context of other brands, as well as managing
brands over multiple categories, over time, and across multiple market segments. Figure 9.3
provides a schematic overview of key concepts in managing brand equity.

Figure 9.3: Managing Customer-based

Brand Equity

1. Define Brand Hierarchy

A. Principle of simplicity
B. Principle of relevance
C. Principle of differentiation
D. Principle of prominence
E. Principle of commonality
Employ as few levels as possible
Create abstract associations relevant as many products as possible
Differentiate individual products and brands
Adjust prominence to affect perceptions of product distance
Link common products through shared brand elements

2. Define Brand Equity over Time

A. Brand extensions Establish new equity and enhance existing equity
B. Brand portfolio Maximize coverage and minimize overlap

3. Enhance Brand Equity over Time

A. Brand reinforcement Innovation in product design, manufacturing and

Merchandising Relevance in user and usage imagery
B. Brand revitalization “Back to basics” strategy
“Reinvention” strategy

4. Establish Brand Equity over Market Segments

A. Identify difference in How they purchase and use products

consumer behaviour What they know and feel about different brands
B. Adjust branding program Choice of brand elements
Nature of supporting marketing program
Leverage of secondary associations

Task Why brand audit necessary for measuring customer-based equity?

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Notes
Self Assessment

Fill in the blanks:

3. Managing ............................ involves managing brand within the context of other brands.

4. ............................ often involves a specification of the appropriate core brand values and
brand mantra.

9.4 Strong Indian Brands

Some strong Indian brands are:

1. HCL

2. Gold flake

3. Airtel

4. Tata Indica

5. Godrej


Case Study Nokia—Building a Powerful Technology Brand

T
he world of parity has hit the mobile phone market just as it has many other
technology product categories. The products range from the simple to the complex,
but every manufacturer offers, of course, the latest features. Leapfrogging in sales
between brands frequently occurs based on design. But overall the market is predictable,
with Nokia, Motorola, and Ericsson fighting it out at the top and several less successful
brands like Samsung, Philips, Siemens and Panasonic trying hard to make inroads into
their top competitors’ market share. So what makes the difference between the most
successful and less successful brands? It certainly is not what product features are offered.
How, then, do consumers choose? The answer seems to be what the brand names mean to
them.

Nokia Group the Finland-based manufacturer of mobile phones, has been steadily working
on its corporate brand name and the management of consumer perceptions over the last
few years. Its efforts have paid off, because it is now the number one brand in many
markets around the world, effectively dislodging Motorola from that position. The brand
has been built using the principles described above, and has been consistently well managed
across all markets. Nokia has succeeded in lending personality to its products, without
even giving them names. In other words, it has not created any sub-brands but has
concentrated on the corporate brand, giving individual products a generic brand
personality. Only numeric descriptors are used for the products, which do not even appear
on the product themselves. Such is the strength of the corporate brand.

Nokia has suceeded where other big brand names have so far failed, chiefly by putting
across the human face technology-taking and dominating the emotional high ground.
It has done so in the following way:

Contd...

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Nokia Brand Personality Notes

Nokia has detailed many personality characteristics for its brand, but employees do not
have to remember every characteristic. They do, however, have to remember the overall
impression of the list of attributes, as you would when thinking about someone you have
met. As the focus is on customer relationships, the Nokia personality is like a trusted
friend. Building friendship and trust is at the heart of the Nokia brand. And the human
dimension created by the brand personality carries over into the positioning strategy for
the brand.

Nokia Positioning

When Nokia positions its brand in the crowded mobile phone marketplace, its message
must clearly bring together the technology and human side of its offer in a powerful way.
The specific message that is conveyed to consumers in every advertisement and market
communication (though not necessarily in these words) is “Only Nokia Human Technology
enables you to get more out of life”.

In many cases, this is represented by the tag line, “We call this human technology”. This
gives consumers a sense of trust and consideration by the company, as though to say that
Nokia understand what they want in life, and how it can help. And it knows that technology
is really only an enabler so that you-the customer-can enjoy a better life. Nokia thus uses
a combination of aspirational, benefit-based, emotional features, and competition-driven
positioning strategies. It owns the “human” dimension of mobile communications, leaving
its competitors wondering what to own (or how to position themselves), having taken the
best position for itself.

Nokia Product Design

Nokia is a great brand because it knows that the essence of the brand needs to be reflected
in everything the company does, especially those that impact the consumer. Product
design is clearly critical to the success of the brand, but how does Nokia manage to inject
personality into product design? The answer is that it gives a great deal of thought to how
the user of its phones will experience the brand, and how it can make that experience
reflect its brand character. The large display screen, for example, is the “face” of the phone.
Nokia designers describe it as the “eye into the soul of the product”. The shape of phones
is curvy and easy to hold. The faceplates and their different colors can be changed to fit the
personality, life-style, and mood of the user. The soft key touch pads also add to the
feeling of friendliness, expressing the brand personality. Product design focuses on the
consumer and his needs, and is summed up in the slogan, “human technology.”

Nokia now accounts for over half of the value of the Finland stock market, and has taken
huge market share from its competitors. According to one brand valuation study carried
out in mid-1999, it ranked 11th on the world’s most valuable brand list, making it the
highest-ranking non-U.S. brand. As has been pointed out, it has unseated Motorola. Nokia
achieved its brilliant feat through consistent branding, backed by first-class logistics and
manufacturing, all of which revolve around what consumers what.

Questions

1. As a user what you think why Nokia so popular in comparison to other brands.

2. ‘Nokia brand name affects the market of other brands’. Explain.

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Notes Self Assessment

Choose the appropriate answer:

5. Out of the following which one is a type of brand audit.

(i) Brand inventory

(ii) Brand tracking

(iii) Brand recall

(iv) All of the above

6. Pick the odd one:

(i) HCL
(ii) Nestle

(iii) HUL

(iv) None of the above

9.5 Summary

 A brand is a product, but one that adds other dimensions that differentiate it in some way
from other products designed to satisfy the same need. These differences may be rational
and tangible related to product performance of the brand or more symbolic, emotional, or
intangible related to what the brand represents.

 Brands themselves are variable intangible assets that need to be managed carefully.

 Strategic brand management involves the design and implementation of marketing

programs and activities to build, measure, and manage brand equity.

9.6 Keywords

Brand: A brand is a name, term, sign, symbol or design or a combination of them, intended to
identify the goods and services of one seller or group of sellers and to differentiate them from
those of competition.

Brand Audit: Brand audit is a comprehensive examination of a brand.

Brand Equity: Brand equity is the value a brand adds to the product.

Brand Value Chain: Brand value chain is a means to trace the value creation process for brands
to better understand the financial impact of brand marketing expenditures and investments.

9.7 Review Questions

1. What is the purpose of strategic management process in brand?

2. According to your perception what is the meaning of good brand?

3. Explain how a normal product converts in a good brand.

4. If you are a brand manager how you establish brand positioning of a brand.

5. Briefly explain the various steps in strategic brand management process.

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Answers: Self Assessment Notes

1. Brand hierarchy 2. Strategic Brand Management Process

3. Brand equity 4. Positioning

5. Brand inventory 6. Nestle

9.8 Further Readings

Books U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.
Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Aaker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand

Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Online links www.en.wikipedia.org

www.web-source.net

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Notes Unit 10: Identifying and Establishing

Brand Positioning

CONTENTS
Objectives
Introduction
10.1 Identifying and Establishing Brand Positioning
10.1.1 Position or Perish!!!
10.2 Brand Positioning
10.2.1 Advertising Persuasion
10.2.2 Unique Selling Proposition
10.2.3 Brand Image and Personality
10.2.4 Brand Positioning
10.3 Building a Strong Brand
10.3.1 Develop Unique Brand Points-of-Difference (PODs)
10.3.2 Points of Parity
10.3.3 Brand Equity
10.3.4 Brand Management
10.3.5 Benefits of a Strong Brand
10.4 Brand Building Blocks
10.4.1 Brand Salience
10.4.2 Brand Performance
10.4.3 Brand Imagery
10.4.4 Brand Judgements
10.4.5 Brand Feelings
10.4.6 Brand Resonance
10.5 Positioning Guidelines
10.6 Most Powerful Brands in the World
10.7 Summary
10.8 Keywords
10.9 Review Questions
10.10 Further Readings

Objectives
After studying this unit, you will be able to:
 Identify and Establish Brand Positioning
 Discuss the concept of Brand Positioning
 Explain the Brand Building Blocks
 Describe the Positioning Guidelines
 Discuss the most Powerful Brands in the World

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Introduction Notes

The term ‘position’ in a physical sense is used to refer to or specify the place or location of an
object. For instance, in a cinema theatre the tickets carry a number like A -15 to signify the seat
which is located on the first row and fifteenth column. People often enquire about the location
of toiletries section in a departmental store, and the staff guides like. ‘Please go straight about
200 ft and then turn left and go about 50 ft to find the grocery section’. In cricket, the battling line-
up also signifies the position that various players have in the batting sequence. In a football
match, both the opposing teams place their players on different positions on the X and Y dimension
of the playground. In a football game, ‘forward’ and ‘goalkeeper’ refer to different positions. In
a classroom situation, the front bench position is usually preferred. But some students prefer
sitting in the last few rows of seats. In a cinema hall, quite unlike a classroom, the back rows are
preferred. Some people prefer the corner positions in a cinema theatre. In the absolute sense,
there is no such thing as a ‘good’ position or a ‘poor’ position. The validity of a position depends
upon the goal or objective. For the students who are seriously interested in studies, the front
row gives them good proximity to the teacher, while for the students who want to avoid
studying, the back benches are good.

The famous “5P’s” of marketing folklore (product, place, price, promotion & packaging) were
fine tools for implementing packaged goods brand positioning - and the basic formula still has
its role in FMCG assignments. But today we are entering the era of customer brands where
‘company’ and ‘brand’ are one and the same. In this scenario the company culture & values
become a crucial factor in the solution: finding and harnessing what’s there already or setting
out to create values and practices which support and manifest the positioning.

10.1 Identifying and Establishing Brand Positioning

Running a brand is like conducting an orchestra. Positioning is the heart of competitive strategy.
The messages transmitted by everything from the advertising to phone calls with your customer
care department all need to be kept in harmony and on-brief. Without a clear, single-minded
definition of what the brand is about the messages rapidly become discordant and confusing.
The positioning statement is therefore a focusing device which helps brand management to
keep everything sharp and relevant.

Identifying where a specific brand is placed within the marketplace and its relationship to
competitive brands, brand positioning is determined by defining the brand’s benefits to the
consumer, opportunities for which the brand is best suited, the brand’s target audience, and who
its main competitors are, or us to achieve the benefits of brand positioning, it is necessary to
research in-depth the market position (or lack thereof) of the brand. Brand maps and forms are
created to profile the brand positioning, comparing the results with competitive brands.

In realizing the benefits of brand positioning, it is important to understand that not all brands
are competitors. A consumer may be presented with six brands of one product and only consider
three out of the six as a purchasing choice. The consumer may have encountered a negative
experience with a specific brand and may never consider purchasing it again, or there may be a
brand that simply does not stand out to the consumer and it is passed up.

10.1.1 Position or Perish!!!

Have you ever thought what makes Kelloggs different from Maggi. The difference lies in
positioning. Let us see how this magical concept plays a major role in making any brand a
success or God forbid a failure!!!

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Notes
TM
.com

The concept of positioning was introduced by Al Ries and Jack Trout in 1969 and was elaborated
in 1972.

To understand the concept of positioning we can consider the human mind as consisting of a
perceptual map with various brands occupying different positions in it. This concept of perceptual
space forms the theoretical basis for brand positioning. What this leads to is the perception of
the consumer, which decides the positioning of any brand. It is important to note that what a
marketer does is to find a position for its brand in the perceptual space of the consumer and place
it at the most lucrative point. Hence, Positioning is not what you do to the product, it is what you
do to the mind of the prospect. It is a new approach to communication and has changed the
nature of advertising. It can be of a product, service, company or oneself.

The perception of a consumer is a function of consumer’s values, beliefs, needs, experience and
environment. Thus as per Subroto Sengupta “the core thought behind brand positioning the
idea that each brand (if at all noticed) occupies a particular point or space in the individual’s
mind, a point which is determined by that consumer’s perception of the brand in question and
in its relation to other brands”.

Thus, in the perceptual map, the spatial distance between the points on which brands are located
reflects the subject’s perception of similarity or dissimilarity between products or brands.

The basic approach of positioning is not to create something new and different but to manipulate
what’s already up there in the mind, to retie the connections that already exist. In communication,
as in architecture, less is more. The only answer to the problems of an over communicated
society is positioning. Positioning is an organized system for finding a window in the mind.

The easy way to get into a person’s mind is to be first in a particular category. If you are not the
first then you have a positioning problem.

10.2 Brand Positioning

Perhaps the most important brand management activity is positioning the brand properly.
A well-positioned brand addresses important consumer benefits in unique and compelling
ways. It also creates an emotional connection to the consumer. Finally, it provides flexibility for
future growth (beyond current product and service categories).

The first step in positioning a brand is in-depth research. The research should provide you with
the following:

1. Profound consumer insight

2. A thorough knowledge of the competitive set

3. An understanding of consumer benefits (by segment)

You should identify functional, emotional, experiential and self-expressive consumer benefits.
Of those benefits, you should understand which are “cost of entry benefits” and which are
“differentiating benefits.”

In-depth qualitative research, including laddering, projective and ethnographic techniques may
be required to achieve the desired insight.

Some would argue that a brand could and should only own one key benefit in the consumer’s
mind (Al Ries) while others would claim that creating the right mix of unique brand benefits
creates a more powerful marketplace position (Martin Callé’s Brand Dimensioning).

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Regardless, the ideal benefit to claim has the following three qualities: (1) it is extremely Notes
important to the target consumer, (2) your organization is uniquely suited to delivering it and
(3) competitors are not adequately addressing it.
We believe there are four key components to brand positioning:

1. Target consumer: The primary audience to whom the brand is designed to appeal
2. Brand essence: The “heart and soul” of the brand
3. Brand promise: A promise of relevant differentiating benefits
4. Brand personality: Adjectives that describe the brand as if it were a person.
Together, these components define the brand. They are codified in a simple format that provides
direction not only for marketing communication and the brand identity standards and systems,
but also for all of the organization’s activities. Some people would say that the best a corporate
brand might hope to own is the leadership position in an industry. The brand promise would
read as follows: “[Company] is the quality, innovation leader in the [industry.]” I believe that is
a very weak positioning. The strongest corporate brands own something more than that in
consumers’ minds. For instance, Disney owns “fun family entertainment” while Nike owns
“genuine athletic performance.” Nicor owns “unconditional primal warmth” while Hallmark
owns “caring shared.”
BrandForward uses the following brand promise form: “Only [brand] delivers [benefit] to
[target consumer].” This form is simple but powerful in its economy. A powerful brand position
should be:
1. Believable, understandable, unique and compelling
2. Aspirationally attainable

3. Admirable and endearing

4. Difficult to emulate
5. Timeless and enduring
6. Extendable
Positioning a brand is complicated. It is an art and a science and is not likely to be well understood
or appreciated by operationally oriented people in your organization. It is, however critical to
your organization’s long-term success. Position your brand with great care.

Task Identify various companies that participate in the toothpaste market and list the
number of brands offered by them.
Positioning is the last step in the marketing strategy formulation. Marketing strategy begins
with identification of market segmentation and later choosing a target for the marketing activity.
Marketing enjoys close similarity with a military conflict. Strategy is a term that has been
conventionally used in the context of military warfare. Strategy is a blueprint or plan developed
to achieve the target by outmaneuvering the rival side. Marketing and military battles are
similar in the following respects:
1. Battles are usually fought to gain physical territory, air space or sea lanes. Geography is
inextricably linked to battles. The target in battles is the acquisition of a geographic unit.
The marketing battle is not fought for acquiring a geographical unit but to win customers
or market share. Market in this context does not mean a physical space. Retailers or the
end users are usually the targets of the marketing battles.

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Notes 2. Battles are fought with troops and a variety of munitions. Soldiers, planes, tanks, ships,
missiles and guns are used to fight the enemy. In marketing, the soldiers are typically the
sales people, and other value creating tools like advertising, sales promotions,
demonstrations, product, after sales care, price, reputation, etc., are the tools used to fight
the marketing battles. Brands are the ultimate fighters used to fight marketing battles.

3. The battles are fought with an enemy in conflict over some mutually desirable goal. The
rivals in battles are generally well identified. Marketing battles are fought with competitors
in the industry who stake claim to or chase the same customers or markets. In marketing,
direct competitors are often identified but indirect competitors are often not clear. The
lines of competition are sometimes blurred.

4. Military battles conventionally take place on a geographical area. It is for this reason that
most battles are named after the place where they were fought. A marketing battle is not
fought in the stores or marketplaces but in the minds of the prospects. Marketing battles
are fought in the minds of prospects for their purchase preference. When a brand is sold in
the mind of the customer, the marketing battle is won.

5. Victory in a military battle is often decided by might or superiority of the force. This is
especially true when the fight is direct and head on. Therefore, nations invest big sums of
money on building military might. In the marketing context, victory is dictated by superior
value delivery. Brands that deliver better value than rivals usually win the customers’
purchase vote.

Historically, might-building or developing absolute superiority guided military thinking. It

meant keeping a constant vigil on the rivals and trying to out-compete them on the basis of
scale. But a rival with an absolute numerical and ordnance superiority can be defeated on the
strength of superior strategy with a smaller force. In marketing, however, the conventional
military ‘superior firepower always prevails’ school of thought guided thinking for a long
period of time. Marketers were influenced and guided by competitors’ superiority in their
responses, and their bid to develop distinction and advantage.

10.2.1 Advertising Persuasion

In the early years, marketers relied upon the powers of communication tools like advertising to
win customers. The belief that dominated this era was that customers could be sold anything on
the basis of persuasive communication. Prowess in communication was equated with likelihood
of success of the marketing campaign. Message repetition, indeed bombardment or blitzkrieg,
was believed to be the key to drilling information into customers’ brains and thus influencing
consumer buying. Buyers could be influenced to buy what seller offered. In this era,
communicating with the prospects was more about creativity and less about strategy.
Accordingly, content took precedence over execution. Advertising came to acquire an important
status in the corporate functions.

But this school of thought led to bombardment of messages on the prospects’ senses, which was
becoming untenable, as advertising budgets soared but advertising effectiveness plummeted.
Message repetition is required to communicate, but it is wrong to say that when the same
message is repeated far too many times, prospects welcome the assault. It begins to look
suspiciously like brainwashing. So, when the communication barrage began to cross the limits
of comfort, prospects developed screens to eliminate undesirable messages. Even today, message
filtration is one of the most dreaded problems of the advertising community. Cutting through
the perceptual screen is a fundamental challenge to be tackled at the very minimum to successfully
communicate with the prospects.

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10.2.2 Unique Selling Proposition Notes

Once advertising ceased to be as effective as it used to be as a persuader, marketers turned to

product. In order to create a hot button to pull in the customer, marketers began to look for
unique product aspects. The attention shifted to product attributes and benefits that could become
unique selling propositions. Rosser Reeves called this entire process of discovering uniqueness
in the product to sell the product as the ‘USP’, or unique selling proposition. It is essential that
every brand must develop its own USP and repeat it to the extent it is required to communicate
it to customers. Reeves proposed three guidelines for the use of unique selling proposition: it
must involve a specific product benefit; to make it unique, it must not be used by competitors;
and finally, it must be good enough to sell the product.

The search for a unique selling proposition often creates digression in the strategy. The obsession
to find the differentiating proposition often promotes too much of competitor orientation. The
process of finding USP is often confined to listing the competitive products and studying their
propositions. The competitor products are analyzed threadbare and attempts are made to discover
something that is not offered by competition. Such process of finding USP often leads to discovery
of selling propositions that indeed are unique but offer little or no value to the customer. The
focus on competition pushes the whole process outside the realm of relevance from the customers’
perspective. It is for this reason that many times, marketers launch differentiated products that
offer very little value to customer.


Case Study Reviving Khadi – From Freedom Fabric to
Fashion Fabric

M
any a great leader fought the war of Indian Independence in kurtas and dhoti/
pyajamas made of Khadi. After independence khadi had become a fashion
statement, from the common public to the elite, all wearing khadi due to its
USP of being “swadesi”. But Khadi lost its sheen during 1960s and 70s when it got replaced
widely by polyester and other synthetic fibres.

The saleability of any textile depends on its USP and performance. For many years, the
promotion for Khadi had been on emotional and political grounds while its quality and
variety had been ignored completely. Khadi has very little to offer in terms of fabric
performance. It looks attractive when starched and kept in showrooms but, it does not
remain the same after washing. Even finer counts and blends of Khadi cannot withstand
many washes and thus, cannot be used for day-to-day purposes.

It was becoming extremely difficult for Khadi to compete with the high-tech, colour-fast,
wrinkle-free, mill-made cottons and blends available today. According to analysts, Khadi
requires government sanction in every single activity and has therefore been stuck in a
bureaucratic swamp, unable to increase its output or raise the quality of the fabric.

In 1985, designer Devika Bhojwani pioneered the Swadeshi label of Khadi ensembles.
Those were distributed through nearly 5000 Khadi Emporia. To display Khadi’s potential
and its unique selling proposition of being a totally natural garment which has nothing
synthetic in it, the stage was already set. KVIC organized a fashion show in Mumbai in
1989. This was the first step towards changing Khadi’s earlier image of being unfashionable.
Commenting on the poor state of Khadi, Devika Bhojwani said that failures in the Khadi

Contd...

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Notes sector were a result of red tapism and bureaucracy prevalent in the Indian system. Even
though the country had a wide distribution network, the middlemen, commissions and
cuts had gradually weakened the system. She further said that though the government
was taking the initiative to revive Khadi, nothing much would improve until the
implementation, and the cost per garment, etc. were controlled.

In 1990, the Delhi based designer, Ritu Kumar presented her first Khadi collection, Tree of
Life, which helped put Khadi in the fashion circuit. With increasing interest of the western
world in use of handloom and Khadi due to its USP, many Indian designers began to use
Khadi for their designs. The government also made efforts to promote Khadi. In September
2000, Vasundhara Raje, Minister for Small Scale Industries, initiated a movement to revive
all the 7,000 KVIC shops in India and make Khadi more fashionable and affordable. The
KVIC Board hired the services of leading fashion designers to help create a new range and
brand of Khadi wear.

In May 2001, KVIC set up the first air-conditioned shop in New Delhi. The décor was
modern and the clothes were neat and fashionable. The outlet sold Khadi garments designed
by high profile designers. On the opening of this outlet, well-known fashion designer,
Rohit Bal commented, “Khadi is the Indian alternative for linen. It is as comfortable and
now, we’ve proved that it is as fashionable”. In January 2002, a high-profile textile exhibition,
featuring Khadi ensembles designed by prominent Indian designers, was launched in
New Delhi to popularise the traditional hand-spun cotton. The idea of the exhibition was
to promote wholly hand spun, hand woven and hand patterned fabric, as a unique luxury
product. The exhibition displayed western as well as traditional Indian attire made from
the finest Khadi available in the country. Besides, nearly 110 varieties of the fabric (from
the sheerest to the coarsest) were showcased.

With many designers experimenting with Khadi, the designs are no longer as simple as
they used to be. A great deal of emphasis was given to the details of the designs and many
new colours were introduced. Eco-friendly vat dyes were used. In order to compete with
other varieties of textile and make it more acceptable in the market, improvisation was
needed and new products and designs had to be developed. Keeping this objective in
mind, in October 2001, KVIC signed a memorandum of understanding with the
Ahmedabad-based National Institute of Design (NID) to provide it design support in
order to improve the diminishing market-share of Khadi.

Under the agreement, a special cell would be set up at NID (financed by the KVIC) to
provide design support services in Khadi, village industries, packaging, marketing,
communication, publicity, disseminating materials and other design-related activities.

In July 2002, a collection of ensembles in ‘Tencel Khadi’ (a blend of Tencel and Khadi in the
ratio 30:70) was created by Bangalore-based designer, Deepika Govind, in association
with the Karnataka Khadi Board. Tencel offers the comfort and luxury of a natural fiber as
well as the performance and practicality of a man-made fabric. Tencel Khadi showed
lesser shrinkage (4-5%) as compared to the high shrinkage seen in Khadi garments (about
7%). Due to Tencel’s softness, it would become easier to work with Khadi and lend better
drape quality to finished garments. Tencel Khadi would provide excellent scope for exports.
In 2002, the Austria-based company, Lenzing AG, proposed to make Khadi more eco-
friendly by blending the biodegradable ‘modal fibre’12 with Khadi. This blend would
absorb 50 per cent more humidity than cotton. The blend, besides strengthening the Khadi
yarn, would make it easy to wash and maintain. Thus adding to the overall USP.

Contd...

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As a result of this continuous effort to revive khadi primarily on the basis of its USP has Notes
started yielding good results both in terms of sales as well as revenues. Though it has a
long road to travel yet.

Questions

1. What do you analyse as the role of USP in the revival of khadi?

2. Analysing this case, do you really feel that every product needs to have a USP?
Source: www.icmrindia.org

10.2.3 Brand Image and Personality

David Ogilvy pioneered the idea of brand image and personality. He argued that ‘every
advertisement should be thought of as a contribution to the complex symbol which is a brand
image’. The argument of ‘brand image’ signified a leap forward in the way marketers
communicated with customers and persuaded them to respond favorably to their products and
services. The marketed products do offer some utility for which they are bought, but Ogilvy
shifted the attention to a non-product area conceptualized as brand image. The brand reputation,
image, esteem and prestige are crucial in developing brand pull. This is especially true when we
recall that customers in those days were moving up the social ladder and becoming affluent.

Many marketing activities such as perpetual promotions cheapen and dilute the brand image.
Bargains are fine in times of scarcity, but affluent customers are driven by something else. The
esteem in which a brand is held is important. Ogilvy further highlighted the importance of
personality when brands in a category are similar. In product categories like whiskeys, cigarettes,
detergents and many more, brands are not significantly differentiated. In this situation of brand
parity, ‘the less part reason plays in brand selection, the better’. Accordingly, brands need to
develop sharply defined personalities to create connection with the prospects. Trivial product
differences do not determine brand position in the marketplace. It is brand image that is the
crucial driver.

Like other approaches listed above, brand image also began to lose its charm when other
marketers in the category also started to build image for their brands. Successful brands began
to influence others in the category so much, that images so promoted began to come very close
to each other. For instance, various men’s shirt brands have overlapping images. Even in the
sports shoes category, top brands are struggling hard to keep their images differentiated. Image
ideas also lost its sheen when hordes of marketers vigorously pursued image building. The
clutter and crowd seriously challenged the efficacy of this idea in brand promotion.

10.2.4 Brand Positioning

The greatest peril for communicators of today is the communication itself. The environment is
filled with too much of communication. It is an over-communicated society. The mantras that
ensured success in the past, when communication was limited, are no longer effective. Creativity
is not a key to achieving communication objectives. Getting across the perceptual barrier imposed
by the prospects is the most important challenge. Crossing over to the prospect’s mind was not
difficult in the era of under-communicated society. The perceptual gates were left open because
the communication environment was comfortable. The communication directed was well within
the prospects’ information processing capacity, and thus did not trouble them unduly.

Ries and Trout suggest that success in an over-communicated society like the present one,
creativity by itself cannot guarantee success. Strategy must take precedence over creativity.
In order to succeed, the marketer must create a position in the prospect’s mind. The position

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Notes must take into consideration a company’s strengths and weaknesses along with that of competitors.
Positioning is governed by the rule of first mover advantage. The brand must get into a prospect’s
mind first. This does not imply being physically or chronologically first; rather, it means being
perceptually first. For instance, it was the Sperry Rand Company that first invented the computer.
But very few people know that; most associate IBM with computers. This is because IBM got into
perceptual space and occupied the computer position firs, before anyone else could move in.

Positioning is about building the image of a brand. It is about how the brand is going to be
perceived in the market. Kotler defines positioning as ‘the act of designing the company’s
offering: an image to occupy a distinct place in the mind of the target market.’ Positioning must
result in creation of a customer focused value proposition. It must provide a cogent reason for
buying the product. Most successful brands occupy distinct position that sets them apart form
the competition and provides the target customer a reason to favor them:

1. Liril - freshness

2. Dominos - guaranteed pizza delivery in 30 minutes

3. Fair & Lovely - fairness cream

4. Pears - tender skin, like baby’s

5. Bata - value for money shoes

6. Woodland - sturdy shoes for adventure sports

7. Zodiac - fine quality shirts

8. Allen Solly - casual formal wear

9. Live on - after bath hair de-tangler

10. Ujala - easy-to-use liquid fabric whitener

Task Positioning logic command that a brand without a unique position has little chance
of achieving marketing success. List the five brands that have failed to make much impact.

!
Caution Before moving the building brand concept students recall the brand concept.

Self Assessment

State whether the following statements are true or false:

1. Positioning is the last step in the marketing strategy formulation.

2. Positioning a brand is not a complicated concept.

3. It is essential that every brand must develop its own USP.

10.3 Building a Strong Brand

I’ve heard very strong arguments that public relations is the way a strong brand is truly established
and advertising is how the brand is maintained.

If a brand is successful in making a connection with people and communicating its distinct
advantage, people will want to tell others about it and word-of-mouth advertising will develop

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naturally – not to mention writers in the press will want to write about the brand. Once that type Notes
of differentiation is established in the market’s mind, advertising can help maintain and shape
the brand.

Today it’s commonly accepted that strong brands accelerate business performance, with the
power to lift companies, their products and services from obscurity or commodity status to
positions of preeminence in their marketplaces. We define “brand” as the recognition and
personal connection that forms in the hearts and minds of your customers and other key audiences
through their accumulated experience with your brand, at every point of contact. Ideally the
brand that emerges is a positive one, leading to trust, loyalty and advocacy for your offerings,
increasing shareholder value and establishing long-term advantage in the marketplace.

Public relations are the way a strong brand is truly established and advertising is how the brand
is maintained. If a brand is successful in making a connection with people and communicating
its distinct advantage, people will want to tell others about it and word-of-mouth advertising
will develop naturally-not to mention writers in the press will want to write about the brand.
Once that type of differentiation is established in the market’s mind, advertising can help maintain
and shape the brand.

What you need to do in branding is to communicate what the brand distinctively stands for
using as few words or images as possible.

So remember, branding is all about creating singular distinction, strategic awareness, and
differentiation in the mind of the target market-not just awareness. When you have been successful,
you will start building equity for your brand.

10.3.1 Develop Unique Brand Points-of-Difference (PODs)

Because of an overwhelming variety of products and services on the market, those that stand out
in some manner are better noticed by consumers. There are various (positive and negative)
ways of being different compared to competitors in the same market. Differentiation is the term
given to the positive way in which a company’s product differs from its competitors. Points of
Difference (PODs) describe the individual factors of differentiation. They can be understood
simply as the attributes or benefits consumers strongly associate with a brand, positively evaluate
and believe they could not find to the same extent with a competing brand i.e. points where you
are claiming superiority or exclusiveness over other products in the category.
The key points of difference of a company are synonymous with its Unique Selling Proposition
(USP) although not interchangeable, and are critical in defining its competitive advantage and
branding strategy. They must be attributes or benefits that consumers strongly, uniquely, and
positively associate with the company’s brand; and not with any competing brand. Once points
of difference have been clearly communicated to consumers, the company and its brand are set
apart from its competitors. Brand loyalty depends upon the ability of the company to establish
and maintain clarity of communication with the consumer regarding their brand; and to maintain
and expand the points of difference that defines the brand.

There are primarily three key issues that have to be kept in mind while developing/marketing
PODs, viz.,

1. Desirable to consumer

2. Deliverable by the brand

3. Differentiating from competitors

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Notes
Example: Creating strong, favorable, and unique associations as points-of-difference is
a great challenge, but essential in terms of competitive brand positioning. Consider the success
of IKEA as a case study.

Swedish retailer IKEA took a luxury product home furnishings and furniture and made it a
reasonably priced alternative for the mass market. IKEA supports its low prices by having
customers self-serve, deliver, and assemble the products themselves. IKEA also gains a point-of-
difference through its product offerings.

IKEA built its reputation on the notion that Sweden produces good, safe, well-built things for
the masses. It has some of the most innovative designs at the lowest cost out there. It also
operates an excellent restaurant in each store (rare among furniture stores), offers child-care
services while the parents shop; offers a membership program entitling members to special
discounts on their purchases beyond the normal low price and mails out millions of catalogs
featuring the latest furniture.

10.3.2 Points of Parity

Discussion of strategic awareness, points of singular distinction, and brand equity would not be
complete without discussion of brand points of parity.

Points of parity are those associations that are often shared by competing brands. Consumers
view these associations as being necessary to be considered a legitimate product offering within
a given category.

In other words, if you create what you consider to be a wonderful point of differentiation and
position, they might not be enough if consumers do not view your product or service as measuring
up on “minimum product expectations”. Points of parity are necessary for your brand but are
not sufficient conditions for brand choice.

Example: Maruti might produce a wonderful new automobile that uses advanced global
positioning and sensor technologies that render a driver obsolete by automatically routing the
car, adjusting speed for traffic conditions, recognizing and complying with all traffic laws, and
delivering passengers and cargo to the proper destination without the need for operator
intervention. They have invented the first car with functional autopilot. What a strong position
and unique selling proposition!

However, unless they have fully considered their brand’s points of parity with other products in
the category, they probably will not meet with success.

Consumers might expect that at minimum Maruti’s automobile have four wheels with rubber,
inflatable tires, be street legal, run on a widely-available fuel source, be able to operate during
both night and day in most weather conditions, seat at least two people comfortably with
luggage, be able to operate on existing roads and highways, and provide a fair level of personal
safely to occupants. If their automobile does not possess these points of parity with competing
brands, then it might be too different and might not be seen as a viable choice or a strong brand.

The lesson here is that differentiation and singular distinction are necessary for strong brands,
but they do not solely make for a strong brand. Your brand must also measure up well against
the competition on expected criteria so as to neutralize those attributes.

Once you have met the points of parity requirement and then you provide a unique selling
proposition and hold a strong, defensible position, then you have the makings of a very strong
brand.

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10.3.3 Brand Equity Notes

Brand Equity is the sum total of all the different values people attach to the brand, or the holistic
value of the brand to its owner as a corporate asset.

Brand equity can include the monetary value or the amount of additional income expected from
a branded product over and above what might be expected from an identical, but unbranded
product; the intangible value associated with the product that can not be accounted for by price
or features; and the perceived quality attributed to the product independent of its physical
features.

A brand is nearly worthless unless it enjoys some equity in the marketplace. Without brand
equity, you simply have a commodity product.

10.3.4 Brand Management

If a brand is not effectively managed then a perception can be created in the mind of your market
that you do not necessarily desire. Branding is all about perception.

Wouldn’t it be nice to have people perceive you the way you would like them to perceive you?
That is what branding and brand management are all about.

Brand management recognizes that your market’s perceptions may be different from what you
desire while it attempts to shape those perceptions and adjust the branding strategy to ensure
the market’s perceptions are exactly what you intend.

So you may now have a better understanding of what a brand is and why awareness about your
brand does not necessarily mean your brand enjoys high brand equity in the marketplace. You
might even understand that brand management is all about shaping and managing perceptions.
You may still be asking yourself, however, why you should care about branding in the first
place.

10.3.5 Benefits of a Strong Brand

The benefits of strong brand are:

1. A strong brand influences the buying decision and shapes the ownership experience.

2. Branding creates trust and an emotional attachment to your product or company. This
attachment then causes your market to make decisions based, at least in part, upon
emotion – not necessarily just for logical or intellectual reasons.

3. A strong brand can command a premium price and maximize the number of units that can
be sold at that premium.

4. Branding helps make purchasing decisions easier. In this way, branding delivers a very
important benefit. In a commodity market where features and benefits are virtually
indistinguishable, a strong brand will help your customers trust you and create a set of
expectations about your products without even knowing the specifics of product features.

5. Branding will help you “fence off” your customers from the competition and protect your
market share while building mind share. Once you have mind share, you customers will
automatically think of you first when they think of your product category.

6. A strong brand can make actual product features virtually insignificant. A solid branding
strategy communicates a strong, consistent message about the value of your company.
A strong brand helps you sell value and the intangibles that surround your products.

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Notes 7. A strong brand signals that you want to build customer loyalty, not just sell product. A
strong branding campaign will also signal that you are serious about marketing and that
you intend to be around for a while. A brand impresses your firm’s identity upon potential
customers, not necessarily to capture an immediate sale but rather to build a lasting
impression of you and your products.

8. Branding builds name recognition for your company or product.

9. A brand will help you articulate your company’s values and explain why you are competing
in your market.

Self Assessment

Fill in the blanks:

4. ............................ relates to the ways in which the product or service attempts to meet
customers’ more functional needs.

5. ............................ are customers’ emotional responses and reactions with respect to the
brand.

10.4 Brand Building Blocks

The four steps involved in brand building can be depicted as six “brand building blocks” as
shown in Figure 10.1.

Figure 10.1: Brand Building Blocks

Resonance

Judgements Feelings

Performance Imagery

Salience

10.4.1 Brand Salience

The right brand identity can be made by creating brand salience with customers. Brand salience
relates to the aspects of the awareness of the brand, i.e. it relates to what extent the brand is
evoked under various situations, to what extent is the brand easily recalled or recognized? What
types of reminders are necessary? How pervasive is this brand awareness?

Brand awareness refers to customers’ ability to recall and recognize the brand, as reflected by
their ability to identify the brand under different conditions.

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Breadth and Depth of Awareness Notes

Creating brand awareness involves giving the product an identity by linking brand elements to
a product category and associated purchase and usage situations. The depth of brand awareness
concerns the likelihood that a brand element will come to mind. The breadth of brand awareness
concerns the range of purchase and usage situations in which the brand element comes to mind.

Product Category Structure

To fully understand brand recall, it is important to appreciate product category structure, or

how product categories are organized in memory. In consumers’ minds a product hierarchy
often exists, with product class information at the highest level, product category information at
the second-highest level, product type information at the next level, and brand information at
the lowest level. The organization of the product category hierarchy will play an important role
in consumer decision making.

10.4.2 Brand Performance

Brand performance relates to the ways in which the product or service attempts to meet customers’
more functional needs. It refers to the intrinsic properties of the brand in terms of inherent
product or service characteristics.

The product is the primary influence of consumers’ experience with a brand. Designing and
delivering a product that fully satisfies consumer needs and wants is a prerequisite for successful
marketing.

10.4.3 Brand Imagery

The other main type of brand meaning involves brand imagery. Brand imagery deals with the
extrinsic properties of the product or service, including the ways in which the brand attempts to
meet customers’ psychological or social needs. Brand imagery is how people think about a
brand abstractly, rather than what they think the brand actually does. Thus, imagery refers to
more intangible aspects of the brand.

Task Product develop into successful brand by manufacturer, seller or consumer. Discuss.

10.4.4 Brand Judgements

Brand judgements focus on customers’ personal opinions and evaluations with regard to the
brand. Brand judgements involve how customers put together all the different performance and
imagery associations of the brand to form different kinds of opinions.

10.4.5 Brand Feelings

Brand feelings are customers’ emotional responses and reactions with respect to the brand.
Brand feelings relate to how the brand affects customers’ feelings about themselves and their
relationship with others. The following are the six important types of brand-building feelings:

Warmth: The brands make consumers feel a sense of calm or peacefulness. Consumers may feel
sentimental, warmhearted, or affectionate about the brand.

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Notes Fun: Upbeat type of feelings; the brand makes consumers feel amused, lighthearted, joyous,
playful, cheerful and so on.

Excitement: A different form of upbeat feeling: the brand makes consumers feel energized and
feel that they are experiencing something special.

Security: The brand produces a feeling of safety, comfort, and self assurance. As a result of the
brand, consumers do not experience worry or concerns that they might have otherwise felt.

Social Approval: The brand results in consumers having positive feelings about the reactions of
others; that is, consumers fell that others look favourably on their appearance, behaviour, and
so on.

Self-respect: The brand makes consumers feel better about themselves: consumers feel a sense of
pride, accomplishment or fulfillment.

10.4.6 Brand Resonance

The final step of the model focuses on the ultimate relationship and level of identification that
the customer has with the brand. Brand resonance refers to the nature of this relationship and the
extent to which customers feel that they are “in sync” with the brand.

Self Assessment

Choose the appropriate answer:

6. USP Stands for

(i) Unique Selling Proposition

(ii) Unit Sale Position

(iii) United States Politics

(iv) Uninterrupted Supply of Power

7. IBM stands for

(i) Indian Business Machine

(ii) International Business Machine

(iii) In Between Man

(iv) None

10.5 Positioning Guidelines

As an organization manager, it falls to you to work with the team up with a positioning or
branding statement for the highest impact on your audience. This statement will tell the audience
who are and you stand for. Therefore, you should be familiar with some of the basic guidelines
for a branding process as outlined here. Work with these ideas and concepts in developing and
hammering home your brand positioning.

What’s in it for me?

Known as WIFM (pronounced whiff-em), this is the overwhelming concern of your audience.
They must be able to know, appreciate, and embrace the benefit your position offers them.
If you tout your Doppler radar, the audience must know how it will help them save their

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property and their lives. If you have the earliest newscast in the market, tell your viewers that Notes
you did it so they could get a head start on their world each day. If your news anchors are not
from your market, let them tell your audience how much they love living there.

Is it Simple?

Make sure your chosen positioning statement is simple. Parsimonious Wordsmithing is the
way to go. Say everything with little effort. It must be easily understood and remembered. The
statement must also be able to be incorporated into everything you and your station do. This
synergistic requirement will come back to either bless you or haunt you unless you think it
through.

Does it your Target Audience?

Your positioning dimension must be important to your target audience. If your station has
chosen the proverbial soccer mom as its target audience, ensure that your branding is reflected
in your graphics, music, and on-air philosophy. Here is where some money spent in researching
the wants and needs of your target audience will pay off in overwhelming dividends. Whatever
you do, do not scrimp on research. You end up like a famous clothing maker who ignored the
research that said it should stick to its core product. Against the advice of researchers (and
customers), it expanded into other lines and almost went bankrupt.

Does it have both Tangible and Intangible Aspects?

When selecting your positioning statement, it is important to be sure you have introduced some
intangible positioning with it. The emotional or even irrational feeling your statement induces
in the minds of the audience will make it much more difficult for your competitors to rip off and
thereby steal your thunder. However, don’t ignore the functional and rational positioning
either. Being “the station where people cry a lot” contains emotion and is certainly not rational,
but it has no concrete function in its branding line.

Are you Promising too Much?

Can your position be sustained over the long run? In the first decade of the 21st century, NBC
could truthfully tout itself as “the network of the Olympics.” However, very few stations have
an investment that will run that long. Your audience will soon determine if you’re promising
them the moon and delivering mud balls. Make sure your positioning line will outlive the
morning paper.

Can your Competition Steal your Thunder?

Make sure that your competitors can’t undermine your statement. In a classic case, at the turn of
the last century, a beer company in New York City came up with the statement “We sterilize our
bottles!” Of course, all the other brewers also sterilize their bottles, but being the first to say so
effectively shut out competition until one competitor came up with “super-sterilized containers.”
If you are hawking the benefits of your helicopter, be aware that your competition can come up
with a newer, faster, see-in-the-dark and track-down-running-criminals machine. Be prepared.

Can you Introduced it Gradually?

A well-known axiom of human behavior notes that people hate changes, so if you are
re-branding your station, make the changes gradually. If possible, make the changes consistent

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Notes with prior associations, thereby positioning them as improvements. An example would be a
new news set that will make it easier for the audience to see the weather or story preparation.

Are you Alienating your Loyalists?

Another axiom of human behavior states it is easier to retain your current brand loyalists than
it is convince someone to change to your brand. Therefore, when making and implementing
your branding statement, be sure you appreciated those loyalists. Even if their demographic
isn’t as valuable to the sales department, they have influence over demographics that are.

Will it Withstand the Test of Time?

The world’s greatest brands have maintained the same position for decades. Just ask Coke, Betty
Crocker, or Heinz. Can your positioning statement stand up that long? There is another oft-
quoted that by the time you-in the station-have gotten tired of a spot, it is just beginning to make
a dent in the hearts and minds of the audience. How many times did you hear a Coke jingle
before you realized you were thirsty and needed a Coke?

Does it Work in Copy?

This last item is one that will set the teeth of many creative people on edge. Make sure your
positioning line can be easily and effectively translated into promotional spots and advertising
copy. If you have decided to be “the bright and happy station.” How will that line fir into a spot
about hurricane death and destruction?

Work it out in copy, and if you determine that in some cases it would not be appropriate, make
sure the copy restrictions are written down and understood by all those responsible for copy.

Likewise, see how the line works graphically. It may be great in a large-sized logo, but how
does it look as a lower? What happens to it in print as a “bug” in a co-op ad? What does it look
like as a microphone flag with flags of your competition all around it?

10.6 Most Powerful Brands in the World

Here we discuss the ten most powerful brands in the world, which takes into account the
measure of brand equity combined with the performance of the company. According to the
report, the top five remained the same, with all the five companies showing an increase in brand
valuation between 15% and 30% when compared to 2007, but there are several changes with the
rest of the list.

1. Google: As expected, Google tops the list. Google is the most powerful brand in the world
with a current brand value estimated at $86 billion, and it has achieved all this in just ten
short years. This global search engine giant had its beginnings in 1996 and was just a
research project started by Larry Page and Sergey Brin, two Stanford University Ph.D.
students. The incorporation of Google Inc. took place on September 7, 1998 at their friend’s
garage in California. The company experienced stupendous growth in a short time and
went public on Aug 19, 2004. Google’s rank is based on the equity value and the fantastic
financial performance.

2. General Electronics (GE): GE is a giant US multinational engaged in technology and services

industries. It has its headquarters in Fairfield, Connecticut. It is now the second largest
company in the world, in terms of market capitalization. The brand value of this company
is estimated at $71.4 billion.

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3. Microsoft Corporation: Microsoft is the world’s largest software company and the third Notes
most powerful brand on the globe, with annual revenue of $44.28 billion and a brand
value of $70.89 billion. This veteran software company was started by Bill Gates and Paul
Allen in 1975 and has its headquarters in Washington. The company went public in 1986.
It manufactures computer technology for business and personal computing, offering a
wide range of software products.

4. Coca-Cola: Coca-Cola makes carbonated soft drinks and has a brand value of $58.2 billion.
It was started in 1885 as a patent medicine by Dr. John Stith Pemberton in Covington,
Georgia. It was named Pemberton’s French Wine Coca back then.

5. China Mobile: This is the world’s largest mobile phone operator with the maximum
number of subscribers (about 296 million). Vodafone owns 3.3 percent of the China Mobile.
This company has a 65% share of the most competitive Chinese mobile market and
commands a brand value of $57.2 billion.

6. IBM: IBM once had the distinction of being the largest computer company in the world but
Hewlett-Packard took that spot in 2006. However, IBM is currently the largest information
technology employer in the entire world. Its brand value is reported to have shown a 65%
increase to $55.3 billion and this moved the company up to sixth place.

7. Apple: Apple Computer Company was formed in the year 1977 by Steve Jobs, Steve
Wozniac and Ronald Wayne. It was initially called Apple Computer Inc. but then the
world “computer” was dropped from its name in keeping with the expansion from a
computer maker to consumer electronics and software. The well-known Apple creations
and designs are Mac laptop and desktop computers, iPod and iTunes, the OS X operating
system and the very popular iPhone. The company has seen a 123% rise in its brand value
because of these innovative products. Fortune magazine called Apple the most admired
company in the United States and it has a brand value of $55 billion.

8. McDonalds: The fast food giant McDonald’s brand value grew more than 49% and is
currently estimated to be at $49.49 billion. This restaurant chain is one of the most
recognizable on earth being the most popular food outlet in the world. It had the most
basic beginnings when Dick and Mac McDonald created the brand. But the story goes that
much of the success is owed to a salesman of a milk-shake maker, Ray Croc, who made a
trip to California to check out McDonald’s hamburger stand, only to enter into a well-
known business relationship with the McDonald brothers.

9. Nokia: Nokia Corporation is a Finnish multinational company with its headquarters in

Keilaniemi, Espoo. This communications company is focused on wired and wireless
telecommunications. It is the world’s largest manufacturer of mobile telephones and
employs thousands of people worldwide. It has achieved its goal of connecting the world
and has a brand value of $43.9 billion.

10. Marlboro: Marlboro had its share of problems initially and reaped rewards after the
introduction of a new cowboy image for the brand. With this change, sales shot up by 5000
percent with an estimated brand value of $39.2 billion, which is an increase in value by
2 percent from last year.

It is interesting to note that all these powerful brands had humble beginnings but soon reached
the top with their imaginative and innovative approaches to business, customer satisfaction and
to achieving their goals.

Task Discuss about any successful Indian brand.

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Notes

Case Study Which Direction Should the Brand Take?

L
iril made a big splash in the toilet soaps category in the late seventies. The market
then was not very competitive. The mixed economy model did not yet fulfill the
dream of prosperity and affluence. The licensing raj tightly controlled the industrial
activity. Like most of the industry sectors the toilet soap industry was dominate only a
handful of players like the Hindustan Lever, Calcutta Chemicals and Tomco. These two
players marketed a complete portfolio with brand aimed at different segments and different
benefits. The other players catered to small niches like J&J limited its range to infant and
kid with mild soaps. Other local players like Chandrika, Swastik, Keshnikhar, Mysore
Sandal and Medimix and host of small players that operated locally.

It was during the seventies when marketing was not really something that firms followed
and marketing personnel command good esteem. The demand still chased supply. The
advertising did not use sophisticated tools both to explore consumer motivation and
create executions. Like many other categories the brand used rational appeals to woo
consumers. The problem solution themes dominated the marketing arena. Soap fragrance,
size, color name were seen to be major bait for hooking customers. The brand
communication focused on product and ingredients as means to influence buying. The
markets were still clubbed into large masses of customers with little expressed
differentiation. The whole economy seemed to have been stuck in introduction with little
clamor to fight out the competition.

Liril arrived on the soap space with the promise to transform bathing form a problem
coping to providing experience. The brand with its ‘freshness’ platform sought to add a
psychological dimension of feeling good. The brand uniquely communicated and connected
with its prospects through a bold advertisement by then prevalent values. In 1975 the
brands communication showed a beautiful model in bikini under a natural waterfall. The
excitement and freshness so conveyed by the advertisement struck an emotional connect
with the people. The sound used in the ad ‘La..la..la..’ concretized the delivery promised
by the brand. In no time the brand becomes hugely successful. The brand headline invited
the potential uses as ‘come alive with Liril freshness’. The brand advertising showed
floating juicy sliced lemon to back up its freshness claim. It was first brand that sought to
play on inherent freshness associated with lime.

Brand communication

Potential customer: young women

Background: natural high energy waterfall

Theme: young, vivacious, attractive girl having bath

Promised benefit-freshness experience

Promise support: floating juicy slices of lemon

Voice over: Come alive with Liril freshness

It cornered 14 percent market share good enough to give it slot in first three positions. It
established premium segment in soaps category. Brand has been a top performer in the
toilet soaps category until 1995 when it began to loose market share. During this period
the brand lost big volume over 35 percent. And its market share slid to below five percent.

Contd...

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The excitement and innovation created by the brand could not be sustained. The later Notes
brand communication deviated form the original brand positioning. Further the brand
benefits of lime and freshness responsible for its success lost novelty. Many other brands
began to focus on lime as ingredient and the claimed benefits of freshness. What was once
a pioneering unique benefit was becoming generic. Further the brand’s original customers
who grew up with it over time were becoming older. With age the need structure of this
group was shifting form experience and emotional delivery to functionality. This way the
brand began to loose its grip over the market.

The net result of loyal customers migrating to functionality and brands unique positioning
getting cluttered the brand faced the challenge associated with the life cycle. Lack of
differentiation and resonance with the potential customers began to take the toll on brand.
The brand personal that centered on lime and freshness did not offer the uniqueness that
the brand required now. The issue facing Liril was how to resurrect the once very strong
brand and get back to its glory. Many thought of launching variations and redoing brand’s
communication in order to make it more tune with time so that young customers could be
included in the brand’s fold.

Challenged, as the brand was Lever did try to inject fresh blood into the brand. The period
of change and experimentation began in 1995. Brand first rode on the extension mode.
First the brand saw a launch of shower gel in 1994. And then a cologne variant in 1996.
Later in 1999 another variation saw the light of the day by the name of Rainfresh. Then
came icy blue Liril. The brand was hooked with a number of variants that all tried to play
around with the theme of freshness in different contexts.

The brand communication that once created history of sorts with sexy bikini clad Karen
Lunel under the white natural waterfall changed radically. The original Karen Lunel ads
ran for twelve years establishing firmly the brand’s associations with lime freshness. The
girl in the waterfall theme was abandoned in favor of something called as ‘unusual water
experience’. Now the girl instead of waterfall came out in open to bathe in a car wash or
danced in front of a fire tanker hose. In a bid to lure youth a set of commercials were
launched on MTV. Then came the pissing boy, girl in the desert and Liril Icy commercial.
The brand communication began to take many routes as if idea was to shoot arrows in all
direction and one will hit the target. But that did not seem to happen. The advertising
initiatives and line extensions failed to enthuse any energy into brand’s performance.

Like the brand communication even the product looks and forms were deviated form its
green streaked look. Icy blue become blue variant and contained menthol. With line
extensions the brand sought to deliver different bathing experience. The brand bold
commercial of green bikini clad model gave way to green swimsuit. Later the swimsuit of
the Liril model moves on to become the hot pants. The brand faced intense competitive
pressures form other lime soaps aiming to copy freshness platform in nineties.

Experts feel differently about the fall of Liril form it prima donna status. One expert
blames the fall of the brand to the confusion between the execution and brand idea. He
believed that the central brand idea has never been clear. It appeared that girl in the
waterfall was the central band idea and it should not be touched. But is this creative
expression of the central idea of freshness or the ideas itself that remains sacrosanct.

Others believe that Liril drew its success form the brand personality created by the first
model. She symbolized not only youth but also other traits like exuberance, innocence
and fun. The models that replaced Karen were only young pretty things. They lacked on
all other personality aspects of the first model that launched the brand. Lever has not been
able to get somebody who would capture and reflect the brand essence as Karen once did.
Contd...

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Notes
The managers at the company believed that the brand’s creative expression of girl in the
waterfall has become outdated. It has lived its life. But actually the hangover still persists.
They have not deviated form its altogether. Be it Liril calendar or advertisements the signs
of the waterfall and the girl would always be visible. Beyond communication the brand
has also seem to have suffered on account of Lever’s inability to come out with right
product line in case Liril unlike they did for Lux and Lifebuoy. It is suggested that brand
has to discover new audacious paradigms and reach out to new horizons. It must transcend
its current expression then only is there some hope.

Many believe that brand failed to progress with time. The rapid changes executed in the
communications amounts to influencing the superficial. The fundamental problems plaguing
the brand were never unearthed. The tactics to correct immediate problems began to drive
the strategy. New variations and communications make the picture rosy for some time but
once the excitement period passes the sales tumble to their previous levels.

Alyque Padamsee who initially created the brand believes that Liril’s problems lie in the
fact that its original bathing experience has been replaced with unusual water experience.
The new ads like the pissing boy and the desert ad use the water but he questions where
the bathing experience in these is. Is it central to the idea of freshness? The brand seems to
have withered too far and beyond its original core idea. All the commercials are good to
look at but they fail to touch the heart. Many industry people believe that bringing back
those original commercial may be a good idea.

But how would that help? Brand’s current customers do not have any idea of those
advertisements of seventies. There are no nostalgic feelings. The customers to today are
fundamentally different form that of past. They look for more active participation in
everything. They don’t expect a brand to deliver a benefit rather they want to create an
experience by active participation. Presently Liril has three variants Liril Aloe Vera, Icy
Cool and Liril Orange.

Questions

1. Will marketing communication effect the position of brand? Discuss.

2. If you are the brand manager how you describe and differentiate liril to other same
category products of competitors.

Self Assessment

Choose the appropriate answer:

8. Which one not involve in famous 5 P’s concept

(i) Price

(ii) People

(iii) Place

(iv) Product

9. The key component of brand positioning

(i) Brand essence

(ii) Brand promise

(iii) Brand personality

(iv) All of the above

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10. A powerful brand positioning should Notes

(i) Admirable and endearing

(ii) Difficult to emulate

(iii) Only (i)

(iv) Both of (i) (ii)

10.7 Summary

 Brand judgements focus on customers’ personal opinions and evaluations with regard to
the brand.

 Brands should use brand resonance as a goal and a means to interpret their brand related
marketing activities.

 Ensuring the identification of the brand with customers, establishing the totality of brand
meaning in the minds of customers, eliciting the proper customer responses to this brand
identification and brand meaning, converting brand response to create an intense, active
loyalty relationship between customers and the brand are the four important steps in
building a brand.

 Brand salience, brand performance, brand imagery, brand judgements, brand feelings,
and brand resonance are the six main building blocks of a brand.

 Positioning is the last step in the marketing strategy formulation.

 Positioning is about building the image of a brand. It is about how the brand is going to
be perceived in the market.

10.8 Keywords

Product Positioning: This is the act of developing a product offer and selecting an image to
occupy a distinctive place in the minds of the target market.

Pro-environment approach to Positioning: This approach to positioning aims to show that the
company is a good citizen.

Public Relation: Public relations are the way a strong brand is truly established and advertising
is how the brand is maintained.

Brand Equity: Brand Equity is the sum total of all the different values people attach to the brand,
or the holistic value of the brand to its owner as a corporate asset.

Brand Feeling: Brand feelings relate to how the brand affects customers’ feelings about themselves
and their relationship with others.

10.9 Review Questions

1. What is brand positioning? How are particular brands positioned in the Indian market?

2. Distinguish between product segmentation, product positioning, product adoption and

product standardisation.

3. Define preference analysis. How it is useful in product positioning and segmentation?

4. What part do market research and product positioning play in the success of a product in
the market?

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Notes 5. How does the concept of shared characteristics relate to market segmentation?

6. Explain different types of brand-building feeling. Also discuss it is useful in brand

positioning or not.

7. Discuss something about powerful brands of the world. Also give some powerful brands
name of India.

8. Discuss how advertising play important role in brand positioning.

9. What do you mean by unique selling proposition?

10. Explain the benefits of strong brand.

Answers: Self Assessment

1. T 2. F

3. T 4. Brand performance

5. Brand feelings 6. (i)

7. (ii) 8. (ii)

9. (iv) 10. (iv)

10.10 Further Readings

Books U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.
Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Asker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand

Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

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Notes

Online links www.en.wikipedia.org

www.web-source.net

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Notes Unit 11: Planning and Implementing

Brand Marketing Programs

CONTENTS
Objectives
Introduction
11.1 Planning and Implementing Brand Marketing Programs
11.1.1 Decisions Relating to Brand Elements
11.1.2 Marketing Activities
11.2 Criteria for Choosing Brand Elements
11.2.1 Memorability
11.2.2 Meaningfulness
11.2.3 Likability
11.2.4 Transferability
11.2.5 Adaptability
11.2.6 Protectability
11.3 Options and Tactics for Brand Elements
11.3.1 Brand Names
11.3.2 URLs
11.3.3 Logos and Symbols
11.3.4 Characters
11.3.5 Slogans
11.3.6 Jingles
11.3.7 Packaging
11.4 Tactics to Create a Strong Brand
11.5 Integrated Marketing Communication
11.5.1 Growing Importance of IMC
11.6 Use of IMC for Brand Building
11.6.1 Tools of Integrated Marketing Communication
11.7 Leveraging Secondary Brand Associations to Brand Building
11.7.1 Primary Association
11.7.2 Secondary Association
11.7.3 Leveraging Secondary Associations
11.7.4 Co-Branding
11.7.5 Ingredient Branding
11.7.6 Celebrity Endorsement
11.7.7 Sporting, Cultural, or Other Events
11.8 Summary
11.9 Keywords
11.10 Review Questions
11.11 Further Readings

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Objectives Notes

After studying this unit, you will be able to:

 Know the Criteria for Choosing Brand Elements

 Discuss the Options and Tactics for Brand Elements

 Explain the Tactics to Create a Strong Brand

 Provide insight into Integrated Marketing Communication

 Identify the Use of IMC for Brand Building

 Discuss the Leveraging Secondary Brand Associations to Brand Building

Introduction

Many practicing managers refer to a brand in terms of certain amount of awareness, reputation,
and prominence and so on in the market place. The key to creating a brand is to be able to choose
a name, logo, symbol, package, design or other attribute that identifies a product and distinguishes
it from others. The different components of a brand that identifies and differentiate a product
can be called brand elements. Brand elements can be chosen in a manner to build as much brand
equity as possible. This unit considers how different brand elements can be chosen to build
brand equity.

11.1 Planning and Implementing Brand Marketing Programs

Building brand equity requires creating a brand of which consumers are sufficiently aware and
with which they have strong favorable and unique brand associations. This knowledge building
process depends on the following two factors:

1. The initial choice of the brand elements or identities making up the brand.

2. The marketing activities and supporting marketing programme and the manner in which
the brand is integrated into them (designing marketing programmes to build brand equity).

11.1.1 Decisions Relating to Brand Elements

Brand elements also known as brand identities, are those trademarkable device that serve to
identify and differentiate the brand. The main brand elements include brand names, logos and
symbols. Although marketers need to constantly manage the elements of brands. Marketers
should keep in mind the following criteria when choosing brand elements.
1. Brand elements can be chosen to be inherently memorable, both in terms if brand recall
and recognition.
2. Brand elements can be chosen to be inherently meaningful so that they convey information
about the nature of the product category or particular attributes and benefits of a brand, or
both. The brand element may also reflect brand personality, user or usage imagery, or
feeling for the brand.

3. The information conveyed by brand elements does not necessarily have to relate to the
product alone and may simply be inherently appealing or likeable.
4. Brand elements can be chosen to be transferable within and across product categories and
across geographic and cultural boundaries and market segments.

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Notes

Notes Brand elements can be chosen to be are legally protectable and as far as possible,
competitively defensible.

11.1.2 Marketing Activities

Brand managers have found that communication through traditional mass media has been
ineffective, inefficient and costly. As a result these organizations have long relied on alternative
channels to create brand awareness, convey brand associations and develop loyal customer
bases. New approaches, such as relationship marketing mass customization, after marketing
and loyalty programmes can help marketers to design marketing programmes.

11.2 Criteria for Choosing Brand Elements

In general, there are six criteria in choosing brand elements and these criteria are:

1. Memorability

2. Meaningfulness

3. Likability

4. Transferability

5. Adaptability

6. Protectability

Box 11.1

1. Memorable
(a) Easily recognized
(b) Easily recalled
2. Meaningfulness
(a) Descriptive
(b) Persuasive
3. Likable
(a) Fun and interesting
(b) Rich visual and verbal imagery
(c) Aesthetically pleasing
4. Transferable
(a) Within and across product categories
(b) Across geographic boundaries and cultures
5. Adaptable
(a) Flexible
(b) Updateable
6. Protectable
(a) Legally
(b) Competitively

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The first three criteria – memorability, meaningfulness, and likability – can be characterized as Notes
“brand building” in nature and concern how brand equity can be built through the judicious
choice of a brand element. The latter three, however are more “defensive” in nature and are
concerned with how the brand equity contained in a brand element can be leveraged and
preserved in the face of different opportunities and constraints.

11.2.1 Memorability

A necessary condition for building brand equity is achieving a high level of brand awareness.
Toward that goal brand elements can be chosen that are inherently memorable and therefore
facilitate or recognition in purchase or consumption settings.

In other words, the intrinsic nature of certain names, symbol, logos, and the like-their semantic
content, visual properties and so on-may make them more attention getting and easy to remember
and therefore contribute to brand equity.

Example: Naming a brand of propane gas cylinders “ Blue Rhino” and reinforcing it
with a powder-blue mascot with a distinctive yellow flame is likely to stick in the minds of
consumers.

11.2.2 Meaningfulness

Besides choosing brand elements to build awareness, brand elements can also be chosen whose
inherent meaning enhances the formulation of brand associations. Brand elements may take on
all kind of meaning, varying in descriptive, as well as persuasive, content.

Example: Brand name could be based on people, places, animals or birds, or other things
or objects.

Two particularly important dimensions or aspects of the meaning of a brand elements are the
extent to which it conveys the following:

1. General information about the nature of the product category: In terms if descriptive
meaning, to what extent does the brand element suggest something about the product
category? How likely would it be that a consumer could correctly identify the corresponding
product category or categories for the brand based on any one particular brand element?
In a related question does the brand element seem credible in the product category?
In other words, is the content of a brand element consistent with what consumers would
expect to see from a brand in that product category?

2. Specific information about particular attributes and benefits of brand: In terms of

persuasive meaning, to what extent does the brand element suggest something about the
attributes or benefits of the brand of product.

Example: In terms of key attributes or benefits, it suggest something about a product

ingredient or the type of person who might use the brand.

Task Explain why memorability play vital role for choosing brand element.

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Notes 11.2.3 Likability

The association suggested by a brand element may not always be related to the product. Thus,
brand elements can be chosen that are rich in visual and verbal imagery and inherently fun and
interesting. Independent if its memorability and meaningfulness, how aesthetically appealing
do consumer find the brand element? Is it inherently likable, both visually, verbally, and in
other ways? In other words, independent of the particular product or service, how much would
consumers like the brand element?

In terms of these first three criteria, a memorable, meaningfulness, and likable set of brand
elements offers many advantages. Because consumers often do not examine much information
in making product decision, it is often desirable that brand elements be easily recognized and
recalled and inherently descriptive and persuasive. Moreover, memorable or meaningful brand
names, logos, symbols, and so on reduce the burden on marketing communication to build
awareness and link brand association. The different associations that arise from the likability
and appeal of the brand elements also may play a critical role ion the equity of a brand, especially
when few other product-related associations exist. Often, the less concrete the possible product
benefits are, the more important is the creative potential of the brand name and other brand
elements to capture intangible characteristics of a brand.

11.2.4 Transferability

The transferability of the brand element – in both a product category and geographic sense. First
to what extent can the brand element add to the brand equity of new products sharing the brand
elements introduced either within the product class or across product classes? In other words,
how useful is the brand element for line or category extensions? In general, the less specific the
name, the more easily it can be transferred across categories.

Example: Amazon connotes a massive South American river and therefore as a brand
can be appropriate for a variety of different types of products, whereas Toys “R” Us obviously
does not permit the same flexibility.

Second, to what extent does the brand element add to brand equity across geographic boundaries
and market segments? To a large extent this depends on the cultural content and linguistic
qualities of the brand element.

Example: One of the main advantages of non-meaningful names (e.g., Exxon) is that they
translate well into other languages since they have no inherent meaning.

The mistakes that even top companies have made in translating their brand names, slogans, and
packages into other languages and cultures over the years have become legendry.

11.2.5 Adaptability

The fifth consideration concerns the adaptability of the brand element over time. Because of
changes in consumer values and opinions, or simply because of a need to remain contemporary,
brand elements often must be updated over time. The more adaptable and flexible the brand
element, the easier it is to update it.

Example: Logos and characters can be given a new look or a new design to make them
appear more modern and relevant.

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11.2.6 Protectability Notes

The sixth and final general consideration concerns the extent to which the brand element is
protectable–both in a legal and competitive sense. In terms of legal considerations it is
important to:

1. Choose brand elements that can be legally protected on an international basis.

2. Formally register them with the appropriate legal bodies.

3. Vigorously defend trademarks from unauthorized competitive infringement.

The necessity of legally protecting the brand is dramatized by the billions of dollars in losses in
the United Sates alone from unauthorized use of patents, trademarks, and copyrights.

A closely related consideration is the extent to which the brand element is competitively
protectable. Even if a brand element can be protected legally, it still may be the case that
competitive actions can take away much of the brand equity provided by the brand elements
themselves. If a name, package, or other attribute is too easily copied, mush of the uniqueness if
the brand may disappear.

Example: Consider the ice beer category. Although Molson Ice was one of the early
entries in the category, its pioneering advantage from a branding standpoint was quickly lost
when Miller Ice and what later became Bud Ice were introduced. Thus, it is important to reduce
the likelihood that competitors can imitate the brand by creating a derivative based on salient
prefixes or suffixes of the name, emulating the package look, or other actions.

Self Assessment

Choose the appropriate answer:

1. Which one not include in brand element.

(i) Brand name

(ii) Logos

(iii) Size

(iv) None

2. Criteria in choosing brand elements:

(i) Meaningfulness

(ii) Likability

(iii) Transferability

(iv) All

11.3 Options and Tactics for Brand Elements

The value of choosing brand elements strategically to build brand equity can be seen by
considering the advantage of having chosen “Apple” as the name for a personal computer.
Apple was a simple but well-known word that was distinctive in the product category-factors
facilitating the development of brand awareness. The meaning of the name also gave the company
a “friendly shine” and warm brand personality. Moreover, the name could be reinforced visually
with a logo that could easily transfer across geographic and cultural boundaries. Finally, the

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Notes name serve as a platform for sub-brands (e.g., as with the Macintosh), aiding the introduction of
brand extensions. Thus, as the Apple example illustrates the judicious choice of a brand name
can make an appreciable contribution to the creation of brand equity.

What would an idea brand element to be liked? Consider brand names-perhaps the most central
of all brand element. Ideally, a brand name would be easily remembered, highly suggestive of
both the product class and the particular benefits that served as the basis of this positioning,
inherently fun or interesting. Rich with creative potential, transferable to a wide variety of
product and geographic settings, enduring in meaning and relevant over time, and strongly
protectable both legally and competitively.

Unfortunately, it is difficult to choose a brand name, or any brand element for that matter, that
would satisfy all of these different criteria.

Example: As noted earlier, the more meaningful the brand name, the more likely is it
that the brand name will not be very transferable to other cultures due to translation problems.
Moreover, brand names are generally less adaptable over time. Because it is virtually impossible
to find one brand element that will satisfy all the choice criteria, multiple brand elements are
typically employed.

A variety of brand elements can be chosen that inherently enhance brand awareness or facilitate
the formation of strong, favorable, and unique brand associations.

1. Brand names

2. URLs

3. Logos and symbols

4. Characters

5. Slogans

6. Packaging

11.3.1 Brand Names

The brand name is a fundamentally important choice because it often capture the central theme
or key associations of a product in a very compact and economical fashion. Brand names can be
an extremely effective shorthand means of communication. Whereas the time it takes consumers
to comprehend marketing communications can range from a half a minute to potentially hours,
the brand name can be noticed and its meaning registered or activated in memory within just a
few second.

Like any brand element, brand names must be chosen with the six general criteria of
memorability, meaningfulness, likability, transferability, adaptability, and protectability in
mind.

The name of a brand is the first and probably the greatest expression or “the face” of a product.
The huge complexity of names and their associations has led to a new profession of naming
companies, products, or services. All names usually have some kind of associated image, whether
it is cultural, linguistic or personal. Brand names should be chosen very carefully since they
convey important information to stakeholders. This is especially true for brands that intended
to cross geographic and cultural boundaries; it is a very challenging task to find the right name
for different audiences.

The extraordinary power of a name can be exemplified by the following case. In 1969 Sir Roger
Penrose, a Cambridge physicist, announced his discovery of what he called a “gravitationally

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totally collapsed object” while speaking at a small scientific conference. The response to it was Notes
quite unspectacular but when he changed his description to call it the “black hole” months later,
the news of his discovery raced around the world. Today, the term “black hole” is a part of every
day language.

A well-chosen name for a company, product, or service can be a valuable asset, just like the
brand itself. The name directly affects the perception of the brand. We hear and read various
brand names many times every day, in emails, business cards, brochures, websites, and product
packages. The brand name will be used in every form of communication between a company
and its prospective customers. An ineffective brand name can hinder marketing efforts, because
it can lead to miscommunication if people can’t pronounce it or remember it. Ultimately, the
brand name is the expression that conveys all the values and promises of a company. In order to
build a brand it is essential to continually keep the name present.

Certain factors should be considered before selecting a brand name. They are as follows:

1. Distinguish the product from competitive brands

2. Memorable and easy to pronounce

3. Easy to say, spell and pronounce

4. It should allude to the product

5. Negative or offensive references should be avoided

6. Evoke positive mental image

7. Evoke positive emotional reaction

8. Suggest product function or benefits

9. Simple

10. Sound appropriate

11. Be unique

12. Possibly, translate well in other languages too.

Naming Guidelines: Selecting a brand name for a new product is certainty an art and a science.
This section provides some general guidelines for choosing a name. It focus on developing a
completely new brand name for the product. Box 11.2 display the different types of possible
brand names according to identify experts Landor Associates. As with any brand element, brand
names must be chosen with the six general in mind.

Box 11.2: Landor’s Brand Name Taxonomy

1. Descriptive: Describe function literally; generally un-registerable. For example,

Singapore Airlines, Global Crossing
2. Suggestive: Suggestive of a benefit or function. For example, MarchFIRST. Agilent
Technologies
3. Compounds: Combination of two or more, often unexpected, words. For example,
redhat
4. Classical: Based on Lain Greek, or Sanskrit. For example, Meritor
5. Arbitrary: Real words with no obvious tie-in to company. For example, Apple
6. Fanciful: Coined words with no obvious meaning. For example, avanade

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Notes 11.3.2 URLs

URLs (Uniform Resource Locators) specify locations of pages on the web and are also commonly
referred to as domain names.

A company can either sue the current owner of the URL for copyright infringement, buy the
name from the current owner, or register all conceivable variations of its brand as domain
names ahead of time.

11.3.3 Logos and Symbols

The logo is the “graphic look” of the brand name or company. Too often, small and medium-
sized companies use a logo which is clearly the work of a member of the family or a friend who
is considered to have some artistic talent. Frugality in general may be a virtue but skimping on
your companies brand design is definitely not worth the effort. If a logo fails to communicate
and express what the company represents, it is a wasted opportunity.

A good logo fulfills both graphic and functional imperatives. In order to do so, brand architects
have to keep the big in mind.

Corporate values and characteristics need to be reflected in the logo and the brand should be
safely incorporated in the overall marketing strategy. It can be said that this is true for every
aspect of a corporation’s visual identity.

By creating a powerful visual image for a company, it will achieve not just a name display but
a long-lasting image that connects customers with your brand. But the power of symbols should
not be underestimated, since human tend to be more receptive to images and symbols than
anything else. The old adage “one picture is worth a thousand words”, holds quite a lot of
scientific truth in it. A strong logo can provide cohesion and structure to the brand identity,
facilitating recognition and recall. It is easier to communicate an attribute or value by using a
symbol than to use factual information, especially in the B2B area where complex functional
benefits need to be explained in a vivid and memorable way.

The company logo is the cornerstone of the firm’s branding elements. For many firms the logo
is the visual reminder of everything that the firm stands for. While a great logo won’t necessarily
build the firm, it plays a vital role in representing it. Conversely, a weak or confusing logo can
detract from the value that the firm brings.

Elements of a Good Logo: The elements of a good logo are:

1. It has a lasting value - trendy logos don’t hold up over time.

2. It is distinct - some amount of uniqueness, as long as it doesn’t confuse, is valuable.

3. Appeals to your target market - if your target market is partial to blue then it doesn’t
matter that you’re not.

4. Supports your USP - If you are trying to communicate your low prices then your logo
should support that image.

5. Legible - This seems pretty obvious but many people use typefaces and images that can’t
be printed or carried to a large sign. Your logo should clearly identify your company and
it can’t do that if people don’t understand it.

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Benefits of Logos Notes

1. Because of their visual nature, logos and symbols are often easily recognized and can be a
valuable way to identify products.
2. Another branding advantage of logos is their versatility. Because logos are often
non-verbal, they can be updated as needed over time and generally transfer well across
cultures.
3. Because logos are often abstract, without much product meaning, they can be relevant and
appropriate in a range of product categories. For example, corporate brands often develop
logos because their identity may be needed on a wide range of products.
4. Logos and symbols can be particularly important in services because of their intangible,
abstract nature. For example, many insurance firms use symbols of strength security.
(E.g., logo of Life Insurance Corporation).
5. Unlike brand names, logos can be easily changed over time to achieve a more contemporary
look.

Task List any 10 brand name which one use by you in daily life regularly.

11.3.4 Characters

A special type of brand symbol-one that takes on human or real-life characteristics. Some are
animated like Pillsbury’s Poppin’ Fresh Doughboy, Peter Pan peanut butter’s character, and
numerous cereal characters such as Tony the Tiger, Cap’n Crunch, and Snap, Crackle & Pop.

Others are live-action figures like Juan Valdez (Colombian coffee), the Maytag repairman, and
Ronald McDonald. Notable newcomers include the AOL running man, the Budweiser frogs, and
the AFLAC duck.

11.3.5 Slogans

Slogans are short phrases that communicate descriptive or persuasive information about the
brand.
Slogans are powerful branding devices because, like brand names, they are an extremely efficient,
shorthand means to build brand equity.
Classic Slogans: Some classic slogans are:
1. “Melts in your mouth, not in your hands” (M&M’s)
2. “Sometimes you feel like a nut, sometimes you don’t” (Almond Joy/Mounds)
3. “Where’s the beef?” (Wendy’s)
4. “A mind is a terrible thing to waste” (United Negro College Fund)
5. “Can you hear me now?” (Verizon)

Benefits of Slogan

1. Slogans can be devised in a number of ways to help build brand equity. Some slogans help
to build brand awareness by playing of the brand name in some way (Thumps up, Taste
the Thunder, Mango Fruity, Fresh and Juicy etc.).

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Notes 2. Other slogans build brand awareness even more explicitly by making strong links between
the brand and the corresponding product category by combining both entities in the
slogan (e.g., “If You’re Not Wearing Dockers. You’re Just Wearing Pants”).

3. Slogans can help to reinforce the brand positioning and desired point of difference.

4. Slogans often closely tied to advertising campaigns and can be used as tag lines to
summarize the descriptive or persuasive information conveyed in the advertisements.

11.3.6 Jingles

Jingles are musical messages written around the brand. Typically composed by professional
songwriters, they often have enough catchy hooks and choruses to become almost permanently
registered in the minds of listeners–sometimes whether they want them to or not!
Jingles are perhaps most valuable in enhancing brand awareness.

11.3.7 Packaging

From the perspective of both the firm and consumers, packaging must achieve a number of
objectives:

1. Identify the brand

2. Convey descriptive and persuasive information

3. Facilitate product transportation and protection

4. Assist at-home storage

5. Aid product consumption.

Benefits of Packaging

Packaging can have important brand equity benefits for a company. Often, one of the strongest
associations that consumers have with a brand relates to the look of its packaging. Structural
packaging innovations can build or reinforce valuable brand associations. New packages can
also expand a market and capture new market segments.

Self Assessment

Fill in the blanks:

3. ............................ specify locations of pages on the web and are also commonly referred to
as domain names.

4. The ............................ is the “graphic look” of the brand name or company.

5. ............................ are short phrases that communicate descriptive or persuasive information

about the brand.

11.4 Tactics to Create a Strong Brand

There are some tactic mentioned below used for build a strong brand:

1. Visual Identity: The footprint of a brand-your corporate identity, graphic system, or

visual voice–can take your brand many good places. It can also head you straight into a
wall if it does not accurately project what the brand is and consistently stick to the story.

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2. Advertising: Advertising can be used to generate leads, sell product, advocate beliefs, Notes
persuade, calm unrest, and build brands. Advertising is the act of paying to showcase a
message, and more. Advertising gives the brand builder a high-speed lane to the market.
On the other hand, it is not immune to falling trees, lightning, bad weather, careless
drivers, or an occasional competitor with wings. Smart advertising can fertilize the brand
soil and aid in the brand’s growth.


Case Study Brand Building through Advertising

D
omino’s and Pizza Hut initially restricted their ad strategy to banners, hoardings
and specific promotions. By March 2000, Domino’s opened 37 outlets all over
India. In August 2000, it launched the ‘Hungry Kya? (Are You Hungry?)’ sequence
of advertisements on television. A company official said, “We realized that a Pizza couldn’t
be slotted - it could be a snack; then again, it could also be a complete meal” The only
definitive common link between Domino’s Pizzas and eating was the hunger platform.
The launch of ‘Hungry Kya?’ campaign coincided with Domino’s tie-up with Mahanagar
Telephones Nigam Ltd. (MTNL) for the ‘Hunger Helpline’. The helpline enabled the
customers to dial a toll-free number (1600-111-123) from any place in India. The number
automatically hunted out the nearest Domino’s outlet from the place where the call was
made and connected the customer for placing the order. The number also helped Domino’s
to add the customer’s name, address and phone number to its database.
This was followed by Pizza Hut’s first campaign on television in July 2001, which said,
‘Good times start with great pizzas’. The ad was aired during all the important programs
on Star Plus, Sony, Sony Max, Star Movies, HBO, AXN, and MTV. Pizza Hut planned to
spend between ` 70-75 million on the ad campaign in 2001. Said Pankaj Batra, “The first ad
campaign on TV defines Pizza Hut as a brand, and what it offers to its existing and
potential customers. Once the awareness of this message is high, we will focus on other
facets of the brand and its offerings.”
Between April 2000 and February 2001, Domino’s set up 64 more outlets in India. Delhi
had the maximum number of outlets - 17, followed by Mumbai with 13. Domino’s had the
largest retail network in the fast food segment in India- with 101 outlets across 40 cities.
Domino’s had a tie-up with a real estate consultant Richard Ellis to help with locations,
conduct feasibility studies, and manage the construction. It was also looking at
non-traditional outlets like large corporate offices, railway stations, cinema halls and
university campuses. In early 2000, Domino’s had opened an outlet at Infosys, Bangalore,
which was very successful. It also had outlets at cinema halls - PVR in Delhi, Rex in
Bangalore, and New Empire in Kolkata.
By January 2001, Pizza Hut had 19 outlets across India. In a move to expand further, Pizza
Hut planned to open an additional five restaurants in Mumbai and 30 restaurants across
major cities in India, by 2001 end. Tricon announced that the company would invest ` 30
million on each of the restaurants. In March 2001, Pizza Hut opened its first three-storeyed
125-seater dine-in restaurant at Juhu in Mumbai. Said a company official, “We are expanding
the number of restaurants across the major cities to cater to today’s youth which has taken
to pizzas as a cuisine.”

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Notes
Questions
1. Domino’s entered India at a time when Pizza Hut and McDonald’s were already in
the market. What was the strategy adopted by Domino’s to make a dent in the
Indian market?
2. ‘Database Marketing was an important part of the strategy in the Pizza Industry.’
Comment.
3. Though Pizza Hut entered India before Domino’s, it eventually lost its share to
Domino’s. How can Pizza Hut counter the competition from Domino’s?
Source: www.icmrindia.org

3. Brand Partnerships: Sometimes two brands are better than one. Collaboration with other
brands, vendors, and distribution channels not only adds firepower and reduces costs, but
it ultimately can strengthen a brand.

Partnerships can be as simple as two brands co-hosting an event or as formal as an

agreement involving new selling channels, co-op ad spending, joint research, and licensing
contracts. When choosing any brand partner, you should adhere to an established set of
guidelines that complement your brand and meet business goals.

4. Media Relations: Twenty-four-hour news, free-flowing information, and breaking reports

offer vast opportunities to get your brand message out with an added layer of authority
and third-party endorsement. Despite the cynics, the media has immense influence on the
market.

Organizations that don’t take full advantage of this powerful vehicle will miss sales,
stature, and a substantial brand bang.

5. Community Relations: Community relations encompasses any niche community where

having a strong positive relationship is important and valuable to the brand and the
market you serve. For many organizations, this includes your category industry and
nonprofit interests.

6. Sales Promotions/Events: Promotions are any activities that stimulate purchasing.

Promotions can work well in both consumer markets and the business-to-business space
if planned and executed correctly. A great sales promotion can launch new products,
reintroduce new and improved ones, clean out an old line or inventory, synergize
co-brands, cross-sell among product lines, arouse loyalty, and entice first-time sampling
or trial purchases.

7. Customer Service: Serving customers seems like a simple task, yet many savvy business
leaders are blind to the huge service cracks in their business. A crack in service is extremely
dangerous. One too many rude encounters, another insensitive act, or a downright bitter
battle, and your customer will not only make you history, but his rage can spread like
wildfire and burn up even the best brand.

8. Sales: Selling with brand in hand shortens the distance to the finish line. Selling today is
no cakewalk. New products, trillions of choices, and floods of options surround us. Pressure
is high, competition is everywhere, and the economy is faltering. So what. Quit your
whining. Add some brand to your sales arsenal, and the process gets easier and more
effective.

9. The Environment and Merchandising: Visual seduction is not just for retailers.
Merchandising and environmental branding needs more respect. Once thought of as merely
decorative displays or point-of-purchase sale stimulators, today merchandising and the
environment are a significant brand-building tactic.

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10. Online: Building a brand, one thousand clicks at a time: Online technology has catapulted Notes
the brand like no other tactic. The impact on all business sectors and models is immense.
Small companies can be global. Virtual stores can operate without inventory. Time to
market is condensed to a warp speed, and the customer has more options and choices than
ever before. As with every new horizon, there lie vast opportunities and difficult challenges.

11. Alternative and Buzz Activities: Guerrilla or alternative marketing has no rules. The
more you can get away with, the better. Such campaigns are non-traditional. They disrupt
and surprise. They can be crazy, irreverent, or bizarre, and many times they are extremely
potent and effective for a lot less money than the ordinary campaigns.

Tasks How media relation helpful for creating a strong brand?

11.5 Integrated Marketing Communication

Integrated Marketing Communications is a term used to describe a holistic approach to marketing

communication. It aims to ensure consistency of message and the complementary use of media.
The concept includes online and offline marketing channels. Online marketing channels include
any e-marketing campaigns or programs, from Search Engine Optimization (SEO), pay-per-
click, affiliate, email, banner to latest web related channels for webinar, blog, micro-blogging,
RSS, podcast, and Internet TV. Offline marketing channels are traditional print (newspaper,
magazine), mail order, public relations, industry relations, billboard, radio, and television.
A company develops its integrated marketing communication programme using all the elements
of the marketing mix (product, price, place, and promotion).

Integrated marketing communication is integration of all marketing tools, approaches, and

resources within a company which maximizes impact on consumer mind and which results into
maximum profit at minimum cost. Generally marketing starts from “Marketing Mix”. Promotion
is one element of Marketing Mix. Promotional activities include Advertising (by using different
medium), sales promotion (sales and trades promotion), and personal selling activities. It also
includes internet marketing, sponsorship marketing, direct marketing, database marketing and
public relations. And integration of all these promotional tools along with other components of
marketing mix to gain edge over competitor is called Integrated Marketing Communication.

11.5.1 Growing Importance of IMC

Several shifts in the advertising and media industry have caused IMC to develop into a primary
strategy for marketers:
1. From media advertising to multiple forms of communication.
2. From mass media to more specialized (niche) media, which are centered around specific
target audiences.
3. From a manufacturer-dominated market to a retailer-dominated, consumer-controlled
market.
4. From general-focus advertising and marketing to data-based marketing.
5. From low agency accountability to greater agency accountability, particularly in advertising.
6. From traditional compensation to performance-based compensation (increased sales or
benefits to the company).
7. From limited Internet access to 24/7 Internet availability and access to goods and services.

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Notes 11.6 Use of IMC for Brand Building

Communication is always one of the most important and vital strategic areas of an organization’s
success. You can have the best or most innovative products or services, but if your internal and
external communications are weak, then the demand for your products or services raises a
personal flag of concern. When communicating the value of your products or services, you want
to focus on how they will benefit your clients.

When planning your strategy for Integrated Marketing Communication or IMC, you want to
have dialogue with your customers by inviting interaction through the coordinated efforts of
content, timing and delivery of your products or services. By ensuring direction, clarity,
consistency, timing and appearance of your messages, conveyed to your targeted audience,
these factors will help avoid any confusion about the benefits of your brand, through the
connection of instant product recognition.

When looking at your marketing mix, you’re examining price, distribution, advertising and
promotion, along with customer service. Integrated marketing communication is part of that
marketing mix included in your marketing plan. IMC strategies define your target audience,
establishes objectives and budgets, analyzes any social, competitive, cultural or technological
issues, and conducts research to evaluate the effectiveness of your promotional strategies.

It is impossible to talk about IMC without talking about brand. That is because brand building
relies on creation and nurturing of profitable relationships to meet objectives, which is the goal
of all IMC processes. IMC devises strategies to use MCs to create and build brand for individual
audiology practices. IMC has important characteristics (Figure 11.1), are:

1. Continuous and circular, with no beginning or end as long as the practice is alive.

2. Data-driven, using information collection and feedback from Customer Relationship

Management (CRM) technology to develop messages and dialog with target markets.

Figure 11.1: IMC Process

Figure 11.1, IMC process is circular and data driven, using database information to link consistent
and continuously refined messaging and dialog with target markets in an accountable manner.
IMC can use any mix of MC components (center box), depending on the audiology practice.

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3. Customer-centric, focusing on target market needs and wants rather than on specific Notes
products and technologies.

4. Strategic, creating a consistent meaning in all messages and dialog.

5. Nurturing, “growing” customers by finding new ways to increase their satisfaction.

6. Profitable, focusing on lucrative relationships to make them more worthwhile.

7. Integrated, ensuring that all messages and all personnel work together to speak with one
voice.

8. Accountable, viewing marketing expenditures as short and long-term investments to

meet objectives (MROI) rather than expenses to be minimized.

9. Independent of any specific marketing mix, recognizing that each practice is unique.

11.6.1 Tools of Integrated Marketing Communication

The basic tools of integrated marketing communication help for brand building are:

1. Advertising: This tool can get your messages to large audiences efficiently through such
avenues as radio, TV, Magazines, Newspapers (ROP), Internet, Billboards and other mobile
technological communication devices. This method can efficiently reach a large number
of consumers, although the costs may be somewhat expensive.


Case Study Levis: Aiming at the Echo Boomers

I
n 1986, Levi Strauss & Company found that the best way to stay true blue to its
customers was to change its colors. Riding high on the results of a recent “back to
basis” campaign with its flagship 501 brand, Levi’s was enjoying reinvigorated jeans
sales. But the good news was followed by bad. Research showed that baby boomers, the
core of the company’s customer franchise, were buying only one or two pairs of jeans
annually, compared to the four to five pairs purchased each year by 15 to 24-year-olds.

Born between 1946 and 1964, the baby boomers had adopted jeans as a symbol of their
break with the tastes and traditions of their parents. They had, in the words of Steve
Goldstein, vice president of marketing and research for Levi’s, helped turn the company
into an “international global colossus” in the apparel industry. Now, however, the baby
boomers were looking for something different. They still wanted clothing that was
comfortable and made from natural fabrics, but fashion had become more important.
Many worked in environments with relaxed dress codes, so they sought clothing that
combined style and versatility-something appropriate for both professional and leisure
activities.

“We set ourselves out to answer the big question,” Goldstein says. “How could we keep
the baby boomer generation in Levi’s brands when they weren’t wearing so many pairs of
Levi’s jeans? And the answer was Dockers, something between the jean that they loved
and the dress pants that their parents expected them to wear when they got their first job.”

Dockers created a product category-new casuals. Blue denim was out; cotton khaki (in
brown, green, black, and navy, but mostly traditional tan) was in. Positioned as more

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Notes formal than jeans yet more casual than dress slacks, Docker’s satisfied an unfulfilled need.
They were the right pants for a variety of occasions, an unpretentious alternative to
dressy, tailored slacks. The challenge in marketing Dockers was to leverage the Levi’s
name and heritage while establishing the independence of the new brand, and to do so
without detracting from Levi’s core jeans focus. According to Goldstein, the company
briefly considered not using the Levi’s name at all, but realized that this would be “sort of
like trying to put a space shuttle up without any launch rockets.” So the original theme for
Dockers was “Levi’s 100 percent cotton Dockers. If you’re not wearing Dockers, you’re just
wearing pants.”
Response from retailers and from the target market of 25 to 49-year-old was everything
Levi’s hoped for. All the top men’s wear accounts across the country placed the new
product in their stores, and in only five years, Dockers became a $1 billion brand. Brand
awareness among men 25 and older was 98 percent, and 70 percent of target consumers
had at least one pair of Dockers in their closets. With the new brand sailing along smoothly,
Levi Strauss & Company began to dissociate Dockers from the company brand name.
In 1993, the Levi’s name and the words “since 1850” were removed from the Dockers logo.
Robert Hanson, vice president of marketing and research for Dockers, claims the change
was needed to “allow the Levi’s brand to be focused on the core teen target because…it’s
the quintessential icon of youth culture.”
Still following the baby boomer market, Levi’s in 1996 brought out Slates, an extensive
line of wool, polyester microfiber, and fine-gauge cotton dress pants. “We thought there
was room in a man’s closet for a third brand,” says Jann Westfall, president of the Slates
division. “That’s why Slates was created to [fill the gap] between khakis and suits.”
To Levi Strauss & Company, it seemed a natural evolution-the guy who wore Levi’s in the
’70s and Dockers in the ’80s would be ready for Slates in the ’90s. Slates would be the high
end of casual, neatly filling the “lunch with client/salary review with boss” role in the
Docker man’s wardrobe.
Consumer research told Levi’s that consumers found shopping for dress pants a chore:
slacks departments were dreary; finding the right size was difficult; and getting alterations
was frustrating. Consumers wanted cash and carry, off-the-rack dress pants. So Levi’s
devised a carefully crafted strategy to overcome the typical male distaste for dress pants
shopping. Slates were sold in scientifically tested selling areas consisting of mahogany-
toned circular store displays that allowed easy access to the various styles and sizes. Levi’s
also responded with off-the-rack pants that require little altering. Whereas most dress
pants come only in even waist sizes, forcing alterations for off-size men, Slates also come
in odd sizes. All Slates are hemmed and cuffed and have double pleats in the front. For
customers with larger waist sizes, the pleats are more kindly placed.
Levi’s backed Slates with $20 million in advertising, beginning with television ads at the
opening of the National Football League season. To charm potential customers, Levi’s
agency designed ads such as one showing a guy springing up from lunch with his partner
to tango with his waitress. “The ads are stylish but they are not over [the market’s] heads,”
said Nancy Friedman, vice president of research and development. “The trick is to rein it
back in so it isn’t so chi-chi that people can’t relate to it.” A year later, everyone agreed that
Slates was a dynamite brand. Levi’s had turned on the Dockers customer to dress slacks
just when “corporate casual” started to “dress up.” Noted one industry insider, “Slates and
other labels have pushed the envelope. This has created a tremendous consumer awareness
for slacks in general.” Some retailers found that their tailored pants business was up 15 to
20 percent.
However, just like the good news about Levi’s “back to basics” move a decade earlier, the
good news about Slates has been accompanied by bad news-plummeting market share in
the core jeans market. Although Levi Strauss had 30.9 percent of the U.S. blue jeans business
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in 1990, it had only 18.7 percent seven years later. Worse yet, Levi’s sales to teens, the core Notes
blue jeans buyers, had dropped from 33 percent in 1993 to 26 percent in 1997. Once the
darling of the 15 to 24-year-old buyer, Levi’s now faces indifference in this segment and an
attitude that Levi’s are “your dad’s pants.” The bottom-line message: Levi’s are uncool.
Male teenagers increasingly prefer brands like Tommy Hilfiger and Old Navy. Even the
young women who have been more inclined buy Levi’s are moving toward brands such
as Calvin Klein, Gap, and Guess. Levi’s is being squeezed by upscale brands like Tommy
Hilfiger and Ralph Lauren on one end and private label or store brands on the other.
It’s a classic marketing goof: Levi’s lost sight of the market that launched it to success. By
concentrating on Dockers, and more recently on Slates, executives were distracted from
the threat to the core jeans business. “They missed all the kids and those are your future
buyers,” says Bob Levi, owner of Dave’s Army & Navy Store in New York. “It’s very
important that you attract this age group,” says Gordon Hart, vice-president of the Lee
brand at VF Corp. “By the time they’re 24, they’ve adopted brands that they will use for
the rest of their lives.” Moreover, the younger segment sets fashion trends that influence
older shoppers. The mistake has been costly: falling sales and market share forced Levi’s
to lay off 1,000 salaried workers in February 1997, and to shutter 11 plants and lay off one-
third of its North American workforce in November of that year.
What is Levi’s doing to fix the problem? It’s pumping up the Silver Tab brand, an eight-
year-old jeans line considered more stylish among young consumers. Silver Tab has a
baggier fit and uses non-denim fabrics. The median age of a Silver Tab buyer is 18,
compared to 25 for Levi’s other products. Levi’s plans to expand the line to include more
tops, more trendy styles, and new khaki pants. The company also plans to boost Silver
Tab promotional spending fivefold for events such as concerts in New York and San
Francisco, for up-and-coming bands playing music known as Electronica, and for outfitting
characters on hot television shows such as Friends and Beverly Hills 90210.
Levi’s is also taking action on the retail front. In 1998, Levi’s will introduce jazzier, more
colorful packaging aimed at giving its products a more exciting, youthful look. It has dropped
plans to open 100 new stores in malls across the country in favor of NikeTown-type stores,
which will serve as the company’s flagship outlets in large cities. Holding nothing sacred in
its quest to reposition itself in younger segments, Levi’s is also searching for a new ad
agency to replace Foote, Cone and Belding, which has been the Levi’s agency for more than
sixty years. And the company is recruiting more outside managers. “[Levi Strauss &
Company] has always been insular, paternalistic, and, quite frankly, a little smug” says
Isaac Lagnado, president of Tactical Retail Solutions. All that appears to be changing.
Will the new strategy work? Many industry insiders think that Levi has the money and
market clout to pull it off. But didn’t we just read that some of those trendy new styles for
Silver Tab include khakis? Doesn’t that sound like Dockers? And speaking of Dockers,
Levi’s may have a problem making that brand relevant to the next generation of young
men. Baby boomers who are aging out of the Dockers’ target market have refused to leave
the brand behind. Consequently, the Dockers brand that has been positioned for consumers
just moving out of their core jeans-wearing years may now be thought of as “my dad’s
brand” by the next generation of young men moving into this segment. Thus, the “dad’s
brand” problem that hit Levi’s in the blue jeans segment now threatens the Dockers
market. Even as Levi’s is working to get its core jeans business back on track, it will have
to contend with a similar problem with Dockers.
Questions
1. What actors and forces in Levi Strauss & Company’s microenvironment and macro
environment have affected its marketing position?

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Notes 2. Why was Levi’s so successful in designing products for the baby boomers?
3. How and how well has Levi’s responded to changes in its marketing environment?
4. Evaluate Levi’s strategy for the Silver Tab brand. Is the strategy likely to succeed?
Does it meet the concerns of younger buyers? How does Silver Tab compare with
the competition?
5. What marketing recommendations would you make to Levi’s management?
Source: Elaine Underwood, “Levi’s New Dress Code,” Brandweek, August 19, 1996, p. 22; “Denim Dish:
Dream Jeans for Teens,” Womens’ Wear Daily, December 11, 1997, p. 12; Becky Ebenkamp, “Slates
Speaks Directly to Men,” Adweek, September 8, 1997, p. 5; Stan Gellers, “Tailored Slacks Follow the
Mainfloor Leader: Slates Boom Trickles-Up to Better Makers in Casual Fabrics and Golfwear,” Daily
News Record, September 24, 1997, p. 3; and Linda Himelstein, “Levi’s Is Hiking Up Its Pants,” Business
Week, December 1, 1997, pp. 70, 75.

2. Sales Promotion: This tool is used through coupons, contests, samples, premiums,
demonstrations, displays or incentives. It is used to accelerate short-term sales, by building
brand awareness and encouraging repeat buying.

3. Public Relations: This integrated marketing communications tool is initiated through

public appearances, news/press releases or event sponsorships, to build trust and goodwill
by presenting the product, company or person in a positive light.

4. Direct Marketing: This tool will utilized email, mail, catalogs, encourage direct responses
to radio and TV, in order to reach targeted audiences to increase sales and test new products
and alternate marketing tactics.

5. Personal Selling: Setting sales appointments and meetings, home parties, making
presentations and any type of one-to-one communication, to reach your customers and
strengthen your relationship with your clients, initiate this IMC tool.

Task Explain how IMC used for brand building purpose.

Self Assessment

Fill in the blanks:

6. ............................ is a term used to describe a holistic approach to marketing communication.

7. SEO stands for .............................

8. CRM stands for ............................

11.7 Leveraging Secondary Brand Associations to Brand Building

Marketers want to achieve a return on their investment, and one vital decision is how to best
utilize their brand assets. Marketers may choose to leverage some of the brand’s established
equity to create line extensions, brand extensions, or co-branded products.

1. Line Extensions: Adding a new form of the product or service is generally regarded as the
easiest extension, but is likely to generate low incremental revenue. Critical questions to
be answered when considering a line extension include: From what brands do we want to
launch extensions of existing product lines or services? How do we launch line extensions
successfully?

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2. Brand Extensions: This type of extension differs from a line extension in that it consists of Notes
extending the products or services brand into a new category. A brand extension has the
benefit of real growth opportunity, but a drawback is the potential for costly mistakes.
A critical question is: How do we select brand extensions to be successful?

3. Co-branded Products: This method of leveraging brands consists of an alliance of

complementary brands. This can often take the form of ingredient branding. A good
marketing strategy will consider whether co-branding is appropriate for particular
situations.

Brand associations may themselves be linked to other entities that have their own associations,
creating “secondary” brand associations. In other words, a brand association may be created by
linking the brand to another node or information in memory that conveys meaning to consumers.

Example: The brand may be linked to certain source factors, such as the company through
branding strategies, countries or other geographical regions (through identification of product
origin), and channels of distribution (through channel strategy) as well as to other brands
(through ingredient or co-branding), characters (through licensing), spokespeople (through
endorsements), sporting or cultural events (through sponsorship), or some other third-party
sources (through awards or reviews). Because the brand becomes identified with another entity,
even though this entity may not directly relate to product performance, consumers may infer
that the brand shares associations with that entity, thus producing indirect or secondary
associations for the brand. In essence, the marketer is borrowing or “leveraging” some other
associations for the brand to create some associations of its own and thus help to build its brand
equity.

Secondary brand associations may be quite important if existing brand associations are deficient
in some way. In other words, secondary associations can be leveraged to create strong, favorable,
and unique brand associations that otherwise may be lacking. These secondary associations
may lead to a transfer of global associations such as attitude or credibility (i.e., expertise,
trustworthiness, and likability). These secondary associations may also lead to a transfer of
more specific associations related to the product meaning and the attributes or benefits of the
brand.

11.7.1 Primary Association

Before I start on secondary associations, it makes sense that I talk about what the primary
associations of a brand are. Primary associations are qualities/equity inherently possessed by
the brand. These would include those of salience/utility (whether a washing powder cleans
clothes or whether fairness cream makes you fair), performance (does the washing powder
tackle tough stains well, whether the fairness cream makes you 5 shades or 2 shades fairer),
imagery (how reputed the brand is, how successful has it been), judgment (how the brand fairs
in comparison to competitors), etc.

11.7.2 Secondary Association

Secondary association on the other hand is more of a branding-marketing function. It transfers

the qualities/equity of other entities to the brand in question. Consider a commodity like salt.
One can argue that iodized salt is iodized salt and while one can double filter it and another
triple filter it, the two salts cannot be too different. But when one of them is Tata Salt and the
other Dandi Namak one would tend to think of the former as of better quality. This is a classic
case of the secondary association: Tata’s reputation of quality being transferred to the salt.

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Notes 11.7.3 Leveraging Secondary Associations

The above example was one of the many ways one can build secondary associations – through
the parent company. However, there are many other ways of doing the same. Some of these are
illustrated below:

Leveraging secondary association deals with:

1. Creation of new brand associations

2. Effects on existing brand knowledge:

(a) Awareness and knowledge of the entity

(b) Meaningfulness of the knowledge of the entity

(c) Transferability of the knowledge of the entity

3. Brand associations may themselves be linked to other entities, creating secondary

associations:

(a) Company (through branding strategies)

(b) Country of origin (through identification of product origin)

(c) Channels of distribution (through channels strategy)

(d) Other brands (through co-branding)

4. Special case of co-branding is ingredient branding:

(a) Characters (through licensing)

(b) Celebrity spokesperson (through endorsement advertising)

(c) Events (through sponsorship)

(d) Other third-party sources (through awards and reviews)

5. These secondary associations may lead to a transfer of:

(a) Response-type associations

(i) Judgments (especially credibility)

(ii) Feelings

(b) Meaning-type associations

(i) Product or service performance

(ii) Product or service imagery


Case Study Got Milk?

W
hat would you do if you were in charge of marketing a product that people
only noticed when it was all gone? If you were Jeff Manning, you wouldn’t be
depressed by research indicating that consumers took your product for granted
-you’d milk the news for all it was worth.

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As the executive director of the newly formed California Milk Processing Board (CMPB), Notes
Manning faced the challenge of reinvigorating sales of a staple in American households
that had been declining steadily in consumption for more than 15 years. In 1993, the year
the CMPB was established, per capita consumption of milk was 23 gallons, down from 29
gallons in 1980. In contrast, per capita consumption of soft drinks had increased 80 percent
over roughly the same period. “And there was really no reason to believe that it wouldn’t
continue to go down to some base level of 15 or 18 gallons because you had this incredible
influx of, obviously, the sodas, but then the New Age beverages, the Snapples, the isotonics,
the Gatorades, and then all of this bottled water stuff,” Manning says.

According to a survey by Beverage Industry magazine, 1,805 new beverages were

introduced in 1991 alone. However, a consumer research study commissioned in 1992 by
the United Dairy Industry Association revealed that the proliferation of beverage
alternatives wasn’t the only factor behind milk’s decline. People also cited milk’s lack of
portability and flavor variety, the belief that milk is not thirst-quenching or refreshing,
and the fact that milk is “forgettable” because of low spending on advertising. Although
these research results were useful, it was a different kind of finding that especially caught
the eye of Manning and representatives of the CMPB’s advertising agency, Goodby
Silverstein and Partners in San Francisco. In the minds of consumers, drinking milk is
closely tied to the consumption of other types of food, such as cereal and cookies. This
perceived link was important because it opened up a completely new direction for a
marketing communications campaign. At the time, the dominant advertising strategy for
milk around the world was “Milk is good for you.” But, as Manning points out, “The
problem is, was, remains, that 92 or 93 percent of the people already believed milk was
good for you. So what do you have to say? It’s white? It comes in cartons? We had no news
whatsoever.”

The connection between milk and food gave the CMPB something new and different to
talk about, but it was only half the glass. The other half-the truly compelling portion of the
story-was based on Goodby Silverstein’s insight that the time milk was most important to
people was when they ran out. “[Consumers] pour their Cheerios, they slice the banana,
and they reach in [the refrigerator for] the carton [of milk]. They bring the carton [out],
and it’s got about two ounces of backwash from their teenagers from the night before.
They’re out of milk,” Manning says. “Milk suddenly becomes very, very important to
them. And nothing else wins. You can’t take Snapple and put it on there; you can’t take
orange juice or tea or coffee. Only milk is important at that moment.”

To help develop the concept of “milk deprivation,” a group of consumers was asked to
live without milk for one week. They couldn’t have milk in their coffee, in their cereal,
with meals or desserts, or in any recipes. After seven days without milk, Manning says,
they were “insane” because they realized how much they took the beverage for granted.
“I keep saying it’s like air. You know, we don’t walk around [inhaling], saying ‘Whoa,
good air.’ Take it away for about a minute and see how you feel about air. That’s kind of
how it is with milk deprivation, because without it you realize, ‘I can’t live without this
product.’”

Jeff Goodby, a principal with the advertising agency, believed that the best way to execute
the milk deprivation idea was not to lecture consumers about keeping enough of the
beverage on hand, but to ask them to think about it and answer the question for themselves.
This is how “Got milk?” was born. The campaign was launched in November 1993 and
produced spectacular results, both in terms of the attention it garnered among consumers
and its impact on consumption. The Los Angeles Times reported that the ads had a

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Notes
“near-cult following.” More important, the number of individuals who reported consuming
milk at least “several times a week” jumped from 72 percent at the start of the campaign
to 78 percent a year later. The total turnaround in first-year sales volume was $31 million,
in contrast to the rest of the country, where consumption continued to decline. This shake-
up was accomplished on a budget of only $23 million in a product category where total
competitive media spending tops $2 billion annually.

In 1995, the CMPB licensed the hugely successful campaign to the National Dairy Board.
Television advertisements depicting people in frustrating situations without milk are the
keystone of the integrated marketing communications campaign, which also includes
billboards, print ads, sales promotions, joint promotions with major brands, and public
relations. One popular “Got milk?” advertisement features Oscar the grouch from Sesame
Street looking at a big pile of chocolate chip cookies with a more-than-usually disgruntled
look on his face. The slogan “Got milk?” appears above his right shoulder. He’s obviously
unhappy about no milk. What’s next? The key challenge is, how do you nurture “Got
milk?’ How do you make “Got milk?” stronger and bigger and more influential in people’s
lives, which is exactly the challenge for any good advertising campaign? There are lots of
ideas on the subject. One would be to change the situations in which people haven’t got
milk. Instead of situations people might usually encounter, such as no milk to go with
cereal in the morning, the campaign could use unusual situations. An example might be
an airplane pilot who sees a cart with cookies in the aisle behind him and sends the plane
into a nose-dive in order to move the cart his way. Of course, with this pilot’s luck, a
passenger opens a lavatory door and stops the cart. Another possibility might be a couple
who meet at the refrigerator in search of milk but are distracted by a steamy romantic
encounter. Spots such as these would feature humor and sex-both of which are successfully
used to sell products. But do they sell milk? And is sex appropriate to use to sell milk,
which heavily targets children?

An alternative would be to use celebrities in embarrassing situations where they’ve not

got milk. Perhaps Seinfeld could have his cereal ready and not find milk in the refrigerator;
perhaps Kramer, Elaine, or George stops in, opens the fridge and finds-no milk. Or the
friends find cereal but no milk. Such situations use humor but avoid sex. The present ad
campaign encourages consumption of milk, primarily at home, which is where 90 percent
of milk is consumed. Another advertising objective might be to encourage consumption
of milk away from home. Future ads could feature situations in which milk could be used
at work or during leisure activities. Such a campaign is a variant on the “It’s not just for
breakfast anymore” orange juice campaigns. Advertisers try to create the idea that “milk
is not just for home use anymore.” Spots might show a family that has stopped at a
roadside table to enjoy a cookie break but find they’ve not got milk. Or workers could
stop for lunch and find no milk in their lunch boxes or the office refrigerator. A final
possibility would be to replace the “Got milk?” campaign altogether. After all, it’s been
running for over five years, and consumers may tire of the slogan. Perhaps the campaign
is worn out, especially in California, where consumers have had the opportunity to watch
it for even longer. Even Nike has replaced the famous “Just do it” slogan in its television
advertising. Knowing when to replace an ad campaign is important-advertisers don’t
want to bore consumers or risk zapping when ads come on during commercial breaks.
Consumers are exposed to hundreds of promotional messages every day, and they learn
to screen out ads that are overly familiar, to focus instead on the new and unusual.
So, although Manning and associates may view the “Got Milk?” campaign as a brand or
product that can be cultivated for decades, they may find that they have been too successful-
that everyone knows about “Got milk?” and no longer pays close attention to the message.

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Notes
Questions

1. Why has the “Got Milk?” campaign been so successful?

2. What are the current objectives of the “Got Milk?” campaign? What audiences does
the campaign target?

3. Would the proposed ads-featuring either unusual situations or celebrities-fit with

the campaign’s objectives and the target audience?

4. What are the pros and cons of attempting to stimulate milk usage in situations away
from the home?

5. Should the “Got Milk?” campaign be replaced? What information would the CMPB
and its agency needs to make that decision? How could they get this information?

6. Suppose the CMPB decides to replace the campaign and you are in charge of
developing a new theme and slogan. Develop at least two new ideas. Be certain to
specify the target audiences, campaign objectives, message themes, and appropriate
media to use.
Source: “Got Milk?-California Fluid Milk Processors Advisory Board,” Adweek, August 5, 1996, p. A6;
“Milk Ads Shaking Up Sales,” Supermarket News, August 12, 1996, p. 39; Jerry Dryer, “Milk’s About
Face,” Dairy Foods, Feb. 1997, p. 28: Donna Hemmila, “Award-Winning ‘Got Milk?’ Ads Promote
Healthy Sales,” Power Marketing, July 18-24, 1997, pp. 4A-5A; and Kathy Tyrer, “Goodby’s Got More
Milk,” Adweek, March 25, 1996, p. 4.

11.7.4 Co-Branding

Co-branding occurs when two or more existing brands are combined into a joint product or are
marketed together in some fashion.

Co-Brands is used extensively by credit cards. Consider a Standard Chartered card that is co-
branded with Shopper’s Stop. It would indicate that the card is oriented towards the frequent
shopper who could avail discounts at Shopper’s Stop outlets using the card. An ABN Amro -
MakeMyTrip.com card on the other hand would be one for frequent fliers and enable one to
stock points for each flight booked using this card. As for equity transfer, a StanC-Shopper’s Stop
co-branded card would work differently when compared to a StanC-Big Bazaar one - the previous
would transfer sophistication to the card while the later would transfer qualities related to cost
effectiveness and value-for-money.

Examples:
1. Sony Ericsson

2. Yoplait Trix Yogurt

3. Nestle’s Cheerios Cookie Bars

Advantages of Co-Branding

1. Borrow needed expertise

2. Leverage equity you don’t have

3. Reduce cost of product introduction

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Notes 4. Expand brand meaning into related categories

(a) Broaden meaning

(b) Increase access points

5. Source of additional revenue.

Disadvantages of Co-Branding

1. Loss of control

2. Risk of brand equity dilution

3. Negative feedback effects

4. Lack of brand focus and clarity

5. Organizational distractions.

11.7.5 Ingredient Branding

A special case of co-branding that involves creating brand equity for materials, components, or
parts that are necessarily contained within other branded products.

Take Sona-Chandi Chyavanprash. Gold and silver, being expensive and noble metals, lend their
‘sheen’ to the chyavanprash making it seem better in quality than, say, a Dabur Chyavanprash.

Examples:
1. Betty Crocker baking mixes with Hershey’s chocolate syrup

2. Intel inside

Licensing

Involves contractual arrangements whereby firms can use the names, logos, characters, and so
forth of other brands for some fixed fee.

Examples:
1. Entertainment (Star Wars, Jurassic Park, etc.)

2. Television and cartoon characters (The Simpsons)

3. Designer apparel and accessories (Calvin Klein, Pierre Cardin, etc.)

11.7.6 Celebrity Endorsement

Belmonte, a little known clothing brand, gets endorsed by Shah Rukh Khan and immediately
starts selling more. Why? Because Shah Rukh Khan had a relevant equity (his style statement) to
lend to the brand. I am unsure if someone like, say, Govinda, would have worked as well.

1. Draws attention to the brand

2. Shapes the perceptions of the brand

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3. Celebrity should have a high level of visibility and a rich set of useful associations, Notes
judgments, and feelings

4. Q-Ratings to evaluate celebrities.

Disadvantages of Celebrity Endorsement

The disadvantages of celebrity endorsement are:

1. Celebrity endorsers can be overused by endorsing many products that are too varied.

2. There must be a reasonable match between the celebrity and the product.

3. Celebrity endorsers can get in trouble or lose popularity.

4. Many consumers feel that celebrities are doing the endorsement for money and do not
necessarily believe in the endorsed brand.

5. Celebrities may distract attention from the brand.

11.7.7 Sporting, Cultural, or Other Events

Sponsored events can contribute to brand equity by becoming associated to the brand and
improving brand awareness, adding new associations, or improving the strength, favourability,
and uniqueness of existing associations.

The main means by which an event can transfer associations is credibility. When building a
secondary association, one should be aware of the relevance of the equity sought for the brand.
For example ‘German technology se bana Binani Cement’ makes sense because Germany is
known for its superior engineering strength, ‘German main bana ABCD Chai’ makes no sense.

Further equity when lent to a brand should reinforce and augment the parent brand. For example,
if Tata Salt turns out to be non-refined and foul, it will not just damage the salt brand but also the
name of Tata. A recent example is of how the Satyam scandal has hit the reputation of India Inc.
as a whole by virtue of association.

Ultimately, the aim would be that while initially a brand leverages on secondary associations,
it should eventually be in a position where it is not just a good brand in its own right, but also
lends positive associations back to the source of its secondary association.

Task Explain the benefits of co-branding. It is good for company or bad. Discuss.

Self Assessment

State whether the following statements are true or false:

9. Jingles are musical messages written around the brand.

10. Advertising cannot be used to generate leads.

11.8 Summary

 The different components of a brand that identifies and differentiate a product can be
called brand elements.

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Notes  The brand elements are name, logo, symbol, package design and other attribute that
identifies a product and distinguishes it from others.

 Brand elements can be chosen in a manner to build as much brand equity as possible.

 Brand names can be an extremely effective shorthand means of communication.

 Logos are devised as symbols to reinforce the brand meaning in some way.

 Logos can be quite concrete or pictorial in nature.

 Slogans are short phrases that communicate descriptive or persuasive information about
the brand.

 Packaging involves the activities of designing and producing containers or wrappers for
a product.

 The brand elements should be selected by considering the six criteria of memorability,
meaningfulness, likability, transferability, adaptability and protect ability. Savvy
customers, Brand proliferation, Media fragmentation, Increased competition, increased
costs, greater accountability are the challenges of branding.

11.9 Keywords

Brand Name: The brand name is a fundamentally important choice because it often captures the
central theme or key associations of a product in a very compact and economical fashion.

Logos and Symbols: Logos are devised as symbols to reinforce the brand meaning in some way.

Meaningfulness: The inherent meaning of the brand elements can enhance the formation of
brand associations.

Memorability: A necessary condition for building brand equity is achieving a high level of
brand awareness.

Slogans: Slogans are short phrases that communicate descriptive or persuasive information
about the brand.

11.10 Review Questions

1. Explain the criteria for choosing the brand elements.

2. Comment on the challenges of branding.

3. In an organization, how a brand manager take decision on brand elements?

4. Why organization need protectability? Discuss.

5. What do you think brand name affect the value of product in the market?

6. Explain the naming guidelines of a brand.

7. What are the roles of logos and symbols? Explain.

8. Discuss the benefits of slogans.

9. What you think IMC is good for brand building? Discuss.

10. Discuss various tools of IMC.

11. Explain the features of co-branding.

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Answers: Self Assessment Notes

1. (iii) 2. (iv)

3. URL’s 4. Logo

5. Slogans 6. IMC

7. Search Engine Optimization 8. Customer Relationship Management

9. T 10. F

11.11 Further Readings

Books U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.
Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Asker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand

Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Online links www.en.wikipedia.org

www.web-source.net

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Notes Unit 12: Measuring and Interpreting

Brand Performance

CONTENTS
Objectives
Introduction
12.1 Measuring and Interpreting Brand Performance
12.2 Developing a Brand Equity Measurement and Management System
12.2.1 Brand Audit
12.2.2 Brand Tracking
12.2.3 Brand Equity Management System
12.3 Measuring Sources of Brand Equity
12.3.1 Qualitative Research Techniques
12.3.2 Free Association
12.3.3 Projective Techniques
12.3.4 Awareness
12.3.5 Recognition
12.3.6 Recall
12.3.7 Image
12.3.8 Specific, Lower-level Brand Associations
12.3.9 Brand Performance
12.3.10 Brand Imagery
12.3.11 General, Higher-order Brand Associations
12.4 Measuring Outcomes of Brand Equity
12.4.1 Comparative Methods
12.4.2 Holistic Methods
12.5 Summary
12.6 Keywords
12.7 Review Questions
12.8 Further Readings

Objectives
After studying this unit, you will be able to:
 Measure and Interpret Brand Performance
 Discuss the Development of Brand Equity Measurement and Management System
 Explain Measuring Sources of Brand Equity
 Discuss the Measuring Outcomes of Brand Equity

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Introduction Notes

Brands represent enormously valuable pieces of legal property, capable of influencing consumer
behavior, being bought and sold, and providing the security of sustained future revenues to
their owner. The value directly or indirectly accrued by these various benefits is often called
brand equity.

For brand equity to provide a useful strategic function and guide marketing decisions, it is
important for marketers to fully understand the sources of brand equity, how they affect outcomes
of interest (e.g., sales), and how these sources and outcomes change, if at all, over time.
Understanding the sources and outcomes of brand equity provides a common denominator for
interpreting marketing strategies and assessing the value of a brand: The sources of brand
equity help managers understand and focus on what drives their brand equity; the outcomes of
brand equity help managers understand exactly how and where brands add value.

Towards that goal, we review measures of both sources and outcomes of brand equity in detail.
We then present a model of value creation, the brand value chain, as a holistic, integrated
approach to understanding how to capture the value created by brands. We also outline some
issues in developing a brand equity measurement system.

12.1 Measuring and Interpreting Brand Performance

To understand the effects of brand marketing programs, it is important to measure and interpret
brand performance. A useful tool in that regard is the brand value chain. The brand value chain
is a means to trace the value creation process for brands to better understand the financial impact
of brand marketing expenditures and investments. The brand value chain helps to direct
marketing research efforts. Taking the customer’s perspective of the value of a brand, the brand
value chain assumes that the brand value creation process begins when the firm invests in a
marketing program targeting actual or potential customers.

Notes Any marketing program investment that potentially can be attributed to brand
value development falls into this category, e.g., product research, development, and design;
trade or intermediary support and marketing communications.

The marketing activity associated with the program then impacts the customer “mindset” with
respect to the brand, what they know and feel about the brand. The customer mindset includes
everything that exists in the minds of customers with respect to a brand, thoughts, feelings,
experiences, images, perceptions, beliefs, attitudes, etc. consistent with the customer-based brand
equity model, five key dimensions that are particularly important measures of the customer
mindset:

1. Brand awareness

2. Brand associations

3. Brand attitudes

4. Brand attachment

5. Brand activity or experience

The customer mindset affect how customers react or respond in the marketplace in a variety of
ways. Six key outcomes of that response are:

1. Price premiums

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Notes 2. Price elasticities

3. Market share

4. Brand expansion

5. Cost structure

6. Brand profitability

Based on all available current and forecasted information about a brand, as well as many other
considerations, the financial marketplace then formulates opinions and makes various
assessments that have very direct financial implications for the value of the brand. Three
particularly important indicators are the stock price, the price/earnings multiple, and overall
market capitalization for the firm.

The model also assumes that a number of linking factors intervene between these stages. These
linking factors determine the extent to which value created at one stage transfers or “multiplies”
to the next stage. Thus, there are three sets of multipliers that moderate the transfer between the
marketing program and the subsequent three stages, the program multiplier, the customer
multiplier, and the market multiplier.

Profitable brand management requires successfully designing and implementing a brand equity
measurement system. A brand equity measurement system is a set of research procedures
designed to provide timely, accurate and actionable information for marketers so that they can
make the best possible tactical decisions in the short-run and strategic decisions in the long-run.
Implementing such a system involves two key steps, conducting tracking studies and
implementing brand equity management system.

Tracking studies involves information collected from consumers on a routine basis over time.
Tracking studies provide valuable tactical insight into the short-term effectiveness of marketing
programs and activities. Whereas brand audits measure “where the brand has been,” tracking
studies measure “where the brand is at” and whether marketing programs are having their
intended effects.

Three major changes must occur as part of a brand equity management system. First, the company
view of brand equity should be formalized into a document, the brand equity charter. This
document serves a number of purpose: It chronicles the company’s general philosophy with
respect to brand equity, summarizes the activity and outcomes related to brand audits, brand
tracking, etc., outlines guidelines for brand strategies and tactics,, and documents proper treatment
of the brand. The charter should be updated annually to identify new opportunities and risks
and to fully reflect information gathered by the brand inventory and brand exploratory as part
of any brand audits. Second, the result of the tracking survey and other relevant outcome
measures should be assembled into a Brand Equity Report that is distributed to management on
a regular basis. The Brand Equity Report should provide descriptive information as to what is
happening within a brand as well as diagnostic information as to why it is happening. Finally,
senior management must be assigned to overseas how brand equity is treated within the
organization. The people in that position would be responsible for overseeing the implementation
of the Brand Equity Charter and Brand Equity Reports to make sure that as much as possible,
product and marketing actions across divisions and geographical boundaries are done in a way
that reflect the spirit of the Charter and the substance of the Report so as to maximize the
long-term equity of the brand.

Task What are the reasons behind MRF choose Gautam Gambhir as brand ambassador?
(contract end with Sachin).

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12.2 Developing a Brand Equity Measurement and Management System Notes

A brand equity measurement system uses a set of research procedures that is designed to provide
timely, accurate, and actionable information for marketers for their tactical decisions in the
short run and strategic decisions in the long-run. The goal in developing a brand equity
measurement system is to be able to achieve a full understanding of the sources and outcomes
of brand equity and be able to, as much as possible, relate the two. The ideal brand equity
measurement system would provide complete, up-to-date, and relevant information on the
brand and all its competitors to relevant decision makers within the organization. Three key
components of a brand equity measurement system are brand audits, brand tracking, and brand
equity management systems.

12.2.1 Brand Audit

A brand audit is a comprehensive examination of a brand. Specifically, a brand audit involves a

series of procedures to assess the health of the brand, uncover its sources of brand equity, and
suggest ways to improve and leverage its equity. A brand audit requires understanding sources
of brand equity from the perspective of both the firm, it is necessary to understand exactly what
products and services are currently being offered to consumers and how they are being marketed
and branded. From the perspective of the consumer, it is necessary to dig deeply into the minds
of consumers and tap their perceptions and beliefs to uncover the true meaning of brands and
products.

The brand audit can be used to set strategic direction for the brand. Are the current sources of
brand equity satisfactory? Do certain brand associations need to be strengthened? Does the
brand lack uniqueness? What brand opportunities exist and what potential challenges exist for
brand equity? As a result of this strategic analysis, a marketing program can be put into place to
maximize long-term brand equity. A brand audit should be conducted whenever important
shifts in strategic direction are contemplated.

Moreover, conducting brand audits on a regular (e.g., annually) allows marketers to keep their
“fingers on the pulse” of their brands so that they can be more proactively and responsively
managed. As such, they are particularly useful background for managers as they set up their
marketing plans. A brand audit consists of two steps:

1. Brand Inventory: The purpose of the brand inventory is to provide a current,

comprehensive profile of how all the products and branded profiling each product or
service requires that all associated brand elements be identified as well as aspects of the
marketing program. This information should be summarized in both visual and verbal
form. The outcome of the brand inventory should be an accurate, comprehensive and
timely profile of how all the products and services sold by a company are branded and
marketed. As part of the brand inventory, it is also advisable to profile competitive
brands, in as much details as possible, in terms of their branding and marketing efforts.

The brand inventory is a valuable first step in the brand audit. It helps to suggest what
consumer current perceptions may be bases on. Thus, the brand inventory provides useful
information for interpreting follow-up research activity such as the brand exploratory
that collects actual consumer perceptions toward the brand. Second, the brand inventory
may provide some initial insights into how brand equity may be better managed.

Example: The consistency of the branding and marketing for all the different product or
services can be assessed. A thorough brand inventory should be able to reveal the extent of
brand consistency.

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Notes 2. Brand Exploratory: The second step of the brand audit is to provide detailed information
as to what consumers think of the brand by means of the brand exploratory, particularly
in terms of brand awareness and the strength, favourability, and uniqueness of brand
associations. The brand exploratory is research activity directed to understanding what
consumers think and feel about the brand and its corresponding product category in order
to identify sources of brand equity.

Although the “supply-side” view of the brand as revealed by the brand inventory is useful,
actual consumer perceptions, of course, may not necessarily reflect the consumer perceptions
that were intended to be created by the marketing program. Thus, the second step of the brand
audit is to provide detailed information as to what consumers think and feel about the brand by
means of the brand exploratory.

Several preliminary activities are useful for the brand exploratory. First, in many cases, a number
of prior research studies may exist and be relevant. Reports may have been buried, and perhaps
even long forgotten, which contain insights and answers to a number of important questions or
suggest new questions that may still need to be posed. Second, it is also useful to interview
internal personnel to gain an understanding of their beliefs about consumer perceptions for the
brand and competitive brands. Past and current marketing managers may be able to share some
wisdom not necessarily captured in prior research reports.

12.2.2 Brand Tracking

Brand audits are a means to provide in-depth information and insights that are essential for
setting long-term strategic direction for the brand. In terms of more short-term tactical
considerations, less detailed brand-related information should be collected as a result of
conducting ongoing tracking studies. Tracking studies involve information collected from
consumers on a routine basis over time. Tracking studies typically employ quantitative measures
to provide marketers with current information as to how their brands and marketing programs
are performing on the basis of a number of key dimensions identified by the brand audit or
other means. Tracking studies are a means to understand where, how much and in what ways
brand value is being created.

Tracking studies play an important function for managers by providing consistent baseline
information to facilitate their day-to-day decision-making. As more marketing activity surrounds
the brand, it becomes difficult and expensive to research each individual marketing action.
Tracking studies provide valuable diagnostic insights into the collective effects of a host of
marketing activities on the customer mindset, market outcomes, and perhaps even shareholder
value. The reality is that marketing can create all types of effects in the minds of consumers that
may influence how they respond to subsequent marketing activity. Regardless of how few or
many changes are made in the marketing program over time, it is important to monitor the
health of the brand and its equity so that proper adjustments can be made if necessary.

A number of ingredients characterize a successful tracking program. To capture the effects of the
complex, varied marketing activity that make up many marketing programs, it is important to
adopt detailed, rich marketing models. If well-specified, these models should directly suggest a
comprehensive, robust set of measures to employ in tracking. At the same time, it is important
to adopt a modular approach to tracking – not every type of measure needs to be included in
every tracking survey every time. For example, detailed measures of specific performance and
imagery benefits may be included less frequently than basic measures of brand awareness,
attitudes and behaviors that are likely to be impacted by a broad range of marketing activity.
Finally, firms must obviously adopt good survey practices and carefully design surveys, collect
data, and interpret results.

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12.2.3 Brand Equity Management System Notes

Brand tracking studies – as well as brand audits – can provide a huge reservoir of information
concerning how to best build and measure brand equity. Nevertheless, the potential value of
these research efforts will not be realized unless proper internal structures and procedures are
put into place within the organization to capitalize on the usefulness of the brand equity concept
and the information that is collected with respect to it. A brand equity management system is
defined as a set of organizational processes designed to improve the understanding and use of
the brand equity concept within a firm. Although there are many aspects to a brand equity
management system, two useful tools that can be employed are highlighted here.

Brand Equity Charter

The first step in establishing a brand equity management system is to formalize the company
view of brand equity into a document, the brand equity charter, which provides relevant
guidelines to marketing managers within the company as well as key marketing partners
outside the company (e.g., ad agency personnel). This document should:

1. Define the firm’s view of the brand equity concept and explain why it is important.

2. Describe the scope of key brands in terms of associated products and the manner by which
they have been branded and marketed (as revealed by historical company records as well
as the most recent brand inventory).

3. Specify what the actual and desired equity is for a brand at all relevant level of the brand
hierarchy.

4. Explain how brand equity is measured in terms of the tracking study and the resulting
brand equity report.

5. Suggest how brand equity should be managed in terms of some general strategic guidelines
(e.g., stressing clarity, relevance, distinctiveness, and consistency in marketing programs
over time).

6. Outline how marketing programs should be devised in terms of some specific tactical
guidelines (e.g., ad evaluation criteria, brand name choice criteria, etc.).

7. Specify the proper treatment of the brand in terms of trademark usage, packaging, and
communications.

Although parts of the brand equity charter may not change from year to year, it should nevertheless
be updated on an annual basis to provide a current brand profile and identify new opportunities
and potential risks for the brand to decision-makers.

Brand Equity Report

The second step in establishing a successful brand equity management system is to assemble the
results of the tracking survey and other relevant performance measures for the brand into a
brand equity report to be distributed to management on a regular basis (monthly, quarterly, or
annually). Much of the information relevant to the report may already exist within or be collected
by the organization. Yet, the information may have been otherwise presented to management
in disjointed chunks such that a more holistic understanding is not possible. The brand equity
report attempts to effectively integrate all these different measures.

The brand equity report should provide descriptive information as to what is happening with a
brand as well as diagnostic information as to why it is happening. It should include all relevant
internal and external measures of brand performance and sources and outcomes of brand equity.

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Notes In particular, one section of the report should summarize consumer perceptions on key attribute
or benefit associations, preferences, and reported behavior as revealed by the tracking study.
Another section of the report should include more descriptive market level information such as:

1. Product shipments and movement through channels of distribution.

2. Relevant cost breakdowns.

3. Price and discount schedules where appropriate.

4. Sales and market share information broken down by relevant factors, e.g., geographic
region, type of retail account or customer, etc.

5. Profit assessments.

Collectively, these measures can provide insight into the market performance component of the
brand value chain.

Task You have any general technique how to measure brand performance and brand
equity of a brand.

Self Assessment

Choose the appropriate answer:

1. Which one is not the key dimensions that are particularly important measures of the
customer mindset

(i) Brand associations

(ii) Brand value

(iii) Brand attitudes

(iv) Brand attachment

2. Brand audit consists into two parts one is brand exploratory and other one

(i) Value chain

(ii) Brand recall

(iii) Brand inventory

(iv) Brand recognition

12.3 Measuring Sources of Brand Equity

The value of a brand – and thus its equity – is ultimately derived in the market place from the
words and actions of consumers. Consumers decide with their purchases, based on whatever
factors they deem important, which brands have more equity than other brands. Although the
details of different approaches to conceptualize brand equity differ, they tend to share a common
core: All definitions typically either implicitly or explicitly rely on brand knowledge structures
in the minds of consumers – individuals or organizations as the source or foundation of brand
equity. In other words, the real power of a brand is in the thoughts, feelings, images, beliefs,
attitudes, experiences and so on that exist in the minds of consumers. This brand knowledge
affects how consumers respond to products, prices, communications, channels and other
marketing activity – increasing or decreasing brand value in the process. Along these lines,

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formally, customer-based brand equity has been defined as the differential effect that consumer Notes
brand knowledge has on their response to brand marketing activity.

Brand knowledge is not the facts about the brand – it is all the thoughts, feelings, perceptions,
images, experiences, and so on that become linked to the brand in the minds of consumers. All
of these types of information can be thought of in terms of a set of associations to the brand in
consumer memory. Accordingly, brand knowledge can be viewed in terms of an associative
network memory model as a network of nodes and links where the brand can be thought of as
being a node in memory with a variety of different types of associations potentially linked to it.
A “mental map” can be a useful way to portray some of the important dimensions of brand
knowledge. Figure 12.1 displays a very simple hypothetical mental map highlighting potential
brand associations for a consumer for the Dole brand.

Figure 12.1

Two particularly important components of brand knowledge are brand awareness and brand
image. Brand awareness is related to the strength of the brand node or trace in memory as
reflected by consumers’ ability to recall or recognize the brand under different conditions.
Brand awareness can be characterized by depth and breadth. The depth of brand awareness
relates to the likelihood that the brand can be recognized or recalled. The breadth of brand
awareness relates to the variety of purchase and consumption situations in which the brand
comes to mind. Brand image is defined as consumer perceptions of and preferences for a brand,
as reflected by the various types of brand associations held in consumers’ memory. These
associations range along a number of different dimensions, such as their strength, positivity,
uniqueness, and abstractness. Strong, favorable and unique brand associations are essential as
sources of brand equity to drive consumer behavior.

According to a customer-based brand equity perspective, the indirect approach to measuring

brand equity attempts to assess potential sources for brand equity by measuring consumer
mindset or brand knowledge. The indirect approach is useful in identifying what aspects of the
brand knowledge may potentially cause the differential response that creates brand equity in
the marketplace. Because any one measure typically only captures one particular aspect of brand
knowledge, multiple measures need to be employed to account for the multidimensional nature
of brand knowledge. Brand awareness can be assessed through a variety of aided and unaided
memory measures that can be applied to test brand recall and recognition; brand image can be
assessed through a variety of qualitative and quantitative techniques.

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Notes 12.3.1 Qualitative Research Techniques

There are many different ways to uncover and characterize the types of associations linked to
the brand. Qualitative research techniques are often employed to identify possible brand
associations and sources of brand equity. Qualitative research techniques are relatively
unstructured measurement approaches where by a range of possible consumer responses are
permitted. Because of the freedom afforded both researchers in their probes and consumers in
their responses, qualitative research can often be a useful “first step” in exploring consumer
brand and product perceptions. Consider the following three qualitative research techniques
that can be employed to identify sources of brand equity.

12.3.2 Free Association

The simplest and often most powerful way to profile brand associations involves free association
tasks whereby subjects are asked what comes to mind when they think of the brand without any
more specific probe or cue than perhaps the associated product category (e.g., “What does the
Rolex name mean to you?” or “Tell me what comes to mind when you think of Rolex watches.”).
Answers to these questions help marketers to clarify the range of possible associations and
assemble a brand profile.

To better understand the positivity of brand associations, consumers can be asked follow-up
questions as to the favourability of associations they listed or, more generally, what they like
best about the brand. Similarly, consumers can also be asked direct follow-up questions as to the
uniqueness of associations they listed or, more generally, what they find unique about the
brand. Thus, additionally useful questions include:

1. What do you like best about the brand? What are its positive aspects? What do you dislike?
What are its disadvantages?

2. What do you find unique about the brand? How is it different from other brands? In what
ways is it the same?

These simple, direct measures can be extremely valuable at determining core aspects of a brand
image. To provide more structure and guidance, consumers can be asked further follow-up
questions to describe what the brand means to them in terms of “who, what, when, where, why,
and how” type of questions such as:

1. Who uses the brand? What kind of person?

2. When and where do they use the brand? What types of situations?

3. Why do people use the brand? What do they get out of using it?

4. How do they use the brand? What do they use it for?

12.3.3 Projective Techniques

Uncovering the sources of brand equity requires that consumers’ brand knowledge structures
be profiled as accurately and completely as possible. Unfortunately, under certain situations,
consumers may feel that it would be socially unacceptable or undesirable to express their true
feelings. As a result, they may find it easier to fall back on stereotypical, “pat” answers that they
believe would be acceptable or perhaps even expected by the interviewer. For example, it may
be difficult for consumers to admit that a certain brand name product has prestige and enhances
their self-image. As a result, consumers may instead refer to some particular product feature as
the reason why they like or dislike the brand. Alternatively, it may just be that consumers find
it difficult to identify and express their true feelings when asked directly even if they attempt to

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do so. For either of these reasons, an accurate portrayal of brand knowledge structures may be Notes
impossible without some rather unconventional research methods.

Projective techniques are diagnostic tools to uncover the true opinions and feelings of consumers
when they are unwilling or otherwise unable to express themselves on these matters. The idea
behind projective techniques is that consumers are presented with an incomplete stimulus and
asked to complete it or given an ambiguous stimulus that may not make sense in and of itself
and are asked to make sense of it. In doing so, the argument is that consumers will reveal some
of their true beliefs and feelings. Thus, projective techniques can be especially useful when
deeply rooted personal motivations or personally or socially sensitive subject matters may be
operating. Projective techniques often provide useful insights that help to assemble a more
complete picture of consumers and their relationships with brands. All kinds of projective
techniques are possible. Here we highlight two:

1. Completion & Interpretation Tasks: Classic projective techniques use incomplete or

ambiguous stimuli to elicit consumer thoughts and feelings. One such approach is with
“bubble exercises” based on cartoons or photos where different people are depicted buying
or using certain products, services, or brands. Empty bubbles, as found in cartoons, are
placed in the scenes to represent the thoughts, words, or actions of one or more of the
participants in the scene. Consumers are then asked to figuratively “fill in the bubble” by
indicating what they believed was happening or being said in the scene. The stories and
conversations told through bubble exercises and picture interpretations can be especially
useful to assess user and usage imagery for a brand.

2. Comparison Tasks: Another technique that may be useful when consumers are not able to
directly express their perceptions of brands is comparison tasks where consumers are
asked to convey their impressions by comparing brands to people, countries, animals,
activities, fabrics, occupations, cars, magazines, vegetables, nationalities, or even other
brands. For example, consumers might be asked: “If Nike were a car, which one would it
be? If it were an animal, which one might it be? Looking at the people depicted in these
pictures, which ones do you think would be most likely to wear Nike shoes?” In each case,
consumers could be asked a follow-up question as to why they made the comparison they
did. The objects chosen to represent the brand and the reasons why they were chosen can
provide a glimpse into the psyche of the consumer with respect to a brand.

Although qualitative measures are useful to identify and characterize the range of possible
associations to a brand, a more quantitative portrait of the brand often is also desirable to
permit more confident and defensible strategic and tactical recommendations. Whereas
qualitative research typically elicits some type of verbal responses from consumers, quantitative
research typically employs various types of scale questions so that numerical representations
and summaries can be made. Quantitative measures are often the primary ingredient in tracking
studies that monitor brand knowledge structures of consumers over time.

12.3.4 Awareness

Brand awareness is related to the strength of the brand in memory, as reflected by consumers’
ability to identify various brand elements (i.e., the brand name, logo, symbol, character,
packaging, and slogan) under different conditions. Brand awareness relates to the likelihood
that a brand will come to mind and the ease with which it does so given different type of cues.

Several measures of awareness of brand elements can be employed. Choosing the appropriate
measure depends on the relative importance of brand awareness for consumer behavior in the
category and the resulting role it plays to the success of the marketing program for the brand.
For example, if research reveals that many consumer decisions are made at the point-of-purchase
where the brand name, logo, packaging, and so on will be physically present and visible, then

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Notes brand recognition and visual awareness measures will be important. If research reveals that
consumer decisions are mostly made in other settings away from the point-of-purchase where
the brand elements are not physically present, on the other hand, then brand recall and verbal
measures will be more important. As a cautionary note, even though brand recall per se may be
viewed as less important when consumer decisions are made at the point-of-purchase, consumers’
brand evaluations and choices will still often depend on what else they recall about the brand
given that they are able to recognize it there.

12.3.5 Recognition

Recognition processes require that consumers be able to discriminate a stimulus – a word,

object, image, etc. – as something they have previously seen. Brand recognition relates to
consumers’ ability to identify the brand under a variety of circumstances and can involve
identification of any of the brand elements. The most basic type of recognition procedures gives
consumers a set of single items visually or orally and asks them if they thought that they had
previously seen or heard these items. To provide a more sensitive test, it is often useful to
include decoys or lures – items which consumers could not have possibly seen. In addition to
“yes” or “no” responses, consumers also can be asked to rate how confident they are in their
recognition of an item. There are also a number of additional, somewhat more subtle recognition
measures that involve “perceptually degraded” versions of the brand. In some cases, the brand
element may be visually masked or distorted in some way or shown for extremely brief duration.
For example, brand name recognition could be tested with missing letters. These additional
measures can provide more sensitive measures of recognition than simple “yes” or “no” tasks.

By applying these direct and indirect measures of brand recognition, marketers can determine
which brand elements exist in memory and, to some extent, the strength of their association.
One advantage to brand recognition measures versus recall measures is that they can be used in
any modality. For example, because brand recognition is often visual in nature, visual recognition
measures can be used. It may be difficult for consumers to describe a logo or symbol in a recall
task either verbally or pictorially but much easier for them to assess the same elements visually
in a recognition task. Nevertheless, brand recognition measures only really provide an
approximation as to potential recall-ability. To determine whether the brand elements will
actually be recalled under various circumstances, measures of brand recall are necessary.

12.3.6 Recall

Brand recall relates to consumers’ ability to identify the brand under a variety of circumstances.
With brand recall, consumers must retrieve the actual brand element from memory when given
some related probe or cue. Thus, brand recall is a more demanding memory task than brand
recognition because consumers are not just given a brand element and asked to identify or
discriminate it as one they had or had not already seen.

Different measures of brand recall are possible depending on the type of cues provided to
consumers. Unaided recall on the basis of “all brands” provided as a cue is likely to identify only
the very strongest brands. Aided recall uses various types of cues to help consumer recall. One
possible sequence of aided recall might use progressively narrowly defined cues – such as
product class, product category, and product type labels – to provide insight into the organization
of consumers’ brand knowledge structures. For example, if recall of the Porsche 944 – a high
performance German sports car – in non-German markets was of interest, the recall probes
could begin with “all cars” and move to more and more narrowly defined categories such as
“sports cars,” “foreign sports cars,” or even “high performance German sports cars.” For example,
consumers could be asked: “When you think of foreign sports cars, which brands come to
mind?”

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Other types of cues may be employed to measure brand recall. For example, consumers could be Notes
probed on the basis of product attributes (e.g., “When you think of chocolate, which brands
come to mind?) or usage goals (e.g., “If you were thinking of having a healthy snack, which
brands come to mind?”). Often, to capture the breadth of brand recall, it may be important to
examine the context of the purchase decision or consumption usage situation. For example,
consumers could be probed according to different purchase motivations as well as different
times and places when the product could be used to see which brands came to mind (e.g.,
different times of the day, days of the week, or times of the year; at home, at work, or on
vacation). The more that brands have strong associations to these considerations, the more
likely it is that they will be recalled when they are given those situational cues. Combined,
measures of recall based on product attribute or category cues as well as situational or usage
cues give an indication of breadth of recall.

Besides being judged as correctly recalled, brand recall can be further distinguished according to
order, as well as latency or speed of recall. In many cases, people will recognize a brand when it
is shown to them and will recall it if they are given a sufficient number of cues. Thus, potential
recall-ability is high. The bigger issue is the salience of the brand – do consumers think of the
brand under the right circumstances, e.g., when they could be either buying or using the product?
How quickly do they think of the brand? Is it automatically or easily recalled? Is it the first brand
recalled?

12.3.7 Image

Brand awareness is an important first step in building brand equity, but usually not sufficient.
For most customers in most situations, other considerations, such as the meaning or image of
the brand, also come into play. One vitally important aspect of the brand is its image, as reflected
by the associations that consumers hold toward the brand. Brand associations come in many
different forms and can be classified along many different dimensions. Consistent with the
laddering concept described above, it is useful to make a distinction between more “lower
level” considerations related to consumer perceptions of specific attributes and benefits versus
more “higher-level” considerations related to consumer responses and their judgments and
feelings toward the brand. There is an obvious relationship between the two levels as consumers’
responses typically are a result of perceptions of specific attributes and benefits about the brand.
We next consider both types of associations.

12.3.8 Specific, Lower-level Brand Associations

Beliefs are descriptive thoughts that a person holds about something. Brand association beliefs
are those specific attributes and benefits linked to the brand and its competitors. For example,
consumers may have brand association beliefs for Sony Playstation home video games such as
“fun and exciting,” “cool and hip,” “colorful,” “good graphic quality,” “advanced technology,”
“variety of software titles,” and “sometimes violent.” They may also have associations to the
brand logo and the slogan, “Live in Your World. Play in Ours.” Playstation user imagery may be
“used by a teenager or 20-something male who is serious about playing video games, especially
sports games.”

The qualitative research approaches described above are useful in uncovering these different
type of salient brand associations making up the brand image. Any potentially relevant association
can and should be measured. Although a myriad of different types of brand associations are
possible, brand meaning broadly can be distinguished in terms of more functional, performance-
related considerations versus more abstract, imagery–related considerations. Thus, brand
meaning is made up of two major categories of brand associations that exist in customers’ minds
– related to performance and imagery – with a set of specific subcategories within each. These

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Notes brand associations can be formed directly – from a customer’s own experiences and contact with
the brand – or indirectly – through the depiction of the brand in advertising or by some other
source of information (e.g., word-of-mouth). We next describe the two main types of brand
meaning and the sub-categories within each.

Task Why any organizations recall their brand? What are the reasons behind this?

12.3.9 Brand Performance

Brand performance relates to the ways in which the product or service attempts to meet customers’
more functional needs. Thus, brand performance refers to the intrinsic properties of the brand in
terms of inherent product or service characteristics. How well does the brand rate on objective
assessments of quality? To what extent does the brand satisfy utilitarian, aesthetic, and economic
customer needs and wants in the product or service category?

The specific performance attributes and benefits making up functionality will vary widely by
category. Nevertheless, there are five important types of attributes and benefits that often
underlie brand performance and can be measured, as follows:

1. Primary Characteristics & Supplementary Features: Customers often have beliefs about
the levels at which the primary characteristics of the product operate (e.g., low, medium,
high, or very high). Additionally, they may also may have beliefs as to special, perhaps
even patented, features or secondary elements of a product that complement these primary
characteristics.

2. Product Reliability, Durability, & Serviceability: Reliability refers to the consistency of

performance over time and from purchase to purchase. Durability refers to the expected
economic life of the product. Serviceability refers to the ease of servicing the product if it
needs repair. Thus, measures of product performance can capture factors such as the speed,
accuracy, and care of product delivery and installation; the promptness, courtesy, and
helpfulness of customer service and training; the quality of repair service and the time
involved; and so on.

3. Service Effectiveness, Efficiency, and Empathy: Service effectiveness refers to how

completely the brand satisfies customers’ service requirements. Service efficiency refers
to the manner by which these services are delivered in terms of speed, responsiveness, etc.
Service empathy refers to the extent to which service providers are seen as trusting,
caring, and with customer’s interests in mind.

4. Style and Design: Consumers may have associations to the product that go beyond its
functional aspects to more aesthetic considerations such as its size, shape, materials, and
color involved. Thus, performance may also depend on sensory aspects as to how a product
looks and feels and perhaps even what it sounds or smells like.

5. Price: Finally the pricing policy for the brand can create associations in consumers’ minds
to the relevant price tier or level for the brand in the category, as well as to its corresponding
price volatility or variance (in terms of the frequency or magnitude of discounts, etc.).

12.3.10 Brand Imagery

The other main type of brand meaning involves brand imagery. Brand imagery deals with the
extrinsic properties of the product or service, including the ways in which the brand attempts to
meet customers’ more psychological or social needs. Brand imagery is how people think about

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a brand abstractly rather than what they think the brand actually does. Thus, imagery refers to Notes
more intangible aspects of the brand.

All different kinds of intangibles can be linked to a brand, but five categories can be highlighted:

1. User Profiles: The type of person or organization who uses the brand. This imagery may
result in a profile or mental image by customers of actual users or more aspirational,
idealized users. Associations of a typical or idealized brand user may be based on
descriptive demographic factors or more abstract psychographic factors. In a business-to-
business setting, user imagery might relate to the size or type of organization.

2. Purchase Situations: Under what conditions or situations the brand could or should be
bought and used. Associations of a typical purchase situation may be based on a number
of different considerations, such as: (1) Type of channel (e.g., department store, specialty
store, or direct through internet or some other means); (2) Specific store (e.g., Lord &
Taylor, Radio Shack or Bluefly.com); and (3) Ease of purchase and associated rewards, if
any.

3. Usage Situations: Under what conditions or situations the brand could or should be used.
Associations of a typical usage situation may be based on a number of different
considerations, such as: (1) Particular time of the day, week, month, or year to use the
brand; (2) Location to use the brand (e.g., inside or outside the home); and (3) Type of
activity where the brand is used (e.g., formal or informal).

4. Personality and Values: As noted above, brands may also take on personality traits and
values similar to people. Brand personality is often related to the more descriptive usage
imagery but involves much richer, more contextual information.

5. History, Heritage and Experiences: Finally, brands may take on associations to their past
and certain noteworthy events in the brand history. These types of associations may
involve distinctly personal experiences and episodes or be related to past behaviors and
experiences of friends, family, or others.

Example: Take a brand with rich brand imagery, such as Nivea skin cream in Europe.
Some of its more intangible associations include: family/shared experiences/maternal;
multipurpose; classic/timeless; and childhood memories.

12.3.11 General, Higher-order Brand Associations

The purpose of measuring higher-order brand associations is to find out how consumers combine
all of the specific considerations about the brand in their minds to form different responses.
Brand responses refer to how customers respond to the brand and all its marketing activity and
other sources of information. Brand responses can be distinguished according to brand judgments
and brand feelings, i.e., in terms of whether they arise more from the “head” or from the
“heart.” Scale questions can be developed to tap into each of these dimensions.

Brand Judgments

Brand judgments focus upon customers’ own personal opinions and evaluations with regard to
the brand. Brand judgments involve how customers put together all the different performance
and imagery associations for the brand to form different kinds of opinions. Although customers
may make all types of judgments with respect to a brand, four types of summary brand judgments
are particularly important:

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Notes 1. Brand Quality: Among the most important attitudes that customers may hold relates to
the perceived quality of the brand. Other notable attitudes related to quality pertain to
perceptions of value and satisfaction.

2. Brand Credibility: Customers may form judgments that transcend more specific brand
quality concerns. Brand credibility refers to the extent to which the company or
organization making the product or providing the service as a whole is seen as being:
(1) Competent, innovative, and a market leader (brand expertise); (2) Dependable and
keeping customer interests in mind (brand trustworthiness); and (3) Fun, interesting, and
worth spending time with (brand likability).

3. Brand Consideration: Consideration deals with the likelihood that customers will actually
include the brand in the set of possible options of brands they might buy or use.
Consideration depends in part on how personally relevant customers find the brand, i.e.,
the extent to which customers view the brand as being appropriate and meaningful to
themselves.

4. Brand Superiority: Finally, superiority relates to the extent to which customers view the
brand as unique and better than other brands. Do customers believe that the brand offers
advantages that other brands cannot?

Brand Feelings

Brand feelings are customers’ emotional responses and reactions with respect to the brand. Brand
feelings also relate to the social currency evoked by the brand. What feelings are evoked by the
marketing program for the brand or by other means? How does the brand affect customers’
feelings about themselves and their relationship with others? These feelings can be mild or intense
and be positive or negative in nature. Six important types of brand-building feelings are:

1. Warmth: Warmth refers to more soothing types of feelings – the extent to which the brand
makes consumers feel a sense of calm or peacefulness. Consumers may feel sentimental,
warmhearted, or affectionate about the brand. Hallmark is a brand typically associated
with warmth.

2. Fun: Feelings of fun are also upbeat types of feelings when the brand makes consumers
feel amused, light-hearted, joyous, playful, cheerful, and so on. Disney is a brand often
associated with fun.

3. Excitement: Excitement relates to more upbeat types of feelings – the extent to which the
brand makes consumers feel energized and a feeling that they are experiencing something
special. Brands that evoke feelings of excitement may result in consumers feeling a sense
of elation or “being alive” – cool, sexy, etc. MTV is a brand seen by many teens and young
adults as exciting.

4. Security: Security feelings occur when the brand produces a feeling of safety, comfort, and
self-assurance. Feelings of security are when consumers do not experience worry or concerns
that they might have otherwise felt as a result of the brand. All state insurance is a brand
that communicates security to many.

5. Social Approval: Social approval is when the brand results in consumers having positive
feelings about the reactions of others, i.e., when consumers feel others look favorably on
their appearance, behavior, and so on. This approval may be a result of direct
acknowledgement of the consumer using the brand by others or less overt and a result of
attribution of the product itself to consumers. Mercedes is a brand that may signal social
approval to consumers.

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6. Self-respect: Self-respect occurs when the brand makes consumers feel better about Notes
themselves, e.g., when consumers feel a sense of pride, accomplishment or fulfillment.
A brand like Tide laundry detergent is able to link its brand to “doing the best things for
the family” to many homemakers.

The first three are more experiential and immediate, increasing in level of intensity. The latter
three are more private and enduring, increasing in level of gravity.

Self Assessment

Fill in the blanks:

3. ............................ relates to the likelihood that a brand will come to mind and the ease with
which it does so given different type of cues.
4. A ............................ is a comprehensive examination of a brand.

5. ............................ studies involve information collected from consumers on a routine basis

over time.

6. ............................ are diagnostic tools to uncover the true opinions and feelings of consumers
when they are unwilling or otherwise unable to express themselves on these matters.

7. ............................ refers to more soothing types of feelings - the extent to which the brand
makes consumers feel a sense of calm or peacefulness.

12.4 Measuring Outcomes of Brand Equity

The previous section described different approaches for marketers to gain a good understanding
of consumer brand knowledge structures to be able to identify and quantify potential sources of
brand equity. As a consequence of creating such knowledge structures, consumers should respond
more favorably to the marketing activity for a brand than if the brand had not been identified to
consumers. Specifically, a product with positive brand equity can potentially enjoy the following
seven important customer-related benefits:

1. Be perceived differently and produce different interpretations of product performance;

2. Enjoy greater loyalty and be less vulnerable to competitive marketing actions;

3. Command larger margins and have more inelastic responses to price increases and elastic
responses to price decreases;

4. Receive greater trade cooperation and support;

5. Increase marketing communication effectiveness;

6. Yield licensing opportunities;

7. Support brand extensions.

These benefits, and thus the ultimate value of a brand, depends on the underlying components
of brand knowledge and sources of brand equity. Via the indirect approach, individual
components can be measured, but to provide more direct estimates, their resulting value still
must be estimated in some way. The direct approach to measuring customer-based brand equity
attempts to more explicitly assess the impact of brand knowledge on consumer response to
different aspects of the marketing program for the firm. The direct approach is useful in
approximating the possible outcomes and benefits that arise from differential response to
marketing activity due to the brand, either individually or in aggregate.

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Notes
12.4.1 Comparative Methods

The main way to measure the outcomes and benefits of brand equity is with comparative
methods. Comparative methods involve experiments that examine consumer attitudes and
behavior towards a brand to more directly estimate the benefits arising from having a high
awareness and a positive brand image.

There are two types of comparative methods. Brand-based comparative approaches use
experiments in which one group of consumers respond to the marketing program or some
marketing activity when it is attributed to the target brand and another group responds to that
same activity when it is attributed to a competitive or fictitiously named brand. Marketing-
based comparative approaches use experiments where consumers respond to changes in the
marketing program or marketing activity for the target brand or competitive brands. We describe
each of these two approaches in turn. Conjoint analysis is then identified as a technique that, in
effect, combines the two approaches.

Brand-based Comparative Approaches

As a means of measuring the outcomes of brand equity, brand-based comparative approaches

hold the marketing activity under consideration fixed and examine consumer response based
on changes in brand identification. These measurement approaches typically employ experiments
where one group of consumers respond to questions about the product or some aspect of its
marketing program when it is attributed to the brand and one (or more) groups of consumers
respond to the same product or aspect of the marketing program when it is attributed to some
other brand or brands, typically a fictitiously named or unnamed version of the product or
service or one or more competitive brands. Comparing the responses of the two groups provides
some useful insights into the equity of the brand. Consumer responses may be on the basis of
beliefs, attitudes, intentions, actual behavior or even feelings.

The classic example of the brand-based comparative approach is “blind testing” research studies
where consumers examine or use a product with or without brand identification. These studies
often reveal how dramatically consumer perceptions differ depending on the presence or absence
of brand identification. Brand-based comparative approaches are also especially useful to
determine brand equity benefits related to price margins and premiums.

Critique: The main advantage to a brand-based comparative approach is that – because it holds
all aspects of the marketing program fixed except for the brand – it isolates the value of a brand
in a very real sense. Understanding exactly how knowledge of the brand affects consumer
responses to prices, advertising, etc. is extremely useful in developing strategies in these different
areas. At the same time, there is almost an infinite variety of marketing activities that potentially
could be studied so that the totality of what is learned will depend on how many different
applications are examined.

A crucial consideration with the brand-based comparative approach is the experimental realism
that can be achieved when some aspect of the marketing program is attributed to a fictitiously
named or unnamed version of the product or service. Brand-based comparative methods are
particularly applicable when the marketing activity under consideration represents a change
from past marketing of the brand, e.g., a new sales or trade promotion, ad campaign, or proposed
brand extension. If the marketing activity under consideration is already strongly identified
with the brand (e.g., an ad campaign that has been running for years), it may be difficult to
attribute some aspect of the marketing program to a fictitiously named or unnamed version of
the product or service in a believable fashion.

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There will necessarily be a trade-off involving a sacrifice of some realism in order to gain Notes
sufficient control to be able to isolate the effects of brand knowledge. Detailed concept statements
of the particular marketing activity under consideration can be employed in some situations
when it may be otherwise difficult for consumers to examine or experience that element of the
marketing program without being aware of the brand.

!
Caution A concern with brand-based comparative approaches is that the simulations and
concept statements that are used may highlight those particular characteristics that are
mentioned or featured and make them more salient than they would otherwise be,
distorting the results.

Marketing-based Comparative Approaches

Marketing-based comparative approaches hold the brand fixed and examines consumer response
based on changes in the marketing program. For example, there is a long tradition exploring
price premiums with these types of comparative approaches. In the mid-1950’s, Pessemier (1959)
developed a dollarmetric measure of brand commitment which involved a step-by-step increase
of the price difference between the brand normally purchased and an alternative brand. Variations
of this approach have been adopted by a number of marketing research suppliers to derive
similar types of demand curves, and many firms now try to assess price sensitivity and thresholds
for different brands. For example, Intel has routinely surveyed computer shoppers to find out
how much of a discount they would require before switching to a personal computer which did
not have an Intel microprocessor in it or, conversely, what premium they would be willing to
pay to buy a personal computer with an Intel microprocessor in it.
Marketing-based comparative approaches can be applied in other ways. Consumer response to
different advertising strategies, executions or media plans can be assessed through multiple test
markets. For example, IRI’s electronic test markets and other such research methodologies can
permit tests of different advertising weights or repetition schedules as well as ad copy tests.
By controlling for other factors, the effects of the brand and product can be isolated. Potential
brand extensions can also be explored in this fashion by collecting consumer evaluation to a
range of concept statements describing brand extension candidates.
Critique: The main advantage with the marketing-based comparative approach is the ease of
implementation. Virtually any proposed set of marketing actions can be compared for the
brand. At the same time, the main drawback of the comparative approach is that it may be
difficult to discern whether consumer response to changes in the marketing stimuli is being
caused by brand knowledge or more generic product knowledge. In other words, it may be that
for any brand in the product category, consumers would be willing or unwilling to pay certain
prices, accept a particular brand extension, etc.

Notes One way to determine whether consumer response is specific to the brand or not is
to conduct similar tests of consumer response with competitive brands, e.g., via conjoint
analysis.

12.4.2 Holistic Methods

Comparative methods attempt to approximate specific benefits of brand equity. Holistic methods
attempt to place an overall value for the brand in either abstract utility terms or concrete
financial terms. Thus, holistic methods attempt to “net out” various considerations to determine

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Notes the unique contribution of the brand. The residual approach attempts to examine the value of
the brand by subtracting out consumers’ preferences for the brand based on physical product
attributes alone from their overall brand preferences. The valuation approach attempts to place
a financial value on brand equity for accounting purposes, mergers and acquisitions, or other
such reasons. We describe each of these two approaches in turn.

Residual Approaches

Several researchers have employed “residual approaches” to estimate brand equity. A basic
tenet behind these approaches is that it is possible to infer the relative valuation of brands
through the observation of consumer preferences and choices if as many sources of measured
attribute values are taken into account as possible. According to these approaches, brand equity
is what remains of consumer preferences and choices after subtracting out objective characteristics
of the physical product.

Dillon et al. (2001) present a model for decomposing ratings of a brand on an attribute into two
components: (1) brand-specific associations (i.e., features, attributes or benefits that consumers
link to a brand) and (2) general brand impressions (i.e., overall impressions based on a more
holistic view of a brand). They empirically demonstrate their model properties in three product
categories: Cars, toothpaste, and paper towels.

Critique: Residual approaches provide a useful benchmark to interpret brand equity. In particular,
they may be useful for situations when approximations of brand equity are necessary and thus
may also be valuable to researchers interested in a financially-oriented perspective on brand
equity. The disadvantages with these approaches is that they are most appropriate for brands
characterized with a predominance of product-related attribute associations because they are
unable to distinguish between different types of non-product-related attribute associations.
Consequently, its diagnostic value for strategic decision-making in other cases is much more
limited.

Notes More generally, note also that residual approaches takes more of a “static” view of
brand equity by attempting to identify sources of consumer preferences in order to uncover
the contribution by the brand.

This approach contrasts sharply with a “process” view, as reflected by the brand-based and
marketing-based comparative approaches, which stress looking at consumer response to the
marketing of a brand and attempt to uncover the extent to which that consumer response is
affected by brand knowledge. Consumer response is defined in terms of perceptions, preferences,
and behaviors and, most importantly, with respect to a variety of marketing activities. That is,
comparative approaches go beyond attempting to dissect overall consumer product preferences
towards a brand to assess how consumers actually respond to the marketing of a brand and,
especially, new marketing activity supporting it.

Valuation Approaches

The ability to evaluate and put a price tag on a brand’s value may be useful for a number of
reasons: (1) mergers and acquisitions – both to evaluate possible purchases as well as to facilitate
disposal; (2) brand licensing – internally for tax reasons and to third parties; (3) fund raising – as
collateral on loans or for sale or leaseback arrangements; and (4) brand management
decisions – to allocate resources, develop brand strategy, or prepare financial reports.

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Notes

Task You know very well “Vimal Brand” its from the house of Reliance. What you
suggest to Mr. Mukesh Ambani to re-create the value of Vimal in the market?

For example, many companies are attractive acquisition candidates because of the strong
competitive positions of their brands and their reputation with consumers. Unfortunately, the
value of the brand assets in many cases is largely excluded from the company’s balance sheet
and therefore of little use in determining the firm’s value. It has been argued that adjusting the
balance sheet to reflect the true value of a company’s brands permits a more realistic view and
allows assessment of the purchase premium to book value that might be earned from the brands
after acquisition. Such a calculation, however, would require estimates of capital required by
brands and the expected after-acquisition Return-on-Investment (ROI) of a company.

Separating out the percentage of revenue or profits that is attributable to brand equity is a
difficult task. In the U.S., there is no conventional accounting method for doing so, and market
based estimates of value can differ dramatically from those based on U.S. accounting conventions.
In determining the value of a brand in an acquisition or merger, three main approaches are
possible:

1. Cost Approach: This view maintains that brand equity is the amount of money that would
be required to reproduce or replace the brand (including all costs for research and
development, test marketing, advertising, etc.). One commonly noted criticism of
approaches involving historic or replacement cost is that it rewards past performance in a
way that may bear little relation to future profitability – e.g., many brands with expensive
introductions have been unsuccessful. On the other hand, for brands such as Heinz,
Kellogg’s, and Chanel who have been around for decades, it would be virtually impossible
to find out what was the investment in brand development and largely irrelevant too.
Finally, it obviously is easier to estimate costs of tangible assets than intangible assets but
the latter often may lie at the heart of brand equity. Similar problems would exist with a
replacement cost approach – e.g., the cost of replacing a brand would depend a great deal
on how quickly the process were to take and what competitive, legal, logistical obstacles
that might be encountered.

2. Market Approach: According to this view, brand equity can be thought of as the present
value of the future economic benefits to be derived by the owner of the asset. In other
words, the amount an active market would allow such that the asset would exchange
between a willing buyer and willing seller. The main problem with this approach is the
lack of open market transactions for brand name assets and the fact that the uniqueness of
brands makes extrapolating from one market transaction to another problematic.

3. Income Approach: The third approach to determining the value of a brand argues that
brand equity is the discounted future cash flow from the future earnings stream for the
brand. Three such income approaches are:

(a) Capitalizing royalty earnings from a brand name (when these can be defined);

(b) Capitalizing the premium profits which are earned by a branded product (by
comparing its performance with that of an unbranded product);

(c) Capitalizing the actual profitability of a brand after allowing for the costs of
maintaining it and the effects of taxation.

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Notes

Case Study Brand Development by Identifying Brand Values

Introduction

The Cadbury brand name has been in existence since 1824 when John Cadbury opened his
first shop in Birmingham, England. (Cadbury Ireland, as a subsidiary of) Cadbury
Schweppes is the fourth largest confectionery business in the world selling chocolate,
sugar and gum based products. Cadbury Ireland is the number one confectionery company
in Ireland. Today Cadbury’s best tasting chocolate constitutes the main ingredient of
much of these products including everything from solid blocks to chocolate filled bars
and novelties. The Cadbury brand is associated with best tasting chocolate. This case
shows how marketing managers at Cadbury are working to ensure this association is
continually developed through their new ‘Choose Cadbury’ marketing strategy. Key
concepts of quality, taste and emotion underpin the Cadbury brand. These core values
help to differentiate Cadbury from other brands and ensure its competitive advantage.

The Cadbury Family of Brands

The Umbrella Brand

Research data shows that the Cadbury brand equity is highly differentiated from other
brands with consumers. Brand equity is the value consumer loyalty brings to a brand, and
reflects the likelihood that a consumer will repeat purchase. This is a major source of
competitive advantage. The Cadbury umbrella brand has endured in a highly competitive
market, and has established the link, in the mind of the consumer, that Cadbury equals
chocolate. An umbrella brand is a parent brand that appears on a number of products that
may each have separate brand images. The Cadbury umbrella brand image consists of
four icons namely the Cadbury script, the glass and a half, dark purple colour and the
swirling chocolate image. These elements create a visual identity for Cadbury that
communicates the ultimate in chocolate pleasure. Consumer research is conducted
regularly so managers can learn more about how the market perceives the brand. This
research has confirmed that the swirling chocolate and ‘glass and a half’ are powerful
images. Both clearly portray a desire for chocolate while the half full glass suggests core
values of goodness and quality.

Product Brands

The Cadbury brand has a profound impact on individual product brands. Brands have
individual personalities aimed at specific target markets for specific needs e.g. Time-out,
for example, is an ideal snack to have with a cup of tea. These brands derive benefit from
the Cadbury parentage, including quality and taste credentials. To ensure the success of
product brands every aspect of the parent brand is focused on. A Flake, Crunchie or Time-
out are clearly different and are manufactured to appeal to a variety of consumer segments.
However, the strength of the umbrella brand supports the brand value of each chocolate
bar. Consumers know they can trust a chocolate bar that carries Cadbury branding. The
relationship between Cadbury and individual brands is symbiotic with some brands
Contd...

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benefiting more from the Cadbury relationship, i.e. pure chocolate brands such as Dairy Notes
Milk. Other brands have a more distant relationship, as the consumer motivation to
purchase is ingredients other than chocolate, e.g. Crunchie.

Similarly issues such as specific advertising or product quality of a packet of Cadbury

biscuits or a single Crème Egg will, in turn, impact on the perception of the parent brand.
Similarly the umbrella brand has a strong brand value and a reputation that must be
supported by its individual brands.

Identifying Brand Values

We are all consciously and unconsciously affected by brands in our daily lives. When we
go to purchase a pair of training shoes we rarely make a purely practical decision. There
are numerous branded and non-branded options available. For many people, a pair of
trainers must sport a brand logo because that will communicate certain values to other
people.

The confectionery market elicits similar conscious and unconscious feelings of passion,
loyalty and enthusiasm. For many people, chocolate is Cadbury, and no other brand will
do. This consumer loyalty is critical because of the value of the chocolate confectionery
market and because, in all markets, a small number of consumers account for a large
proportion of sales. Loyal customers are the most valuable customers to have because
they will buy your product over and over again.

Branded products command premium prices. Consumers will happily pay that premium
if they believe that the brand offers levels of quality and satisfaction that competing
products do not. The most enduring brands have become associated with both tangible
and intangible properties over time. The most successful provoke a series of emotional or
aspirational associations and values in our minds that go way beyond the physical product.

Cadburys has identified these brand values and adjusts its advertising strategies to reflect
these values in different markets. Its strategy can vary from increasing brand awareness,
educating potential customers about a new product, increasing seasonal purchases, or as is
currently the case in the ‘Choose Cadbury’ campaign to highlight the positive emotional
value of the brand.

Questions

1. Explain the benefits and value an umbrella brand can bring to a family of branded
products.

2. What is the objective of advertising a brand? Explain this by referring to the ‘Choose
Cadbury’ marketing strategy.

Self Assessment

State whether the following statements are true or false:

8. Brand recall is a more demanding memory task than brand recognition.

9. Brand imagery deals with the intrinsic properties of the product or service.

10. Self-respect occurs when the brand makes consumers feel better about themselves.

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Notes 12.5 Summary

 A number of important themes were emphasized in this unit. One assertion of the unit is
that brand equity can be measured indirectly, by measuring the potential sources of brand
equity in terms of consumer brand knowledge, and directly, by measuring the different
possible outcomes or manifestations of brand equity in terms of differential effects of
marketing activity.

 Measuring sources of brand equity involves profiling consumer knowledge structures.

 Measuring outcomes of brand equity involves approximating the various benefits realized
from creating these sources of brand equity.

 There are many different ways to assess consumer knowledge and thus potential sources
of brand equity.

 Although it is particularly important to capture the breadth and depth of awareness; the
strength, favourability, and uniqueness of brand associations; the favourability of consumer
responses; and the intensity and activity of consumer loyalty, other qualitative and
quantitative measures can and should be employed. Successful brand management requires
a keen understanding of exactly how consumers think, feel, and act towards brands.

 The brand equity report should provide descriptive information as to what is happening
with a brand as well as diagnostic information as to why it is happening.

 Brand knowledge is not the facts about the brand - it is all the thoughts, feelings, perceptions,
images, experiences, and so on that become linked to the brand in the minds of consumers.

 Projective techniques are diagnostic tools to uncover the true opinions and feelings of
consumers when they are unwilling or otherwise unable to express themselves on these
matters.

 Recognition processes require that consumers be able to discriminate a stimulus – a word,

object, image, etc. – as something they have previously seen.

12.6 Keywords

Brand Image: Brand image is a broader term than brand personality and includes consumer’s
impressions about the brand’s physical attributes, its performance, the functional benefits, the
kind of people who use it, the emotions and associations it develops, and the imagery or the
symbolic meanings it generates.

Brand Imagery: How people think about a brand abstractly.

Brand Performance: The ways in which the product or service attempts to meet customers’ more
functional needs.

Brand Personality: Brand personality is viewed as a main driver of consumer preference and
usage in many product categories.

Brand Recall: Brand recall relates to consumers’ ability to identify the brand under a variety of
circumstances.

12.7 Review Questions

1. Can you measure the brand performance? Discuss.

2. What are the roles of brand audit?

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3. Why organization follow brand tracking system? Notes

4. What are the sources of measuring brand equity? Explain with suitable example.

5. How you recognize a brand? Discuss.

6. Briefly explain what is brand judgment?

7. How we measure the outcomes of brand equity?

8. Write short note on valuation approaches.

9. Why organization need brand equity report? What is the purpose of that report?

10. Discuss the projective techniques of measuring brand equity.

Answers: Self Assessment

1. (ii) 2. (iii)

3. Brand awareness 4. Brand Audit

5. Tracking 6. Projective techniques

7. Warmth 8. T

9. F 10. T

12.8 Further Readings

Books U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.
Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Asker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand

Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

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Notes

Online links www.en.wikipedia.org

www.web-source.net

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Unit 13: Growing and Sustaining Brand Equity Notes

CONTENTS

Objectives

Introduction

13.1 Growing and Sustaining Brand Equity

13.2 Designing and Implementing Branding Strategies

13.3 Brand-Product Matrix

13.4 Brand Hierarchy

13.5 Brand Equity at Different Hierarchical Level

13.5.1 Brand Loyalty

13.5.2 Brand Awareness

13.5.3 Perceived Quality

13.5.4 Brand Associations

13.6 Customer-based Brand Hierarchy

13.7 Summary

13.8 Keywords

13.9 Review Questions

13.10 Further Readings

Objectives
After studying this unit, you will be able to:
 Discuss the Designing and Implementing Branding Strategies
 Explain the Brand-Product Matrix and Brand Hierarchy
 Describe Customer-based Brand Hierarchy
 Provide insight into Brand Equity at Different Hierarchical Level

Introduction

Strong and powerful brands have a dramatic impact on consumer purchasing decision and can
build customer loyalty and improve profitability. As a result, there is an increasing interest in
branding, as organizations become more aware of the significance of building strong and
powerful brands which transcend boundaries and provide an organization with one of its most
valuable assets.

Indian companies across sectors are realizing that the long domination they enjoyed is under
severe pressure and old tactics of offers and promotions may not be the only way to manage a
brand going forward. In the current environment, where the value of many businesses has
fallen, brand has become even more important because it can help to sustain companies in tough
times. With recession causing many consumers to rethink their purchases, the question
confronting most of the companies is, whether to cutback, step-up or innovate their advertising

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Notes and promotion activities. Spending on marketing is critical during a slowdown. The brand
building effort during slowdown pays off when the economy revives.

The challenges facing brand managers have multiplied manifold in recent times. While the
basic principles of brand management may not have changed much over the years, launching
new brands has become more complex. It has become difficult for firms to differentiate their
products on quality alone. The challenges posed by these conditions require a change in mindset
as well as actions on the part of brand managers. These managers are challenged not only by the
imperatives of the daily crises forced by customer and competitive market activities, but also by
a need to think more strategically about the function of brand management itself.

13.1 Growing and Sustaining Brand Equity

Strong brand leadership positioned can be obtained through the skilful design and
implementations of marketing that capitalize on a well-conceived brand positioning. Maintaining
and expanding on that brand equity, however, can be quite challenging. Brand equity
management concerns those activities that take a broader and more diverse perspective of the
brand’s equity managing brand equity managing brands within the context of other brands, and
over multiple categories, over time, and across multiple market segments.

An organization’s branding strategy provides general guidelines on which brand elements it

chooses to apply across the products it offers. Two main tools in defining the corporate branding
strategy are the brand-product matrix and the brand hierarchy. The brand-product matrix is a
graphic representation of all the brands and products sold by the organization. While the brand
hierarchy reveals an explicit ordering of brands by displaying the number and nature of common
and distinctive brand components across an organization’s products. By capturing the potential
branding relationships between the different products sold by an organization, a brand hierarchy
is a useful means to graphically portray an organization’s branding strategy.

Through the skillful design and implementation of marketing program that capitalize on a
well-conceived brand positioning, strong brand leadership position can be obtained. Maintaining
and expanding on that brand equity, however, can be quite challenging. Brand equity
management concerns those activities that take a broader and more diverse perspective of the
brand’s equity-understanding how branding strategies should reflect corporate concern and be
adjusted, if at all, over time or over geographical boundaries or market segments. Managing
brands within the context of other brands, as well as managing brands over multiple categories,
over time, and across multiple market segments.

13.2 Designing and Implementing Branding Strategies

A key aspect of managing brand equity is the proper branding strategy. Brand names of products
typically do not consist of only one name but often consist of a combination of different brand
names and other brand elements. A branding strategy for a firm identifies which brand elements
a firm chooses to apply across the various products it sells. Two important tools to help formulate
branding strategies are the brand-product matrix and the brand hierarchy. Combining these
tools with consumer, company, and competitive consideration can help a marketing manager
formulate the optimal branding strategy.

Did u know? What is brand-product matrix?

The brand-product matrix is a graphical representation of all the brands and products sold
by the firm. The matrix or grid has the brands for a firm as rows and the corresponding
products as columns.

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The rows of the matrix represent brand-product relationships and capture the brand extension Notes
strategy of the firm with respect to a brand. Potential extensions must be judged by how effectively
the extension, in turn contributes to the equity of the existing parent brand. The columns of the
matrix represent product-brand relationships and capture the brand portfolio strategy of the
number and nature of brands to be marketed in each category.

A branding strategy can be characterized according to its breadth (i.e., in terms of brand-product
relationships and brand extension strategy) and its depth (i.e., in terms of product–brand
relationships and the brand portfolio or mix). The breadth of the branding strategy concerns the
product mix and which products the firm should manufacture and/or sell. The depth of the
branding strategy concerns the brand portfolio and the set of all brands and brand lines that a
particular seller offers for sale to buyers.

A firm may offer multiple brands in a category to attract different-and potentially mutually
exclusive-market segments. Brands also can take on very specialized roles in the portfolio-as
flanker brands to protect more valuable brands, as low-end entry level worth to expand the
customer franchise, as high-end prestige brands to enhance the worth of the entire brand line, or
as cash cows to milk all potentially realizable profits.

!
Caution Companies must be careful to understand exactly what each brand should do for
the firm and, more importantly, what they want it to do for the customer.

A brand hierarchy reveals an explicit ordering of all brand names by displaying the number and
nature of common and distinctive brand name elements across the firm’s products. By capturing
the potential branding relationships among the different products sold by the firm, a brand
hierarchy is a useful means to graphically portray a firm’s branding strategy. One example
representation of possible brand elements and thus potential levels of a brand hierarchy is
(from to bottom):

1. Corporate or company brand

2. Family brand

3. Individual brand

4. Modifier

A number of specific issues arise in designing the brand hierarchy. Brand elements at each level
of the hierarchy may contribute to brand equity through their ability to create awareness and
foster strong, unique, and favorable brand associations. The challenge in setting up the brand
hierarchy and arriving at a branding strategy is:

1. To design the proper brand hierarchy in terms of the number and nature of brand elements
to use at each level.

2. To design the optimal supporting marketing program in terms of creating the desired
amount of brand awareness and type of brand associations at each level.

In terms of designing a brand hierarchy, the number of different levels of brands that will be
employed and the relative emphasis or prominence that brands at different levels will receive
when combined to brand any one product must be defined. In general, the number of levels
employed typically is two or three. One common strategy to brand a new product is to create a
sub-brand where an existing company or family brand is combined with a new individual brand.

When multiple brand names are used as with a sub-brand, the relative visibility of a brand
elements as compared to other brand elements determines its prominence. Brand visibility and

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Notes prominence will depend on factors such as the order, size, color, and other aspects of physical
appearance of the brand. To provide structure and content to the brand hierarchy the specific
means by which a brand is used across different products and if different brands are used for
brand products, the relationship among those brands also must be made clear to consumers.

In terms of designing the supporting marketing program in the context of a brand hierarchy the
desired awareness and image at each level of the brand hierarchy for each product must be
defined. In a sub-branding situation, the desired awareness of a brand at any level will dictate
the relative prominence of the brand and the extent to which associations linked to the brand
will transfer to the product.

Notes In terms of building brand equity, determining which associations to link at any
level should be based on principles of relevance and differentiation.

In general, it is desirable to create associations that are relevant to as many brands nested at the
level below and to distinguish any brands at the same level. Corporate or family brands can
establish a number of valuable associations that can help to differentiate the brand such as
common product attributes, benefits, or attitudes, people and relationships; programs and values;
and corporate credibility. A corporate image will depend on a number of factors, such as:

1. The products a company makes

2. The actions it takes

3. The manner with which it communicates to consumers.

Communications may focus on the corporate brand in the abstract or on the different products
making up the brand line.

Brand extensions are when a firm uses an established brand name to introduce a new product.
Brand extensions can be distinguished as to whether the new product is being introduced in a
product strategy currently served by the parent brand (i.e., line extension) or a completely
different product category (i.e., category extension). Brand extensions can come in all forms.
Brand extensions offer many potential benefits but also can pose many problems.

The basic assumptions with brand extensions is that consumers have some awareness of and
positive associations about the parent brand in memory and at least some of these positive
associations will be evoked by the brand extension. Moreover, negative association.

Notes Discuss in detail, various aspects of brand creation.

Self Assessment

Fill in the blanks:

1. The ............................ is a graphical representation of all the brands and products sold by
the firm.

2. ............................ may focus on the corporate brand in the abstract or on the different products
making up the brand line.

3. ............................ offer many potential benefits but also can pose many problems.

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13.3 Brand-Product Matrix Notes

To characterize the product and branding strategy of a firm, one useful tool is the brand-product
matrix, a graphical representation of all the brands and products sold by the firm. The matrix (or
grid) has the brands of a firm as rows and the corresponding products as columns (Figure 13.1).

The rows of the matrix represent brand-product relationships and capture the brand extension
strategy of the firm in terms of the number and nature of products sold under firm’s brands. A
brand line consists of all products-original as well as line category extensions-sold under a
particular brand. Thus, a brand line would be one row of the matrix. A potential new product
extension for a product extension for a brand must be judged by how effectively it leverages
existing brand equity from the parent brand to the new product, as well as how effectively the
extension, in turn, contributes to the equity of the parent brand. In other words, what is the level
of awareness likely to be and what are the expected strength, favourability, and uniqueness of
brand associations of the particular extension product? At the same time, how does the
introduction of the brand extension affect the prevailing levels of awareness and the strength,
favourability, and uniqueness of brand associations or overall response towards the parent
brand as a whole?

Figure 13.1: Brand-Product Matrix

Products

1 2 … … N

B
.

Brands .
.
.
M

The column of the matrix, on the other hand, represent product-brand relationships and capture
the brand portfolio strategy in terms of the number and nature of brands to be marketed in each
category. The brand portfolio is the set of all brands and brand lines that a particular firm offers
for sale to buyers in a particular category. Thus, a brand portfolio would be one particular
column of the matrix. Different brands may be designed and marketed to appeal to different
market segments. A brand portfolio be must be judged on its ability to collectively maximize
brand equity.

!
Caution Any one brand in the portfolio should not harm or decrease the equity of the other
brands in the portfolio.

In other words, the optimal brand portfolio is one in which each brand maximizes equity in
combination with all other brads in the portfolio.

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Notes A product line is a group of products within a product category that are closely related because
they function in a similar manner, are sold to the same customer groups, are marketed through
the same type of outlets, or fall within given price ranges. A product line may be composed of
different brands or a single family brand or individual brand that has been line extended.
A product mix is the set of all product lines and items that a particular seller makes available to
buyers. Thus, product lines represent different sets of columns in the brand-product matrix that,
in total make up the product mix. A brand mix is the set of all brand lines that a particular seller
makes available to buyers.

The branding strategy for a firm reflects the number and nature of common and distinctive
brand elements applied to the different products sold by the firm. In other words, branding
strategy involves deciding which brand names, logos, symbols, and so forth should be applied
to which products and the nature of new and existing brand elements to be applied to new
products. A branding strategy for a firm can be characterized according to its breadth (i.e. in
terms of brand-product relationships and brand extension strategy) and its depth (i.e. in terms of
brand product-brand relationships and the brand portfolio or mix).

Example: A branding strategy can be seen as both deep and broad if the firm has a large
number of brands, many of which have been extended into various product categories.

13.4 Brand Hierarchy

The brand-product matrix helps to highlight the range of products and brands sold by a firm.
As described it measures each product is given one brand name in many cases a firm may want
to make connections across products and brands to show consumers how these products and
brands may be related. As a result, brand names of products are typically not restricted to one
name but often consist of a combination of multiple brand name elements. For example, an IBM
ThinkPad A22M notebook personal computer consists of three different brand name elements.
“IBM”, “ThinkPad” and “A22M”. Some of these brand name elements may be shared by many
different products, other brand name elements are limited to a more restricted range of products.
For example, whereas IBM uses its corporate name to brand many of its products, ThinkPad
designates a certain type of computer (i.e. one that is portable as opposed to desktop), and A22M
identifies a particular model of ThinkPad (i.e. one with a 1 GHz Intel Pentium III, 128 SDRAM, 30
GB EIDE hard disk etc.)

A brand hierarchy is a means of summarizing the branding strategy by displaying the number
and nature of common and distinctive brand elements across the firm’s products, revealing the
explicit ordering of brand elements. By capturing the potential branding relationships among
the different products sold by the firm, a brand hierarchy is a useful means graphically portraying
a firm’s branding strategy. Specifically a brand hierarchy is based on the realization that a
product can be branded in different ways depending on how many new and existing brand
elements are used and how they are combined for any one product. Because certain brand
elements are used to make more than one brand, a hierarchy can be constructed to represent
how products are nested with other products because of their common brand elements. Some
brand elements may be shared by many products, other brand elements may be unique to
certain products. Figure 13.2 displays a simple characterization of ESPN’s brand hierarchy.

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Figure 13.2: ESPN Brand Hierarchy

Notes

ESPN
“World Wide Leader in Sports”

ESPN ESPN
ESPN
News Classic

Television Network

ESPN Sports ESPN Radio

ESPN Books ESPN STORE

Consumer Goods

ESPN Entertainment
ESPN Music ESPN Zone
Video Games

Self Assessment

Fill in the blanks:

4. A ............................ can be characterized according to its breadth and its depth.

5. A ……………..is a means of summarizing the branding strategy by displaying the number

and nature of common and distinctive brand elements across the firm’s products, revealing
the explicit ordering of brand elements.

13.5 Brand Equity at Different Hierarchical Level

Now let us understand the concept of Brand Equity at Different Hierarchical Level

Figure 13.3: Brand Equity at Different Hierarchial Levels

Brand Equity

Brand Brand Perceived Brand Other Proprietary

Loyalty Awareness Quality Association Brand Assets

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Notes 13.5.1 Brand Loyalty

What happens when customers pay very little or no attention to a brand and buy on the basis of
other considerations? It suggests that a brand lacks hold on the customers. This indicates that the
brand is not the basis on which buying is done. A situation like this exhibits no equity creation
by the brand. Brand loyalty is one of the important bases of equity creation. When customers
show allegiance to the brand, it creates equity. Loyalty is at the heart of equity and is one of the
important brand equity assets.

Brand loyalty has always been one of key concerns of marketers. A brand is valued for its ability
to have a dramatic impact on a firm’s marketing performance. Loyalty provides insulation
against competitive assaults. It also allows the opportunity to command a premium. Earlier,
brand loyalty was viewed purely from the angle of a customer’s response or behaviour. Now,
behavioural angle is combined with attitudinal dimension in defining loyalty. “Brand loyalty is
the biased (i.e., non-random) behavioural response (i.e., purchase), expressed over time by
some decision making unit, with respect to one or more alternative brands out of a set of such
brands, and is a function of psychological (decision making, evaluative) processes”. Another
definition of loyalty is proposed as “consisting of repeated purchases prompted by a strong
internal disposition”. Thus loyalty has both behavioural and attitudinal dimensions to it.

Brand loyalty is not a dichotomous construct. It may operate at different levels. Five levels of
brand loyalty can be distinguished, extending from committed buyer at one extreme to switcher
or indifferent buyer at the other extreme. The other three are in-between states.

Each state implies a different type of brand equity asset and different types of marketing challenges.
At the lowest level, the indifferent buyer does not attach any importance to the brand. The
buying is done on a basis other than brand, like availability or price. These buyers are switchers
and are indifferent to the brand. The second category of buyers comprises the ones satisfied with
the brand (absence of dissatisfaction). These buyers have no reason to switch but may actually
switch given the stimulations from the competitors. These can be called ‘habitual buyers’. They
are vulnerable and can succumb to benefits offered by the competition. The third category of
buyers is satisfied with the brand, though they have switching costs in terms of time, money,
and risk. This category is somewhat safe because they would switch only when competition is
able to overcome switching costs for them. This set can be called ‘switching-cost loyal’ customers.
In all these categories of customers, a virtually negligible element of attitudinal commitment to
the brand is visible. They all signify different shades of behavioural loyalty.
The fourth category of loyalty implies that the buyers like the brand. They tend to have some
sort of emotional attachment to the brand. This attachment may get developed as the result of
prolonged relationship (usage over a long period of time) or use experience or perceived high
quality. People in this category consider a brand as a friend. It is an affect driven loyalty. At the
next level of loyalty, the customers tend to be committed to the brand. The commitment is “an
enduring desire to continue the relationship and to work to ensure its continuance”. Customers
get committed to a brand when the brand achieves personal significance for them. It happens
when buyers perceive it to be a part of themselves. They identify with the brand. It becomes a
vehicle of self expression. The strong identification may be based on functionality or images/
symbolism that it signifies. A case in point could be Coke as a ubiquitous symbol of what
America is all about, or Harley-Davidson which portrays something about the Harley rider
which words cannot express. The committed buyers are not usually available to the competition.
They are a solid asset base. The committed buyers spread a lot of good word-of-mouth publicity
around about the brand and thereby generate a market for it.

Loyalty implies customers who would continue to buy the brand. It represents a future revenue
stream. It also implies lesser loss of customers by way of defection or attrition. Hence, firms
with a greater proportion of loyal customers would have relatively lesser marketing costs

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(lower advertising costs) and greater revenue (from increased purchases, price premiums). Notes
Brand loyalty is generally a function of product usage experience whereas other brand equity
assets like awareness, associations, and perceived quality may not be related with usage
experience. However, these dimensions also contribute to loyalty. All brand equity dimensions
tend to have causal relationships among each other. One may cause the other (e.g., perceived
quality may be based on associations or association with a symbol may affect the awareness).
The key premise is that for brand equity to exist the customers remain loyal to the brand. When
customers are not loyal to the brand, the equity is not likely to exist.

Customer loyalty is of strategic importance to the firm. It is an asset. Loyalty adds value in four
ways. First, loyalty reduces marketing costs of the firm because it costs much less to do business
with repeat customers than attracting new ones. Loyalty also imposes entry barriers on potential
players as customers are not easily available to be captured. Secondly, loyalty provides trade
leverage. It is much easier to gain shelf space, trade cooperation, etc., when a brand has a loyal
customer base. Thirdly, it allows a marketer to attract new customers because loyal customers
signify assurance, confidence and faith in the brand. A prospect can more easily be converted
into a customer when a brand has loyal followers. Finally, loyal customers provide the firm
with lead time to respond to competitive moves (e.g., product improvement). Loyal customers
do not move quickly to such competitive endeavours, giving the firm the much needed time to
effectively counter competitive moves.

13.5.2 Brand Awareness

Brand awareness is the second brand equity asset. It includes brand recognition and brand recall.
Brand recognition is the ability to confirm prior exposure (“Yes, I’ve seen it earlier”) and recall
is the ability to remember the brand when a product category is thought about. This sort of
awareness is essential for a brand to be able to take part in the decision process. Brand awareness
may exist at three levels: brand recognition, brand recall and top-of-the-mind recall.

Brand recognition is at the bottom level of the awareness pyramid. When a person is able to
confirm prior exposure, the brand is said to have been recognised. It is gauged by aided recall
measures. Brand recognition is particularly important under low involvement buying situations,
especially when the decision is taken in stores or at the point of purchase. Recognition means
some sense of familiarity, which is sometimes sufficient in choice decision. Still higher level of
awareness is reflected in a person’s ability to recall a brand without any aid when a cue about a
product class is given. (E.g., “mention brands of tyres”). It indicates stronger brand position in
the mind. At a still higher level of awareness is the top-of-the- mind recall: the brand that comes
first to mind.

The top-of-the-mind awareness indicates the relative superiority a brand enjoys over others.
Sometimes, a brand is able to achieve such a dominant position that it becomes the only recalled
brand in the product category. Brand dominance, competitively, is a coveted state which every
marketer would like to achieve. A dominant position prevents other brands from getting in the
buyer’s mind. Hence, dominant brand is the only one that is considered while making a purchase.
Very few brands are able to achieve dominance. The cases may include Johnson & Johnson baby
powder, Dettol antiseptic, and Band Aid. Once upon a time, Dalda and Colgate also enjoyed this
status.

How does brand awareness create value? It does so in at least four ways. First, brand name acts
as the central node to which other associations can be attached. It is, therefore, the first
communication task. Brand recognition must be created first, without which other associations
cannot be established. Brand awareness allows easy access to these associations. Awareness acts
as an anchor to which other associations can be attached (e.g., attributes and benefits). It is for
this reason that marketers first establish a brand name and then expand its scope by incorporating

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Notes various attributes and benefit associations. Second, recognition – confirmation of prior exposure
– implies familiarity, which sometimes leads to liking. Brand recognition is particularly important
in low involvement conditions when the customer is not motivated to engage in extensive
product evaluation. Brands may simply be bought on the strength of familiarity. Third, awareness
also acts as a surrogate for a firm’s commitment and substance.

A brand which enjoys recognition may imply extensive advertising support, long standing of
the firm, brand success, etc. It suggests that a brand is supported by a firm. The perception of
substance and commitment of the firm to the brand sometimes influences buying in high
involvement conditions. Final source of value from awareness is a brand’s ability to be considered
in the decision process. Brand awareness is a crucial determinant of its participation in the
consideration or evoked set. Generally, when a brand is not able to get recall, it is not included
in the consideration set. Recall is essential for finding membership in the evoked set. Recall
sometimes may also be an adequate condition to survive, especially in low involvement buying.
The mind share (top-of-the-mind recall) often leads to market share.

13.5.3 Perceived Quality

The quality can be objective or perceived. The objective quality means the actual superiority of
product or service. However, the perceived quality is perception of superiority of a product or
service with respect to its intended function. Perceived quality is customer based. Different
people value different things. It involves judgement about what is valued by the customers.
Quality also needs to be distinguished from satisfaction. A customer may still be satisfied with
poor quality. Satisfaction is determined by expectations. On the whole, perceived quality is an
overall feeling that a customer tends to have about a brand. It is generally based on some
underlying quality dimensions (product attributes or benefits) on which the customer perceives
the product’s performance or delivery.

There are various ways in which perceived quality generates value. Firstly, perceived quality
gives a powerful reason to the customer to consider and buy a specific brand. Only brands that
are perceived to be of quality are considered in a purchase decision: the rest are all eliminated.
It is particularly important when a buyer is not motivated to collect information to determine
quality objectively, where information is not available and the customer does not have the
ability to obtain and process brand information. A customer relies on perceived quality and
makes the purchase decision. Second, perceived quality allows a brand to acquire a position or
differentiation. Brands are differentiated on the basis of their position on the quality spectrum.
Top-of-the-line brands are differentiated on the basis of perceived quality.

Brands with higher quality perception can afford to charge price premiums. The premium can
be further deployed in brand building efforts like research and development, awareness
enhancement, and strengthening association. Selling a quality brand at competitive prices
enhances value perceptions. This would further contribute to brand loyalty, increased customer
base, and improvement in marketing effectiveness and efficiency. Brands with higher perceived
quality find greater acceptance from trade partners and they are willing to carry such brands.
Finally, it can be the basis to leverage brands into launching extensions. A brand with strong
quality perceptions is likely to be extended further and has a greater probability of success.

13.5.4 Brand Associations

As has been discussed in earlier sections, a brand node may be connected with other information
nodes. Whatever a brand is connected with forms part of the brand association network. For
instance, a brand may have connected associations of feelings, character, symbols, life-style,
user, etc. Associations tend to have strength. Some associations linked to the brand may be

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strong, while others could be weak. Brand image is how a brand is perceived by the prospects in Notes
terms of these associations. Brand image may represent perception, but may not reflect reality.

From the equity point of view, brand association can create value in a number of ways. Brands
are bought for what is associated with them. Customers also exhibit loyalty for the same reasons.
Associations form an information chunk representing what the brand is. Information in chunks
is relatively easy to process, store, and retrieve. Associations, in fact, also help in interpretation
(e.g., visual of LIC - palms protecting the lamp) by providing the context. Associations also
influence recall of information. This is especially important during decision making. For instance,
‘Dart’ symbol helps recall the related information about the Blue Dart courier service.

The other ways in which associations create value, is by becoming the basis of differentiation.
Brands are differentiated essentially on the basis of associations e.g., Taj Tea and Tata Tea.
Associations that represent product attributes or benefits give consumers reason to buy (e.g., All
Clear shampoo with ZPTO, the agent that kills microbes which cause dandruff). Associations
also stimulate positive feelings. These feelings, in turn, are transferred to the brand. (E.g., Amul
girl symbol, celebrity endorsement by someone like Salman Khan for Thums up, a slogan like
“We bring good things to life”, all generate positive feelings). The feelings transform the use
experience for customers. Finally, associations provide basis for extending the brand into new
product categories (Pepsi into Pepsi Urbanwear).

A brand is an asset. It is a source of value generation. A brand’s equity is determined by a set of

assets and liabilities that are associated with it. These are brand associations, perceived quality,
loyalty, awareness and other proprietary assets.

Task How does brand awareness contribute to brand equity?

Self Assessment

State whether the following statements are true or false:

6. Brand loyalty has always been one of key concerns of marketers.

7. Brands can play special roles that facilitate the migration of customers within the brand
portfolio.

8. A brand concept can be viewed as a long-term investment developed and nurtured to

achieve long-run competitive advantage.

9. Reinforcing brand meaning may depend on the nature of brand associations involved.

13.6 Customer-based Brand Hierarchy

Keller’s views on brand equity are customer oriented. Brand equity is seen from the perspective
of the customer. Figure 13.4 depicts that the customer based brand equity is conceptualised as
the ‘differential effect’ of ‘brand knowledge’ on ‘consumer response’ to marketing of a brand. At
a more general level, equity is seen as the marketing effects – customer’s perception of value/
behaviours/preference – that occur due to brand name, which otherwise would not occur if
brand name is missing. It is the differential in marketing effect which could be attributed to
brand name. The differential that a brand name brings determines the brand worth of value.
Strong brands embody a kind of brand power which dramatically enhances the marketing
effects while the weaker brands are unable to achieve this feat. It is for this reason that strong
brands command huge financial value.

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Notes Figure 13.4: Differential Effect of Brand Knowledge

Brand Name

+ –
Product Marketing Effects Product
Value

These are three key elements in Keller’s framework of brand equity:

1. Differential effect

2. Brand knowledge

3. Customer response.

Consider the situation when a product without any brand name is marketed. It is a generic or
commodity. In such a situation, a consumer is likely to exhibit a particular kind of behaviour
pattern both in terms of liking, preference and perception of value. These are marketing effects
that are attributable to the commodity marketed in question. If the brand name is now attached
to the product, it acts as a moderator between marketing efforts and marketing effects. The
brand name may bring along with it a knowledge structure – associations tied to a brand node
– creating a change in the marketing effects. This differential is brand equity, the source of which
is brand knowledge structure. The differential effect can be both positive and negative. A brand
name, if it signifies associations that are not favourable, could create negative differential effect
in the form of consumers disliking, and valuing the brand less than the generic product.
Accordingly, customers may prefer to stay away from the brand.

This view of brand equity as differential effect caused by brand knowledge structure is particularly
useful in conducting operational decisions. Given the pressures that marketers are experiencing
about raising effectiveness and efficiency of decisions, this consumer oriented framework may
provide help in pin-pointing exactly what needs to be done in order to achieve desired results.
In the absence of this framework, marketers have to rely on aggregate indirect measures like
sales as a guide to decisions. The performance of a brand is directly influenced by the knowledge
structure it has. Accordingly, a marketer can explore the content and structure of brand knowledge
to arrive at the attending challenges that must be taken care of by the marketing efforts.

In this framework of customer based brand equity, brand knowledge is the key concept. It is
important to understand what kind of structure the brand knowledge has in the customer’s
mind. That is, when a customer is confronted with a brand name, what kind of associations
spring up. Whatever is connected to the brand name is a crucial determinant of customer
behaviour. As discussed earlier, a brand tends to form an associative network of nodes and
connections. The nodes signify concepts or information chunks which are linked to other nodes.
The links or connections may vary in their strength. A weak link would mean difficulty in
spreading activation, while a strong link suggests quick spreading of activation. The links
determine the speed at which other nodes would be activated and what would be recalled.
Activation spreads from one node to another. Thus, strength of link or connection is an important
concept. The recall of information contained in a node depends on its level of activation. Only if
activation exceeds a threshold level, is information recalled.

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Notes

Case Study Brand Equity in the Insurance Industry

T
he findings from our comprehensive brand equity study of the insurance industry
has implications for many industries. Here is what we found:

1. While there are over 100 insurance brands whose names people have heard of, few
achieve widespread top-of-mind awareness (first recall).
2. The insurance industry is highly fragmented with a low dominance of usage and
preference by a few brands.
3. Very few companies are aggressively claiming relevant differentiating benefits in
consumer communication. The few that are rapidly gaining market share (witness
GEICO which is claiming price/value leadership in auto insurance with substantial
advertising support).
4. Prices/rates are cited as one of the top differentiating benefits, suggesting that the
category is commodity-like for many consumers.
5. While behavioral loyalty is high, attitudinal loyalty is much lower, indicating a
consumer’s propensity to switch companies when the switching becomes easier
(something the Internet might facilitate).
6. Emotional connection to insurance brands is very low. Less than one in five
consumers say that their insurance brand has never disappointed them. (The top
brand on this measure disappointed two thirds of its customers at some time. All
brands below the top eight on this measure disappointed over 90% of their
customers.)
7. Our analysis of the most powerful differentiating benefits indicate that many of
them lie with the way in which insurance agents/representatives and the claims
adjusters interact with customers.
8. Our data would indicate that the industry is ripe for consolidation or strong niche
marketing.
Three opportunity areas emerged for insurance companies:
1. Reinventing the process by which they interact with their consumers.
2. Claiming a highly relevant, unique point of difference (focusing on a product
category, a consumer benefit or both).
3. Increasing emotional connection with their consumers.
The study provides the following lessons that are applicable to other industries:
1. Strong, recognizable brand names and logos are important, but the brands behind
those trademarks must stand for something unique and important in consumer’s
eyes. What does your brand stand for?
2. When price becomes the major point of difference in an industry, consolidation will
occur. The companies that are most likely to succeed in this environment (other than
the acquirers) are those that aggressively take ownership of relevant points of
difference and redesign themselves to consistently deliver against those points of
difference.
Contd...

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Notes 3. The importance of the customer points of contact to strong brands can not be
underestimated. Aligning these with your brand’s promise is critical. This may
require redesign of your hiring, training, performance management, recognition
and rewards and other HR practices. It may also require a redesign of your customer
service processes.

4. Companies that are market driven, truly caring about their consumers and constantly
changing their products and services to meet changing consumer needs, will succeed
at the expense of companies that are purely sales driven.

Questions

1. According to you, which factor affects the customer mind before taking insurance
policy.
2. Why you take insurance policy? Give valid reasons.

Self Assessment

Choose the appropriate answer:

10. Brand awareness include brand recognition and

(i) Brand value

(ii) Brand audit

(iii) Value chain

(iv) Brand recall

11. Which one is not the key element in Keller’s framework of brand equity.

(i) Brand knowledge

(ii) Customer response

(iii) Brand manager

(iv) None

13.7 Summary

 Effective brand management requires taking a long-term view of marketing decisions.

 A long-term perspective of brand management recognizes that any change in the

supporting marketing program for a brand may, by changing consumer knowledge,
affect the success of future marketing programs.

 Brand equity is reinforced by marketing actions that consistently convey the meaning of
the brand to consumers in terms of what products the brand represents, what core benefits
it supplies and what needs it satisfies and in terms of how the brand makes those products
superior and which strong, favourable and unique brand associations should exist in the
minds of consumers.

 Consistency of the marketing support is the most important consideration in reinforcing

brands.

 Revitalizing a brand requires either the lost sources of brand equity be recaptured or the
new sources of brand equity be identified and established.

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 Time is the most critical variable in estimating whether a brand has been successful in Notes
implementing these characteristics to make a perceptible difference with the consumers.

 With time symbols change, a brand’s customers move on and become older, brands created
around living personalities acquire new meanings, lifestyles change and consumer
expectations pose new challenges.

 Values, customs and behaviors are constantly changing and a brand’s ability to adapt
itself with the times would be vital than ever before.

 The brand has no other choice but to surpass even itself and become a constantly moving
target rather than a stationary one.

 Even a constantly evolving brand must have a brand blueprint that clearly identifies what
the brand stands for and outlines the dimensions across which the brand performance will
be measured.

 A number of brand dimensions are not quantitatively measurable but dividing a brand
into decipherable elements increases the chance of keeping the brand true to its real
identity or core.

13.8 Keywords

Brand Consistency: Brand consistency is critical to maintaining the strength and favourability
of brand associations.

Brand Equity: Brand equity is reinforced by marketing actions that consistently convey the
meaning of the brand to consumers in terms of what products the brand represents.

Brand Hierarchy: A brand hierarchy is a means of summarizing the branding strategy by

displaying the number and nature of common and distinctive brand elements across the firm’s
products, revealing the explicit ordering of brand elements.

Brand-Product Matrix: The brand-product matrix is a graphical representation of all the brands
and products sold by the firm.

Effective Brand Management: Effective brand management requires taking a long-term view of
marketing decisions.
Reinforcing Brands: Brand equity is reinforced by marketing actions that consistently convey
the meaning of the brand to consumers in terms of brand awareness and brand image.

13.9 Review Questions

1. How can one reinforce the brand?

2. Discuss the ways of revitalizing a brand.

3. Comment on the concept of effective brand management.

4. What are the roles of brand hierarchy? Discuss.

5. Brand loyalty how’s different from customer loyalty?

6. You choose a brand from Indian market it goes into almost critical stage, what is your
suggestion to redevelop the brand in the market?

7. Explain how you manage high-tech brands.

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Notes 8. As a brand manager how you design the branding strategies?

9. What do you mean by brand-product matrix?

Answers: Self Assessment

1. Brand-Product matrix 2. Communication

3. Brand extension 4. Branding strategy

5. Brand hierarchy 6. T

7. T 8. F

9. T 10. (iv)
11. (iii)

13.10 Further Readings

Books U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.
Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Aaker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand

Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Online links www.en.wikipedia.org

www.web-source.net

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Unit 14: Managing Brands over Time Notes

CONTENTS

Objectives

Introduction

14.1 Managing Brand Image

14.2 Stages of Concept Management

14.3 Reinforcing Brands

14.4 Adjustments to the Brand Portfolio

14.4.1 Migration Strategies

14.4.2 Acquiring New Customers

14.4.3 Retiring Brands

14.5 Brand Concept Management (BCM)

14.6 Brand Identity and Aaker

14.7 Brand Identity Prism

14.8 Revitalizing Brands

14.8.1 Hush Puppies

14.8.2 St. Joseph Aspirin

14.8.3 L’Oreal

14.9 Managing Brands in Crisis

14.10 Creating and Managing High-tech Brands

14.11 Summary

14.12 Keywords

14.13 Review Questions

14.14 Further Readings

Objectives
After studying this unit, you will be able to:
 Explain how to manage brand image
 Recall the Revitalizing of Brands
 Explain Managing Brands in Crisis
 Discuss the Creating and Managing High-tech Brands

Introduction

The long-term success of a brand depends on marketer’s ability to select a brand meaning prior
to market entry and operationalizing that meaning in the form of an image, and maintaining

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Notes that image over time. The fact that several brands have been able to maintain their image for
more than 100 years (e.g. Ivory’s ‘purity’ image) supports their position. A brand image has both
a direct effect on sales and a moderating effect on the relationship between Product Life Cycle
(PLC) strategies and sales. Finally, a brand image is not simply a perceptual phenomenon
affected by the firm’s communication activities alone. It is the understanding consumers derive
from the total set of brand-related activities engaged in by the firm.

Unfortunately, positioning/repositioning statements do incorporate what the brand image

should be but they do not indicate how the image can be managed over time. Instead, short-term
market driven factors such as current consumer needs and competitors are used as a basis for
managing the brand’s image/position and there is no strategic orientation.

14.1 Managing Brand Image

Positioning and repositioning decisions are often taken in managing the brand over time. That
is, brands are often repositioned to make them appealing in changing market conditions. But a
limitation of these actions is that they are driven by short-term orientation. These decisions are
often stimulated by shifts in consumer needs or competitive moves. Accordingly, the long-term
perspective usually tends to be absent in positioning and repositioning decisions. Park, Jaworski
and MacInnis propose a framework for managing the image over time. Image management
necessitates coordination between sales inducing activities and communication activities. Long-
term brand image management begins with the brand concept selection.

First of all, the brand concept needs to be selected. The firm selects the meaning of the brand.
It is derived from basic consumer needs. One way of looking into consumer needs is to see them
as functional, symbolic and experiential needs.

Functional Needs: These concern the performance or functional aspects of living, for example,
the need to solve the problem of dirt in the house or solution to oral hygiene or protection
against germs.

Symbolic Needs: The symbolic needs are learned needs. These reflect desires for self-enhancement,
identification with a group or need for esteem.

Experiential Needs: These reveal the third aspect of human beings. People seek pleasures through
their senses. Some seek cognitive stimulations or variety.

Depending upon a product’s predominant delivery characteristics, it is classified into various

categories. For instance, products like vacuum cleaners, fans, bulbs, etc., can be classified as
functional because of their problem solving role. Expensive watches, clothes, car can be classified
as symbolic for their ability to enhance self-esteem and group identification. Products like food,
theme parks, and games would all fall into the experiential category because they all deliver
sensory satisfaction.

The product classification that prevails need not be a guide to brand concept selection. It reflects
how various products are categorized in common consciousness. It is a generic product image in
people’s mind. The popular product category perception may sometimes impose some sort of
constraint but need not totally guide a brand’s image to be created in a particular category. For
instance, though lawnmowers are a functional product, they can be positioned with an experiential
or symbolic image. Brand concept selection essentially means what image the marketer intends
to build along these consumer needs dimensions. For instance, writing instruments like pens
may be considered to offer solution to functional needs. Brands like Mont Blanc, Cross, Waterman,
Cartier and Dior are positioned more as symbolic brands. Their delivery is in terms of esteem
and identification need satisfaction of the prospects.

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Can a brand be made to offer multiple benefits – a combination of functional, symbolic and Notes
experiential benefits? Theoretically, it is possible. Many brands in the marketplace attempt to
combine two benefits and create an image accordingly. But this kind of strategy is not without
its dangers. Combining multiple benefit concepts into a brand creates inconsistency in
positioning strategies in the long run. Multiple concept brands compete against a greater number
of brands. This happens because they indirectly touch multiple benefit categories. For instance,
a brand which combines functional and symbolic concepts would attract competition from
brands that are exclusively positioned on functional and symbolic image dimensions. Lastly,
combining multiple concepts into a brand often makes it difficult for consumers to decode its
true meaning. For instance, a toothpaste like Aquafresh, which tries to bring three attributes
under a single umbrella makes it difficult on the part of prospects to combine it into a unified
whole. In the process, prospects experience difficulty in decoding the brand’s meaning. This
increases the cost of managing the brand over various stages.

The initial challenge for the brand manager is to decide on the brand concept. The brand concept
chosen – functional, symbolic or experiential – would remain consistent over the lifetime of the
brand. The brand concept becomes the guide in executing positioning decisions. Though the
actual position of the brand may change depending on market conditions, its concept would
remain the same over the brand’s life. In other words, brand concept defines the brand’s market
boundaries within which the brand may change its position.

Example: Eternal Brands and their Concepts

Lifebuoy: The brand has unwaveringly clung to its original concept. Lifebuoy originated
as carbolic soap with a functional benefit concept: it effectively washes off germs that
come with dirt and grime.

Lux: Lux soap seems to have defied the concept of time. It continues to rule the Indian
toilet soap market ever since it was launched over 50 years ago. The brand has been a soap
which promised the beauty of film stars – symbolic concept. Though the toilet soap market
in India has witnessed many ups and downs, Lux continues to charm the masses with its
beauty appeal.

Dettol: Dettol has a history going back over sixty years old. The brand has travelled from
the battlefield to households as an effective germicide. Its promise of protection against
germs has remained constant. Dettol religiously stuck to its core benefit – functional
appeal. The brand is still the market leader and a hot property in its category.

Bourn Vita: Cadbury’s Bourn Vita has ruled the brown beverage market ever since its
introduction. The brand’s core proposition has remained the same over the long period it
has been in the marketplace. It continues to offer the ‘essential vitamins and minerals’ that
children need. The brand is functionally focused on its benefits. Though the brand’s
positioning has been changed (now RDA formula) but its concept has not been diluted.

Colgate: Colgate has a long history. It was founded by William Colgate way back in the
early 1800s. Colgate is worldwide number one in oral care. Colgate has always stood for
clean, white and healthy teeth. The brand has constantly upgraded its image and expanded
its range to cover all possible segments in oral care. It has never compromised on its
concept – Colgate is one word for dental care.

Nirma: It all started with Karsanbhai Patel creating a detergent powder in 1969. It started
with affordability at its core (Nirma sold for ` 3.50 a kg. when Surf was ` 15). Ever since
then, though the brand has reached out to different product categories, it has always
shown signs of progress. The brand signifies affordability and economy unambiguously
to all.

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Notes 14.2 Stages of Concept Management

Three stages of brand management can be identified: introduction, elaboration and fortification.
The relationship between brand concept and image needs to be properly managed over these
stages of a brand. The management faces a challenge of adopting specific positioning strategies
in these stages depending upon what is to be achieved.
Introduction Stage: At the time of a brand’s entry, the key task is to establish its image or
position.

Example: LML has recently launched its new brand of two-wheeler scooter by the name
of ‘Prithvi’.
The challenge at this stage is to utilize the marketing mix in such a manner that its brand image
or position is established in the marketplace, whatever is decided upon.
Similarly, Tata has launched it shoe brand ‘Stryde’ recently. A brand’s communication must
establish its image in the prospect’s mind.
Besides establishing the brand position or image at the introductory stage, brand managers
must utilize marketing mix variables so that transaction barriers are reduced or eliminated.
LML must ensure that information about ‘Prithvi’ is available, and can be accessed easily.
Elaboration Stage: After introduction, competition usually follows. From being a loner, the
brand now gets pitched against competitive brands. The task facing brand managers is how to
enhance the brand’s image so that it’s perceived as superior to its rivals. Image enhancement
could as well be triggered from the customer side. Over time, competitors copy the brand,
resulting in the same customer perception. The brand’s value now needs to be enhanced. For
instance, Nirma’s superiority in the economy segment was neutralized because a plethora of
similar brands entered the market.
A brand can employ a number of positioning strategies to enhance its value at the elaboration
stage. These include, positioning the brand specific to a particular need or usage occasion, (e.g.,
petroleum jelly’s use as a hand softener could be made specific to use after washing anything; or,
a watch can be made to be used while running); a feature could be added or deleted (e.g., Maggi
Sauce became ‘Hot and Sweet’ by way of a product extension); an attribute could be improved
(e.g., Rin with more whitening power) and finally, a brand’s exclusivity or scarcity could be
enhanced to increase its perceived value (restricting the brand’s availability to some exclusive
outlets).
Fortification Stage: Over time, the firm may branch out into manufacturing products in other
classes. At the fortification stage, the elaborate brand image needs to be connected with the
image of their products.

Example: Nirma began with the economical yellow detergent brand. But over time, the
company ventured into toilet soaps, shampoos, and toothpastes. The idea at the fortification
stage is to connect products in different product classes with images so that they mutually
reinforce each other and strengthen the image of each brand. The Nirma example illustrates this
point particularly well. Originally, Nirma – the company has created a mix of brands like Nirma
Beauty, Nirma Bath, Nirma Lime, Nirma Super Bar, Nirma Bar, Nirma Super Powder, Nirma
Harbolina – connected with the common image and positioning of value for money. The brands
mutually support and strengthen each other. The firm fortifying a brand in this manner can gain
two advantages. First, the communication costs for any single brand are reduced. Secondly,
similar images can provide an impression of complementarity. Accordingly, consumers may
begin to use them as a package.

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Notes
Figure 14.1: Concept Management Stages

Introduction Elaboration enhance Fortification

establish brand brand image to achieve extend image to
image or position superiority over rivals other products

Self Assessment

Fill in the blanks:

1. The relationship between brand concept and …………needs to be properly managed over
these stages of a brand.

2. At the ………….stage, the elaborate brand image needs to be connected with the image of
their products.

14.3 Reinforcing Brands

Brand equity is reinforced by marketing actions that consistently convey the meaning of the
brand to consumers in terms of brand awareness and brand image. The important considerations
concerning brand reinforcement are as follows:

1. Maintaining Brand Consistency: The most important consideration in reinforcing brands

is the consistency of the marketing support that the brand receives, both in terms of the
amount and nature of that support. Brand consistency is critical to maintaining the strength
and favourability of brand associations. Brands that receive inadequate support in terms
of shrinking research and development and marketing communication budgets run the
risk of becoming technologically disadvantaged.

2. Protecting Sources of Brand Equity: Although brands should always look for potentially
powerful new sources of brand equity, a top priority should be given to preserve and
defend those sources of existing brand equity. For example, Procter & Gamble made a
minor change in the formulation of its Cascade automatic dishwashing detergent, primarily
for cost-saving reasons. As a result, the product was not quite as effective as it previously
ad been under certain, water conditions. After discovering the fact, one of P&G’s chief
competitors, Lever Brothers, began running comparative advertisements for its Sunlight
brand featuring side-by-side glasses that claimed, “Sunlight Fights Spots Better than
Cascade”. Since the consumer benefit of “virtually spotless” is a key brand association and
source of brand equity for Cascade, P&G reacted swiftly. It immediately returned Cascade
to its original formula and contacted Lever Brothers to inform that company of the change,

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Notes effectively forcing it to stop running the new Sunlight ads on legal grounds. This episode
clearly demonstrates that Procter & Gamble fiercely defends the equity of its brands.

3. Fortifying versus Leveraging: There are a number of different ways to raise brand awareness
and create strong, favourable and unique brand associations in consumer memory to
build customer-based brand equity. The advantage of creating a brand with a high level of
awareness and a positive brand image is that many benefits may accrue to the firm in
terms of cost savings and revenue opportunities.

Notes Marketing actions that attempt to leverage the equity of a brand in different ways
may help to fortify the brand by enhancing its awareness and image.

4. Fine-tuning the Supporting Marketing Programme: Reinforcing brand meaning may

depend on the nature of brand associations involved. Several specific considerations play
an important role in reinforcing brand meaning in terms of product-related performance
and non-product related imagery associations, as follows:

(a) Product-related Performance Associations: The core associations of a brand are primarily
product-relate performance attributes or benefits, innovation in product design,
manufacturing, and merchandising is especially critical to enhancing brand equity.
For example, after Timex watched brands such as Casio and Swatch gain significant
market share by emphasizing digital technology and fashion in their watches, it
made a number of innovative marketing changes. Within a short period of time,
Timex introduced Indigo glow-in–the dark technology, showcased popular new
models such as the Iron man in mass media advertising, and launched new Timex
stores to showcase its products. These innovations in product design and
merchandising have significantly revived the brand’s fortunes.

(b) Non-product related Imagery Associations: For brands whose core associations are
primarily non-product-related attributes and symbolic or experiential benefits,
relevance in user and usage imagery is critical. Because of their intangible nature,
non-product-related associations may be potentially easier to change. In categories
in which advertising plays a key role in building brand equity, imagery may be an
important means of differentiation.

14.4 Adjustments to the Brand Portfolio

Managing brand equity and the brand portfolio requires taking a long-term view of the brand.
As part of this long-term perspective, it is necessary to carefully consider the role of different
brands and the relationships among different brands in the portfolio over time. In particular, a
brand migration strategy needs to be designed and implemented so that consumers understand
how various brands in the portfolio can satisfy their needs as they potentially change over time.

!
Caution Managing brand transitions are especially important in rapidly changing,
technologically intensive markets.

14.4.1 Migration Strategies

Brands can play special roles that facilitate the migration of customers within the brand portfolio.
For example, entry-level brands are often critical in bringing in new customers and introducing

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them to the brand offerings. Ideally, brands would be organized in consumers’ minds so that Notes
they at least implicitly know how they can switch among brands within the portfolio as their
needs or desires change. For example, a corporate or family branding strategy in which brands
are ordered in a logical manner could provide the hierarchical structure in consumers’ minds to
facilitate brand migration.

14.4.2 Acquiring New Customers

All firms face trade-offs in their marketing efforts between attracting new customers and retaining
existing ones. Firms proactively develop strategies to attract new customers, especially younger
ones. The marketing challenge in acquiring new customers lies in making a brand seem relevant
to customers from potentially vastly different generations and life styles.

Some alternative approaches that attempt to broaden the marketing programme and attract
new customers as well as retain existing ones are discussed as follows:

1. Multiple Marketing Communication Programmes: One approach to attract a new market

segment for a brand and satisfy current segments is to create separate advertising campaigns
and communication programmes for each segment. The increased effectiveness of targeted
media makes multiple targets more and more feasible. The drawbacks of this approach is
the expense involved and too much of media overlap among target groups.

2. Brand Extension and Sub-brands: Another approach to attract new customers to a brand
and keep the brand modern and up-to-date is to introduce a line extension or establish a
new sub-brand. These new product offerings for the brand can incorporate new technology,
features, and other attributes to satisfy the needs of new customers as well as satisfy the
changing desires of existing customers. For example, Lifebuoy introduced Lifebuoy plus
young men and Lifebuoy gold for young women.

3. New Distribution Outlets: Attracting a new market segment become simple when we
make the product more available to that group. For example, the sale of Nescafe Sunrise
is increased by making that product more available to the target group.

14.4.3 Retiring Brands

The adverse changes in the marketing environment may make some brands not worth saving.
Their sources of brand equity may have essentially dried up or even worse, damaging and
difficult to change new associations may have been created. In such a situation, decisive
management actions are necessary to properly retire the brand. Several options are possible to
deal with a fading brand. The first step in retrenching a fading brand is to reduce the number of
its product types. Such actions reduce the cost of supporting the brand and allow the brand to put
its best foot forward. In some cases, the brand is beyond repair and more drastic measures have
to be taken. One possible option for fading brands is to consolidate them into a stronger brand.
Finally, a more permanent solution may be to discontinue the product altogether.

Self Assessment

Fill in the blanks:

3. Brands that receive inadequate support in terms of shrinking …………..and marketing

communication budgets run the risk of becoming technologically disadvantaged.

4. The marketing challenge in acquiring ………………..lies in making a brand seem relevant

to customers from potentially vastly different generations and life styles.

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Notes 14.5 Brand Concept Management (BCM)

Taking a strategic long-term approach, presented a normative framework termed Brand Concept
Management (BCM) for selecting, implementing and controlling brand image over time to
enhance market performance. The framework consists of a sequential process of selecting,
introducing, elaborating and fortifying a brand concept. The brand concept guides positioning
strategies, and hence the brand image, at each of these stages. Three types of brand concepts are
developed based on consumer needs, namely Functional, Symbolic and Experiential concept.

1. A brand with a functional concept is defined as one designed to solve externally generated
consumption needs or in other words a product that fulfills immediate consumption
needs should be driven by a functional concept.

2. A brand with a symbolic concept is one designed to associate the individual with a desired
group, role or self-image. This is ideal for products that fulfill internally generated needs
like self-enhancement or ego identification.

3. A brand with an experiential concept is designed to fulfill internally generated needs for
stimulation or variety.

Table 14.1: Brand Concept Management

Concept Introduction Concept Elaboration Concept Fortification

Brand with a Functional
Concept:
1869 Vaseline Petroleum Jelly
introduced to the market as a
lubricant and a skin balm for
burns
Brand with a Symbolic
Concept:
Almost a century ago, the
Lenox
Company introduced a line of
fine china
Brand with an Experiential
Concept:
Barbie Doll was introduced to
the market in 1959
Vaseline Petroleum Jelly
Problem-solving generalization Vaseline Health and beauty
strategy related products:
Produce usage extended to Vaseline Intensive Care
multiple-usage situations: Lotion
preventing diaper rash, Intensive Care Bath
removing eye makeup, lip balm
Beads
Vaseline Constant Care
Vaseline Dermatology Formula
Range of Vaseline Baby Care
Products
Lenox China
Market Shielding Lenox Crystal
A tightly controlled marketing Lenox silverplated
mix to preserve the status hollowware
concept Candles
Jewelry
Barbie Doll
Brand accessory strategy Barbie Magazine
Accessories like outfits, Barbie Game
houses, furniture, cars, jewelry Barbie Boutique
for Barbie, Ken

!
Caution Products that fulfill experiential needs and provide sensory pleasure, variety,
and/or cognitive stimulation should be driven by an experiential concept.

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Once a broad needs-based concept has been selected, it can be used to guide the positioning Notes
strategy through the three management stages of introduction, elaboration and fortification. In
the introductory stage of BCM a set of activities are designed to establish a brand image/
position in the marketplace during the period of market entry. During the elaboration stage,
positioning strategies focus on adding value to the brand’s image so that its perceived superiority
relative to the competitors can be established or sustained. In the final stage of BCM, the
fortification stage, the aim is to link an elaborated brand image to the image of other products
produced by the firm in different product classes. The specific strategy implemented at the three
different stages depends upon the initial concept type. Below is an example of brands from each
concept type and the implication for long-term brand management.

A brand concept can be viewed as a long-term investment developed and nurtured to achieve
long-run competitive advantage. The concept can especially prove useful in establishing,
maintaining and enhancing long-term customer relationships. In fact consumers enter into
relationships with brands because continuity of interaction, and not the reduction of choice, is
an important motivating factor. A number of studies in various product categories indicate that
consumers prefer a vast array of choices and attempts to reduce consumer choices have often
been met with resistance.

Did u know? The BCM model ensures a continuity of interaction with the brand and an
increasing array of choices as it goes from the introduction to the elaboration and
fortification stage.

The three different concepts provide clarity to the brand and the successive stages help increase
consumer loyalty and involvement with the brand. Staying true to a single concept can help a
brand build a consistent and unambiguous long-term relationship with the consumers.

But the success of a brand concept depends upon such factors as the effectiveness and efficiency
of positioning efforts and the competitive environment. Even a brand whose image has been
managed successfully can decline if the brand concept ceases to be valued by the target customers
and the market trends in a particular category shift significantly. E.g. Jiffy Pop popcorn, meant
to be cooked over a stove, became obsolete by the ubiquitous usage of microwave oven. Jiffy
Pop eventually introduced Microwave Jiffy Pop but not before it was too late to save the brand.
A single brand can also fulfill more than one type of need e.g. traveling first class with a
premium Airlines could fulfill both symbolic needs as well as experiential needs, therefore
making a single brand concept insufficient as the underlying basis for long-term brand strategy.

14.6 Brand Identity and Aaker

Today the most comprehensive and well-known academic treatment of brand equity and a
number of issues in building, measuring and managing brand equity has been by David Aaker
defines brand equity as a set of five categories of brand assets and liabilities linked to a brand,
its name, and symbol that add to or subtract from the value provided by a product or a service
to a firm and/or to that firm’s customers. These categories of brand assets are:

1. Brand loyalty

2. Brand awareness

3. Perceived quality

4. Brand associations

5. Other proprietary assets (e.g. patents, trademarks, and channel relationships).

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Notes These assets provide value to both the customers and the firm in the long-term. Table 14.2
presents a summary of guidelines emerging from his framework as found in his two landmark
books Managing Brand Equity and Building Powerful Brands.

Table 14.2: Aaker’s 10 Guidelines for

Building Strong Brands

Brand Identity Have an identity for each brand. Consider the perspective of brand as-
person, brand-as-organization, and brand-as-symbol, as well as the brand-
as product. Identify the core identity. An Image is how the customer
perceives you but an identity is how you aspire to be perceived by the
customer.
Value proposition Know the value proposition for each brand that has a driver role. Consider
emotional, symbolic and functional. Know how endorser brands will
provide credibility. Understand the customer/brand relationship.
Brand position For each brand, have a brand position that will provide clear guidelines to
those implementing a communication program. Recall that a position is the
part of identity that is actively communicated.
Execution Execute the communication program so that it not only is on target with
the identity and position but also achieves brilliance and durability.
Generate alternatives and consider options beyond media advertising.
Consistency over time Have a consistent identity, position and execution over time. Maintain
symbols, imagery and metaphors that work. Understand and resist
organizational biases towards changing the identity, position and
execution.
Brand system Make sure the brands in the portfolio are consistent and synergistic.
Have or develop strategic brands that help support brand identities and
positions. Exploit branded features and services. Use sub-brands to clarify
or modify.
Brand leverage Extend brands and develop co-branding programs only if the brand
identity will be both used and reinforced. Identify range brands and
develop an identity for each. Specify how that identity will be different in
disparate product contexts. If a brand is moved up or down, take care to
manage the integrity of resulting brand identity.
Tracking brand equity Track brand equity over time, including brand awareness, perceived
quality, brand loyalty, and especially brand associations. Have specific
communication objectives. Especially note areas where the brand identity
and communication objectives are not reflected in the perceptions of the
brand.
Brand responsibility Have someone in charge of the brand who will create the identity and
positions and coordinate the execution over organizational units, media
and markets.
Invest in brand Continue investing in brands even when the financial goals are not being
met.

According to Aaker, a particularly important concept for building and managing long-term
brand equity is that of Brand identity. Brand identity according to Aaker is a unique set of brand
associations and these associations represent what the brand stands for and imply a promise to
customers from the organization members. Brand identity structure includes a core and extended
identity. The core identity–the central, timeless essence of the brand-is most likely to remain
constant as the brand travels to new markets and products. The extended identity includes brand
identity elements, organized into cohesive and meaningful groups.

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Self Assessment Notes

Fill in the blanks:

5. Three types of brand concepts are developed based on consumer needs,

namely……………...

6. According to Aaker, a particularly important concept for building and managing long-
term brand equity is that of ………………

14.7 Brand Identity Prism

Brand identity has become one of the most contemporary concepts for building and managing
brands over time and Jean-Noel Kapferer, the famous French brand strategist, provides a different
rendition of the concept. Brand identity prism is organized around six key aspects: Brand
Physique, Personality, Relationship, Culture, Reflection and self-image. According to Kapferer,
the concepts of Brand Image and Brand positioning do not work in today’s environment.
A brand image is a synthesis made by the people of the various brand signals, e.g. brand name,
visual symbols, products, advertisements, sponsoring, patronage, and articles. An image results
from decoding a message, extracting meaning and interpreting signs. But sometimes companies
get obsessed with the need to build an appealing image that will be favorably perceived by all
and thus Brand Image ends up focusing too much on appearance and much lesser on brand
essence. Brand positioning on the other hand focuses too much on the product itself and basically
answers the Why? For Whom? When? and Against whom? Questions for the product. Positioning
as a concept becomes inadequate in case of a multi-product brand and does not say anything
about brand communication, culture, form or spirit. This is where the concept of Brand Identity
provides a more holistic approach to managing the brand in the long-term. As shown below,
Brand Identity can be represented by a hexagonal prism.

Figure 14.2: Brand Identity Prism

Picture of Sender
E I
X N
T Physique Personality T
E E
R R
N N
A A
L Relationship Culture L
I I
Z Z
A A
T T
I Reflection Self-image I
O O
N N
Picture of Receiver

The Brand Identity Prism includes a vertical division. The facets on the left physique, relationship,
reflection- are the social facets that give the brand its outward expression. The facets on the
right-personality, culture and self-image are those incorporated within the brand itself, within
its spirit. Without delving deeper into each of the brand facets, for the current purpose it is
essential to understand that these six facets define the identity of the brand as well as the
boundaries within which it is free to change or to develop. The prism concept is an organic
viewpoint of the brand, as someone that is a communicating entity with the gift of speech. Since
a brand is a speech in itself, it can be analyzed like any other speech or form of communication.

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Notes Semiologists have taught us that behind any type of communication there is a sender and a
receiver. Both physique and personality of a brand help define the sender and build an image of
the sender of the brand communication. Every type of communication also speaks to a recipient:
when we speak, everything seems as if we are addressing a certain type of person or audience.
Reflection (How the customer wishes to be seen as a result of using the brand) and Self-image
(The inner relationship or our understanding of selves due to our attitudes towards a particular
brand) both help define the recipient. The remaining two facets, relationship and culture, bridge
the gap between sender and recipient. Managing brands strategically over long-term would
require the awareness that the brand would slowly gain its independence and a meaning of its
own. As it grows it defines its own boundaries, its facets take shape but it slowly loses some
degree of freedom and certain communication concepts may seem alien to the brand identity
now.

Notes According to Kapferer, conducting research with consumers will not provide brand
identity or strategy but it should definitely provide one or several brand plans or visions.

Then it would be up to the senders of the brand communication (the brand managers/
brand custodians) to choose the one that best serves the brand in its target market and
completely focus on that.

Task What is reason of 100 successful years of Godrej? How they manage their brand
name?

14.8 Revitalizing Brands

A number of changes can occur in a market over time including changes in consumer tastes and
preferences, emergence of new technology and competitors, a change in the regulatory
environment. All these can adversely impact the fortunes of a brand and a number of brands
across categories have faded or virtually disappeared over the years. But a number of other
brands have managed to stage successful comebacks in recent years through new marketing
programs and at times renewed consumer interest. Revitalizing a brand requires either that lost
sources of brand equity are recaptured or new sources of brand equity are identified and
established. Below are some examples of brands that have been revived, revitalized, repositioned
and made meaningful again.

14.8.1 Hush Puppies

Hush Puppies’ suede shoes, symbolized by the cuddly, rumpled, droopy-eyed dog, were a kids’
favorite in the 1950s and 1960s. Changes in fashion trends and a series of marketing mishaps
eventually resulted in an outdated image and diminished sales. Wolverine World Wide, makers
of Hush Puppies, made a number of marketing changes in the early 1990s to reverse the sales
slide (Naughton, 1995). New product designs and numerous offbeat color combinations (e.g.
bright shades of green, purple, and pink) enhanced the brand’s fashion appeal. Increased
expenditures backed an ad campaign featuring youthful, attractive people wearing the shoes
and the tag line, “We invented casuals.” Popular designers began to use the shoes in their
fashion shows and the brand got a boost when Tom Hanks wore a pair of old Hush Puppies in
the final scene of Forrest Gump. As a result of all these developments, and a concerted program
to engage retailer interest, the brand has now reappeared in fashionable department stores and

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sales and profits have skyrocketed. For rejuvenating Hush Puppies, old sources of brand equity Notes
had to be leveraged upon and some of the dormant yet relevant values had to be expressed
through effective marketing and advertising.

14.8.2 St. Joseph Aspirin

Johnson & Johnson is known for powerhouse brands and is not a company associated with
“orphan” products. Its bid to revive St. Joseph aspirin shows that even a giant marketer can
embrace a promising niche product entry. Reviving an old, no longer relevant brand requires a
sound strategy and commitment to a clever idea. St. Joseph’s long established franchise as an
orange-flavored children’s aspirin dissolved after the U.S. Centers for Disease Control linked
aspirin usage to a deadly children’s ailment, Reye’s Syndrome, in 1984. Among the rival brands
that drove St. Joseph into relative obscurity was J&J’s Children’s Tylenol. St. Joseph’s owners at
the time, Schering Plough Corp., tried to position the product for adults once research suggested
that low-dose aspirin therapy could aid adults recovering from heart attacks. But the sales of the
brand did not recover till J&J acquired the brand in December 1999. With its strength in non-
aspirin pain relievers, it had no aspirin-based product to offer adults under treatment for heart
disease. J&J backed the product with huge resources and a new push to St. Joseph advertising and
marketing effort. Combining gentle humor and nostalgia, it reintroduced the “children’s” brand
to adults as the ideal form of aspirin (low dosage, pleasant flavor) for aspirin-a-day heart
therapy. The consumer response to the new position is a reminder that niche-marketing strategies
can be winner for brands. What could have been considered baggage for an old brand has been
strategically repositioned to a new set of customers under changed market conditions.

14.8.3 L’Oreal

L’Oréal has turned around from a successful French company into a world-class global beauty
empire with its particular skill of buying local cosmetics brands, giving them a facelift, and
exporting them around the world. In fact, it is the story of L’Oréal’s own corporate makeover. A
decade ago, about 75% of the company’s $5.5 billion in annual sales was in Europe, the majority
in France, and the L’Oréal name was indelibly linked with Parisian sophistication. In 2001,
Europe accounted for only 49% of the group’s $13.7 billion in revenues, with 32% coming from
North America (double the share in the early 1990s).

For L’Oreal, new brands represented “adventures” where the company could experiment with
different images and tap new customers. And no brand adventure was bigger or riskier than the
$758 million purchase of Maybelline in 1996. The goal was to make the Memphis cosmetics firm
a global mass-market brand. At the time such thinking seemed odd, because just 7% of Maybelline’s
$350 million in annual sales was outside the U.S. Since its creation in 1915, Maybelline had found
its core market in America, where it earned a safe, steady income churning out undaring lipsticks
and nail polish. But by the end of 1996 L’Oreal shifted Maybelline’s entire management operation
from Memphis to New York City and the new Maybelline team set about revamping the brand’s
staid color lines and soon launched Miami Chill nail polish in icy lemon and peppermint hues
that never would have made it out of the labs at the old Maybelline. Meanwhile, Maybelline
began an international rollout, with “New York” added to the brand name overseas and in 2001
56% of the brand’s $1 billion in sales came from outside the U.S. Maybelline was the leading
medium priced makeup brand in Western Europe, with a 20% market share, and is now sold in
about 90 countries.

L’Oreal’s expertise at rejuvenating brands and making them more useful to a larger albeit
non-overlapping segment was evident in its takeover of Soft Sheen and Carson, two U.S. hair-
care firms catering to African-Americans. L’Oréal acquired them in 1998 and 2000, respectively,
and merged them into Soft Sheen/Carson. In 1998, the Chicago-based Soft Sheen, the brand had

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Notes no international presence. Carson, acquired two years later, had found a market in South Africa,
but the Savannah firm was up to its neck in debt and in no shape to expand. L’Oreal seized the
opportunity and realized that people of African origin, wherever they were in the world, were
a huge future potential business. L’Oréal boosted awareness of the combined brand in Africa by
educating hairdressers about the products and training them how to use them. The company
also opened a research laboratory in Chicago to study the properties of African hair. The research
has already yielding commercial results: This year, when Soft Sheen/Carson launched its
Breakthrough hair products in South Africa, they included an “anti-breakage” ingredient
developed by L’Oréal scientists. Soft Sheen/Carson is still a long way from conquering Africa,
a haircare market that L’Oréal estimates is worth about $1 billion a year. But in South Africa, the
continent’s biggest economy, Soft Sheen/Carson now controls 41% of a $90 million market, up
from 30% at the time of the Carson acquisition. And it is beginning to push northward, organizing
training sessions for hairdressers in former French colonies like Senegal and Cote d’Ivoire. The
company is also setting its sights on the large black communities in such European cities as
London and Paris. L’Oreal works its brands through a very well-crafted brand vision and strategy.
It is French only when it wants to be, the rest of the time it’s happy being African, Asian, or
anything else that sells.

These are just some of the strategies adopted by various firms in order to revitalize acquired
brands or refurbish old brands where the target market or market perceptions have changed
over the years. The brand revitalization process can be accomplished through a step-by-step
approach. The most important step is of rededicating oneself to providing product quality.
Advertising cannot compensate for a deficiency in quality on the part of a product or service and
by far the single variable most closely associated with good financial performance over the long
run is “relatively perceived product quality,” that is high-quality products or services for a
given price. There is more to a consumer’s perception of a product’s quality than its actual
quality otherwise there would never be a difference in blind and branded product test results.

Finding out the source of perceptions about a product are difficult but necessary to understand,
especially for a brand that needs to be revitalized. Product and all the other vehicles through
which the brand communicates in the marketplace including but not limited to display,
promotion, public relations and publicity exert an influence on the way consumers perceive the
product. The next step is the need to understand the brand/consumer relationship and in case of
a brand that needs revitalization, the relationship is obviously no longer working. Many brands
in the marketplace tend to adopt an “authority figure” relationship treating them as lacking
experience and knowledge. When the product is highly specialized or a new technology consumer
is willing to abdicate the responsibility to the brand that offers reassurance and security like
IBM. At other times such a relationship does not work as the consumer may be made to feel
dumb, inadequate and may not approve of the brand’s empty claim of superiority. Getting the
consumer-brand relationship right and nurturing this relationship in the long-term holds the
key. The brands that are most likely to respond to revitalization are those that have clear and
relevant values that have either not communicated properly or have been violated by product
problems, price reductions, etc. The brands that did not possess any strong values in the first
place were never truly brands and bringing them back to life is not revitalization but rather like
starting a process from scratch.

According to Keller, with a declining or old brand, often it is not the ‘depth’ of brand awareness
that is a problem implying that consumers can still recognize or recall the brand under certain
circumstances. The problem is the ‘breadth’ of brand awareness that is consumers tend to think
of the brand in very narrow ways. To ensure an increase in breadth of brand awareness it is
necessary that consumers do not overlook the brand and think of purchasing or consuming it in
those situations where the brand can satisfy consumers’ needs and wants. Assuming a brand has
a reasonable level of awareness and a positive brand image, the most appropriate way to create
new sources of brand equity would be to increase usage through identifying new or additional

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usage opportunities. Brand usage can be increased by either increasing the level or quantity of Notes
consumption (how much) or increasing the frequency of consumption (how often). Generally, it
is easier to increase the number of times a product is used than to change the amount used at one
time. For products with an elastic demand and high degree of substitutability defined as usage
variant products, larger package sizes and price discounts, by lowering the perceived unit cost
of the product, have been shown to accelerate usage. Sometimes the brand may have strong
associations with particular usage situations or user types. Effective strategies for such brands
would include improving top-of-mind awareness or redefining usage situations.

Example: The purchase situation of an Indian brand of steel storage cupboards Godrej
Storewell was closely associated with gift giving to newly married couples limiting the purchase
of the product to one specific occasion in a consumer’s life. Experiencing a sales decline, the staid
image of the brand was revitalized with a nostalgia appeal. Now Godrej is seen as a brand for
successive generations brought into the house on any joyous occasion including marriage,
childbirth, moving into a new house etc. The brand’s slogan ‘Kal bhi, aaj bhi, Kal bhi’ (loosely
translated means ‘for the past, present and future’) created a deep emotional bond with consumers
across generations and increased the number of purchase occasions for the brand.

Notes Brand Revitalization Measures

 Increasing Usage:
 Make the brand more convenient to use – easy to cook (Maggi), instant breakfast
(Kellogg’s)
 Reduce doubts associated with more or frequent use – no harmful chemicals
(Vatika)
 Provide incentive to use frequently – honoured guest (Ritz, Carlton), frequent
flier benefits (British Airways), Privilege Card (Snowhite)
 Consumers use more quantity – more toothpaste per application (Colgate)
 New uses – Mosquito Mat for good fragrance (Jet)
 New Markets:
 Reach to new markets not targeted so far – rush to Asian countries (McDonald’s),
rural areas (HLL)
 New segments – cover unattacked segments (line extensions, e.g., shampoo
pouches)
 Image Change:
 Add new associations when existing associations become obsolete – Dalda
Vanspati to Dalda Active
 When associations wear out because of frequent use (cliché) — claim that a detergent
washes whitest or it has dirt blasters.
 Commoditization – brand needs differentiation (e.g., Xerox is not photocopying)
 Brand Enhancement:
 Add new valued differentiators – service (Electrolux), features (Sony) availability
(HLL), guarantee (Daewoo Matiz)
 Value disciplines – innovation (Sony), intimacy (Marriott), operational excellence
(Southwest Airlines)

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Notes The second approach to increase frequency of use for a brand is to identify completely with new
and different usage applications. After years of sales declines of 3-4% annually, sales of Cheez-
Whix rose 35% when the brand was backed by a new ad campaign promoting the product as a
cheese sauce accompaniment.

Some of the other strategies for revitalizing brands could include a change of market to related
and rapidly growing markets (the L’Oreal example), co-branding especially with contemporary
brands can help in changing the image for an older brand, improving brand image and a change
in name or other brand elements. Old brands especially need to be innovative creating new and
innovative products in line with tastes of today’s consumers, and not those of yesterday’s. Most
importantly, whenever a brand is revived or revitalized the necessary changes must respect the
residual brand identity or ‘the roots of the brand’ that may still be alive in the consumer’s mind
and it needs a strong commitment from the management in terms of resources and a lasting
vision.

14.9 Managing Brands in Crisis

Brand Managers must assume and understand that a brand can be threatened by a crisis due to
some unforeseeable circumstances or changes in the market situation.

Table 14.3: Major Brand Crisis

Years Brand Crisis

1957 Windscale Atomic Works rebranded Sellafield following serious fire
1982 Tylenol found to contain cyanide led to seven deaths in Chicago
1982 Townsend Thoresen and the Herald of Free Enterprise disaster
1989 Exxon Valdez oil spill in Alaska
1990 Perrier contaminated with benzene
1991 Gerald Ratner's declaration that his company sold 'crap'
1992 Hoover's disastrous air ticket promotion
1993 Hypodermic needles discovered in Pepsi cans in US
1994 Defective Intel Pentium Processors
1994 Flawed Persil Power washing powder
1997 Mercedes Class A flops in speed tests
1999 Coca-Cola contamination in Belgium
2000 Firestone tires and Ford Explorers
2001 Withdrawal of carcinogenic Vapona Flykiller and mothkiller strips
2001 Red Bull's link to hyperactivity in Sweden
2002 Catholic church in Boston accused of sheltering child molester priest
2003 Tyco's CEO and CFO were accused of theft of over $600 million
2005 SK-II a P&G brand claimed as Consumer litigation
2006 Salmonella found in Cadbury
2008 Lehman Brothers failed due to stock market downturn
2009 UBS slipped dramatically down the list, due to subprime losses
2010 Toyota, Tiger and Tylenol botched crisis PR basics, Coffee Day Anatomy of online crisis and
word of mouth effects
2011 BP the Deepwater Horizon explosion in the Gulf of Mexico, and TEPCO, the Tohoku
earthquake and tsunami

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Most often in the past, such crises have arisen due to questionable product quality. The crisis that Notes
led to considerable loss of Brand equity for Firestone due to consumer deaths related to the tread
separation of some of the badly manufactured tires on Ford Explorers. Other companies that
have handled brand crisis include Exxon when one of its tankers Exxon Valdez hit a reef in
Alaska resulting in a massive oil spill in 1989 and J& J with their now legendary handling of the
Tylenol tampering case. Most recently American Airlines had to handle a brand crisis when the
September 11 hijackers dealt a mighty blow by choosing their airplanes for the attacks.

Brand crisis can be divided into four separate categories:

1. Product Failure e.g. Perrier benzene contamination, Ford/Firestone and Coke

contamination in Belgium.

2. Corporate Social Responsibility e.g. Exxon Valdez, Nike sweat shops, Nestle’s powdered
milk.

3. Consumer backlash e.g. Ratners case and most recently consumer backlash against
proliferation of free AOL CDs (Dornin 2002).

4. Financial Crisis like Anderson, Enron and Worldcom.

Very few brands have been able to come out of the brand crisis unscathed and one of the most
quoted examples is J&J’s Tylenol. Due to tampering with the Extra-Strength Tylenol capsules
with cyanide poison, seven people died in the Chicago area in October 1982. Although the
problem was restricted to just that area, consumer confidence was severely shaken and many
marketing gurus were quick to write the brand off. But J&J acted with amazing alacrity and
within a week of the crisis they issued a worldwide alert to the medical community, set up a
24-hour toll-free telephone number, recalled and analyzed sample batches of the product, briefed
the Food & Drug Administration, and offered a $100,000 reward to apprehend the culprit of the
tampering. All this was accompanied with a voluntary withdrawal of the brand and all advertising
was stopped. Instead all communication with the public was in the form of press releases.
Beginning with an ad featuring the company’s Chief Medical director, Dr. Thomas N. Gates
speaking sincerely to the consumers about what happened, the company took a number of other
concrete steps including mail-in-coupons that were sent to close to 60 million consumers, and
sales reached the pre-crisis levels within a six-month period. Clearly, J&J’s skillful handling of
a complicated issue was a major factor in the brand’s comeback but the brand equity built up
over the years with the strong and valuable ‘trust’ association certainly helped the brand recovery.
A key signal of successful crisis management is when very few people can remember or aware
of the crisis and that has been the case with Tylenol over the years.

14.10 Creating and Managing High-tech Brands

Brand Management is a critical factor that can make the difference between a successful high-
tech venture and an unsuccessful one. The recent dot-com bust is testimony to the problem that
many of the leading high-tech companies – often times managers who have grown up on the
technical side of the business – do not truly understand what good brand management involves
and what it can do for their companies. One of the most popular misconceptions about branding
in the high-tech and business-to-business markets is that brands and brand images are relevant
only when purchase decisions are ‘irrational’ or ‘emotional’ and this better suits marketers of
detergents, automobiles, and fashion. When it comes to selling innovative high-tech products to
sophisticated and experienced consumers, brands have a minimal role to play. This thinking
emanates from relegating brand management to marketing or sales departments without
incorporating it into the company vision. A brand becomes just a logo, trademark, slogan, or ad
campaign, and something that is handled by the marketing department. These misconceptions

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Notes have not only been adequately refuted in literature but also in the business world with more
and more high-tech companies understanding the importance of creating enduring brands for
long term survival and profits.

Powerful high-tech brands can build equity through the process of building a brand pyramid,
which is essentially a way of thinking about the brand-building process. The pyramid’s bottom
level represents the core product-the tangible, verifiable product characteristics. Increasingly,
however, high-tech purchases involve not just technologists but also business managers and
end users, who are far more interested in what a technology product does for them than in how
it works. As a high-tech company understands that instead of selling ‘products’, they are in the
business of selling ‘solutions’ or benefits, this shift in thinking marks the second level in the
brand pyramid. The first two levels still embody the elements of product competition and not
those of brand competition. The third level of the pyramid is where the company can truly
differentiate itself from competitors by providing emotional rewards for its business. The goods
and services that are designed and positioned as a way to fulfill a promise of value and not
simply as new technologies reside in the third level. Apple’s ability to capture the consumer
heart with its innovative products and avant-garde design has provided it with an emotional
hook that goes beyond functional benefits of the product. The top two levels of the brand
pyramid illustrate the concept that powerful brands attract and hold customers with their
particular promises of value and brand personality. While the brand pyramid is in no way a
revolutionary conceptualization of the branding process what it does reinforce is that the basics
of branding remain same whether it is a consumer brand or a high-tech brand.

Even though revolutionary technological innovations that have high social impact lead to
disruption in the marketplace and cause shifts in the behavior of the consuming population, the
fundamental marketing principles remain the same. A revolutionary technological disruption
provides opportunity for early innovator companies to quickly establish brand awareness-but
only a momentary one. As technology matures, it is the consumer behavior that drives the
market and continuously redefines your brand. A brand defined only by innovation cannot
endure. In order to sustain brand relevancy and create lasting consumer relationships, both new
and maturing technology companies must migrate from an inwardly focused operations
orientation to a consumer-centric orientation. The innovation advantages that exist during
introduction and initial rapid growth phase are nearly impossible to sustain throughout an
entire brands’ life cycle. As soon as more competitors enter the field, hi-tech firms face challenges
like category encroachment, increased supply and often price erosion. Consumers in maturing
marketplaces become more sophisticated and skeptical in their buying behavior. They begin to
demand, from both Innovation and Evolutionary brands, further and continued meaningful
differentiation. IBM, Amazon.com and AOL are successfully transitioning from a technology
focus to a consumer-centric brand strategy and developing a much wider range of evolutionary
solutions, to sustain themselves in the long-term. The only thing different about building and
sustaining relevant, successful brands today is the radically increased speed of competitive
disclosure, especially for high-tech brands. The new pace means brands have less time to respond
to consumer demands and while Ford and IBM both had decades to build their brands, the new
brands are not likely to be that fortunate. When it comes to creating and managing an enduring
brand, the challenges are almost the same as they always were. What it was for IBM it would be
for AOL, Amazon.com and also for dotcoms and click-and-mortar brands still to come.

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Notes

Case Study Sosyo’s Comeback

S
osyo, a brand of Surat-based Hajoori & Sons presents an interesting example of
comeback. Sosyo enjoyed customers in a niche market who liked its unique fruity
taste. The brand was mainly limited to Western India with its presence in Gujarat
and Maharashtra. Its presence, over five decades, made Sosyo the preferred brand by
certain sections of society. It enjoyed strong brand loyalty and commitment not from all
market segments but a selected few. Gujaratis particularly exhibited special preference
and affection for the brand.

Like any other market, competitive forces often disturb the equilibrium. With the arrival
of the mighty Cola brands along with other non-Cola offerings, the pressures mounted on
Sosyo. The intensity with which Cola players fought it out amongst themselves and the
way consumers were attacked, drowned and lured, it appeared as if the life of a brand like
Sosyo was over. Driven by this perception, the management decided to pull the brand out
of the market. The brand presence was limited to only a few markets. The company,
Hajoori & Sons, in order to make up for the loss of business, took up franchise of a soft
drink company, which entered the market after Pepsi and Coke. But once the Cola war
became bloodier, Cadbury Schweppes whose franchise the Sosyo owners had taken, began
to feel the pinch. Its brands like Crush and Canada Dry were not doing all that well. The
pressure to survive was intense. The competition which was hurting Cadbury Schweppes
began to inflict wounds on Sosyo owners. The company was sandwiched between the
vanishing Sosyo brand whose following it appeared was declining on the one hand and
pressured franchise business on the other.

The company was in a fix as to what to do to wriggle out of a difficult situation like this.
One option was to completely abandon the Sosyo brand because it seemed to have lost its
values and customer loyalty. The Cola blitzkrieg apparently signified drying up scope for
a conventional brand like Sosyo. But quite contrary to what was visible, the company
thought of brand resurrection. Sosyo had something unique about it. It symbolized
something which a select section of the market preferred and longed for. The brand
loyalty was not dead. The result: Sosyo brand was relaunched in order to win back its
customers who apparently had drifted away to other aerated drinks. The relaunch had
wonderful results. The brand got immediately connected with ‘its customers’. Returning
to its roots paid off for Sosyo. The brand managed to re-establish its presence.

Question

Write down the case facts.

Self Assessment

Fill in the blanks:

7. The Brand Identity Prism includes a ……………division.

8. ………………a brand requires either that lost sources of brand equity are recaptured or
new sources of brand equity are identified and established.

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Notes 14.11 Summary

 The firm selects the meaning of the brand. It is derived from basic consumer needs. One
way of looking into consumer needs is to see them as functional, symbolic and experiential
needs.

 Three stages of brand management can be identified: introduction, elaboration and

fortification.

 Brand equity is reinforced by marketing actions that consistently convey the meaning of
the brand to consumers in terms of brand awareness and brand image.

 A brand migration strategy needs to be designed and implemented so that consumers

understand how various brands in the portfolio can satisfy their needs as they potentially
change over time.

 Taking a strategic long-term approach, presented a normative framework termed Brand

Concept Management (BCM) for selecting, implementing and controlling brand image
over time to enhance market performance. The framework consists of a sequential process
of selecting, introducing, elaborating and fortifying a brand concept.

 David Aaker defines brand equity as a set of five categories of brand assets and liabilities
linked to a brand, its name, and symbol that add to or subtract from the value provided by
a product or a service to a firm and/or to that firm’s customers.

 Brand identity has become one of the most contemporary concepts for building and
managing brands over time and Jean-Noel Kapferer, the famous French brand strategist,
provides a different rendition of the concept.

14.12 Keywords

Brand Concept Management (BCM): Taking a strategic long-term approach, presented a normative
framework termed Brand Concept Management (BCM) for selecting, implementing and
controlling brand image over time to enhance market performance.

Brand Identity Prism: The Brand Identity Prism includes a vertical division. The facets on the
left physique, relationship, reflection- are the social facets that give the brand its outward
expression.

Revitalizing Brands: A number of changes can occur in a market over time including changes in
consumer tastes and preferences, emergence of new technology and competitors, a change in the
regulatory environment.

14.13 Review Questions

1. Write down the Stages of concept management.

2. What is Reinforcing Brands?

3. Briefly explain the Adjustments to the Brand Portfolio.

4. What is Brand Concept Management (BCM)?

5. What do you mean by retiring brands?

6. Discuss how to Manage Brands in Crisis?

308 LOVELY PROFESSIONAL UNIVERSITY

 Unit 14: Managing Brands over Time

Answers: Self Assessment Notes

1. Image 2. Fortification

3. Research and development 4. New customers

5. Functional, Symbolic and Experiential concept

6. Brand identity 7. Vertical

8. Revitalizing

14.14 Further Readings

Books U.C. Mathur, Product and Brand Management, Excel Books, New Delhi.
Harsh V. Verma, Brand Management, Excel Books, New Delhi.

Tapan K. Panda, Building Brands in the Indian Market, Excel Books, New Delhi.

Kapferer, Strategic Brand Management, Kogan Page, New Delhi.

Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Ries, A. and J. Trout, Positioning: The Battle for your Mind, N.Y. Warner Books, 1991.

Smith, R.F. and Robert F. Lusch, “How Advertising can Position a Brand,” Journal
of Advertising Research, Feb. 1976, pp. 37-3.

Aaker, David A., “Brand Extensions: The Good, the Bad, the Ugly,” Sloan
Management Review, Summer 1990, p. 42.

Sullivan, Mary W., “Brand Extensions: When to use them?,” Management Science,
June 1992.

Court, David C., Mark G. Leiter and Mark A. Loach, “Brand Leverage,” The
McKinsey Quarterly, No.-2, 1999, pp. 101-109.

Tauber, E.M., “Brand Leverage: Strategy for Growth in a Cost Controlled World,”
Journal of Advertising Research, Aug.-Sep., 1988, pp. 26-30.

Kapferer, Noel-Jean, Strategic Brand Management, N Y, Free Press, 1992, p. 125.

Aaker, David A. and Kevin Lane Keller, “Customer Evaluations of Brand

Extensions,” Journal of Marketing, Jain 1990, pp. 27-41.

Online links www.en.wikipedia.org

www.web-source.net

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LOVELY PROFESSIONAL UNIVERSITY
Jalandhar-Delhi G.T. Road (NH-1)
Phagwara, Punjab (India)-144411
For Enquiry: +91-1824-300360
Fax.: +91-1824-506111
Email: odl@lpu.co.in
 LECTURE NOTES

ON

PRODUCT AND BRAND MANAGEMENT

IV SEMESTER

(ELECTIVE – V)

Ms. AZARA

ASSISTANT PROFESSOR

DEPARTMENT OF MASTER OF BUSINESS ADMINISTARTION

INSTITUTE OF AERONAUTICAL ENGINEERING

(AUTONOMOUS)
Dundigal, Hyderabad-500 043
 UNIT-1

PRODUCT CONCEPTS

DEFINITION OF 'PRODUCT'

Definition: A product is the item offered for sale. A product can be a service or an item. It can be physical or in
virtual or cyber form. Every product is made at a cost and each is sold at a price. The price that can be charged
depends on the market, the quality, the marketing and the segment that is targeted. Each product has a useful life
after which it needs replacement, and a life cycle after which it has to be re-invented. In FMCG parlance, a brand
can be revamped, re-launched or extended to make it more relevant to the segment and times, often keeping the
product almost the same.

Description: A product needs to be relevant: the users must have an immediate use for it. A product needs to be
functionally able to do what it is supposed to, and do it with a good quality.
A product needs to be communicated: Users and potential users must know why they need to use it, what benefits
they can derive from it, and what it does difference it does to their lives. Advertising and 'brand building' best do
this.

A product needs a name: a name that people remember and relate to. A product with a name becomes a brand. It
helps it stand out from the clutter of products and names.
A product should be adaptable: with trends, time and change in segments, the product should lend itself to
adaptation to make it more relevant and maintain its revenue stream.

PRODUCT MIX

product mix, also known as product assortment, refers to the total number of product lines that a company offers
to its customers. For example, a small company may sell multiple lines of products. Sometimes, these product
lines are fairly similar, such as dish washing liquid and bar soap, which are used for cleaning and use similar
technologies. Other times, the product lines are vastly different, such as diapers and razors. The four dimensions
to a company's product mix include width, length, depth and consistency.
WIDTH

The width of a company's product mix pertains to the number of product lines that a company sells. For example,
if a company has two product lines, its product mix width is two. Small and upstart businesses will usually not
have a wide product mix. It is more practical to start with some basic products and build market share. Later on, a
company's technology may allow the company to diversify into other industries and build the width of the product
mix.

LENGTH

Product mix length pertains to the number of total products or items in a company's product mix, according to
Philip Kotler's textbook "Marketing Management: Analysis, Planning, Implementation and Control." For
example, ABC company may have two product lines, and five brands within each product line. Thus, ABC's
product mix length would be 10. Companies that have multiple product lines will sometimes keep track of their
average length per product line. In the above case, the average length of an ABC Company's product line is five.

DEPTH

Depth of a product mix pertains to the total number of variations for each product. Variations can include size,
flavor and any other distinguishing characteristic. For example, if a company sells three sizes and two flavors of
toothpaste, that particular brand of toothpaste has a depth of six. Just like length, companies sometimes report the
average depth of their product lines; or the depth of a specific product line.

CONSISTENCY

Product mix consistency pertains to how closely related product lines are to one another--in terms of use,
production and distribution. A company's product mix may be consistent in distribution but vastly different in use.
For example, a small company may sell its health bars and health magazine in retail stores. However, one product
is edible and the other is not. The production consistency of these products would vary as well.

PRODUCT MARKET MIX STRATEGY

Small companies usually start out with a product mix limited in width, depth and length; and have a high level of
consistency. However, over time, the company may want to differentiate products or acquire new ones to enter
new markets. A company can also sell the existing products to new markets by coming up with new uses for their
product.
PRODUCT LINE

The product line is a subset of the product mix. The product line generally refers to a type of product within an
organization. As the organization can have a number of different types of products, it will have similar number of
product lines. Thus, in Nestle, there are milk based products like milkmaid, Food products like Maggi, chocolate
products like Kitkat and other such product lines. Thus, Nestle’s product mix will be a combination of the all the
product lines within the company.

PRODUCT LINE LENGTH

If a company has 4 product lines, and 10 products within the product line, than the length of the product mix is 40.
Thus, the total number of products against the total number of product lines forms the length of the product mix.
This equation is also known as product line length.

PRODUCT LINE WIDTH

The width of the product mix is equal to the number of product lines within a company. Thus, taking the above
example, if there are 4 product lines within the company, and 10 products within each product line, than the
product line width is 4 only. Thus, product line width is a depiction of the number of product lines which a
company has.

PRODUCT LINE DEPTH

It is fairly easy to understand what depth of the product mix will mean. Where length and width were a function
of the number of product lines, the depth of the product mix is the total number of products within a product line.
Thus if a company has 4 product lines and 10 products in each product line, than the product mix depth is 10. It
can have any variations within the product for form the product line depth.

PRODUCT LINE CONSISTENCY

The lesser the variations between the products, the more is the product line consistency. For example, Amul has
various product lines which are all dairy related. So that product mix consistency is high. But Samsung as a
company has many product lines which are completely independent of each other. Like Air conditioners,
televisions, smart phones, home appliances, so on and so forth. Thus the product mix consistency is low in
Samsung.

PACKAGING

Packaging is the activity of designing and producing the container or wrapper for the product. It is an important
and effective sales tool for encouraging the consumers for buying. It is powerful medium for sales promotion. It
must perform all the basic function such as protection, ease of handling and storage, convenience in usage etc. and
should not be deceptive and convey any deceptive message. It is the best method for attracting the consumers for
buying the products.

According to W.J.Stanton, “Packaging may be defined as the general group of activities in product planning
which helps in value designing and producing the container or wrapper for a product.”

According to Pride and Farell, “Packaging involves the development of container and a graphic design for a
product.”

FUNCTIONS OF PACKAGING

Packaging should serve the following basic functions:

 • Protects the contents:

The basic function of packaging is to protect the contents from damage, dust, dirt, leakage, pilferage, evaporation,
watering, contamination and so on. Packaging helps in the protection of the contents of the products. Seasonal
fluctuations in demand may be smoothed out through packaging. Packaging helps to protect the contents of all the
available products.

• Provides product density:

Packaging helps to provide product density. It implies selecting such package materials, design, and shape that
helps to use the limited space in the best way. It improves relations with common carriers, permits better use of
space in storage and usage and increases the grace and poise of arrangement.

• Act as promotional tool:

Good packaging can sell the product more easily and quickly as it works as a promotional tool. As a promotional
tool, it does self-advertising , displaying, publishing and acts as an advertising medium. It is the package, size,
design, color combinations and graphics that decide its ability to attract the valuable attention of customers or the
prospects.

• Provides user convenience:

Packaging helps to provide the user convenience.The good packaging does this in a greater degree. As a result,
the marketing functions of the transportation, storage, and handling are performed with ease and without wastage.
Consumers are greatly assisted so long as the product is in usage. Neat packaging has brought a home reduction in
inventory costs, packaging costs, space and time costs.

• Facilitates product identification:

Packaging helps to facilitate the identification of the product. This process of product differentiation is furthered
by effective product identifiers; one is branding and another is packaging. The product package identifies the
product no matter where you see it, under what circumstances you see it, or when you see it. A package is
product’s personality, its reality. Product identification goes easy with distinguished packaging as it adds to its
personality or image.

• Allows easy product mix:

Product mix relates to the product lines and an assortment of sizes, colors, measures, grades, package types etc.
offered by the selling house. Change in product mix can be possible as packaging helps to influence weight, size,
and dimensions of the product. Packaging helps to allow the product mix easily for the consumers.

IMPORTANCE OF PACKAGING

The importance of packaging are as follows:

• Creation of demand:

Packaging plays an important role in the creation of demand by attracting the consumers. The customers become
known with the product through advertising. It helps to increase the demand of the customers.

• Protection of the product:

Packaging helps to protect the product from heat, light, moisture, evaporation, dust etc. during its long passage
from the factory to the target customers. It protects the products from breakage, leakage spoilage etc.

• Transportation:

Packaging facilitates transportation of products from one place to another. It ensures easy transportation and better
handling of products in transit.

• Guidelines to customers:

Packaging helps as a guidelines for the customers. From the informative literature regarding the quality and use of
the product, the customers get the guidelines. The customers are ensured about the quality of the products.

• Better storage:

Packaging acts as a better storage of the products. Goods with good packages can be stored in the retail shop also
in lesser price.

• Facilitates for carrying:

Packaging plays an important role in carrying the goods in transit and from one place to another. It is made in
different sizes and it facilitates provisions for easy and open carrying.

• Identification of product differentiation:

Packaging helps to identify the product differentiation easily. It ensures the individuality of the products and one
product can be easily differentiated with each other products in the market. The customers can easily identify their
product of choice at the time of purchase. This helps the customers to prevent substitution of goods by other
customers.

• Economy:

Packaging helps to reduce the cost of marketing the goods by reducing losses from damages. As packaging is
helpful for sales promotion, so it helps to attain economy in the cost structure of the producers and marketers.

Types of packaging

There are various types of packaging some of them are as follow:

• Consumer packaging:

Consumer packaging is one which holds the required volume of a product for ultimate consumption. It is the
means of buying household. In other words, the consumer has the option to purchase the pack size which he/she
considers adequate for the consumption of his/ her family over a length of time.

• Transit packaging:

Transit packaging is another type of packaging. It is either for the industrial consumer’s use. The consumer
package itself very often requires an outside package in which it is sometimes referred to a bulk package or an
outer container.

• Industrial packaging:

An industrial packaging can either describe a bulk package or the package for durable consumer goods. These are
the basic package types although many subdivisions can be listed which can be broadly listed under these basic
headings.

• Dual use packaging:

A dual packaging is one which has a secondary usefulness after its contents have been consumed. The examples
of dual use packaging are Drinking glasses, boxes of jewelry, waste baskets, refrigerator dishes, etc.
Features of good packaging

A good package indicates individuality of a product in a dramatic and easily recognizable way. The features of
good packaging can be briefly shown below:

• Convenience:

Convenience is one of the good features of packaging.The packaging provides size options and it facilitates
provisions for the easy open of the products. The package should neither be heavy in weight nor large in size.

• Security:

The packaging provides security of the products and it protects the products from dust, light, spoilage, damage,
evaporation, etc. It ensures the preservation of the quality and quantity of the products.

• Status or prestige:

Packaging creates confidence among the customers and it creates status and prestige of the products. It helps in
the increment of status and prestige to the consumers. The product is also known by its packaging.

• Adaptability:

The package should of moderate size so that it can be kept in proper place. It should be adapted in all the places.
Adaptability is very essential in packaging.

• Dependability:

The packaging should be dependable. Dependability indicates the positive idea of a customer about the
manufacturing of the product. It is very important to have dependability in the products.
 • Handsome design:

The packaging should have a handsome design. The handsome design attracts the customers to buy the products.
To get touch with the taste and fashion of the customers, a constant renewal of design is required. It is very
necessary to design the products for making the consumers attracted towards it.

PRODUCT MODIFICATION
An adjustment in one or more of a product's characteristics. It is most likely to be employed in the maturity stage
of the product life cycle to give a brand a competitive advantage. Product line extensions represent new sizes,
flavors, or packaging. This approach to altering a product mix entails less risk than developing a new product.

There are three major ways of product modification, i.e. quality modifications, functional modifications, and style
modifications.

(1) Quality modifications: These are changes that relate to a product's dependability and durability and usually
are executed by alterations in the materials or production process employed. Reducing a product's quality may
allow an organization to lower the price and direct the item at a larger target market.

The quality of a product may give a firm an advantage over competing brands and may allow the firm to charge a
higher price because of increased quality. Or the firm may be forced to charge more because of higher costs to
achieve the increased quality.

(2) Functional modifications: Changes that affect a product's versatility, effectiveness, convenience, or safety
are called functional modifications. They usually require redesigning the product.

Functional modifications can make a product useful to more people, which enlarges the market for it. This type of
change can place a product in a favorable competitive position by providing benefits not offered by competing
items. Functional modifications can also help an organization to achieve and maintain a progressive image.

(3) Style modifications: Style modifications are directed at changing the sensory appeal of a product by altering
its taste, texture, sound, smell, or visual characteristics. Since a buyer's purchase decision is affected by how the
product looks, smells, tastes, feels, or sounds, a style modification may have a definite impact on purchases.

Through style modifications a firm can differentiate its product from competing brands and perhaps gain a sizable
market share for this unique product. The major drawback in using style modifications is that their value is
determined subjectively. Although a firm may modify a product to improve the product's style, customers may
find the modified product to be less appealing.

NEW PRODUCT DEVELOPMENT

New product development is a task taken by the company to introduce newer products in the market. Regularly
there will arise a need in the business for new product development.

Your existing products may be technologically outdated, you have different segments to target or you want to
cannibalize an existing product. In such cases, New product development is the answer for the company.
There are 7 stages of new product development and they are as follows.

1) Idea generation

In this you are basically involved in the systematic search for new product Ideas. A company has to generate
many ideas in order to find one that is worth pursuing. The Major sources of new product ideas include internal
sources, customers, competitors, distributors and suppliers.

Almost 55% of all new product ideas come from internal sources according to one study. Companies like 3M and
Toyota have put in special incentive programs or their employees to come up with workable ideas.

Almost 28% of new product ideas come from watching and listening to customers. Customers: even create new
products on their own, and companies can benefit by finding these products and putting them on the market.

Example – Pillsbury gets promising new products from its annual Bake-off. One of Pillsbury’s four cake mix
lines and several variations of another came directly from Bake-Off winners’ recipes.

2) Idea Screening

The second step in New product development is Idea screening. The purpose of idea generation is to create a large
pool of ideas. The purpose of this stage is to pare these down to those that are genuinely worth pursuing.
Companies have different methods for doing this from product review committees to formal market research.

It, is helpful at this stage to have a checklist that can be used to rate each idea based on the factors required for
successfully launching the product in the marketplace and their relative importance.

Against these, management can assess how well the idea fits with the company’s marketing skills and experience
and other capabilities. Finally, the management can obtain an overall rating of the company’s ability to launch the
product successfully.

3) Concept Development and Testing

The third step in New product development is Concept Development and Testing. An attractive idea has to be
developed into a Product concept. As opposed to a product idea that is an idea for a product that the company can
see itself marketing to customers, a product concept is a detailed version of the idea stated in meaningful
consumer terms.

This is different again from a product image, which is the consumers’ perception of an actual or potential product.
Once the concepts are developed, these need to be tested with consumers either symbolically or physically. For
some concept tests, a word or a picture may be sufficient, however, a physical presentation will increase the
reliability of the concept test.
After being exposed to the concept, consumers are asked to respond to it by answering a set of questions desi gned
to help the company decide which concept has the strongest appeal. The company can then project these findings
to the full market to estimate sales volume.

4) Marketing Strategy Development

This is the next step in new product development. The strategy statement consists of three parts: the first part
describes the target market, the planned product positioning and the sales, market share and profit goals for the
first few years.

The second part outlines the product’s planned price, distribution, and marketing budget for the first year. The
third part of the marketing strategy statement describes the planned long-run sales, profit goals, and the marketing
mix strategy.

Business Analysis – Once the management has decided on the marketing strategy, it can evaluate the
attractiveness of the business proposal.

Business analysis involves the review of projected sales, costs and profits to find out whether they satisfy a
company’s objectives. If they do, the product can move to the product development stage.

5) Product Development

Here, R&D or engineering develops the product concept into a physical product. This step calls for a large
investment. It will show whether the product idea can be developed into a full- fledged workable product.

First, R&D will develop prototypes that will satisfy and excite customers and that can be produced quickly and at
budgeted costs. When the prototypes are ready, they must be tested. Functional tests are then conducted under
laboratory and field conditions to ascertain whether the product performs safely and effectively.

6) Test Marketing

If the product passes the functional tests, the next step is test marketing: the stage at which the product and the
marketing program are introduced to a more realistic market settings. Test marketing gives the marketer an
opportunity to tweak the marketing mix before the going into the expense of a product launch.

The amount of test marketing varies with the type of product. Costs of test marketing can be enormous and it can
also allow competitors to launch a “me-too” product or even sabotage the testing so that the marketer gets skewed
results. Hence, at times, management may decide to do away with this stage and proceed straight to the next one:

7) Commercialization

The final step in new product development is Commercialization. Introducing the product to the market – it will
face high costs for manufacturing and advertising and promotion. The company will have to decide on the timing
of the launch (seasonality) and the location (whether regional, national or international). This depends a lot on the
ability of the company to bear risk and the reach of its distribution network.

Today, in order to increase speed to market, many companies are dropping this sequential approach to
development and are adopting the faster, more flexible, simultaneous development approach. Under this
approach, many company departments work closely together, overlapping the steps in the product development
process to save time and increase effectiveness.

Above was the complete process of New product development. You can also read this related article on why new
product development is necessary for survival.

PRODUCT INNOVATION

Is defined as the development of new products, changes in design of established products, or use of new materials
or components in the manufacture of established products

Numerous examples of product innovation include introducing new products, enhanced quality and improving its
overall performance. Product innovation, alongside cost-cutting innovation and process innovation, are three
different classifications of innovation which aim to develop a company's production methods.

Thus product innovation can be divided into two categories of innovation: radical innovation which aims at
developing a new product, and incremental innovation which aims at improving existing products

Advantages of product innovation include:

• Growth, expansion and gaining a competitive advantage: A business that is capable of differentiating their
product from other businesses in the same industry to large extent will be able to reap profits. This can be
applied to how smaller businesses can use product innovation to better differentiate their product from
others. Product differentiation can be defined as "A marketing process that showcases the differences
between products. Differentiation looks to make a product more attractive by contrasting its unique
qualities with other competing products. Successful product differentiation creates a competitive
advantage for the seller, as customers view these products as unique or superior."Therefore, small
businesses that are able to utilize product innovation effectively will be able to expand and grow into
larger businesses, while gaining a competitive advantage over its remaining competitors

• Brand switching: Businesses that once again are able to successfully utilize product innovation will thus
entice customers from rival brands to buy its product instead as it becomes more attractive to the
customer.[6] One example of successful product innovation that have led to brand switching are the
introduction of the iPhone to the mobile phone industry (which has caused mobile phone users to switch
from Nokia, Motorola, Sony Ericsson,etc. to the Apple iPhone).
Disadvantages of product innovation include:

• Counter Effect of Product Innovation: Not all businesses/ competitors do not always create products/
resources from scratch, but rather substitute different resources to create productive innovation and this
could have an opposite effect of what the business/ competitor is trying to do. Thus, some of these
businesses/ competitors could be driven out of the industry and will not last long enough to enhance their
product during their time in the industry

• High Costs and High Risk of Failure: When a business attempts to innovate its product, it will inject lots
of capital and time into it, which requires severe experimentation. Constant experimentation could result
in failure for the business and will also cause the business to incur significantly higher costs. Furthermore,
it could take years for a business to successfully innovate a product, thus resulting in an uncertain return

• Disrupting the outside world: For product innovation to occur, the business will have to change the way it
runs, and this could lead to the breaking down of relationships between the business and its customers,
suppliers and business partners. In addition, changing too much of a business's product could lead to the
business gaining a less reputable image due to a loss of credibility and consistency

Theory for new product development

TRIZ Theory

All sorts of projects reach a point in the development process where the analysis portion of the project is
complete, but it is unclear what the next step should be. To figure out the next best step, the project team must be
creative to figure out what to do. Traditionally, common creativity tools and methodology have been constrained
to brainstorming and similar methods, which are dependent on team members’ intuition, knowledge, and orders
given by somebody in a position of authority. These common creativity tools and methods are often described as
psychologically based; and unfortunately, they often have unpredictable and unrepeatable results. And that’s
where TRIZ should come in...

TRIZ is a (Russian) acronym for the “Theory of Inventive Problem Solving”, which was developed by G.S.
Altshuller and his colleagues between 1946 and 1985 in the former U.S.S.R. According to the TRIZ Journal
webpage, “TRIZ is a problem solving method based on logic and data, not intuition, which accelerates the project
team’s ability to solve these problems creatively. TRIZ also provides repeatability, predictability, and reliability
due to its structure and algorithmic approach.” As opposed to psychologically-based common creativity tools,
“TRIZ is an international science of creativity that relies on the study of the patterns of problems and solutions,
not on the spontaneous and intuitive creativity of individuals or groups. More than three million patents have been
analyzed to discover the patterns that predict breakthrough solutions to problems.” It also should be noted that
TRIZ solves all kinds of problems, not just those involving patentable entities.

TRIZ research first began with the idea that there are universal principles of creativity that form the basis for
technology-advancing creative innovations. The TRIZ researchers hypothesized that if these universal principles
of creativity could somehow be objectively identified and codified, then they could be made teachable to people
and make the innovation process more predictable. A condensed version of this idea is as follows:

“Somebody someplace has already solved this problem (or one very similar to it). Creativity is now finding that
solution and adapting it to this particular problem.”

As described in the “What is TRIZ?“ section on the TRIZ Journal webpage, the three primary findings of TRIZ
research since its inception are:

1. Problems and solutions are repeated across industries and sciences. The classification of the contradictions in
each problem predicts the creative solutions to that problem.
2. Patterns of technical evolution are repeated across industries and sciences.
3. Creative innovations use scientific effects outside the field where they were developed.

And accordingly, the practice of TRIZ involves learning these repeating patterns of problems and solutions,
repeating patterns of technical evolution and methods of using scientific effects, and then applying these general
TRIZ patterns to your specific problem.

When to Use TRIZ?

The following graphic, developed by Ellen Domb of the TRIZ PQR Group, gives an easily-digestible answer to
the question:
While modern industry has developed its own best practices for the new product development process, such as the
popular Stage-Gate Process, it would be naïve and counter-productive to not try to introduce a new arsenal of
tools such as the TRIZ approach to tackle difficult inventive problems. If properly used, the TRIZ approach and
best practices such as the Stage-Gate Process can greatly benefit each other. These approaches are not rivals, but
rather can be used to amplify each other’s successes.

MODELS FOR NEW PRODUCT DEVELOPMENT

Conceptual models have been designed in order to facilitate a smooth process. The concept adopted by IDEO, a
successful design and consulting firm, is one of the most researched processes in regard to new product
development and is a five-step procedure.These steps are listed in chronological order:

• Understand and observe the market, the client, the technology, and the limitations of the problem;

• Synthesize the information collected at the first step;

• Visualize new customers using the product;

• Prototype, evaluate and improve the concept;

• Implementation of design changes which are associated with more technologically advanced procedures
and therefore this step will require more time.

THE BAH MODEL

Booz, Allen and Hamilton’s New Product Process divides new product development into seven sequential stages:
new product strategy development, idea generation, screening and evaluation, business analysis, development,
testing, and commercialization.

Firstly, BAH process begins with the development of new product strategies in line with the company’s objectives
which provides “guidelines for establishing screening criteria” and a “point of reference for subsequent new
product development stages.”

This is then followed by idea generation and screening and evaluation of the generated ideas that merit further
analysis thereby focussing on those ideas that offer the greatest potential. These select few ideas are subject to
business analysis where hypothetical business plans for the ideas are evaluated on the basis of quantitative factors
such as market growth information, financial projections, etc.

Successful product ideas are then graduated to the development stage where these ideas are translated into actual
product offerings and these offerings are further tested to validate earlier projections and business judgments.
Finally, after required alterations have been made depending on the test results, the product offerings undergo
commercialization which involves “full-scale market introduction of newly developed products.”
STAGE-GATE MODEL

Stage-Gate® is a value-creating business process and risk model designed to quickly and profitably transform an
organization's best new ideas into winning new products. When embraced by organizations, it creates a culture of
product innovation excellence - product leadership, accountability, high-performance teams, customer and market
focus, robust solutions, alignment, discipline, speed and quality.

The Stage-Gate Product Innovation Process.

In addition to the benefits that are well-documented by research and benchmarking firms, many companies that
have implemented and adopted an authentic Stage-Gate process realize:

• Accelerated speed-to-market

• Increased new product success rates

• Decreased new product failures

• Increased organizational discipline and focus on the right projects

• Fewer errors, waste and re-work within projects

• Improved alignment across business leaders

• Efficient and effective allocation of scarce resources

• Improved visibility of all projects in the pipeline

• Improved cross-functional engagement and collaboration

• Improved communication and coordination with external stakeholders.

How Does a Stage-Gate® Process Work?

The Stage-Gate model is based on the belief that product innovation begins with ideas and ends once a product is
successfully launched into the market. This has a lot to do with the benchmarking research that the Stage-Gate
model design is premised on, and is a much broader and more cross-functional view of a product development
process.
The Stage-Gate model takes the often complex and chaotic process of taking an idea from inception to launch,
and breaks it down into smaller stages (where project activities are conducted) and gates (where business
evaluations and Go/Kill decisions are made). In its entirety, Stage-Gate incorporates Pre-development Activities
(business justification and preliminary feasibilities), Development Activities (technical, marketing, and operations
development) and Commercialization Activities (market launch and post launch learning) into one complete,
robust process.

The Stages

The Stages.

Each stage is designed to collect specific information to help move the project to the next stage or decision point.

Each stage is defined by the activities within it. Activities are completed in parallel (allowing for projects to
quickly move towards completion) and are cross-functional (not dominated by any single functional area). These
activities are designed to gather information and progressively reduce uncertainty and risk. Each stage is
increasingly more costly and emphasizes collection of additional information to reduce uncertainty.

In the typical Stage-Gate model, there are 5 stages, in addition to the Idea Discovery Stage:

Stage 0 – Idea Discovery

Pre-work designed to discover and uncover business opportunities and generate new ideas.

Stage 1 – Scoping
Quick, inexpensive preliminary investigation and scoping of the project – largely desk research.

Stage 2 – Build the Business Case

Detailed investigation involving primary research – both market and technical – leading to a Business Case,
including product and project definition, project justification, and the proposed plan for development.

Stage 3 – Development
The actual detailed design and development of the new product and the design of the operations or production
process required for eventual full scale production.

Stage 4 – Testing and Validation

Tests or trials in the marketplace, lab, and plant to verify and validate the proposed new product, brand/marketing
plan and production/operations.
Stage 5 – Launch
Commercialization – beginning of full-scale operations or production, marketing, and selling.
The Gates

The Gates.

Preceeding each stage, a project passes through a gate where a decision is made whether or not to continue
investing in the project (a Go/Kill decision). These serve as quality-control checkpoints with three goals: ensure
quality of execution, evaluate business rationale, and approve the project plan and resources.

Each gate is structured in a similar way:

Deliverables: The project leader and team provide Gatekeepers with the high-level results of the activities
completed during the previous stage.

Criteria: The project is measured against a defined set of success criteria that every new product project is
measured against. Criteria should be robust to help screen out winning products, sooner. The authentic Stage-Gate
process incorporates 6 proven criteria: Strategic Fit, Product and Competitive Advantage, Market Attractiveness,
Technical Feasibility, Synergies/Core Competencies, Financial Reward/Risk.

Outputs: A decision is made (Go/Kill/Hold/Recycle). New product development resources are committed to
continuing the project. The action plan for the next stage is approved. A list of deliverables and date for the next
gate is set.

The Stage-Gate model is designed to improve the speed and quality of execution of new product development
activities. The process helps project teams prepare the right information, with the right level of detail, at the right
gate to support the best decision possible, and allocate capital and operating resources. The process empowers the
project team by providing them with a roadmap, with clear decisions, priorities, and deliverables at each gate.
Higher quality deliverables submitted to Gatekeepers enables timely decisions.

GENERIC PRODUCT DEVELOPMENT PROCESS.

Product : A product is something sold by an enterprise to its customers.

Product Development : It is the set of activities beginning with the perception of a market opportunity and
ending in the production, sale and delivery of a product.
 UNIT-2

NEW PRODUCT DEVELOPMENT

NEW PRODUCT INTRODUCTION

New product introduction or, as it is more generally referred to, new product development is the process involved
in bringing any new product into being and then launched onto the market. So it is more than simply designing
and then developing the product itself, it involves defining the market for the product, testing the market, bringing
the product to the commercial market and advertising it and so on.

It is therefore a very complex process, which can usually be separated into two separate areas.

The first strand involves the product itself, the second involves the commercialization of the product. However, it
is important to note that the two strands intertwine and can happen simultaneously at times. There is a cross over
at times because the design and technical issues will often be happening when the market analysis is being
conducted.

Ideas and Light bulb Moments: Initial Stages

The idea for a new product is the very first stage of introducing any product. Someone has to think about it, which
can either be a result of analysis and research, or it can be a ‘light bulb’ idea, where the designer suddenly realises
that a product is required.

Once the idea is generated, then there is usually some kind of market analysis to ascertain if there is indeed a
market for the product and if so, is it worth developing it?
It is also necessary to look at whether or not there are any similar products on the market that could threaten the
development of this new item.

Design and Development

The design of the product needs to be carefully undertaken to ensure that it costs the absolute minimum but is fit
for purpose and of sufficient quality. The production costs of the item also need to be broken down; how much
will each item cost, can it be produced more cost effectively etc?

This process will also involve the financial feasibility of the product and whether or not it is worth bringing to
market. If the decision is taken that it is, then production will proceed; if not, then the product will go no further!
The viability of the product needs to be examined by a process known as the business analysis, to ascertain how
much the product should sell for and how must it will cost.
Market Testing

Once prototypes have been worked up, then market testing can begin as focus groups, customer discussions or
even testing the product at a trade show. This is an important part of the process because it involves listening to
the customers and whether or not they would actually buy the item and think that it is of any worth!

Planning Issues

If the prototype is to go ahead, then production needs to be planned. This will involve procurement, logistics,
quality management tools, costing, pricing and so on. This should even involve a contingency plan to ensure that
when something goes wrong (as it will) there will be some kind of Plan B to rely on.

Meanwhile those in marketing and advertising will be planning the launch of the product and raising its profile as
soon as it is on the market.

Launching The Product

The product is then launched on the market. But this is not the end of the matter- after the launch of the product a
review has to be undertaken to ensure that the product is still viable and that it has met sales targets.
In fact the review will also look at all the costs involved in bringing the product to market and whether budgets
were met, if the price of the product is right and so on.

Introducing a new product to the market sounds really easy; in reality it is anything but!

GROWTH STRATEGIES

Important Business Growth Strategies:

• Market penetration

• Integrative strategy

• Growth strategy

• Diversification strategy

Companies have various growth strategies available before them if they want to grow their business. Some of the
most common growth strategies utilized by companies are penetration, diversification and integration. Of these
three growth strategies the one that is considered least risky is the market penetration strategy. It involves
selling existing products in existing markets. Companies can penetrate their existing markets more thoroughly.
However, this strategy is to be followed in cases where one of the following conditions exists:

• Market is still unsaturated

• Growth rate of the industry is rising but competitive market share is falling
 • If the existing customers are likely to buy the existing products in higher quantity.

• Economies of scale provide a competitive advantage.

In case one of the given conditions exists, this strategy can be used to create further growth. Generally as a part of
market penetration companies increase their investment and focus on distribution and promotion. They spend
more on marketing and advertising. Other promotional methods like discount coupons and seasonal sales are also
utilized for this purpose and the size of the sales force is increased as a part of this strategy.

Another notable strategy used for business growth is diversification. Companies use this strategy to grow
business as well fully utilize its resources and excess cashflow. Diversification is not about existing products like
penetration. It involves addition of similar but new products to the company’s core business. To do this a
company can develop new products internally or acquire a competing business that already deals in related
products.

The aim is to realize higher profits and extend the brand’s presence into related areas. There are a few important
concerns related to diversification. Before diversifying, firms must check if the industry they are trying to enter is
really profitable. They must check if they would be able to generate a competitive advantage in the business they
are entering and if there is a synergy between their new and existing businesses. Firms can obtain this synergy in
case of acquisition using following methods:

• Exploit economies of scale: Increase production and unit costs will fall

• Exploit economies of scope: Utilize the same resources better for different tasks

• Allocate capital efficiently

However, compared to market penetration, diversification can be a riskier strategy. Several firms have failed in
their attempts to diversify in the history of the business world. The reasons vary from one business to another.
There are other examples where firms have seen considerable success after diversifying. So, the difference lies in
how well they planned and executed their strategies.

Another important strategy frequently utilized by businesses to find growth is the integration strategy. It differs
from both penetration and diversification. Two firms in similar businesses can integrate to become a large
business. If two combine, it is known as amalgamation whereas if the larger one absorbs the smaller one it is
absorption or merger. There can be following various forms of integration:

• Backward integration: It can be understood as backward expansion. If a firm integrates parts of its
supply chain or acquires a supplier’s business to ensure smooth and continue supply of raw material, it is
called backward integration. Firms can ensure business growth and higher profits by using this strategy.
 • Forward integration: This can be understood as forward expansion. A company integrates parts of its
distribution channel into its core business to eliminate the intermediaries and to get closer to its
customers. It provides them with higher control over the distribution and sales of their products and
increases profits.

• Horizontal integration: It occurs when two firms that are competing in the same business field are
brought together. It eliminates competition and increases market share and profits.

• Conglomerate growth: It is the strategy of acquiring a firm engaged in a business altogether different
from the acquiring firm’s core business.

However, a growth strategy is also full of risks and companies need to evaluate several actors before embarking
on a growth plan. First important factor to be checked is the availability of economies of scale. If economies of
scale allow to sell products at lower prices or to derive higher profits per unit, companies must embark on a
growth plan. Apart from it companies must check what the response of the customers is going to be to the
expansion.

If companies are uncertain whether customers will spend on new products and services or not a growth strategy
might be dangerous and could fail. If demand is falling, the business environment will not support expansion and
again the growth plan will be a failure. Companies must check if the right conditions including customer demand
exist. Firms must also see if internal financing of the expansion is possible or if there is enough cash to support
the expansion plan. Another thing to be ensured is that if the business one is trying to enter will be more profitable
than the existing one. If planning to diversify then firms must not try to diversify very far from their core business
without properly evaluating the risks. These are only three growth strategies. Companies also use other growth
strategies like Market development or product development to grow their businesses.

Intensive Growth Strategies

For starters, it is best to put together a growth strategy starting with the actions that bring the least amount of risk
with the most results. As you keep growing, the riskier the opportunities get along with the greater results but also
greater risk. The intensive growth strategies entail the following:

Market Penetration

Market Penetration is the least risky growth strategy. The focus is to sell more of the current product to current
customers. Most consumer goods products go this route selling bigger packages of product.

Market Development

Market development comes next and would mean selling more of your current product to an adjacent market.
This can be executed by expanding your reach to more cities or states.
Alternative Channels

Alternative channels means reaching your customers in new and different ways than before. You can offer
product online or in physical stores.

Product Development

Product development is the most traditional growth strategy. The goal is to develop new products for your
existing customers. This mitigates risk as you are selling to people you already know you as you know them.

New Products for New Customers

Sometimes, you’ve exhausted your existing customer base and have to create new products for new customers.
This can happen if the market changes or shifts forcing you to adjust. This phenomenon can also take place when
you create something new that appeals to a new market bringing them into your sphere allowing you to build for
them.

Integrative Growth Strategies

Once you’ve gone through Intensive Growth strategies you can move towards Integrative Growth Strategies.
These are made up of:

Horizontal Growth

Horizontal growth would mean buying a competing business adding not only to your company’s growth, but also
eliminating a future barrier to growth.

Backward Growth

Backward growth would mean buying one of your suppliers so you totally control your supply chain. This could
also decrease your ultimate cost and production time for new products.

Forward Growth

Forward growth would focus on buying out companies within your distribution chain.

Diversification

Lastly, you can explore diversification. Diversification would mean growing your company by buying another
completely unrelated company or product line. This is highly risky, but in successful cases can prove to expand
business enormously.

Overall, growth is an active and dynamic process, you must be willing and available to adjust and change as the
market and environment changes. Its best to plan and execute strategies one rung at a time.
PRODUCT PORTFOLIO ANALYSIS BOSTON CONSULTANCY GROUP

BCG Matrix or BCG analysis

BCG analysis is mainly used for Multi Category / Multi Product companies. All categories and products together
are said to be a Business portfolio. Thus, the various entities of your business portfolio may move forward by a
different pace and with a different strategy. The BCG analysis actually helps you in deciding which entities in
your business portfolio are actually profitable, which are duds, which you should concentrate on and which gives
you a competitive advantage over others.

Once you know which businesses stand where in your business portfolio, you also come to know which
businesses need investments, which needs harvesting (making money), which needs divesting (reducing
investment) and which needs to be completely taken out of the business portfolio.

For a major organization like HUL, ITC etc which have multiple categories and within the categories, they have
multiple lines of products, the BCG analysis becomes very important. At a holistic level, they get to make a
decision on which product to continue and which product to be divested. Which product can give new returns
with good investment, and which products are reaching the apex of market share.

BCG Growth Share Matrix – The BCG growth share matrix was developed by Henderson of the BCG group in
1970’s. The matrix classifies businesses / SBU’s by

1) Relative Market Share – The market share of the business / SBU / Product in the market as compared to its
competitors and overall product / category.

2) Market growth rate – The growth rate of the industry as a whole is taken into consideration from which the
growth rate of the product is extrapolated. This growth rate is then pitched on the graph.

Thus by having 2 basic but at the same time very important factors on X axis and Y axis, the BCG matrix makes
sure that the classifications are concrete. Calculating the Market growth rate comprises of both industry growth
and product growth rate thereby giving a fair knowledge of where the product / SBU stands in comparison to the
Industry.

The market share on the other hand comprises of the competition and the product potential in the market. Thus
when we consider growth rate and market share together, it automatically gives us an overview of the competition
and the industry standards as well as an idea of what the future might bring for the product.

Once the businesses have been classified, they are placed into four different quadrants of the matrix. The
quadrants of the matrix are divided into

1) Cash Cows – High market share but low growth rate (most profitable).

2) Stars – High market share and High growth rate (high competition)

3) Question marks – Low market share and high growth rate (uncertainty)

4) Dogs – Low market share and low growth rate (less profitable or may even be negative profitability)

On the basis of this classification, strategies are decided for each SBU / Product. Lets discuss the characteristics
and strategies of each quadrant in detail.

1) Cash Cows in the BCG MATRIX

The cornerstone of any multi product business, cash cows are products which are having a high market share in a
low growing market. As the market is not growing, that cash cow gains the maximum advantage by generating
maximum revenue due to its high market share. Thus for any company, the cash cows are the ones which require
least investment but at the same time give higher returns. These higher returns enhance the overall profitability of
the firm because this excess revenue can be used in other businesses which are Stars, Dogs or Question marks.

Strategies for cash cow – The cash cows are the most stable for any business and hence the strategy generally
includes retention of the market share. As the market is not growing, acquisition is less and customer retention is
high. Thus customer satisfaction programs, loyalty programs and other such promotional methods form the core
of the marketing plan for a cash cow product / SBU.

2) Stars in the BCG Matrix

The best product which comes in mind when thinking of Stars is the telecom products. If you look at any top 5
telecom company, the market share is good but the growth rate too is good. Thus because these two factors are
high, the telecom companies are always in competitive mode and they have to juggle between investment and
harvesting vis investing money and taking out money time to time. Unlike cash cows, Stars cannot be complacent
when they are top on because they can immediately be overtaken by another company which capitalizes on the
market growth rate. However, if the strategies are successful, a Star can become a cash cow in the long run.
Strategies for Stars – All types of marketing, sales promotion and advertising strategies are used for Stars. This is
because in cash cow, already these strategies have been used and they have resulted in the formation of a cash
cow. Similarly in Stars, because of the high competition and rising market share, the concentration and investment
needs to be high in marketing activities so as to increase and retain market share.

3)Question Marks in the BCG Matrix

Several times, a company might come up with an innovative product which immediately gains good growth rate.
However the market share of such a product is unknown. The product might lose customer interest and might not
be bought anymore in which case it will not gain market share, the growth rate will go down and it will ultimately
become a Dog.

On the other hand, the product might increase customer interest and more and more people might buy the product
thus making the product a high market share product. From here the product can move on to be a Cash Cow as it
has lower competition and high market share. Thus Question marks are products which may give high returns but
at the same time may also flop and may have to be taken out of the market.

This uncertainty gives the quadrant the name “Question Mark”. The major problem associated with having
Question marks is the amount of investment which it might need and whether the investment will give returns in
the end or whether it will be completely wasted.

Strategies for Question marks – As they are new entry products with high growth rate, the growth rate needs to
be capitalized in such a manner that question marks turn into high market share products. New Customer
acquisition strategies are the best strategies for converting Question marks to Stars or Cash cows. Furthermore,
time to time market research also helps in determining consumer psychology for the product as well as the
possible future of the product and a hard decision might have to be taken if the product goes into negative
profitability.

4) Dogs in the BCG matrix

Products are classified as dogs when they have low market share and low growth rate. Thus these products neither
generate high amount of cash nor require higher investments. However, they are considered as negative
profitability products mainly because the money already invested in the product can be used somewhere else.
Thus over here businesses have to take a decision whether they should divest these products or they can revamp
them and thereby make them saleable again which will subsequently increase the market share of the product.

Strategies for Dogs – Depending on the amount of cash which is already invested in this quadrant, the company
can either divest the product altogether or it can revamp the product through rebranding / innovation / adding
features etc. However, moving a dog towards a star or a cash cow is very difficult. It can be moved only to the
question mark region where again the future of the product is unknown. Thus in cases of Dog products,
divestment strategy is used.

Sequences in BCG Matrix

Success Sequence in BCG Matrix – The Success sequence of BCG matrix happens when a question mark
becomes a Star and finally it becomes a cash cow. This is the best sequence which really give a boost to the
companies profits and growth. The success sequence unlike the disaster sequence is entirely dependent on the
right decision making.

Disaster sequence in BCG Matrix – Disaster sequence of BCG matrix happens when a product which is a cash
cow, due to competitive pressure might be moved to a star. It fails out from the competition and it is moved to a
question mark and finally it may have to be divested because of its low market share and low growth rate. Thus
the disaster sequence might happen because of wrong decision making. This sequence affects the company as a
lot of investments are lost to the divested product. Along with this the money coming in from the cash cow which
is used for other products too is lost.

Strategies based on the BCG Matrix.

There are four strategies possible for any product / SBU and these are the strategies which are used after the BCG
analysis. These strategies are

1) Build – By increasing investment, the product is given an impetus such that the product increases its market
share. Example – Pushing a Question mark into a Star and finally a cash cow (Success sequence)

2) Hold – The company cannot invest or it has other investment commitments due to which it holds the product in
the same quadrant. Example – Holding a star there itself as higher investment to move a star into cash cow is
currently not possible.

3) Harvest – Best observed in the Cash cow scenario, wherein the company reduces the amount of investment and
tries to take out maximum cash flow from the said product which increases the overall profitability.
4) Divest – Best observed in case of Dog quadrant products which are generally divested to release the amount of
money already stuck in the business.

Thus the BCG matrix is the best way for a business portfolio analysis. The strategies recommended after BCG
analysis help the firm decide on the right line of action and help them implement the same.

GE McKinsey Matrix

The GE McKinsey Matrix or GE Matrix is a variant of the Boston Consulting Group (BCG) portfolio analysis

Portfolio

The GE McKinsey Matrix has also many points in common with the MABA analysis.

MABA is an acronym that stands for Market, Attractiveness, Business position and Assessment.

The GE McKinsey Matrix also compares product groups with respect to market attractiveness and competitive
power.

Another name for this type of analysis is Portfolio analysis.

The portfolios of businesses consist of all combinations of products and/ or services that are offered to the market/
target groups.

Originally, the GE McKinsey Matrix made an analysis of the composition of the portfolio of GE business units.

Later, the GE McKinsey matrix proved to be very useful in other companies as well.

The GE McKinsey Matrix comprises two axes.

The attractiveness of the market is represented on the y-axis and the competitiveness and competence of the
business unit are plotted on the x-axis.

Both axes are divided into three categories (high, medium, low) thus creating nine cells.

The business unit is placed within the matrix using circles. The size of the circle represents the volume of the
turnover.

The percentage of the market share is entered in the circle. An arrow represents the future course for the business
unit.
E McKinsey Matrix factors

It is possible to determine in advance whether a market is attractive enough to enter.

This can be done by using the following factors:

• Market size

• Historical and expected market growth rate

• Price development

• Threats and opportunities (component of SWOT Analysis)

• Technological developments

• Degree of competitive advantage

Other factors are used to determine competitiveness:

• Value of core competences

• Available assets

• Brand recognition and brand strength

• Quality and distribution

• Access to internal and external finance resources

AD LITTLE PRODUCT PORTFOLIO ANALYSIS

The ADL matrix by Arthur D. Little is a portfolio management matrix which helps managers discern their SBUs
strategic position depending upon 2 dimensions-

• SBU’s life cycle and

• Competitive position

Each of these dimensions can be further split up into the following categories to better analyze a firm and
accordingly determine the future strategic actions-

Life cycle stages can be

• Embryonic

• Growth

• Maturity

• Ageing

Competitive position can also be either of the following

1. Dominant:The position of a company falls into this category if it is a clear market leader or has a monopoly
position. Exampl , Intel in microprocessors.

2. Strong:In this case, the company might not be a monopoly but definitely has a strong presence and loyal
customers.

3. Favorable:Companies with favorable competitive position usually operate in fragmented markets and no single
one controls all market share.

4. Tenable:Here each company caters to a niche segment defined by a product variety or segmented
demographically.

5. Weak :In this scenario, the company financials are too weak to gain a strong hold in the market and is expected
to die out within a short span of time.
Thus depending on where a particular firm lies on the ADL grid, a suitable set of strategies should be adopted by
it to gain greater market share and move to higher stages of life cycle and competitive positions.

Hence, this concludes the definition of ADL Matrix- Arthur D. Little along with its overview.

SHELL INTERNATIONAL PRODUCT PORTFOLIO ANALYSIS

The Shell Directional Policy Matrix is another refinement upon the Boston Matrix. Along the horizontal axis are
prospects for sector profitability, and along the vertical axis is a company’s competitive capability. As with the
GE Business Screen the location of a Strategic Business Unit (SBU) in any cell of the matrix implies different
strategic decisions.

• Double or quit – gamble on potential major SBU’s for the future.

• Growth – grow the market by focusing just enough resources here.

• Custodial – just like a cash cow, milk it and do not commit any more resources.

• Cash Generator – Even more like a cash cow, milk here for expansion elsewhere.

• Phased withdrawal – move cash to SBU’s with greater potential.

• Divest – liquidate or move these assets on a fast as you can.

However decisions often span options and in practice the zones are an irregular shape and do not tend to
be accommodated by box shapes. Instead they blend into each other.
Each of the zones is described as follows:

• Leader – major resources are focused upon the SBU.

• Try harder – could be vulnerable over a longer period of time, but fine for now.

IDEA GENERATION TECHNIQUES AMONG CREATIVE PROFESSIONALS

The idea generation techniques identified are briefly introduced as follows:

1.Role Playing:
Role playing involves designers acting out scenarios. These scenarios are often ones that the designers observed
during the research phase of the design process when they participated in user research. This technique is a tool
for both team-based ideation and communication to users and/or clients.

2. Active Search:
Active search refers to designers hunting for a particular solution. This hunt could range from a web search for
images of current vacuum cleaners to searching through books, magazines, newspapers, etc. to find demographics
of a particular population.

3. Attribute List:
Attribute listing refers to taking an existing product or system, breaking it into parts and then recombining these to
identify new forms of the product or system

4. Brainstorm:
Brainstorming involves generating a large number of solutions to a problem (idea) with a focus on the quantity of
ideas. During this process, no ideas are evaluated; in fact unusual ideas are welcomed. Ideas are often combined
to form a single good idea as suggested by the slogan “1+1=3” [12]. Brainstorming can be used by groups as well
as individuals
Reverse brain storming: first prevent your problem from happening.Since brainstorming was the first idea
generation technique created it is often referred to as, “the mother of all idea generation techniques”.

5. Collaborate:
Collaboration refers to two or more people working together towards a common goal Designers often work in
groups and co create during the entire creative process.

6. Concrete Stimuli:
Concrete stimuli are used when designers want to gain new perspectives on a problem by manipulating physical
materials. This could be looking at paint chips, feeling different material textures or physically
Maneuvering objects.

7. Critique:
Critique refers to receiving input on current design ideas. This could be collaborative such as receiving a design
critique from a colleague or individuals critiquing their own ideas (either systematically or intrinsically). This
technique often spurs new thought by finding solutions to design flaws within current concepts.

8. Documenting:
Documenting refers to designers writing down ideas (physically or electronically). This includes journaling,
writing stories, and taking notes.

9.Expert Opinion:
Designers often elicit opinions from experts to identify potential problems with products or services before more
comprehensive evaluations. This occurs when they are looking for an answer to a problem that is outside their
domain knowledge or when they want to test a new idea

10. Empathy/User Research:

User research requires the designer to observe people in everyday situations in order to develop empathy for them.
The methods used to conduct this type of research is founded in ethnographic research methods such as
observations, field studies and rapid ethnography
11. Encompass:
Encompassing is an inspirational technique which involves designers immersing themselves iinformation relevant
to the current project.

ROLE OF RESEARCH AND DEVELOPMENT IN MARKETING

A company's research and development department plays an integral role in the life cycle of a product. While the
department usually is separate from sales, production and other divisions, the functions of these areas are related
and often require collaboration. A thorough understanding of the functions of the research and development
department allows you to maximize those duties at your small business, even if you don't have a big department.

New Product Research

Before a new product is developed, a research and development department conducts a thorough study to support
the project. The research phase includes determining product specifications, production costs and a production
time line. The research also is likely to include an evaluation of the need for the product before the design begins
to ensure it is a functional product that customers want to use.

New Product Development

The research paves the way for the development phase. This is the time when the new product is actually
developed based on the requirements and ideas created during the research phase. The developed product must
meet the product guidelines and any regulatory specifications.

Existing Product Updates

Existing products of the company also fall under the scope of research and development. The department
regularly evaluates the products offered by the company to ensure they are still functional. Potential changes or
upgrades are considered. In some cases, the research and development department is asked to resolve a problem
with an existing product that malfunctions or to find a new solution if the manufacturing process must change.

Quality Checks

In many companies, the research and development team handles the quality checks on products created by the
company. The department has an intimate knowledge of the requirements and specifications of a particular
project. This allows team members to ensure the products meet those standards so the company puts out quality
products. If the company also has a quality assurance team, it may collaborate with research and development on
quality checks.

Innovation
The research and development team aids the company in staying competitive with others in the industry. The
department is able to research and analyze the products other businesses are creating, as well as the new trends
within the industry. This research aids the department in developing and updating the products created by the
company. The team helps direct the future of the company based on the information it provides and products it
creates.

PRODUCT MAPS

• Definition: organizing or sorting products/services into groupings with similarities

• Used to: find gaps in what is currently being offered to consumers so that new products can be developed

Example:

Snack Foods: Potato chips, tortilla chips, rice chips, rice cakes, corn chips, pretzels, etc

MARKET MAPPING

Once an entrepreneur has identified an appropriate segment of the market to target, the challenge is to position
the product so that it meets the needs and wants of the target customers.

One way to do this is to use a "market map" (you might also see this called by its proper name – the "perceptual
map").

The market map illustrates the range of "positions" that a product can take in a market based on two dimensions
that are important to customers.

Examples of those dimensions might be:

• High price v low price

• Basic quality v High quality

• Low volume v high volume

• Necessity v luxury

• Light v heavy

• Simple v complex

• Lo-tech v high-tech

• Young v Old
Let's look at an illustrated example of a market map. The map below shows one possible way in which the
chocolate bar market could be mapped against two dimensions – quality and price:

How might a market map be used?

One way is to identify where there are "gaps in the market" – where there are customer needs that are not being
met.

For example, in the chocolate bar market, Divine Chocolate (a social enterprise) successfully spotted that some
consumers were prepared to pay a premium price for very high quality chocolate made from Fairtrade cocoa.
Green & Black's exploited the opportunity to sell premium chocolate made from organic ingredients. Both these
brands successfully moved into the high quality / high price quadrant (see above) before too many competitors
beat them to it.

The trick with a market map is to ensure that market research confirms whether or not there is actually any
demand for a possible "gap in the market". There may be very good reasons why consumers do not want to buy a
product that might, potentially, fill a gap.

JOINT SPACE MAPS

A common approach to perceptual mapping is to integrate both the consumer’s perceptions of the various
competing brands along with the preferred/ideal needs for the different consumer segments in the market.

This style of perceptual mapping is usually referred to as a joint space map. This is simply because both consumer
perception and ideal positioning points are jointly shown on the same perceptual map.

Joint space maps are very important when different market segments have quite distinct needs and, therefore, will
choose between competing brands and products on a different basis.

Example of a Joint Space Map

The following perceptual map is an example of a joint space map. (Click on the map to enlarge it.)
An example of a joint space map for soft drinks

In this example, the preferences (or ideal positioning points) have been plotted in blue for five different
demographic segments. In this case, a simple age-based demographic segmentation base has been used to
construct the market segments of: kids, teens, young adults, middle-aged people and older adults.

As you can see from this perceptual map, the strength of positioning of each of the brands now depends upon how
well (that is, how close they are) to the various market segments preferred (or ideal) positioning points.

For example, kids prefer a soft drink that is low in caffeine, but is quite sweet (that is, high in perceived sugar).
This perceptual map shows that both Sprite and Fanta are well positioned to appeal to this segment’s needs. On
the other hand, Diet Coke is a long way from the kid’s target market preferences (being low in sugar taste and
high in perceived caffeine0, which means that this brand is perceived as a poor fit to the needs (ideal positioning)
of this target map.

People in marketing often like to use joint space maps because it is very important to understand the underlying
needs and preferences of the different market segments. By plotting the segment’s preferred positioning, it
becomes much easier to assess the effectiveness of a brand’s positioning.

IDEA SCREENING

With your list of potential new product ideas, you now need to decide which ideas to pursue and which to discard.
Consider your competition, your existing products, their shortcomings, and the needs of your market. Draw on the
customer needs list you have developed, and the areas for product improvement you have identified.

Develop a set of criteria to evaluate your ideas against. Your criteria might include:

• most prominently identified customer needs

• product improvements most needed

 • the benefits to your target market

• the technical feasibility of the idea

• the level and scope of research and development required

• the profitability of the idea. What is its potential appeal to the market? How would you price it? What are
the costs in bringing it to market - overall and per unit?

• where the product fits in the market. Is there a gap? How close is it to competitor products?

• the resources it will require in development

• the marketing potential of the idea

• the fit with your business profile and business objectives.

CONCEPT TESTING

Concept testing (to be distinguished from pre-test markets and test markets which may be used at a later stage
of product development research)[1] is the process of using surveys (and sometimes qualitative methods) to
evaluate consumer acceptance of a new product idea prior to the introduction of a product to the market. It is
important not to confuse concept testing with advertising testing, brand testing and packaging testing; as is
sometimes done. Concept testing focuses on the basic product idea, without the embellishments and puffery
inherent in advertising.

It is important that the instruments (questionnaires) to test the product have a high quality themselves. Otherwise,
results from data gathered surveys may be biased by measurement error. That makes the design of the testing
procedure more complex. Empirical tests provide insight into the quality of the questionnaire. This can be done
by:

• conducting cognitive interviewing. By asking a faction of potential-respondents about their interpretation

of the questions and use of the questionnaire, a researcher can verify the viability of the cognitive
interviewing.

• carrying out a small pretest of the questionnaire, using a small subset of target respondents. Results can
inform a researcher of errors such as missing questions, or logical and procedural errors.

• estimating the measurement quality of the questions. This can be done for instance using test-retest,
quasi-simplex, or mutlitrait-multimethod models.

• predicting the measurement quality of the question. This can be done using the software Survey Quality
Predictor (SQP).
Concept testing in the new product development (NPD) process is the concept generation stage. The concept
generation stage of concept testing can take on many forms. Sometimes concepts are generated incidentally, as the
result of technological advances. At other times concept generation is deliberate: examples include brain-storming
sessions, problem detection surveys and qualitative research. While qualitative research can provide insights into
the range of reactions consumers may have, it cannot provide an indication of the likely success of the new
concept; this is better left to quantitative concept-test surveys.

In the early stages of concept testing, a large field of alternative concepts might exist, requiring concept-screening
surveys. Concept-screening surveys provide a quick means to narrow the field of options; however they provide
little depth of insight and cannot be compared to a normative database due to interactions between concepts. For
greater insight and to reach decisions on whether or not pursue further product development, monadic concept-
testing surveys must be conducted.

Frequently concept testing surveys are described as either monadic, sequential monadic or comparative. The terms
mainly refer to how the concepts are displayed:

1.) Monadic. The concept is evaluated in isolation.

2.) Sequential monadic. Multiple concepts are evaluated in sequence (often randomized order).

3.) Comparative. Concepts are shown next to each other.

4.) Proto-monadic. Concepts are first shown in sequence, and then next to each other.

"Monadic testing is the recommended method for most concept testing. Interaction effects and biases are avoided.
Results from one test can be compared to results from previous monadic tests. A normative database can be
constructed." However, each has its specific uses and it depends on the research objectives. The decision as to
which method to use is best left to experience research professionals to decide, as there are numerous implications
in terms of how the results are interpreted.

CONCEPT SELECTION

• "Concept Selection" is picking the idea(s) which best satisfy the Product Design Specification (PDS)

• Stage in design process: After (1) understanding customer needs, (2) developing PDS, (3) generating
many concepts. Before detailed design.

• You are selecting among choices constantly in design process. If you don’t have many choices to choose
from at every stage of the design process, your process is bad.

• Selection is an iterative process. (1) May need new or modified concepts, (2) May need more info to
proceed.
 • Think of concept selection as weeding out bad ideas, not as trying to pick the "best" idea. The latter is too
hard. Selection should be a narrowing process, not a competition.

• Put yourself in customers shoes for the selection. No good if you pick based on your own perceptions
since you aren’t buying lots.

• Wait a day or two after any barnstorming sessions before running a selection process.

• Stay flexible

• You NEVER have enough information to do it properly...but often you can’t wait.

DESIGN FOR MANUFACTURING

Design for manufacturability (also sometimes known as design for manufacturing or DFM) is the general
engineering practice of designing products in such a way that they are easy to manufacture. The concept exists in
almost all engineering disciplines, but the implementation differs widely depending on the manufacturing
technology. DFM describes the process of designing or engineering a product in order to facilitate the
manufacturing process in order to reduce its manufacturing costs. DFM will allow potential problems to be fixed
in the design phase which is the least expensive place to address them. Other factors may affect the
manufacturability such as the type of raw material, the form of the raw material, dimensional tolerances, and
secondary processing such as finishing.

Depending on various types of manufacturing processes there are set guidelines for DFM practices. These DFM
guidelines help to precisely define various tolerances, rules and common manufacturing checks related to DFM.

Design for manufacturability (DFM) is the process of proactively designing products to (1) optimize all the
manufacturing functions: fabrication, assembly, test, procurement, shipping, delivery, service, and repair, and (2)
assure the best cost, quality, reliability, regulatory compliance, safety, time-to-market, and customer satisfaction.

Concurrent Engineering is the practice of concurrently developing products and their manufacturing processes.
If existing processes are to be utilized, then the product must be design for these processes.
If new processes are to be utilized, then the product and the process must be developed concurrently.

Design for Manufacturability can reduce many costs, since products can be quickly assembled from fewer parts.
Thus, products are easier to build and assemble, in less time, with better quality. Parts are designed for ease of
fabrication and commonality with other designs. DFM encourages standardization of parts, maximum use of
purchased parts, modular design, and standard design features. Designers will save time and money by not having
to "re-invent the wheel." The result is a broader product line that is responsive to customer needs. Click here for
article on standardization.
Companies that have applied DFM have realized substantial benefits. Costs and time-to-market are often cut in
half with significant improvements in quality, reliability, serviceability, product line breadth, delivery, customer
acceptance and, in general, competitive posture.

These practical methodologies are taught through Dr. Anderson's in-house seminars and lower-cost webinars. He
helps with implementation through his leading-edge consulting.

DESIGNING PRODUCTS FOR MANUFACTURABILITY

In order to design for manufacturability, everyone in product development team needs to:

C In general, understand how products are manufactured through experience in manufacturing, training,
rules/guidelines, and/or multi-functional design teams with manufacturing participation.

C Specifically, design for the processes to be used to build the product you are designing: If products will be built
by standard processes, design teams must understand them and design for them. If processes are new, then design
teams must concurrently design the new processes as they design the product.

PROTOTYPE PRODUCT

A prototype is an early sample, model, or release of a product built to test a concept or process or to act as a
thing to be replicated or learned from. It is a term used in a variety of contexts, including semantics, design,
electronics, and software programming.

UNIT-3

PERPETUAL MAPPING

Perceptual Map

Typically, a simple perceptual map is a two-dimensional graph with a vertical axis and a horizontal axis. Each
axis has a pair of opposite attributes at each end of the axis. For example, if the map is looking at cars, the vertical
axis might have a luxury car at one end and an economy car at the other end; the horizontal axis might have
"family-oriented" at one end and "sporty" at the other end. Each car is then plotted on the graph based on how
consumers perceive the car relative to those attributes.

Firms use perceptual or positioning maps to help them develop a market positioning strategy for their product or
service. As the maps are based on the perception of the buyer they are sometimes called perceptual maps.
Positioning maps show where existing products and services are positioned in the market so that the firm can
decide where they would like to place (position) their product. Firms have two options they can either position
their product so that it fills a gap in the market or if they would like to compete against their competitors they can
position it where existing products have placed their product.
The diagram below is a Perceptual Map of UK chocolate confectionery Brands

Drawing a Perceptual (Positioning) Map

Theoretically a perceptual map can have any number of lines, to keep things simple they usually have 2 lines the x
and y axis. The x axis goes left to right and the y axis goes bottom to top. Any criteria can be used for the map for
example price, quality, status, features, safety and reliability. Once the two lines have been drawn and labelled
existing products will be placed onto the map.

Example Perceptual Map

In the example below two dimensions price and quality have been used. If we plot the UK chocolate market, we
can identify where existing chocolate brands have been positioned by manufacturers. For example our fictional
brand of Belgian chocolates called Belgium Chocolates are high quality and high price so they are placed in the
top right hand box, whilst Twix is an affordable "every day" treat chocolate so it has been placed in the bottom
left hand square, in the low quality low price brand box.

The Purpose Of Perceptual Maps

Perceptual maps can help identify where (in the market) an organisation could position a new brand. In our
example this could be at the medium price and medium quality position, as there is a gap there. There is also a
gap in high price low quality but consumers will not want to pay a lot of money for a low quality product.
Similarly the low price high quality box is empty because manufacturers would find it difficult to make a high
quality chocolate for a cheap price or make a profit from selling a high quality product at a low price.
Benefits of Perceptual Maps

• To help us better understand market segments

• To see how the target market really perceives the brands in the marketplace

• To evaluate the performance of recent marketing campaigns and other marketing mix changes

• To confirm whether how consumers perceive us fits with our positioning goals

• To check that our brand has a clear positioning space in the market

• To track how successfully our new products have been positioned into the market

• To monitor competitive brands and their changing market position

• To help our organization identify gaps in the market

• To monitor changes in consumer preferences over time

Limitations of Perceptual Maps

• Perceptual maps often simplify the consumer’s purchase decision down to two product attributes

• They tend to be more beneficial for low-involvement purchase decisions

• They are more relevant for individual brands, and less helpful for corporate brand image

• The data is often difficult or expensive to obtain (via marketing research)

• There is a often difference between consumer’s perception of the brand’s benefits versus reality

KELLER'S BRAND EQUITY MODEL

Many factors influence the strength of a particular product or brand. If you understand these factors, you can think
about how to launch a new product effectively, or work out how to turn a struggling brand into a successful one.

In this article, we'll look at Keller's Brand Equity model. This tool highlights four steps that you can follow to
build and manage a brand that customers will support.

Overview

Keller's Brand Equity Model is also known as the Customer-Based Brand Equity (CBBE) Model. Kevin Lane
Keller, a marketing professor at the Tuck School of Business at Dartmouth College, developed the model and
published it in his widely used textbook, "Strategic Brand Management."
The concept behind the Brand Equity Model is simple: in order to build a strong brand, you must shape how
customers think and feel about your product. You have to build the right type of experiences around your brand,
so that customers have specific, positive thoughts, feelings, beliefs, opinions, and perceptions about it.

When you have strong brand equity, your customers will buy more from you, they'll recommend you to other
people, they're more loyal, and you're less likely to lose them to competitors.

The model, seen in Figure 1, illustrates the four steps that you need to follow to build strong brand equity.

The four steps of the pyramid represent four fundamental questions that your customers will ask – often
subconsciously – about your brand.

The four steps contain six building blocks that must be in place for you to reach the top of the pyramid, and to
develop a successful brand.

Applying the Model

Let's look at each step and building block in detail, and discuss how you can apply the framework and strengthe n
your brand.

Step 1: Brand Identity – Who Are You?

In this first step, your goal is to create "brand salience," or awareness – in other words, you need to make sure that
your brand stands out, and that customers recognize it and are aware of it.

You're not just creating brand identity and awareness here; you're also trying to ensure that brand perceptions are
"correct" at key stages of the buying process.

Application
To begin, you first need to know who your customers are. Research your market to gain a thorough understanding
of how your customers see your brand, and explore whether there are different market segments with different
needs and different relationships with your brand.

Next, identify how your customers narrow down their choices and decide between your brand and your
competitors' brands. What decision-making processes do your customers go through when they choose your
product? How are they classifying your product or brand? And, when you follow their decision making process,
how well does your brand stand out at key stages of this process?

Step 2: Brand Meaning – What Are You?

Your goal in step two is to identify and communicate what your brand means, and what it stands for. The two
building blocks in this step are: "performance" and "imagery."

"Performance" defines how well your product meets your customers' needs. According to the model, performance
consists of five categories: primary characteristics and features; product reliability, durability, and serviceability;
service effectiveness, efficiency, and empathy; style and design; and price.

"Imagery" refers to how well your brand meets your customers' needs on a social and psychological level. Your
brand can meet these needs directly, from a customer's own experiences with a product; or indirectly, with
targeted marketing, or with word of mouth.

A good example of brand meaning is Patagonia®. Patagonia makes high quality outdoor clothing and equipment,
much of which is made from recycled materials.

Patagonia’s brand performance demonstrates its reliability and durability; people know that their products are
well designed and stylish, and that they won't let them down. Patagonia’s brand imagery is enhanced by its
commitment to several environmental programs and social causes; and its strong “reduce, reuse, recycle” values
make customers feel good about purchasing products from an organization with an environmental conscience.

Step 3: Brand Response – What Do I Think, or Feel, About You?

Your customers' responses to your brand fall into two categories: "judgments" and "feelings." These are the two
building blocks in this step.

Your customers constantly make judgments about your brand and these fall into four key categories:

• Quality: Customers judge a product or brand based on its actual and perceived quality.
 • Credibility: Customers judge credibility using three dimensions – expertise (which includes innovation),
trustworthiness, and likability.

• Consideration: Customers judge how relevant your product is to their unique needs.

• Superiority: Customers assess how superior your brand is, compared with your competitors' brands.

Customers also respond to your brand according to how it makes them feel. Your brand can evoke feelings
directly, but they also respond emotionally to how a brand makes them feel about themselves. According to the
model, there are six positive brand feelings: warmth, fun, excitement, security, social approval, and self-respect.

Application

• First, examine the four categories of judgments listed above. Consider the following questions carefully
in relation to these:

• What can you do to improve the actual and perceived quality of your product or brand?

• How can you enhance your brand's credibility?

• How well does your marketing strategy communicate your brand's relevancy to people's needs?

• How does your product or brand compare with those of your competitors?

Next, think carefully about the six brand feelings listed above. Which, if any, of these feelings does your current
marketing strategy focus on? What can you do to enhance these feelings for your customers?

Identify actions that you need to take as a result of asking these questions.

Step 4: Brand Resonance – How Much of a Connection Would I Like to Have With You?

Brand "resonance" sits at the top of the brand equity pyramid because it's the most difficult – and the most
desirable – level to reach. You have achieved brand resonance when your customers feel a deep, psychological
bond with your brand.

Keller breaks resonance down into four categories:

• Behavioral loyalty: This includes regular, repeat purchases.

• Attitudinal attachment: Your customers love your brand or your product, and they see it as a special
purchase.
 • Sense of community: Your customers feel a sense of community with people associated with the brand,
including other consumers and company representatives.

• Active engagement: This is the strongest example of brand loyalty. Customers are actively engaged with
your brand, even when they are not purchasing it or consuming it. This could include joining a club
related to the brand; participating in online chats, marketing rallies, or events; following your brand on
social media; or taking part in other, outside activities.

FLOWCHARTS AND PROCESS DIAGRAMS

Samples of Marketing Flowcharts and Process Diagrams are created with ConceptDraw PRO diagramming and
vector drawing software enhanced with Marketing solution from ConceptDraw Solution Park. ConceptDraw PRO
provides export of vector graphic multipage documents into multiple file formats: vector graphics (SVG, EMF,
EPS), bitmap graphics (PNG, JPEG, GIF, BMP, TIFF), web documents (HTML, PDF), PowerPoint presentations
(PPT), Adobe Flash (SWF).

Marketing Block Diagram — Customer Decision Making

Diffusion of innovation theory

Diffusion of Innovation (DOI) Theory, developed by E.M. Rogers in 1962, is one of the oldest social science
theories. It originated in communication to explain how, over time, an idea or product gains momentum and
diffuses (or spreads) through a specific population or social system. The end result of this diffusion is that people,
as part of a social system, adopt a new idea, behavior, or product. Adoption means that a person does something
differently than what they had previously (i.e., purchase or use a new product, acquire and perform a new
behavior, etc.). The key to adoption is that the person must perceive the idea, behavior, or product as new or
innovative. It is through this that diffusion is possible.

Adoption of a new idea, behavior, or product (i.e., "innovation") does not happen simultaneously in a social
system; rather it is a process whereby some people are more apt to adopt the innovation than others. Researchers
have found that people who adopt an innovation early have different characteristics than people who adopt an
innovation later. When promoting an innovation to a target population, it is important to understand the
characteristics of the target population that will help or hinder adoption of the innovation. There are five
established adopter categories, and while the majority of the general population tends to fall in the middle
categories, it is still necessary to understand the characteristics of the target population. When promoting an
innovation, there are different strategies used to appeal to the different adopter categories

• Innovators - These are people who want to be the first to try the innovation. They are venturesome and
interested in new ideas. These people are very willing to take risks, and are often the first to develop new
ideas. Very little, if anything, needs to be done to appeal to this population.

• Early Adopters - These are people who represent opinion leaders. They enjoy leadership roles, and
embrace change opportunities. They are already aware of the need to change and so are very comfortable
adopting new ideas. Strategies to appeal to this population include how-to manuals and information sheets
on implementation. They do not need information to convince them to change.

• Early Majority - These people are rarely leaders, but they do adopt new ideas before the average person.
That said, they typically need to see evidence that the innovation works before they are willing to adopt it.
Strategies to appeal to this population include success stories and evidence of the innovation's
effectiveness.

• Late Majority - These people are skeptical of change, and will only adopt an innovation after it has been
tried by the majority. Strategies to appeal to this population include information on how many other
people have tried the innovation and have adopted it successfully.

• Laggards - These people are bound by tradition and very conservative. They are very skeptical of change
and are the hardest group to bring on board. Strategies to appeal to this population include statistics, fear
appeals, and pressure from people in the other adopter groups.
The stages by which a person adopts an innovation, and whereby diffusion is accomplished, include awareness of
the need for an innovation, decision to adopt (or reject) the innovation, initial use of the innovation to test it,
and continued use of the innovation. There are five main factors that influence adoption of an innovation, and
each of these factors is at play to a different extent in the five adopter categories.

• Relative Advantage - The degree to which an innovation is seen as better than the idea, program, or
product it replaces.

• Compatibility - How consistent the innovation is with the values, experiences, and needs of the potential
adopters.

• Complexity - How difficult the innovation is to understand and/or use.

• Triability - The extent to which the innovation can be tested or experimented with before a commitment
to adopt is made.

• Observability - The extent to which the innovation provides tangible results.

LIMITATIONS OF DIFFUSION OF INNOVATION THEORY

There are several limitations of Diffusion of Innovation Theory, which include the following:

• Much of the evidence for this theory, including the adopter categories, did not originate in public health
and it was not developed to explicitly apply to adoption of new behaviors or health innovations.

• It does not foster a participatory approach to adoption of a public health program.

• It works better with adoption of behaviors rather than cessation or prevention of behaviors.

• It doesn't take into account an individual's resources or social support to adopt the new behavior (or
innovation).

This theory has been used successfully in many fields including communication, agriculture, public health,
criminal justice, social work, and marketing. In public health, Diffusion of Innovation Theory is used to accelerate
the adoption of important public health programs that typically aim to change the behavior of a social system. For
example, an intervention to address a public health problem is developed, and the intervention is promoted to
people in a social system with the goal of adoption (based on Diffusion of Innovation Theory). The most
successful adoption of a public health program results from understanding the target population and the factors
influencing their rate of adoption.

ADOPTION PROCESS

Adoption process is a series of stages by which a consumer might adopt a NEW product or service. Whether it be
Services or Products, in todays competitive world, a consumer is faced with a lot of choices. How does he make a
decision to ADOPT a new product is the Adoption process.

There are numerous stages of adoption which a consumer goes through. These stages may happen before or even
after the actual adoption.

• Awareness – This is the area where major marketeers spend billions of dollars. Simply speaking, if you are
not AWARE of the product, you are never going to BUY the product.

• Interest and Information Search – Once you are aware, you start searching for information. Whether it be
your daily soap, your car or for that matter your home, you wont buy it unless you KNOW about it.

• Evaluation / Trial – Evaluation is wherein you test or have a trial of the product. This is pretty difficult in
services as services are generally intangible in nature. However service marketing managers do find ways
of offering Trial packs to users. Comparatively, it is pretty easier in Product marketing and finds a major
usage in BTL ( Below the Line) sales promotion.

• Adoption – The actual adoption of the product. Wherein the consumer finally decides to adopt the product.

Although this is a well scripted adoption process, however consumers might tend to skip over the whole process.
For example you wife asks you to buy a product for her. Would you go through the process of actually collecting
information, Evaluating it and than making a decision??? I dont think so!!! So in this case (Word of Mouth) the
consumer tends to directly adopt the product rather than going through stages. This is one of the primary reason
word of mouth is so much in demand.

On the other hand, The process might end in Rejection. Any of the stages can result in rejection of the product.
No brand recall, No interest generated, Trial improper, Product didnt satisfy, so on and so forth.

The task of the marketer here is to understand what is involved in the psychological adoption process of
consumers for particular product and service in order to be able to positively influence such consumers at
appropriate stages. Only when this process has been understood we can encourage our consumers to actually
purchase the product / service offering.

For example –

• Product trial may be an important stage to be completed before adopting some new products such as newly
flavored soft drinks, prompting marketers to offer free samples of the products in supermarkets.

• One strategy adopted in FMCG’s is to give away small trial-sized packages of products such as shampoos
or laundry detergents to encourage adoption. Yet, in adopting other products such as mobile phones,
awareness, interest, and evaluation become more essential. Thus in these sectors, marketers emphasize on
marketing communications and promotions to lead consumers towards adopting their product.

• Finally, Market research needs to be done by marketers to understand the time and effort taken by the
consumer in each stage of the adoption process so as to lead the consumer to the final stage of adoption.
 UNIT-4

BRAND MANAGEMENT

Brand Management - Meaning and Important Concepts

BRAND:A brand is the set of product or service attributes imbibed in the consumer’s mind in the form of a name,
symbol, logo, design and trademark. The importance of brand management is:

- Product differentiation from competitors

- Building corporate image
- Creating bundle of benefits for different product categories
- Attract and retain the most loyal customers
Brand management begins with having a thorough knowledge of the term “brand”. It includes developing a
promise, making that promise and maintaining it. It means defining the brand, positioning the brand, and
delivering the brand. Brand management is nothing but an art of creating and sustaining the brand. Branding
makes customers committed to your business. A strong brand differentiates your products from the competitors. It
gives a quality image to your business.

IMPORTANCE OF BRAND MANAGEMENT

A brand represents who your company is and what it stands for. This includes your name, logo, messaging,
merchandise, design, and any other feature that identifies your company and its products and service and makes it
distinct from others. With your brand you are developing a promise, conveying the message of this promise and
then maintaining it.

Brand management is the science of crafting and sustaining a brand. This means defining the brand, positioning
the brand, and delivering the brand value constantly. Branding creates customer commitment to your business. A
robust brand differentiates its products from the competitors and gives your business a leg up on the others,
allowing you to increase sales and grow your business.

Brand management includes handling both the noticeable and intangible characteristics of a brand. When it comes
to product brands, this includes the product itself, packaging, pricing, availability, etc. With service brands,
tangibles include customers’ experience. The intangibles include emotional connections and expectations with
products and services. Branding also involves assembling a blend of the right marketing campaigns to create and
reinforce your identity. If done right, you can even create a brand that is able to break through the noise and create
brand loyalty.

Your brand should:

• Make your product or service distinctive from the competition

• Identify what customers can only get from your brand (Don’t camouflage your strengths!)

• Trigger instant recognition with customers and prospects

• Position yourself as an expert

• Be present when and where it matters (Queue your integrated marketing campaigns)

• Remind people of the reputation for which you are known. Show up locally to reinforce this

• Place your company top-of-mind with your audience

• See better return on investment, more brand awareness

• Capitalize on mind share to help drive sales

Why Brand Management Matters

Customers will recognize your company, your product, your service and your status through your brand. You can
build an incredible brand through messages, images and ads but whether you realize it or not, your company is
creating this reputation with everything that you and your local affiliates do. So you need to make sure you are
consistently living up to your brand promise each and every day.

The most important part of brand management is ongoing maintenance and control. Proper brand management
involves making sure that each promotional piece, touch point and every usage of your name, logo and message
supports your organization and goals by reinforcing your brand in the way you intended. This allows you continue
to strengthen the association your brand imprints on your customers. Even the best brands can fall apart if not
managed properly.
Many large corporations hire a full-time brand manager to ensure the brand is held in high regard, and not
diminished or misused. Even with a brand manager, developing high quality promotional pieces that consistently
strengthen your brand and controlling its use can be a challenge for anyone.

Managing your Brand Throughout Your Channel

Brand management becomes even more challenging once you additional parties. If you’re a brand that sells your
products or services through resellers, VARs, agents, distributors or other local affiliates, you know this better
than anyone. Local affiliates are notorious for using out of date information, old logos and off-brand messaging if
they aren’t provided the content they need. And brands generally don’t have the visibility or control at the local
level to police their brand. So what is a brand to do?

Revenue helps brands manage the chaos of local marketing by enabling them to distribute the content, tools, data
and funds needed to activate and empower channel partners to market effectively – all with complete control and
visibility to activities and results.

Branding is more about following rules because if you don’t follow those rules, things don’t look the same and
people won’t remember you. When you put out your marketing pieces, you want to create a similar look and feel
so that people remember you. And you want that similar look and feel on every piece you put out.

The good thing is that you get to make the rules…colors are the same, style of lettering is the same, logo, etc.
However, there is some flexibility as long as you follow the rules. You can’t go too far out of bounds, but you can
change some things within the framework of what others can still recognize.

Branding in your marketing has to make you feel something. A technology company can’t have an old-style font
— you might not think that they are very advanced.

A brand consists of eight basic building blocks:

• The name

• The logo (brand icon)

• The brand’s colors

• The slogan and brand messaging

• The sound of the brand

• The overall look and feel = the brand’s position

• Packaging the brand

• The brand experience

A brand is a greater sum of its parts. It is always more than just the nuts and bolts, the pieces; great brands are
always the result of the whole equaling more than the sum of its parts.

Branding is about making the consumer or buyer more hip, more in the “know,” more cool than anybody else. We
are a generation and a nation wanting to be special. We want to be richer, more beautiful, better dressed, and more
effortlessly gorgeous than any other generation that we know.

Benefits of Branding

Your business needs to create a positive image in the minds of consumers. Contrary to what most people believe,
branding isn’t just a logo. Your business’s purpose, focus, and image all combine to create your brand. Why
should you make this effort? Below are a few benefits:

• You are remembered: It’s hard to remember a company with a generic name. You may not be able to
distinguish their purpose and business focus. And why would you call a company if you couldn’t tell
what they did? Branding your business ensures that consumers will know what you’re about.

• You gain customer loyalty: The fact is, people build close bonds with brand identities. Consumers want
quality products that they can trust. So, your business should have an identity that your customers can
cling to. If your company delivers great products and services and has a great brand identity, people will
remember you. Additionally, they will often refer you to friends and family.

• You become well-known: You want the people who have not done business with you to still know who
you are and what you do. If they see your ads on billboards, hear them on the radio, see them on
television, or any other media, they will know your brand identity. And when the time comes that they
need your product or service, your company will be the first to come to mind.

• Consumers pay for image: We are a very brand-aware society. People commonly associate brand names
with quality and may only buy certain brands for that reason. If people only want one brand of a particular
product, they are willing to pay a higher price. Having a great brand will make your company have a
superior image and cause consumers to forget about the competition.

When you have distinguished your business through branding, the marketing has the capability of becoming so
profound that little else is necessary. Developing your brand takes time and effort, but after it has been solidified,
and after customers have had the chance to identify with it, your sales can increase naturally. You won’t have to
spend as much time planning marketing strategies to attract the public.
Online Branding

Branding, as a whole, is essential for any serious business because a company’s brand is what distinguishes it
from its competitors. In today’s computer age, it is necessary for most businesses to have an online presence to
stay competitive. Effective Internet branding, just like its offline counterpart, helps bring awareness to your
unique business offering and drive customer demand.

While Internet branding offers huge opportunities for business, in order for it to be effective, one needs to attract
and engage its customers. This isn’t easy on the Internet. Branding is not as easy as putting up a website and
adding your company logo and slogan. Your Internet branding strategy should make your online brand noticeable
and apparent.

Branding utilizes hi-tech tools to create an online presence for your business. Graphics and animation, compelling
web copy, and overall website design that reflect your company are some of the important elements that will bring
your online brand alive. An attractive website that helps customers easily and quickly find the information they
need is the key to getting customer interaction and eventually, business. Your branding plan should include good
design elements and ease of use to create an effective overall impression.
A strong online image will make the difference between a customer who buys from you online or switches to your
competitors. Remember that online customers can just leave your website and go to your competitors with the
click of a mouse. A lot depends on the impression they get from your website. Branding seeks to convey an
immediate unique message about your business to your target clients.

Promoting Your Brand

If you haven’t already initiated a brand for your company, now might be j ust the time. Use these simple
techniques in the promotion of your special brand.

• Make your brand as unique as possible: Catch the eye of the public by creating something different —
something that people have not yet seen. Instead of doing what has already been done, go the opposite
direction and be creative. Don’t forget the legal dangers of copyright infringement related to borrowing or
stealing from another firm’s design.

• Display stability: Take time in the development process to establish your brand and accomplish the look
you really want. It’s better to spend sufficient time in the beginning fine-tuning your design for the
desired outcome rather than to play with it after it’s been revealed to the public. Changing your brand, and
all that’s involved with it, including colors, slogans, logos, and tag lines, doesn’t support an image of
reliability and longevity.
 • Stability should be maintained with branding: If you have integrated a brand into your company’s
marketing, use it all over the place. It should appear on all of your marketing materials, business cards,
website, and printed items. The same is true for your packaging. Your brand should appear on all of your
products.

• Give your brand away to the public with diverse promotional products: You can help your brand to
saturate the consumer population by handing out precious, yet low-cost, items. Promotional products
encourage possible customers to keep in mind your brand and your gift every time they are used.

Brand Attributes

Brand Attributes portray a company’s brand characteristics. They signify the basic nature of brand. Brand
attributes are a bundle of features that highlight the physical and personality aspects of the brand. Attributes are
developed through images, actions, or presumptions. Brand attributes help in creating brand identity.

A strong brand must have following attributes:

• Relevancy- A strong brand must be relevant. It must meet people’s expectations and should perform the
way they want it to. A good job must be done to persuade consumers to buy the product; else inspite of
your product being unique, people will not buy it.

• Consistency- A consistent brand signifies what the brand stands for and builds customers trust in brand.
A consistent brand is where the company communicates message in a way that does not deviate from the
core brand proposition.

• Proper positioning- A strong brand should be positioned so that it makes a place in target audience mind
and they prefer it over other brands.

• Sustainable- A strong brand makes a business competitive. A sustainable brand drives an organization
towards innovation and success. Example of sustainable brand is Marks and Spencer’s.

• Credibility- A strong brand should do what it promises. The way you communicate your brand to the
audience/ customers should be realistic. It should not fail to deliver what it promises. Do not exaggerate
as customers want to believe in the promises you make to them.

• Inspirational- A strong brand should transcend/ inspire the category it is famous for. For example- Nike
transcendent Jersey Polo Shirt.

• Uniqueness- A strong brand should be different and unique. It should set you apart from other
competitors in market.
 • Appealing- A strong brand should be attractive. Customers should be attracted by the promise you make
and by the value you deliver.

BRAND DECISIONS

Brand decisions, simply put, are decisions that one makes about a certain brand you are building or promoting.
Yes, this sounds like a very general definition, but this is mostly because brand decisions definitely cover a lot of
ground.

Let’s take a look at the four major branding decisions:

1. Brand Positioning

Brand positioning concerns how you want customers to perceive the brand as compared to its competitors. Your
brand can be positioned based on these three things:

• Attributes
This can be considered as the lowest level in terms of brand positioning. It mainly concerns the physical attributes
of the brand, such as the colors used, the overall design, and anything similar. If you are marketing a car, for
example, this would mostly involve whether you’re selling as SUV or a sedan, and the colors that it would be
available in.

Evidently, this is not exactly something that would set the brand apart from its competitors considerably because
it is always easy to change and mimic physical attributes. This is why this has to work hand in hand with other
factors that determine positioning.

• Benefits
The set of benefits that the target market would enjoy would also be part of brand positioning. Going with our
previous example, this would cover the car’s safety features, speed capabilities, and other similar specs.

• Values and Beliefs

Because benefits and attributes can be shared between competitors, the challenge really is to create a deep
emotional connection between the brand and the market. This is where a brand’s set of values and beliefs would
come in.

A great example of this is Coca-Cola. Their annual Christmas campaigns have become a cultural phenomenon,
which endears them to families all over the world. This shows that they value tradition, which makes the brand an
even greater hit during the holidays.
2. Brand Name Selection

This is a particularly tricky process, but coming up with the right decision could make or break your success. The
name of the brand has to be distinctive, catchy, and easy to remember.

In the past years, you have seen brands that focus on catching attention – Yahoo! and Google are perfect
examples. However, this trend has changed dramatically. Today, a lot of brands choose to pick names that carry
real definitions. Quora, for example, is the plural of “quorum”, which pertains to the minimum number of people
required before a group can make any decision or conduct business. Also, one of its founders, Charlie Cheever,
mentioned that the word is also cool in the sense that it starts with a “Q” and ends with an “A”, which pretty much
sums up what people do on the website.

3. Brand Sponsorship

When it comes to brand sponsorship, you would have to think about choosing among four options. Would you
like it to be a manufacturer’s brand, a private brand, a licensed brand, or a co-brand?

• Manufacturer’s Brand
Going for a manufacturer’s brand would mean marketing your own output. For example, Sony would still be
selling the products they manufacture as Sony TVs or Sony cameras. Now if they start manufacturing products to
be sold to resellers who will not be using the Sony brand, then these resellers would be using a private brand.

• Private Brand
Private brands have become bigger in recent years because consumers have also become less brand-conscious and
more practical. Evidently, products that carry a popular brand name would be more expensive compared to private
brands.

• Licensed Brand
Licensed brands are companies that use a certain name or symbol that is not necessarily created by a single
manufacturer. Hello Kitty, Disney, and Star Wars are perfect examples of licensed brands. You have hundreds of
manufacturers creating products that use these brands.

• Co-Brand
Co-branding would mean putting two brands together for a single product. A great example here would be
Nestle’s coffee machines. Obviously, it wasn’t Nestle who manufactured Nespresso. Instead, they had other
brands like Siemens and DeLonghi working on these machines.
4. Brand Development

Brand development covers four different sectors:

• Line Extension
If the product is just an addition to a current offering, this can be considered as a line extension. This means that
you don’t have to think of a separate brand name for the new product. A great example is Cherry Coke.

Although this could be a practical option, its use is also highly discouraged if you already have quite a lot of
products under a single brand. Aside from the fact that it could be confusing, there is also a risk of the original
branding losing its rea meaning.

• Brand Extension
When you say brand extension, it means coming up with an entirely new product line, but still under the same
brand. Kellogg’s did this with their Special K line, with an entire set of cereals, biscuits and other similar products
under it.

The advantage here is that you group the products accordingly, taking away the potential confusion that a simple
line extension presents. However, if the new product line receives bad publicity or does not work out, there is also
a risk of the original brand being dragged down.

• Multibrand
Huge companies apply the multibrand approach, which means that they have separate product lines and market
several brands under each category. In the USA alone, for example, Procter & Gamble sells 5 different shampoo
brands. This allows them to have a separate brand offering to different market segments.

• New Brand
Evidently, any new brand would fall under this segment. However, older manufacturers and businesses could also
use this approach if their new product does not fit into the existing brands they already have. This can also be
used when the existing brands do not have the same power or appeal that it used to have, or its owners were
hoping they would have.

BRAND AWARENESS

Brand awareness is the probability that consumers are familiar about the life and availability of the product. It is
the degree to which consumers precisely associate the brand with the specific product. It is measured as ratio of
niche market that has former knowledge of brand. Brand awareness includes both brand recognition as well as
brand recall. Brand recognition is the ability of consumer to recognize prior knowledge of brand when they are
asked questions about that brand or when they are shown that specific brand, i.e., the consumers can clearly
differentiate the brand as having being earlier noticed or heard. While brand recall is the potential of customer to
recover a brand from his memory when given the product class/category, needs satisfied by that category or
buying scenario as a signal. In other words, it refers that consumers should correctly recover brand from the
memory when given a clue or he can recall the specific brand when the product category is mentioned. It is
generally easier to recognize a brand rather than recall it from the memory.

Brand awareness is improved to the extent to which brand names are selected that is simple and easy to pronounce
or spell; known and expressive; and unique as well as distinct. For instance - Coca Cola has come to be known as
Coke.

There are two types of brand awareness:

• Aided awareness- This means that on mentioning the product category, the customers recognize your
brand from the lists of brands shown.

• Top of mind awareness (Immediate brand recall)- This means that on mentioning the product
category, the first brand that customer recalls from his mind is your brand.

The relative importance of brand recall and recognition will rely on the degree to which consumers make product -
related decisions with the brand present or not. For instance - In a store, brand recognition is more crucial as the
brand will be physically present. In a scenario where brands are not physically present, brand recall is more
significant (as in case of services and online brands).

Building brand awareness is essential for building brand equity. It includes use of various renowned channels
of promotion such as advertising, word of mouth publicity, social media like blogs, sponsorships, launching
events, etc. To create brand awareness, it is important to create reliable brand image, slogans and taglines. The
brand message to be communicated should also be consistent. Strong brand awareness leads to high sales and
high market share. Brand awareness can be regarded as a means through which consumers become acquainted
and familiar with a brand and recognize that brand.

Importance of Brand Awareness

A brand is the meaning behind your company's name, logo, symbols and slogans. Having a unique and
memorable brand helps you build brand awareness and create a long-term position in the marketplace. Brand
awareness is a measure of how well your brand is known within its target markets.

First Step
Creating brand awareness is usually the first step in building advertising objectives. Before you can create a
favorable impression or motivate customers to buy, they have to become aware of your brand and its meaning.
Marketing messages delivered through various media are often used to communicate the brand name and
important messages tied to its products. Making people aware that you exist helps drive traffic to your business
and create a buzz in the market.

Top of Mind

The highest level of brand awareness is top of mind awareness. This is when customers think of you first when
they need to make a purchase within your product category. You can build top of mind awareness through
repeated exposure and consistent delivery of a good product or service over time. This is a huge advantage in the
market when customers enter a buying situation and your brand immediately comes to mind first.

BRAND IMAGE

Today’s generation is quite impressionable and hence in order to enhance their personality, or to meet social
standards, they gravitate towards branded products that are creating a stir in the market. This brand image is
simply an impression or an imprint of the brand developed over a period of time in the consumer’s mindset.

This image of a brand is ultimately a deciding factor that determines the product sales. The brand image is very
important, as it is an accumulation of beliefs and views about that particular brand. The character and value of the
brand is portrayed by its image, as it is the main component in the scheme of things.

The brand image is eventually the mirror through which the company’s key values are reflected.

Example of brands with strong Brand image

Every brand tries to create an image that will take its company and products forward and for this, they spend lots
of money and implement many creative ideas.

For example, Colgate is a brand name known in every Indian household. The brand has been able to create an
image that defines trust, hope and belief. The consumer is convinced that the usage of Colgate products will give
satisfactory results.

The mindset of customers is set that using Colgate toothpaste will take care of their teeth and using the product
will result in better health and oral care. Thus, when in the market, the consumer will mostly buy Colgate, as the
brand Colgate has been synonymous with trust. Similarly, if there is another brand image etched in the consumers
mind, he will buy that particular product.

Other brands with strong brand image are

• Apple

• Google

• Adidas and many others

Even advertisements related to a brand try to build a strong image of the brand so as to get across the fact that the
brand can be trusted and hence people can rely on them. A branded product that has an encouraging reputation
and image saves a consumer’s time and energy.

As the brand is an established one, the clients are sure that, the products have already been tested and approved
and now the company will provide them the best possible service and merchandise.

Advantages of building a strong brand image

• The perception of a consumer towards a particular brand is in direct relation to the image of the brand.

• Having a strong brand image directly impacts the consumer buying behavior, and hence premium brands as
well as top brands have a target of building a strong and positive image of the brand.

• A positive brand image can make the decision process easier, thereby promoting a lot of repeat purchases as
well as primary purchases.

• A promising brand image conveys the success of the product and gives results with increased sales and
revenues.

• A positive image gives confidence to the customers as they feel that the brand is sincere and clear in
its vision to create the best.

• It is possible to build brand image with strong advertisements because of which companies are promoting
their products through various famous personalities to enhance their image of brand.

Disadvantages

Let us count on the disadvantages first before getting into what all is good about brand image
 • If an organization is unable to depict a satisfactory brand image, then the consequences can be felt quickly.
The brand might fail in the short term itself if the brand image created is negative.

• The product is principally dependent on its brand image and unfavorable or negative image results in the
disgrace of the company, and later on bringing the same brand becomes difficult.

• The main disadvantage of a brand image is that the brand and its products will always be identified with the
image until further changes in the brand image are impelled.

• If in any circumstances the image is compromised, then sales and revenues will also be hampered and
therefore it is necessary to gather a right team that will create and regularly maintain the brand image of a
product.

Film stars like Priyanka Chopra, Ranbir Kapoor, Sonam Kapoor, Shahrukh Khan and Salman Khan, Sports stars
like Sachin Tendulkar, M S Dhoni, and Virat Kohli are part of many advertisements. These personalities help to
create and maintain valuable image for the brand that proves beneficial in the long run.

The main advantage is that a customer is secure in the knowledge that the brand is dependable and will provide
him/her maximum benefits. The honor of a company is replicated by its brand image and it is this image that a
person looks towards at. Hence, brand and its image are very important for the success of a company.

BRAND PERSONALITY

Brand personality is the way a brand speaks and behaves. It means assigning human personality
traits/characteristics to a brand so as to achieve differentiation. These characteristics signify brand behaviour
through both individuals representing the brand (i.e. it’s employees) as well as through advertising, packaging,
etc. When brand image or brand identity is expressed in terms of human traits, it is called brand personality. For
instance - Allen Solley brand speaks the personality and makes the individual who wears it stand apart from the
crowd. Infosys represents uniqueness, value, and intellectualism.

Brand personality is nothing but personification of brand. A brand is expressed either as a personality who
embodies these personality traits (For instance - Shahrukh Khan and Airtel, John Abraham and Castrol) or distinct
personality traits (For instance - Dove as honest, feminist and optimist; Hewlett Packard brand represents
accomplishment, competency and influence). Brand personality is the result of all the consumer’s experience s
with the brand. It is unique and long lasting.

Brand personality must be differentiated from brand image, in sense that, while brand image denote the
tangible (physical and functional) benefits and attributes of a brand, brand personality indicates emotional
associations of the brand. If brand image is comprehensive brand according to consumers’ opinion, brand
personality is that aspect of comprehensive brand which generates it’s emotional character and associations in
consumers’ mind.
Brand personality develops brand equity. It sets the brand attitude. It is a key input into the look and feel of any
communication or marketing activity by the brand. It helps in gaining thorough knowledge of customers feelings
about the brand. Brand personality differentiates among brands specifically when they are alike in many
attributes. For instance - Sony versus Panasonic. Brand personality is used to make the brand strategy lively, i.e,
to implement brand strategy. Brand personality indicates the kind of relationship a customer has with the brand. It
is a means by which a customer communicates his own identity.

Brand personality and celebrity should supplement each other. Trustworthy celebrity ensures immediate
awareness, acceptability and optimism towards the brand. This will influence consumers’ purchase decision and
also create brand loyalty. For instance - Bollywood actress Priyanka Chopra is brand ambassador for
J.Hampstead, international line of premium shirts.

BRAND POSITIONING

Brand positioning refers to “target consumer’s” reason to buy your brand in preference to others. It is
ensures that all brand activity has a common aim; is guided, directed and delivered by the brand’s benefits/reasons
to buy; and it focusses at all points of contact with the consumer.

Brand positioning must make sure that:

• Is it unique/distinctive vs. competitors ?

• Is it significant and encouraging to the niche market ?

• Is it appropriate to all major geographic markets and businesses ?

• Is the proposition validated with unique, appropriate and original products ?

• Is it sustainable - can it be delivered constantly across all points of contact with the consumer ?
 • Is it helpful for organization to achieve its financial goals ?

• Is it able to support and boost up the organization ?

In order to create a distinctive place in the market, a niche market has to be carefully chosen and a differential
advantage must be created in their mind. Brand positioning is a medium through which an organization can
portray it’s customers what it wants to achieve for them and what it wants to mean to them. Brand positioning
forms customer’s views and opinions.

Brand Positioning can be defined as an activity of creating a brand offer in such a manner that it occupies a
distinctive place and value in the target customer’s mind. For instance-Kotak Mahindra positions itself in the
customer’s mind as one entity- “Kotak ”- which can provide customized and one-stop solution for all their
financial services needs. It has an unaided top of mind recall. It intends to stay with the proposition of “Think
Investments, Think Kotak”. The positioning you choose for your brand will be influenced by the competitive
stance you want to adopt.

Brand Positioning involves identifying and determining points of similarity and difference to ascertain the right
brand identity and to create a proper brand image. Brand Positioning is the key of marketing strategy. A strong
brand positioning directs marketing strategy by explaining the brand details, the uniqueness of brand and i t’s
similarity with the competitive brands, as well as the reasons for buying and using that specific brand. Positioning
is the base for developing and increasing the required knowledge and perceptions of the customers. It is the single
feature that sets your service apart from your competitors. For instance- Kingfisher stands for youth and
excitement. It represents brand in full flight.

There are various positioning errors, such as-

• Under positioning- This is a scenario in which the customer’s have a blurred and unclear idea of the
brand.

• Over positioning- This is a scenario in which the customers have too limited a awareness of the brand.

• Confused positioning- This is a scenario in which the customers have a confused opinion of the brand.

• Double Positioning- This is a scenario in which customers do not accept the claims of a brand.

ATTRIBUTE POSITIONING

Positioning by product attributes and benefits: It is to associate a product with an attribute, a product feature, or a
consumer feature. Sometimes a product can be positioned in terms of two or more attributes simultaneously. The
price/quality attribute dimension is commonly used for positioning the products.
 POSITIONING BY PRODUCT ATTRIBUTES AND BENEFITS
Associating a product with an attribute, a product feature or a consumer feature. Sometimes a product can be
positioned in terms of two or more attributes simultaneously. The price/ quality attribute dimension is commonly
used for positioning the products.

A common approach is setting the brand apart from competitors on the basis of the specific characteristics or
benefits offered. Sometimes a product may be positioned on more than one product benefit. Marketers attempt to
identify salient attributes (those that are important to consumers and are the basis for making a purchase decision)

• Consider the example of Ariel that offers a specific benefit of cleaning even the dirtiest of clothes because of
the micro cleaning system in the product.
• Colgate offers benefits of preventing cavity and fresh breath.
• Promise, Balsara’s toothpaste, could break Colgate’s stronghold by being the first to claim that it contained
clove, which differentiated it from the leader.
• Nirma offered the benefit of low price over Hindustan Lever’s Surf to become a success.
• Maruti Suzuki offers benefits of maximum fuel efficiency and safety over its competitors. This strategy helped
it to get 60% of the Indian automobile market.
POSITIONING BY PRICE/ QUALITY

Marketers often use price/ quality characteristics to position their brands. One way they do it is with ads that
reflect the image of a high-quality brand where cost, while not irrelevant, is considered secondary to the quality
benefits derived from using the brand. Premium brands positioned at the high end of the market use this approach
to positioning.
Another way to use price/ quality characteristics for positioning is to focus on the quality or value offered by the
brand at a very competitive price. Although price is an important consideration, the product quality must be
comparable to, or even better than, competing brands for the positioning strategy to be effective.
Parle Bisleri – “Bada Bisleri, same price” ad campaign.

POSITIONING BY USE OR APPLICATION

Another way is to communicate a specific image or position for a brand is to associate it with a specific use or
application.
Surf Excel is positioned as stain remover ‘ Surf Excel hena!’

Also, Clinic All Clear – “Dare to wear Black”.

Price Quality approach of Positioning

The price quality approach of positioning uses the relation between price and quality such that it optimally prices
a product according to the quality of the product to keep the product higher in the customers mind. Pricing does
not need to be high for higher positioning. For example – Walmarthas positioned itself in the minds of its
customer using low pricing rather than high pricing.

Lets review the basics. What is positioning? We know that positioning is related to what perception a customer
forms in his mind for your product. Both pricing and quality play a crucial role in forming the right perception in
the minds of customers – internal as well as external.

Lets take an example. You are offered an option to buy clothes. You might buy a jeans worth 1500 rs or you may
buy 3 jeans worth the same amount of money. Immediately what comes in your mind is that the 3 jeans will be of
lesser quality and therefore you might not get value for money. That’s the price quality approach of positioning
for you.

Several Brands and products use the price quality approach. They will keep the pricing higher to attract only the
cream customers and keep themselves exclusive. This high pricing also ensures that the product is placed as a
quality product in customers mind. However, price quality approach can be a double edged sword. Every sector
has lower priced product and thus entry in the sector with penetration pricing becomes easier.

The best approach of price - quality is premium automobiles like BMW,Ferrari. They maintain their quality such
that their customers are ready to give the highest pricing for the cars. Thus the quality and the pricing positions
the car to the topmost segment. Retail chains like walmart and others position themselves mainly through pricing.
Whereas consumer durables mainly position themselves through a combination of pricing and quality.

Summary – The price quality approach is an excellent positioning tool. However it needs to be used with care as
changes in the market can affect the pricing strategy and thereby the margins of a company.
PRICE POSITIONING STRATEGIES:

The Internet has dramatically changed hospitality pricing. Its speed and transparency have removed most barriers
between customers and suppliers. With OTAs like Hotwire, Orbitz, and Hotels.com, you no longer need be an
industry insider to find the best pricing to suit your needs. Yet, hotels and restaurants still need to make pricing
decisions; these new challenges simply up the ante. Today, we’re looking at five price positioning strategies,
explaining their merits (and drawbacks), and providing examples. When you’re done reading, download a free
price positioning worksheet to experiment with your own pricing strategy.
The Price-Value Matrix

Many factors will influence your prices, including your competitors’ rates and products. As the name implies,
your goal is to develop a pricing strategy that places your brand and its products in a certain position relative to

your competition. One way to visualize this is the price-value

The position of your products within this matrix is a function of your brand proposition, your competitors, and
your pricing objectives. Are you looking to maximize short-term revenues or profit? Are you seeking higher profit
margins in a luxury market with sporadic sales? Do you need to differentiate more to penetrate the market? Or, is
your business in survival mode?

Once you identify your pricing objectives, plot your prices and those of your competitors on the price-value
matrix. At a glance, you’ll see how your pricing lines up with your objectives. If your rates need tweaking—either
because they “say” the wrong things about your brand relative to competitors, or because they’re undermining
your pricing objectives—consider using the following strategies to position your rates or prices more
appropriately.
Price Positioning Strategies

Skim
This strategy clearly positions your company above the rest; it tells consumers something is special (i.e., worth
paying more for) about your products. For example, look at the prices The Old Homestead restaurant has set for
their steaks and chops. We can smell the fried onions and seared, aged prime meat already. We can envision the
long white aprons of the wait staff and the impeccable table side service. To skim, set your prices higher than the
competition does in order to “skim off” customers who are willing to pay more. This strategy can be highly
profitable, but be careful: Though high prices imply high quality for many customers, it’s still critical that they
understand why they’d pay more to stay or eat at your establishment.
Match
This strategy puts your pricing on par with the competition, but not necessarily for all rates. To match, set one rate
comparable to your competition and another slightly higher. This allows you to stay competitive for a larger pool
of customers, yet doesn’t undercut the competition

Penetrate
Being the low-priced option in your market has benefits and drawbacks. The strategy is primarily designed to get
people in the door and in seats. For new establishments, low prices often seem the best way to entice consumers
to try their products. But this strategy also can depress market prices, lower margins, and set a poor precedent as
your business grows. Do your prices reflect how consumers value your hotel or restaurant? Here’s what
consumers see as they peruse online hotel options; those using penetration pricing certainly stand out.

BRAND REPOSITIONING

Brand repositioning is when a company changes abrand's status in the marketplace. This typically includes
changes to the marketing mix, such as product, place, price and promotion. Repositioning is done to keep up with
consumer wants and needs.

Brand Repositioning and Types of Brand Repositioning

Brand Repositioning is changing the positioning of a brand. A particular positioning statement may not work with
a brand.
 For instance, Dettol toilet soap was positioned as a beauty soap initially. This was not in line with its core
values. Dettol, the parent brand (anti-septic liquid) was known for its ability to heal cuts and gashes. The
extension’s ‘beauty’ positioning was not in tune with the parent’s “germ-kill” positioning.

The soap, therefore, had to be repositioned as a “germ-kill” soap (“bath for grimy occasions”) and it fared
extremely well after repositioning. Here, the soap had to be repositioned for image mismatch. There are several
other reasons for repositioning. Often falling or stagnant sales is responsible for repositioning exercises.

After examining the repositioning of several brands from the Indian market, the following 9 types of repositioning
have been identified. These are:

• Increasing relevance to the consumer

• Increasing occasions for use
• Making the brand serious
• Falling sales
• Bringing in new customers
• Making the brand contemporary
• Differentiate from other brands
• Changed market conditions.
It is not always that these nine categories are mutually exclusive. Often one reason leads to the other and a brand
is repositioned sometimes for a multiplicity of reasons.

Lipton Yellow Label Tea:

Lipton Yellow Label Tea was initially positioned as delicious, sophisticated and premium tea for the global
citizen. The advertisements also echoed this theme. For instance, all the props and participants in the
advertisements were foreign. It is possible that this approach did not find favour with the customers.
The repositioning specifically addressed the Indian consumer through an Indian idiom.

Maharaja – the positioning:

Dishwasher in its initial Stages was possibly seen as an exotic product. Thus, Maharaja positioned it as a
product aimed at the upper crust. Thus, the positioning statement was “your guests get Swiss cheese, Italian Pizza
…… you get stained glassware.” But Indians are reluctant to use dishwashers because of deeply embedded
cultural reasons. Thus, the message had to be changed to appeal to the Indian housewife. Thus the positioning was
changed to “Bye, Bye Kanta Bai” indicating that the dishwasher signaled the end of the servant maid’s tyranny.
The brand, therefore, was repositioned from a sophisticated, aristocratic product to one that is functional and
relevant to the Indian housewife.

Visa Card – the Positioning:

Visa Card had to change its positioning to make itself relevant to customers under changed circumstances.
Initially it asked the customer to “pay the way the world does” (1981). This is to give its card an aura of global
reach. But as more and more cards were launched on the same theme, to put itself in a different league, it
positioned itself as the “world’s most preferred card” (1993). To highlight the services it provided, it shifted to the
platform of “Visa Power” (1995). This focus on explaining the range of services available with the card continues
till date (Visa Power, go get it).

Brand Extension - Meaning, Advantages and Disadvantages

Brand Extension is the use of an established brand name in new product categories. This new category to which
the brand is extended can be related or unrelated to the existing product categories. A renowned/successful brand
helps an organization to launch products in new categories more easily. For instance, Nike’s brand core product is
shoes. But it is now extended to sunglasses, soccer balls, basketballs, and golf equipments. An existing brand that
gives rise to a brand extension is referred to as parent brand. If the customers of the new business have values and
aspirations synchronizing/matching those of the core business, and if these values and aspirations are embodied in
the brand, it is likely to be accepted by customers in the new business.

Extending a brand outside its core product category can be beneficial in a sense that it helps evaluating product
category opportunities, identifies resource requirements, lowers risk, and measures brand’s relevance and appeal.

Brand extension may be successful or unsuccessful.

Instances where brand extension has been a success are-

• Wipro which was originally into computers has extended into shampoo, powder, and soap.

• Mars is no longer a famous bar only, but an ice-cream, chocolate drink and a slab of chocolate.

Instances where brand extension has been a failure are-

• In case of new Coke, Coca Cola has forgotten what the core brand was meant to stand for. It thought that
taste was the only factor that consumer cared about. It was wrong. The time and money spent on research
on new Coca Cola could not evaluate the deep emotional attachment to the original Coca- Cola.
 • Rasna Ltd. - Is among the famous soft drink companies in India. But when it tried to move away from its
niche, it hasn’t had much success. When it experimented with fizzy fruit drink “Oranjolt”, the brand
bombed even before it could take off. Oranjolt was a fruit drink in which carbonates were used as
preservative. It didn’t work out because it was out of synchronization with retail practices. Oranjolt need
to be refrigerated and it also faced quality problems. It has a shelf life of three-four weeks, while other
soft- drinks assured life of five months.

ADVANTAGES OF BRAND EXTENSION

Brand Extension has following advantages:

• It makes acceptance of new product easy.

• It increases brand image.

• The risk perceived by the customers reduces.

• The likelihood of gaining distribution and trial increases. An established brand name increases consumer
interest and willingness to try new product having the established brand name.

• The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are
reduced. There are economies of scale as advertising for core brand and its extension reinforces each other.

• Cost of developing new brand is saved.

• Consumers can now seek for a variety.

• There are packaging and labeling efficiencies.

• The expense of introductory and follow up marketing programs is reduced.

• There are feedback benefits to the parent brand and the organization.

• The image of parent brand is enhanced.

• It revives the brand.

• It allows subsequent extension.

• Brand meaning is clarified.

• It increases market coverage as it brings new customers into brand franchise.

• Customers associate original/core brand to new product, hence they also have quality associations.
DISADVANTAGES OF BRAND EXTENSION

• Brand extension in unrelated markets may lead to loss of reliability if a brand name is extended too far.
An organization must research the product categories in which the established brand name will work.

• There is a risk that the new product may generate implications that damage the image of the core/original
brand.

• There are chances of less awareness and trial because the management may not provide enough
investment for the introduction of new product assuming that the spin-off effects from the original brand
name will compensate.

• If the brand extensions have no advantage over competitive brands in the new category, then it will fail.

LINE EXTENSION

A product line extension strategy is an approach to developing new products for your existing customers or for
prospects who do not currently buy from you. Extending a product line involves adding new features to existing
products, rather than developing completely new products. This can reduce the cost of product development as
well as increase opportunities to grow your revenue.

Compete More Effectively

To identify opportunities for product line extension, analyze your existing products and compare them with
competitive offerings. Your competitors may include different features, a wider range of sizes or product
variations aimed at different sectors of the market, such as luxury or budget versions. Adding features that your
competitors offer may enable you to deal with prospects that you cannot currently supply with existing products.
You may also be able to increase your market share by matching competitors’ product specifications but selling at
a lower price.

Meet Changing Needs

A product line extension strategy ensures you can meet your customers’ changing needs. They may require
products in smaller or larger package sizes. They may need different levels of product quality or performance to
meet their own operational needs. You may be able to take advantage of technological developments to offer the
same type of product with superior performance. Ask your sales representatives or contact customers directly to
find out if your current product range meets their needs and to identify opportunities to extend your product line.

• Segment Your Market

Extending your product line can help your company enter new market sectors. An engineering company, for
example, may extend its range by adding features that are specific to sectors such as the automotive or aerospace
industries. In addition to offering products that meet sector needs more closely, a product line extension strategy
also helps to position a company as a specialist supplier to each market sector.

• Maintain Customer Loyalty

Maintaining sales to existing customers is important to long-term revenue growth and profitability. By extending
your product line, you may be able to sell products that your customers are currently sourcing from competitors.
This helps to increase customer loyalty and grow revenue per customer.

• Reduce Marketing Costs

Adding new products or services to your existing line can help to strengthen your brand and reduce your
marketing costs. By using the same packaging designs, logos and advertising themes that feature on your existing
products, you can ensure that customers and prospects recognize the brand values of the new products without
having to run major advertising or marketing campaigns.

Advantages of a product line extension

• Established and loyal customer base

• Existing expertise
• Retailer relationships
• Low cost of production
• Low cost of development
• Provides market information
• Competitive barriers
• Easy to implement
• Possible economies of scale
• Supply relationships
• Meets variety needs of consumers

ESTABLISHED AND LOYAL CUSTOMER BASE

If the company provides another variation of an established brand, then they are leveraging the existing loyalty
and likeability of the brand. This means that immediate sales and profit are far more likely, as well as increasing
overall customer equity and customer lifetime value.

EXISTING EXPERTISE
By concentrating on the range of products that they already produce and market a company can be reassured that
it has the existing expertise within the company to be successful of a product line extension.

RETAILER RELATIONSHIPS

Remaining within the same product category and simply extending the product line, the firm is likely to have
established wholesaler and retailer distribution channels in place. This means that the availability of the new
product should be quite wide and achieved fairly quickly and probably without the need for excessive trade
promotions.

LOW COST OF PRODUCTION

As a company has existing expertise and processes in place for this category of product, then it is likely that their
production costs will be relatively low – as the new product will be produced utilizing the existing systems of the
company.

LOW COST OF DEVELOPMENT

Because the company has developed this category product before, there should be a relatively low-cost
development – primarily because they have the in-house expertise and knowledge, along with the necessary
IT/manufacturing capabilities.

PROVIDES MARKET INFORMATION

By having a range of similar products (within the same product category), the company can various marketing
mix offering for one of these brands/products at a time and is able to generate valuable market information by
utilizing the other brands/products as a control. This allows the company to engage in more marketing
experimentation and gain greater customer insights.

COMPETITIVE BARRIERS

By having a broader range of products within the same product category, makes it more difficult for competitors
to find an obvious gap in the marketplace. It would also have the impact of fragmenting the market and splitting
segments into niches. This may have the effect of making it non-viable for a competitor to bring a similar product
to the market.
EASY TO IMPLEMENT

Having produced a marketed this type of product before, it is highly likely that the new product development
process and marketing launch will be quite simple the company to implement. They should be able to do this
easily with existing personnel and probably without the need to outsource to consultants or other specialists.

POSSIBLE ECONOMIES OF SCALE

With a broader product range, and hopefully a greater level of sales volume, it may be possible to achieve
improved economies of scale – and create a lower cost structure and a higher profit unit margin.

SUPPLY RELATIONSHIPS

Supplier relationships should be enhanced because the firm is likely to purchase more materials from the existing
suppliers because they are manufacturing and/or producing a similar product or service.

MEETS VARIETY NEEDS OF CONSUMERS

Product line extension should also meet in with a variety needs of customers, say in a food market where variety
is important – or meet the needs of a different market segment.

BRAND LICENSING

By definition brand licensing is the renting or leasing of an intangible asset. It is also defined as an opportunity to
extend value. Companies extend their brands via licensing for a variety of reasons. Brand licensing enables
companies with brands that have high preference to unlock their brands’ latent value and satisfy pent-up demand.
Through licensing, brand owners have the ability to enter new categories practically overnight, gaining them
immediate brand presence on store shelves and often in the media. Let’s take a deeper look at the benefits that
make licensing so attractive to brand owners.

BENEFITS OF BRAND LICENSING:

There are ten key benefits to licensing your brand.Brand Licensing enables:
1. Brand Managers to extend their brands with minimal investment. Through the licensing arrangement, third
party manufacturers are responsible for everything from product development to inventory management to store
replenishment.
2. The brand to obtain supplementary marketing support. For the right to use the brand in their category, the
manufacturer must agree to spend a percentage of their net sales on marketing. This marketing commitment not
only supports the category licensed, but can be significant to the overall brand.
3. Trademark protection in the category. For a brand to benefit from trademark protection in a particular category,
it must be actively sold in that category. If the category lies vacant, others may claim rights to use the mark.
Extending a brand into a category via licensing helps brand owners meet the commerce standard.
4. Increased consumer connections and insights in the categories being licensed. Extending a brand via licensing
offers thousands of incremental opportunities to connect with consumers. By inserting a survey inside the licensed
package or a toll free number on the exterior, a brand owner can gain many additional insights about the brand.
5. A brand to gain incremental shelf space. If a brand owner chooses to extend a brand via licensing into a new
category, the brand gains tremendous additional exposure in those categories in every retail store the product is
sold. When sold into major chain retailers, the brand can gain thousands of additional feet of brand exposure in
each category.
6. Entrée into new distribution channels. By licensing the brand to a manufacturer which currently sells into a
retail channel where the brand currently does not have a presence, the brand can gain access to that channel via
the licensing relationship.
7. The brand to enter new regions. Similar to new channel access, a brand can gain entrée into new regions via a
manufacturer which has a presence in regions where the brand is currently not sold.
8. Access to patented technology. Many companies which choose to license brands offer proprietary innovation to
the brand owner. When the patented technology reinforces the brand’s position, the new product offered can be
met with tremendous consumer appreciation and pent up demand.
9. Knowledge transfer from the manufacturing partners who license the brand. A licensing arrangement provides
the opportunity for the brand owner and the manufacturer to share insights and knowledge across multiple
disciplines including product development, marketing, R&D and sales.
10. The brand owner to capture royalty revenue through the manufacturer’s sales of licensed product. This
symbiotic relationship helps to create new products for the marketplace that consumers crave. For every dollar in
revenue generated by the manufacturer, the brand owner receives a percentage in royalty payments, most of which
go straight to the bottom line.

FRANCHISING

Franchising is one of three business strategies a company may use in capturing market share. The others are
company owned units or a combination of company owned and franchised units.
 Franchising is a business strategy for getting and keeping customers. It is a marketing system for creating an
image in the minds of current and future customers about how the company's products and services can help them.
It is a method for distributing products and services that satisfy customer needs.

Franchising is a network of interdependent business relationships that allows a number of people to share:

• A brand identification

• A successful method of doing business

• A proven marketing and distribution system

In short, franchising is a strategic alliance between groups of people who have specific relationships and
responsibilities with a common goal to dominate markets, i.e., to get and keep more customers than their
competitors.

There are many misconceptions about franchising, but probably the most widely held is that you as a franchisee
are "buying a franchise." In reality you are investing your assets in a system to utilize the brand name, operating
system and ongoing support. You and everyone in the system are licensed to use the brand name and operating
system.

The business relationship is a joint commitment by all franchisees to get and keep customers. Legally you are
bound to get and keep them using the prescribed marketing and operating systems of the franchisor.

To be successful in franchising you must understand the business and legal ramifications of your relationship with
the franchisor and all the franchisees. Your focus must be on working with other franchisees and company
managers to market the brand, and fully use the operating system to get and keep customers.

ADVANTAGES OF FRANCHISING

The primary advantages for most companies entering the realm of franchising are capital, speed of growth,
motivated management, and risk reduction -- but there are many others as well.

1. CAPITAL

The most common barrier to expansion faced by today’s small businesses is lack of access to capital. Even before
the credit-tightening of 2008-2009 and the “new normal” that ensued, entrepreneurs often found that their growth
goals outstripped their ability to fund them.

Franchising, as an alternative form of capital acquisition, offers some advantages. The primary reason most
entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or the cost of equity.
First, since the franchisee provides all the capital required to open and operate a unit, it allows companies to grow
using the resources of others. By using other people’s money, the franchisor can grow largely unfettered by debt.

Moreover, since the franchisee -- not the franchisor -- signs the lease and commits to various contracts,
franchising allows for expansion with virtually no contingent liability, thus greatly reducing the risk to the
franchisor. This means that as a franchisor, not only do you need far less capital with which to expand, but your
risk is largely limited to the capital you invest in developing your franchise company -- an amount that is often
less than the cost of opening one additional company-owned location.

2. MOTIVATED MANAGEMENT

Another stumbling block facing many entrepreneurs wanting to expand is finding and retaining good unit
managers. All too often, a business owner spends months looking for and training a new manager, only to see
them leave or, worse yet, get hired away by a competitor. And hired managers are only employees who may or
may not have a genuine commitment to their jobs, which makes supervising their work from a distance a
challenge.

But franchising allows the business owner to overcome these problems by substituting an owner for the manager.
No one is more motivated than someone who is materially invested in the success of the operation. Your
franchisee will be an owner -- often with his life’s savings invested in the business. And his compensation will
come largely in the form of profits.

The combination of these factors will have several positive effects on unit level performance.

Long-term commitment. Since the franchisee is invested, she will find it difficult to walk away from her
business.

Better-quality management. As a long-term “manager,” your franchisee will continue to learn about the
business and is more likely to gain institutional knowledge of your business that will make him a better operator
as he spends years, maybe decades, of his life in the business.

Improved operational quality. While there are no specific studies that measure this variable, franchise operators
typically take the pride of ownership very seriously. They will keep their locations cleaner and train their
employees better because they own, not just manage, the business.

Innovation. Because they have a stake in the success of their business, franchisees are always looking for
opportunities to improve their business -- a trait most managers don't share.

Franchisees typically out-manage managers. Franchisees will also keep a sharper eye on the expense side of
the equation -- on labor costs, theft (by both employees and customers) and any other line item expenses that can
be reduced.
Franchisees typically outperform managers. Over the years, both studies and anecdotal information have
confirmed that franchisees will outperform managers when it comes to revenue generation. Based on our
experience, this performance improvement can be significant -- often in the range of 10 to 30 percent.

3. SPEED OF GROWTH

Every entrepreneur I've ever met who's developed something truly innovative has the same recurring nightmare:
that someone else will beat them to the market with their own concept. And often these fears are based on reality.

The problem is that opening a single unit takes time. For some entrepreneurs, franchising may be the only way to
ensure that they capture a market leadership position before competitors encroach on their space, because the
franchisee performs most of these tasks. Franchising not only allows the franchisor financial leverage, but also
allows it to leverage human resources as well. Franchising allows companies to compete with much larger
businesses so they can saturate markets before these companies can respond.

4. STAFFING LEVERAGE

Franchising allows franchisors to function effectively with a much leaner organization. Since franchisees will
assume many of the responsibilities otherwise shouldered by the corporate home office, franchisors can leverage
these efforts to reduce overall staffing.

5. EASE OF SUPERVISION

From a managerial point of view, franchising provides other advantages as well. For one, the franchisor is not
responsible for the day-to-day management of the individual franchise units. At a micro level, this means that if a
shift leader or crew member calls in sick in the middle of the night, they're calling your franchisee -- not you -- to
let them know. And it's the franchisee’s responsibility to find a replacement or cover their shift. And if they
choose to pay salaries that aren't in line with the marketplace, employ their friends and relatives, or spend money
on unnecessary or frivolous purchases, it won't impact you or your financial returns. By eliminating these
responsibilities, franchising allows you to direct your efforts toward improving the big picture.

6. INCREASED PROFITABILITY

The staffing leverage and ease of supervision mentioned above allows franchise organizations to run in a highly
profitable manner. Since franchisors can depend on their franchisees to undertake site selection, lease negotiation,
local marketing, hiring, training, accounting, payroll, and other human resources functions (just to name a few),
the franchisor’s organization is typically much leaner (and often leverages off the organization that's already in
place to support company operations). So the net result is that a franchise organization can be more profitable.

7. IMPROVED VALUATIONS
The combination of faster growth, increased profitability, and increased organizational leverage helps account for
the fact that franchisors are often valued at a higher multiple than other businesses. So when it comes time to sell
your business, the fact that you're a successful franchisor that has established a scalable growth model could
certainly be an advantage.

When the iFranchise Group compared the valuation of the S&P 500 vs. the franchisors tracked in Franchise
Times magazine in 2012, the average price/earnings ratio of franchise companies was 26.5, while the average P/E
ratio of the S&P 500 was 16.7. This represents a staggering 59 percent premium to the S&P. Moreover, more than
two-thirds of the franchisors surveyed beat the S&P ratio.

8. PENETRATION OF SECONDARY AND TERTIARY MARKETS

The ability of franchisees to improve unit-level financial performance has some weighty implications. A typical
franchisee will not only be able to generate higher revenues than a manager in a similar location but will also keep
a closer eye on expenses. Moreover, since the franchisee will likely have a different cost structure than you do as
a franchisor (she may pay lower salaries, may not provide the same benefits packages, etc.), she can often operate
a unit more profitably even after accounting for the royalties she must pay you.

9. REDUCED RISK

By its very nature, franchising also reduces risk for the franchisor. Unless you choose to structure it differently
(and few do), the franchisee has all the responsibility for the investment in the franchise operation, paying for any
build-out, purchasing any inventory, hiring any employees, and taking responsibility for any working capital
needed to establish the business.

The franchisee is also the one who executes leases for equipment, autos, and the physical location, and has the
liability for what happens within the unit itself, so you're largely out from under any liability for employee
litigation (e.g., sexual harassment, age discrimination, EEOC), consumer litigation (the hot coffee spilled in your
customer’s lap), or accidents that occur in your franchise (slip-and-fall, employer’s comp, etc.).

GLOBAL FRANCHISING

Franchising is a pooling of resources and capabilities to accomplish a strategic marketing, distribution and sales
goal for a company. It typically involves a franchisor who grants to an individual or company (the franchisee), the
right to run a business selling a product or service under the franchisor's successful business model and identified
by the franchisor's trademark or brand.

The franchisor charges an initial up-front fee to the franchisee, payable upon the signing of the franchise
agreement. Other fees such as marketing, advertising or royalties, may be applicable and largely based on how the
contract is negotiated and set up.
Advertising, training and other support services are made available by the franchisor.

The Advantages & Disadvantages of International Franchises

When your franchise is successful, the thought of expansion is common, as it can lead to new financial
opportunities for you as a business owner. Expanding internationally can sometimes be a profitable venture, while
many businesses have flopped when they took that approach. Before expanding your franchise internationally,
weigh some of the pros and cons involved.

NEW MARKETS

When you expand the franchise internationally, you can sometimes take advantage of ne w markets that are
unfamiliar with your business model. For example, if you own a sandwich restaurant, you might open the first
sandwich restaurant of its kind in a developing market. When you own the first business of its kind in an
international market, you may be able to bring in substantial profits. When a new business comes into a region
and the people like it, it creates a cash cow for the owner.

FAVORABLE REGULATIONS

Depending on where you decide to expand, you may be able to take advantage of favorable government
regulations. In many countries, you do not have to submit to the same types of regulations that are required in the
United States. You may also be able to save money on taxes and the fees it takes to get started. If you pay lower
taxes in that country, it can help improve the bottom line for your business.

CULTURAL DIFFERENCES

One of the potential problems of expanding into other countries is overcoming the cultural barriers. Just because
something is popular in the United States does not necessarily mean that it will be popular in other countries.
Every country has its own culture, and you may not be able to accurately predict what people in that culture will
enjoy. Before getting involved in another country, it makes sense to do some market research so that you can
minimize this risk.

FINANCIAL RISK

When expanding into another country, you have to take into consideration the financial risks that you are taking
on as a business owner. For example, the exchange rates between currencies could lead to an unfavorable return
on your investment. You may also have a hard time getting access to the supplies and products you need in any
other country. Some countries charge tariffs and fees to ship products in, which could make your business less
profitable.

UNIT -5

BRAND EQUITY

BRAND EQUITY

Brand equity is a set of brand assets and liabilities linked to a brand name and symbol, which add to or subtract
from the value provided by a product or service.
In 1991 I published a book, Managing Brand Equity, that defines brand equity and describes how it generates
value. This model provided one perspective on brand equity that is worth another look now over twenty years
later since brand equity emerged as an important idea in the late 1980s.
Connecting “brand” to the concepts of “equity” and “assets” radically changed the marketing function, enabling it
to expand beyond strategic tactics and get a seat at the executive table. Marketing was reframed by an avalanche
of researchers, authors and executives who provided substance and momentum to this idea

My model posited that brand equity has four dimensions—brand loyalty, brand awareness, brand associations,
and perceived quality, each providing value to a firm in numerous ways. Once a brand identifies the value of
brand equity, they can follow a brand equity roadmap to manage that potential value.

The Brand Equity Outline

• Brand Loyalty
• Reduced marketing costs
• Trade leverage
• Attracting new customers via awareness and reassurance
• Time to respond to competitive threats
• Brand Awareness
• Anchor to which other associations can be attached
• Familiarity which leads to liking
• Visibility that helps gain consideration
• Signal of substance/commitment
• Brand Associations, including Perceived Quality
• Help communicate information
• Differentiate/Position
• Reason-to-buy
• Create positive attitude/feelings
• Basis for extensions
The introduction of brand loyalty to the model was and is still controversial as other conceptualizations position
brand loyalty as a result of brand equity, which consists of awareness and associations. But when you buy a brand
or place a value on it, the loyalty of the customer base is often the asset most prized, so it makes financial sense to
include it. And when managing a brand, the inclusion of brand loyalty as a part of the brand’s equity allows
marketers to justify giving it priority in the brand-building budget. The strongest brands have that priority.
 Another aspect of the definition of brand equity that I presented in my book was the argument that brand equity
also provides value to customers. It enhances the customer’s ability to interpret and process information, improves
confidence in the purchase decision and affects the quality of the user experience. The fact that it provides value
to customers makes it easier to justify in a brand-building budget. This model provides one perspective of brand
equity as one of the major components of modern marketing alongside the marketing concept, segmentation, and
several others.

ADVANTAGES OF STRONG BRAND EQUITY

While brand equity is largely intangible, its advantages are anything but. The value that a strong brand identity
can bring to your company translates to very real and measurable business benefits. Among them:

Increased margins. Let’s get to the bottom line first: Positive brand equity allows you to charge more for your
product or service, because people will be willing to pay a premium for your name just as they pay a premium for
jewelry that comes in a little blue box or electronic equipment with an apple on top. Is the quality of those
products significantly superior to competitors’ offerings? Maybe, maybe not. But the perception is that it is. And
when customers are willing to pay extra for a name they trust and/or value, that boosts your profit margins.

• Customer loyalty Customers are not only willing to pay more for a product with strong brand equity; they’re also
willing to stay loyal to a company over years and years, coming back to buy there again and again. In fact, some
companies have built such strong brand loyalty that even when they hit a bump in the road—a defective product
or a bad customer experience—their customers are willing to stick with them.

Expansion opportunities. Positive brand equity can facilitate a company’s long-term growth. By leveraging the
value of your brand, you can more easily add new products to your line and people will more willingly try your
new product. You can expand into new markets and geographies, and people there will recognize your brand,
make an instant positive connection, and follow you.

• Negotiating power. Positive brand equity can give you a considerable advantage in negotiating with vendors,
manufacturers and distributors. When suppliers recognize that consumers are enthusiastically seeking and buying
products that bear your name, they’ll want to work with you. And that, of course, puts you in an enviable
bargaining position that can lower your cost of goods sold.
Competitive advantage. Do you know who won’t be too happy about your company’s strong brand equity? Your
competitors. When customers are willing to pay a premium price for your products or services…when customers
 will try your new product sight unseen, just because it has your logo on it…when customers in a new market
flock to you simply because of the reputation you’ve built elsewhere…when you can get better pricing from the
same vendors your competition is using (and thus undersell your competition)… that can mean very good things
for your business and not-so-good things for your competition.

• BRAND EQUITY

Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential
impact of brand knowledge on consumers response to the Brand Marketing. Brand Equity exists as a function of
consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a
choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some
favourable positive strong and distinctive brand associations in the memory.

FACTORS CONTRIBUTING TO BRAND EQUITY

• Brand Awareness
• Brand Associations
• Brand Loyality

• Perceived Quality

BRAND EQUITY MODELS

Many research agencies have developed their own brand equity models that are executed in partnership with end-
user researchers. However, Phliip Kotler talks about the below models to measure brand equity in his book
‘Marketing Management – 13th Edition’ co authored by Kevin Keller. Below are the models to assess Brand
Equity :

BRAND ASSET VALUATOR – BAV Model Advertising agency Young and Rubicam (Y&R) developed a
model of brand equity called Brand Asset Valuator (BAV). Based on research with almost 200,000 consumers in
40 countries, BAV provides comparative measures of the brand equity of thousands of brands across hundreds of
different categories. There are four key components—or pillars— of brand equity, according to BAV.

• Differentiation measures the degree to which a brand is seen as different from others.

• Relevance measures the breadth of a brand’s appeal.

• Esteem measures how well the brand is regarded and respected.

• Knowledge measures how familiar and intimate consumers are with the brand.
Differentiation and Relevance combine to determine Brand Strength. These two pillars point to the brand’s future
value, rather than just reflecting its past. Esteem and Knowledge together create Brand Stature, which is more of a
“report card” on past performance.

Brand Asset Valuator (BAV Model)

Examining the relationships among these four dimensions—a brand’s “pillar pattern”—reveals much about its
current and future status. Brand Strength and Brand Stature can be combined to form a Power Grid that depicts
the stages in the cycle of brand development—each with its characteristic pillar patterns—in successive
quadrants. New brands, just after they are launched, show low levels on all four pillars. Strong new brands tend to
show higher levels of Differentiation than Relevance, while both Esteem and Knowledge are lower still.
Leadership brands show high levels on all four pillars. Finally, declining brands show high Knowledge—evidence
of past performance—relative to a lower level of Esteem, and even lower Relevance and Differentiation.
AAKER MODEL

Aaker views brand equity as a set of five categories of brand assets and liabilities linked to a brand that add to
or subtract from the value provided by a product or service to a firm and/or to that firm’s customers.

These categories of brand assets are:

• Brand loyalty

• Brand awareness

• Perceived quality

• Brand associations

• Other proprietary assets such as patents, trademarks, and channel relationships.

According to Aaker, a particularly important concept for building brand equity is brand identity—the unique set
of brand associations that represent what the brand stands for and promises to customers.

As per Aaker, brand identity as consisting of 12 dimensions organized around 4 perspectives:

• Brand-as-product (product scope, product attributes, quality/value, uses, users, country of origin)

• Brand-as-organization (organizational attributes, local versus global)

• Brand-as-person (brand personality, brand-customer relationships)

• Brand-as-symbol (visual imagery/metaphors and brand heritage).

Aaker also conceptualizes brand identity as including a core and an extended identity.

The core identity—the central, timeless essence of the brand—is most likely to remain constant as the brand
travels to new markets and products.

The extended identity includes various brand identity elements, organized into cohesive and meaningful groups.

BRAND RESONANCE PYRAMID

The brand resonance model also views brand building as an ascending, sequential series of steps, from bottom to
top. The steps are as below:
 • Ensuring identification of the brand with customers and an association of the brand in customers’
minds with a specific product class or customer need

• Establishing the totality of brand meaning in the minds of customers by strategically linking a host of
tangible and intangible brand associations

• Eliciting the proper customer responses in terms of brand-related judgment and feelings

• Converting brand response to create an intense, active loyalty relationship between customers and the
brand.

According to this model, enacting the four steps involves establishing six “brand building blocks” with customers.
These brand building blocks can be assembled in terms of a brand pyramid. The model emphasizes the duality of
brands—the rational route to brand building is the left-hand side of the pyramid, whereas the emotional route is
the right-hand side.

MasterCard is an example of a brand with duality, as it emphasizes both the rational advantage to the credit card,
through its acceptance at establishments worldwide, and the emotional advantage through its award-winning
“priceless” advertising campaign, which shows people buying items to reach a certain goal. The goal itself—a
feeling, an accomplishment, or other intangible—is “priceless” (“There are some things money can’t buy, for
everything else, there’s MasterCard.”).

Brand Resonance Pyramid

The creation of significant brand equity involves reaching the top or pinnacle of the brand pyramid, and will occur
only if the right building blocks are put into place.

• Brand salience relates to how often and easily the brand is evoked under various purchase or
consumption situations.

• Brand performance relates to how the product or service meets customers’ functional needs.
 • Brand imagery deals with the extrinsic properties of the product or service, including the ways in
which the brand attempts to meet customers’ psychological or social needs.

• Brand judgments focus on customers’ own personal opinions and evaluations.

• Brand feelings are customers’ emotional responses and reactions with respect to the brand.

• Brand resonance refers to the nature of the relationship that customers have with the brand and the
extent to which customers feel that they are “in sync” with the brand.

Resonance is characterized in terms of the intensity or depth of the psychological bond customers have with the
brand, as well as the level of activity engendered by this loyalty. Examples of brands with high resonance include
Harley-Davidson, Apple, and eBay.

BRAND RESONANCE

The Brand Resonance refers to the relationship that a consumer has with the product and how well he can relate
with it.
The resonance is the intensity of customer’s psychological connection with the brand and the randomness to recall
the brand in different consumption situations.

Brand Resonance Pyramid/Stages of Brand Development

Building this resonance involves a series of steps, as seen in Figure given below:

Building this resonance involves a series of steps:

The first level of the pyramid deals with establishing the identity of the brand. Keller suggests a single building
block for this phase and terms it brand salience. Salience refers to how easily or often a consumer thinks of the
brand, especially at the right place and right time. In building a highly salient brand, he argues that it is important
that awareness campaigns not only build depth (ensuring that a brand will be remembered and the ease with
which it is) but also breadth (the range of situations in which the brand comes to mind as something that should be
purchased or used).

The second layer of the pyramid deals with giving meaning to the brand and here Keller presents two building
blocks: brand performance and brand imagery. Brand performance is the way the product or service attempts to
meet the consumer’s functional needs. Brand performance also has a major influence on how consumers
experience a brand as well as what the brand owner and others say about the brand.
Delivering a product or service that meets and, hopefully, exceeds consumer needs and wants is a prerequisite for
successful brand building. In communicating brand performance, Keller identifies five areas that need to be
communicated: primary ingredients and supplementary features; product reliability, durability and serviceability;
service effectiveness, efficiency and empathy; style and design; and price

Brand imagery deals with the way in which the brand attempts to meet customers’ psychological and social needs.
Brand imagery is the intangible aspects of a brand that consumers pick up because it fits their demographic profile
(such as age or income) or has psychological appeal in that it matches their outlook on life (conservative,
traditional, liberal, creative,etc). Brand imagery is also formed by associations of usage (at work or home) or via
personality traits (honest, lively, competent, rugged, etc).

MEASURING BRAND EQUITY

Measuring the financial value of the brand usually converts the CFO to a staunch brand supporter and gets the
organization to view brands as assets that must be maintained, built and leveraged. In his book,Managing Brand
Equity, David Aaker writes about several approaches to valuing a brand as an asset. Interbrand has a methodology
to help public and private companies measure their brands’ values. Financial World, a recently defunct
publication, annually ranked top brands by their financial values (estimating the Coca-Cola brand to be worth
$48 billion in 1997).

Measuring brand equity helps you to maintain, build and leverage brand equity (that is, it helps you to understand
how to increase both the “A” and the “R” in the brand’s “ROA”). I will spend the remainder of this post
expounding on (b) measuring brand equity.
To better understand how to build brand equity we must first agree to a definition of brand equity. My favorite
definition is as follows: brand equity is the value (positive and negative) a brand adds to an organization’s
products and services. Brand equity may ultimately manifest itself in several ways. Three of the most important
ways are as the price premium (to consumers or the trade) that the brand commands, the long-term loyalty the
brand evokes and the market share gains it results in.

Brand Awareness

First, consumers must be aware that there are different brands in the product categories in which your brand
operates. Next, they must be aware of your brand. Ideally, your brand should be the first one that comes to their
minds within specific product categories and associated with key consumer benefits. Consumers should be able to
identify which products and services your brand offers. They should also be able to identify which benefit s are
associated with the brand. Finally, they should have some idea of where your brand is sold.

Accessibility

Your brand must be available where consumers shop. It’s much easier for consumers to insist upon your brand if
it is widely available. Slight brand preference goes a long way toward insistence when the brand is widely
available. The importance of convenience cannot be underestimated in today’s world.*

Value

Does your brand deliver a good value for the price? Do consumers believe it is worth the price? Regardless of
whether it is expensive or inexpensive, high end or low end, it must deliver at least a good value.

Relevant Differentiation

This is the most important thing a brand can deliver. Relevant differentiation today is a leading-edge indicator of
profitability and market share tomorrow. Does your brand own consumer-relevant, consumer-compelling benefits
that are unique and believable?

Emotional Connection

First, the consumer must know your brand. Then he or she must like your brand. Finally, the consumer must trust
your brand and feel an emotional connection to it. There are many innovative ways to achieve this emotional
connection–from advertising and the quality of front line consumer contact to consumer membership
organizations and company-sponsored consumer events.
 As you measure brand equity, keep the following points in mind:

•Include measures of awareness, preference, accessibility, value, relevance, differentiation, vitality, emotional
connection, loyalty and insistence.
•Include both behavioral and attitudinal measures (especially for loyalty).
•Tailor the study to your product categories and industry (especially benefit structure)
•Include competitive comparisons

Some of the more telling measures include the following:

•Top-of-mind unaided awareness (first recall)

•Position in the consideration set
•Emotional connection to the brand
•Perceived brand vitality
•Perceived points of difference (open ended question)
•Unique delivery against key benefits

BRAND AUDIT

A brand audit is a detailed analysis that shows how your brand is currently performing compared to its stated
goals, and then to look at the wider landscape to check how that performance positions you in the market.
The methodology will therefore differ depending on industries and individual companies. Regardless of the exact
criteria you choose to measure, an audit should allow you to:
• Establish the performance of your brand
• Discover your strengths and weaknesses
• Align your strategy more closely with the expectations of your customers
• Understand your place in the market compared to the competition
One option is to employ a branding agency to conduct a comprehensive audit. They may examine internal
branding: your positioning, voice, brand values, culture, USP, and product.
External branding can also be considered; logo and other brand elements, website, advertising, SEO, social media,
sponsorships, event displays, news and PR and content marketing.
They can also look at company infrastructure, such as customer service, HR policies, and sales processes.

Why is a brand audit important?

 A brand audit is a holistic way of looking at a business. The brand audit examines all the areas in which your
business interacts with the world. Before your business can prepare any effective marketing strategy or campaign,
it must first understand where your brand is currently positioned and how that position is perceived by your
employees, customers and market.

Brand audits are designed to gain a true understanding of customer perceptions and loyalties, company culture,
company identity, consistency of message and voice, as well as where you stand among your competitors.

So why is a brand audit important? Every business reviews and analyzes their company financial reports,
employee performance and company technology — why wouldn’t you do the same for your company brand —
the biggest and most important asset your company possesses?

Maintaining and analyzing your company brand is important because a consistent brand means you will have a
better chance of building actual brand equity among your target market. Building brand equity can help your
business:

• Spend less money attracting new customers

• Retain current customers

• Reposition the sale of your offerings from transactional to transformational with your customers

• Receive more word-of-mouth referrals

Taking an outside-in view of your company will drive initiatives that create greater market share and build
customer loyalty. The companies who manage their brand correctly by treating it like an asset become the
companies that customers grow to love and trust. These “big brand companies” have huge folders devoted to their
brand guidelines, with detailed instructions about how and where logos can be used, the color palette allowed and
what their promise to customers is.

BRAND TRACKING

Brand Tracking is a way to continuously measure the development of a brand within some key variables, such
as Ad Awareness, what brands the consumer prefer and what he/she is using. Brand tracking is a way to
monitor the results
Brand tracking studies allow marketers to monitor the health of the brand and provide insights into the
effectiveness of marketing programs implemented by the company.
 WHAT SHOULD BE TRACKED?
Each brand faces different issues, which often required customized tracking surveys. Nonetheless, at Relevant
Insights, we always recommend our clients to include measurements of awareness, usage, brand attitudes,
perceptions, and purchase intentin brand tracking studies.
• Awareness: both recall and recognition measures should be collected. They are different indicators of the
strength of the competition among brands in the minds of the consumers. A brand that first comes to mind in
certain situations is more likely to be considered than one that is only recognized when it is prompted to the
consumer.
• Usage: this can be measured through recency, frequency of usage, and total spending in the brand, and
product category. These brand tracking measures, not only tell us about consumer shopping behavior and
preferences, but also are indicators of market share and “share of wallet,” which is the amount of consumer
spending a brand is capturing and has a direct impact on a company’s revenues and profits.
• Brand Attitudes and Perceptions: this is usually captured through questions related to brand image and
associations that consumers develop as they experience the brand and are exposed to its positioning message
through PR, advertising and promotional programs. Many brand associations are often beliefs about product-
related attributes and benefits. However, brand associations also include non-product-related and symbolic
benefits. Product and non-product associations, as well as those related to price and value are important
sources of brand equity and should be part of brand tracking studies. Some brand associations are stronger
than others, are more easily recalled and are enough appealing that they become an important factor in a
consumer’s decision to buy a brand. Some brands may be perceived as unique, but without strong and favorable
brand associations, uniqueness really doesn’t matter (Keller, Strategic Brand Management, 1998).
• Purchase intent: measures of likelihood to buy a brand or switch to a competitor are also indicators of brand
health and should be part of brand tracking studies, but these questions should be put in context regarding specific
product or brand, reason for the purchase, time, channel, price and other relevant factors to the purchase decision,
so they can be predictive of actual purchase behavior.

WHEN AND WHO TO TRACK?

Brand tracking studies usually involve collecting quantitative data from consumers on a regular basis. One way to
do it is to continuously collect information, which allow us to control for unusual marketing activities, in the
analysis, and provide a more representative picture of how the brand stands in consumers’ mind and against
competitors. However, this type of brand tracking may not be feasible due to budget and resources constraints,
and there are other ways to do it (monthly, quarterly, annually, etc.) that can be equally effective.
When determining the frequency of data collection in brand tracking studies, we recommend clients to consider:
• Frequency of product purchase: for example durable goods with long purchase cycles can be tracked less
frequently.
• Marketing activity in the product category: a category where brands are constantly launching marketing
programs and promotions should be monitor more often.
• Level of competition in product category: highly competitive product categories, where new products and
competitors are constantly trying to break in, should be tracked regularly.
• Stability of brand associations: brands with an established image that don’t show appreciable changes over time,
can afford a less frequent brand tracking.
Brand tracking studies are often conducted with current customers, but monitoring non-users of the brand can
prove to be invaluable to the development of an acquisition and market penetration strategy in search for business
growth.

HOW TO INTERPRET BRAND TRACKING MEASURES?

Given the comparative nature of brand tracking studies, brand tracking measures tend to stay the same over time.
However, they should be revised from time to time to assess their reliability and sensibility. They may be stable
over time and thus reflect stability of brand associations, but they can also be unable to capture important shifts in
the market due to changes in socio demographic trends, competitive landscape and economic macro trends.
Another issue with brand tracking measures is defining what constitutes the desirable level of a particular metric.
Is a 50% level awareness good enough? It depends. It is all relative to the product category and the competitive
environment. In low involvement product categories and those with many competitors, it may be difficult to get
very high levels of awareness and strong brand associations, so the benchmark for what it is a good level for a
metric differs across industries and product categories.
Finally, each brand tracking study should be customized to capture the brand associations that contribute the most
to brand equity and the marketing activities that are effective at strengthening it. The goal is to identify key
drivers that have an impact on consumers’ brand choice and purchase behavior and develop marketing tactics that
can lead to brand growth and sustainability.

BRAND VALUATION APPROACHES AND METHODS:

Brand Valuation and Brand Equity:

Brand Valuation can be defined as the process used to calculate the value of a brand or the amount of money
another party is willing to pay for it or the financial value of the brand.

The concept of Brand Value, although similarly constructed to that of Brand Equity, is distinct. To put it simply,
while brand equity deals with a consumer based perspective, brand value is more of a company based perspective.
As early as 1991, Sri vastava and Shocker identified brand equity as a multidimensional construct composed of
brand strength and brand value. This indicates that brand equity is a concept a lot broader than brand value.

Evaluating Brands:

Before evaluating brands, two essential questions need to be answered i.e. what is being valued, the trademarks,
the brand or the branded business and secondly, the purpose for such valuation. This brings us to the answering
what the utility of undertaking brand valuation is. The process of brand valuation is of primal importance not only
for the brand and the respective owning company to improve upon the same but also for the purposes to increase
the market value and ascertain accuracy in instances of mergers and acquisitions. In other words, brand valuation
would comprise of technical valuation which can be utilized for balance sheet reporting, tax planning, litigation,
securitization, licensing, mergers and acquisitions and investor relations purposes and commercial valuation
which is operational for the purpose of brand architecture, portfolio management, market strategy, budget
allocation and brand scorecards. Thus, the application of brand valuation would be for strategic brand
management and financial transactions.

Current Trend/Practices in Brand Evaluation:

However, Brand Valuation is no longer limited to these two areas anymore. International Organization for
Standardization (ISO) came up with ISO 10668 – Monetary Brand Valuation in 2010, which laid down principles
which should be adopted when valuing any brand and is popularly followed by most firms indulging in valuation
of brands like Inter brand, Finance World and Brand Equity Ten. ISO 10668 is a ‘meta standard’ which succinctly
specifies the principles to be followed and the types of work to be conducted in any brand valuation. It is a
summary of existing best practice and intentionally avoids detailed methodological work steps and
requirements. As per ISO 10668, each brand is subjected to an analysis on three levels – Legal analysis,
Behavioral analysis and Financial Analysis. Keeping in mind that the nature and concept of value is difficult to
grasp on account of being subjective in nature, these three methods of analysis objectify the valuing of brands.

Legal Analysis is the method that draws a distinction between the trademarks, the brands and the intangible
assets involved and defines them as separate entities. After the brand valuer has clearly determined the intangible
assets and Intellectual Property rights included in the definition of the ‘brand’ in concern, (s)he is required to
assess the legal protection afforded to the brand by identifying each of the legal rights that protect it, the legal
owner of each relevant legal right and the legal parameters influencing negatively or positively the value of the
brand. Extensive Risk analysis and due diligence is required in the legal analysis and the analysis must be
segmented by type of IPR, territory and business category. In other words, the velour needs to observe and assess
the legal protection afforded to the brand by identifying each of the legal rights that protect the brand, the legal
owner of each of those legal rights and the legal parameters positively or negatively influencing the value of the
brand.
Behavioral analysis involves understanding and forming an opinion on likely stakeholder behavior specific to
geography, product and customer segments where the brand is operational. For perusal using this method, it is
necessary to understand the market size and trends, contribution of the brand to the purchase decision, attitude of
all stakeholder groups to the brand and all economic benefits conferred on the branded business by the brand.
Here, the brand valuer must also look into why a possible stakeholder would prefer the brand in comparison to
that of the competitors’ and the concept of brand strength which is comprised of future sales volumes, revenues
and risks.

Financial Analysis is the most frequently used brand valuation method and uses four approaches – Cost, Market,
Economic and Formulary approach. Often, a fifth approach is also considered. Special situation approach
recognizes that in some instances brand valuation can be related to particular circumstances that are not
necessarily consistent with external or internal valuations. Each case has to be evaluated on individual merit,
based on how much value the strategic buyer can extract from the market as a result of this purchase, and how
much of this value the seller will be able to obtain from this strategic buyer.

COST BASED APPROACH:

Cost Based approach is the approach more often used by Aaker and Keller and is primarily concerned with the
cost in creating or replacing the brand. The cost approach can be further divided into the following methods:

• Accumulated Cost or Historical cost method:

It aggregates all the historical marketing costs as the value (Keller 1998).In other words, the method involves
historical cost of creating the brand as the actual brand value. It is often used at the initial stages of brand creation
when specific market application and benefits cannot yet be identified. However, the shortfalls of this method are
that there exists difficulties as to what would classify as marketing costs and subsequent amortization of
marketing cost as percentage of sales over the brand’s expected life.In addition to that, it is sometimes difficult to
recapture all the historical development costs and this method does not consider long term investments that do not
involve cash outlay such as quality controls, specific expertise and involvement of personnel, opportunity costs of
launching the upgraded products without any price premium over competitors’ prices. The cost of creating the
brand might actually have little to do with its present value. Most alternatives suggested suffer from the same
shortcomings but there is one as proposed by Reilly and Schweihs which may be effective. They propose to adjust
the actual cost of launching the brand by inflation every year where this inflation adjusted launch cost would be
the brand’s value.

• Replacement Cost Method:

The Replacement Cost Method values the brand considering the expenditures and investments necessary to
replace the brand with a new one that has an equivalent utility to the company. Aaker (1991) proposes that the
cost of launching a new brand is divided by its probability of success. Although this method is easy in terms of
calculation, it neglects the success of an established brand. The first brand in the market has a natural advantage
over the other brands as they avoid clutter and with each new attempt, the probability of success diminishes.

• Use of Conversion Model:

Using the method here, one estimates the amount of awareness that needs to be generated in order to achieve the
current level of sales. This approach would be based on conversion models, i.e., taking the level of awareness that
induces trial that further induces regular repurchase (Aaker, 1991). The output so generated can be used for two
purposes: to determine the cost of acquiring new customers and would be the replacement cost of brand
equity. The major flaw in this system is that the differential in the purchase patterns of a generic and a branded
product is needed and the conversion ratio between awareness and purchase is higher for an unbranded generic
than the branded product and this indicates that awareness is not a key driver of sales.

• Customer Preference Model:

Aaker (1991) proposed that the value of the brand can be calculated by observing the increase in awareness and
comparing it to the corresponding increase in the market share. But he had identified the problem wit h this being
how much of the increased market share is attributable to the brand’s awareness increase and how much to other
factors. A further issue is that one would not expect a linear function between awareness and market share.

In alternative, another method is the Recreation method which is similar to the replacement method but involves
costs involved in creating the brand again, rather than simply the costs of replacement. Another distinction that
exists between the two is that the value computed through the replacement cost method excludes obsolescent
intangible assets. Another method is the residual value method states that the value of the brand is the discounted
residual value obtained subtracting the cumulative brand costs from cumulative revenue s attributable to the brand.

MARKET BASED APPROACH:

Market based approach basically deals with the amount at which a brand is sold and is related to highest value
that a “willing buyer & seller” are prepared to pay for an asset. This approach is most commonly used when one
wishes to sell the brand and consists of methods herein stated:

• Comparable Approach or the Brand Sale Comparison Method

This method involves valuation of the brand by looking at recent transactions involving similar brands in the same
industry and referring to comparable multiples. In other words, this method takes the premium (or some other
measure) that has been paid for similar brands and applies this to brands that the company owns. The advantage
of this approach is that it looks at a third party perspective that is, what the third party is willing to pay and is easy
to calculate but the flaw in this method is that the data for comparable brands is rare and the price paid for a
similar brand includes the synergies and the specific objectives of the buyer and it may not be applicable to the
value of the brand at issue.

Brand Equity based on Equity Evaluation method

• Simon and Sullivan (1993) believe that brand equity can be divided into two parts:

• The “demand-enhancing” component, which includes advertising and results in price premium profits,

• The cost advantage component, which is obtained due to the brand during new product introductions and
through economies of scale in distribution.

Hence, they basically estimated the value of brand equity using the financial market value and the advantage of
this approach is that it is based on empirical evidence but shortfalls of this approach is that it assumes a very
strong state of efficient market hypothesis and that all information is included in the share price.

• Residual Method

Keller has proposed the valuation of the brand by means of residual value which would be when the market
capitalization is subtracted from the net asset value. It would be the value of the “intangibles” one of which is the
brand.

Another alternative approach that is suggested is that of usage of real options as proposed by Damodaran (1996).
The variables that need to be calculated are: risk free interest rate, implied volatility (variance) of the underlying
asset, the current exercise price, the value of the underlying asset and the time of expiration of the option. This
method is useful in calculating the potential value of line extensions but the inherent assumptions in this approach
make any practical application difficult.

INCOME BASED APPROACH:

Income Based or Economic Use approach is the valuation of future net earnings directly attributable to the
brand to determine the value of the brand in its current use (Keller, 1998; Reilly and Schweihs, 1999; Cravens and
Guilding, 1999). This method is extremely effective as it shows the future potential of a brand that the owner
currently enjoys and the value is useful when compared to the open market valuation as the owner can determine
the benefit foregone by pursuing the current course of action.

The methods used under the approach are as follows:

• Royalty Relief Method:

The Royalty Relief method is the most popular in practice. It is premised on the royalty that a company would
have to pay for the use of the trademark if they had to license it (Aaker 1991).
The methodology that needs to be followed here is that the valuer must firstly determine the underlining base for
the calculation (percentage of turnover, net sales or another base, or number of units), determine the appropriate
royalty rate and determine a growth rate, expected life and discount rate for the brand. Valuers usually rely on
databases that publish international royalty rates for the specific industry and the product. This investigation
results in a variety and range of appropriate royalty rates and the final royalty rate is decided after looking at the
qualitative aspects around the brand, like strength of the brand team and management. This method has an edge of
being industry specific and accepted by tax authorities but this method loses out as there are really few brands that
are truly comparable and usually the royalty rate encompasses more than just the brand.

• Differential of Price to sale ratios method:

The Differential of Price to Sale ratios Method calculates brand value as the difference between the estimated
price to sales ratio for a branded company and the price to sales ratio for an unbranded company and multiplies it
by the sales of the branded company. Why this method can be used is because information is readily available and
it is easy to conceptualize but the drawback is that the comparable firms are a limited few and there exists no
distinction between the brand and other intangible assets such as good customer relationships.

• Price Premium Method

The premise of the price premium approach is that a branded product should sell for a premium over a generic
product (Aaker, 1991). The Price Premium Method calculates the brand value by multiplying the price differential
of the branded product with respect to a generic product by the total volume of branded sales. It assumes that the
brand generates an additional benefit for consumers, for which they are willing to pay a little extra.The fault in
this method is that where a branded product does not command a price premium, the benefit arises on the cost and
market share dimensions.

• Brand Equity based on discounted cash flow:

The problem faced by this method is the same as when trying to determine the cash flows(profit) attributable to
the brand. From a pure finance perspective it is better to use Free Cash Flows as this is not affected by accounting
anomalies; cash flow is ultimately the key variable in determining the value of any asset (Reilly and Schweihs,
1999). Furthermore Discounted Cash Flow do not adequately consider assets that do not produce cash flows
currently (an option pricing approach will need to be followed) (Damodaran, 1996). The advantage of this model
is that it takes increased working capital and fixed asset investments into account.

• Brand Equity based on differences in return on investment, return on assets and economic value
added.

These models are based on the premise that branded products deliver superior returns, therefore if we value the
“excess” returns into the future we would derive a value for the brand (Aaker, 1991). This method is easy to apply
and the information is readily available, but there is no separation between brand and other intangible assets and
does not adjust, by their volatility, the earnings of the two companies compared, including discount rate.

Other methods also include conjoint analysis, income split method, brand value based on future earnings,
competitive equilibrium analysis model, etc. The very fact that there are so many methods worth discussing und er
the income or economic approach show how accurate and sought after this approach is.

FORMULARY APPROACH:

The Formulary approaches are those that are extensively used commercially by consulting other organizations.
This approach is similar to the income or economic use approach differing in the magnitude of commercial usage
and employing multiple criteria to determine the value of the brand. Within formulary approaches are the
following approaches:

• Interbrand Approach

Interbrand is a brand consultancy firm, specializing in areas such as brand strategy, brand analytics, brand
valuation, etc. It determines the earning from the brand and capitalizes them by making suitable adjustments.
(Keller, 1998) The firm bases its brand valuation on financial analysis, role of the brand and brand strength.

The firm attempts at determination of brand earnings by means of using a brand index which is based on 7 factors
namely –leadership, internationalization/geography, stability, market, trend, support and protection in the
descending order of weightage. This approach is popular and widely appreciated because of its ability to take all
aspects of branding into account. The difficulty in this approach is that it is difficult to determine the appropriate
discount rate because parts of the risks usually included in the discount rate factored into the Brand Index score.
In addition to that, even the capital charge is difficult to ascertain. Aaker reveals that “…the Interbrand system
does not consider the potential of the brand to support extensions into other product classes. Brand support may
be ineffective; spending money on advertising does not necessarily indicate effective brand building. Trademark
protection, although necessary, does not of itself create brand value.”

• Finance World Method

The Financial World magazine method utilizes the “brand index”, comprising the same seven factors and
weightings. The premium profit attributable to the brand is calculated differently. This premium is determined by
estimating the operating profit attributable to a brand, and then deducting the earnings of a comparable unbranded
product from this. This latter value could be determined, for example, by assuming that a generic version of the
product would generate a 5% net return on capital employed (Keller, 1998). The resulting premium profit is
adjusted for taxes, and multiplied by the brand strength multiplier.

• Brand Equity Ten

 As stated by Aaker, the Brand Equity Ten Method measures brand equity through 5 dimensions – loyalty,
perceived quality or leadership measures, other customer oriented association or differentiation measure like
brand personality, awareness measures and market behavior measures like market share, market price and
distribution coverage. Brand Equity ten, thus, looks at the customer loyalty dimension of brand equity and the
measures to create a measurement instrument.

• Brand Finance Ltd.

Brand Finance Ltd. is a UK based consulting organization which undertakes brand valuation by means of
identifying the position of the brand in the competitive marketplace, the total business earnings from the brand,
the added value of total earnings attributed specifically to the brand and beta risk factor associated with the
earnings. On the value so obtained, it discounts the brand added value after tax at a rate that reflects the brand risk
profile.

BRAND REINFORCEMENT

Definition: The Brand Reinforcement majorly focuses on maintaining the Brand Equity by keeping the brand
alive among both the existing and new customers. This can be done through consistently conveying the meaning
of brand in terms of:

• What are the products under the brand? What are its core benefits and how it satisfies the demand?

• How is the brand different from other brands? How it enables a customer to make a strong, unique and favorable
association in their minds?

Brand reinforcement includes regular monitoring of a product at all the levels of product life cycle ( viz.
Introduction Stage, Growth Stage, Maturity Stage and Decline Stage) to keep a check on the changes in the tastes
and preferences of customers.
 The marketers adopt this strategy to remind customers about the brand and its long-lasting benefits. In order to
keep the brand in the minds of the customer, several innovations, researches, and creative marketing programs are
made in line with the changing marketing trends.

Apart from innovation and research the brand reinforcement can be done through various marketing programs
such as:

• Advertising is one of the most common and easy tool of brand reinforcement. By showing the ads frequently on
TV, Internet, Bulletins, Billboard, Radio, etc. can make the brand deep-rooted in the minds of the customer.

• Exhibition provides a vital platform to the brands where the product with any new feature can be demonstrated to
the customer. Products seen in real gives an experience to the customer, and some image gets created in their
minds.

• Event and Sponsorship act as an aide to the brand reinforcement. The companies sponsor big events like sports,
political rallies, education, award functions, etc. with the objective of reminding the customer about their product
and creating the positive image in the minds of new prospects.

• Showroom layout also plays a vital role in strengthening the brand image in the minds of the customer. The way
the brands are placed in the retail outlets or stores reminds the customer about the product and also influences new
users through its appeal.

• Promotion is the most frequently used tool of brand reinforcement. Several companies adopt this strategy
wherein some special offers, freebies, discounts, gift packs, etc. are given along with the product. This is done
with the intention to retain the existing customers and attract new customers simultaneously.

Thus, each firm tries to maintain its brand position in the minds of all the prospective customers such that the life
of the product gets extended and remain in the race of competition.
BRAND RESONANCE

Definition: The Brand Resonance refers to the relationship that a consumer has with the product and how well
he can relate to it.

The brand resonance begins with:

• Brand Identification: The first and foremost step, is to ensure the brand identification with the customers, i.e.
creates awareness about the product and establish an association in the minds of customers with respect to its
usage and the segment for which it exists.
• Brand Establishment: To create a full meaning of the product in the minds of customers, so that they start
remembering it.

• Eliciting Response: Once the association is built with the customers, the next step is to elicit the responses, i.e.
what customers feel about the brand?

• Relationship: The next and final step is to convert the responses into building the customer’s strong relationship
with the brand.

In order to accomplish these four pre-requisites for creating the brand equity, the Six brand building blocks need
to be followed that are arranged in a pyramid-like structure called as Brand Resonance Pyramid.

• Brand Salience: The brand salience means, how well the customer is informed about the product and how often
it is evoked under the purchase situations?

The marketer should not only focus on just creating the awareness about the product but also includes the ease
with which the customers can remember the brand and the ability to recall it under the different purchase
situations.

• Brand Performance: The Brand performance means, how well the functional needs of customers are met?

At this level of the pyramid, the marketers check the way in which product is performing and how efficiently it is
fulfilling the needs of the customers.

• Brand Imagery: The Brand Imagery means, what product image the customer create in their minds?
 This aspect deals with the customer’s psychology or the feelings that how they relate to the product in terms of
their social needs.

• Brand Judgments’: The Brand Judgment means, What customer decides with respect to the product?

The customers make the judgment about the product by consolidating his several performances and the imagery
associations with the brand. On the basis of these, the final judgment is made about the product in terms of its
Perceived Quality, Credibility, Consideration, and Superiority.

• Brand Feelings: The Brand feelings means, what customers feel, for the product or how the customer is
emotionally attached to the product?

The consumer can develop emotions towards the brand in terms of fun, security, self-respect, social approval, etc.

Brand Resonance: The Brand Resonance means, what psychological bond, the customer has created with the
brand?

This is the ultimate level of the pyramid, where every company tries to reach. Here the focus is on building the
strong relationship with the customer thereby ensuring the repeated purchases and creating the brand loyalty.

The resonance is the intensity of customer’s psychological connection with the brand and the randomness to recall
the brand in different consumption situations.

BRAND EQUITY

Definition: The Brand Equity refers to the additional value that a consumer attaches with the brand that is unique
from all the other brands available in the market. In other words, Brand Equity means the awareness, perception,
loyalty of a customer towards the brand..e.g., The additional value a customer is willing to pay for Uncle Chips
against any local chips brand available with the shopkeeper.Brand Equity is the goodwill that a brand has gained
over time.
 Brand Equity can be seen in the way the customer thinks, feels, perceives the product along with its price and
market position and also the way brand commands profit and market share for the organization as a whole.

Customer Brand Equity can be studied in 3 different ways:

• The Different Responses of a customer towards the product or service helps in determining the brand equity. The
way customer thinks about the brand and considers it to be different from the other brands will generate a positive
response for that brand and will contribute to its goodwill.
E.g., Customer, have a positive response towards Mac laptops because of its anti- virus software.

• The responses can be generated only if customers have sufficient knowledge about the brand; thus, Brand
Knowledge is essential to determine the brand equity. The Brand knowledge includes the thoughts, feelings,
information, experiences, etc. that establish an association with the brand.
E.g., Brand Association reflects the knowledge about the product such as woodland is recognized for its rough
and tough styling.

• The different customer’s response that adds to the brand value depends solely on the Marketing of a Brand. The
strong brand results in substantial revenues for the organization and better understanding about the product among
the customers.

Thus, the marketers basically study the Customer-Based Approach wherein they study the response of a customer
towards the brand that can be reflected in their frequency of purchase. It focuses on customer’s perception i.e.
what they have read, felt, thought, seen about the brand and how it has helped them to satisfy their urge of need.

BRAND REVITALIZATION
 Definition: The Brand Revitalization is the marketing strategy adopted when the product reaches the maturity
stage of product life cycle, and profits have fallen drastically. It is an attempt to bring the product back in the
market and secure the sources of equity i.e. customers.

Example: Mountain Dew, A Pepsi product, was launched in 1969 with the tagline “Yahoo Mountain Dew” that
flourished in the market till 1990. After that the sales of mountain dew declined due to which it was re-positioned,
its packaging was changed, and the tagline was changed to “Do the Dew”. It targeted the young males showing
their audacity in performing the adventurous sports. This led the Mountain Dew to the fifth position in the
beverage industry.

Despite a good reinforcement strategy, a product has to be revitalized because of some uncontrollable factors such
as competition, the invention of new technology, change in tastes and preferences of customers, legal
requirements, etc.

The brand has to be revitalized because of the following reasons:

• Increased Competition in the market is one of the major reasons for the product to go under the brand
revitalization. In order to meet with the offerings and technology of competitor, the company has to design its
brand accordingly so as to sustain in the market.

• The Brand Relevance plays a major role in capturing the market. The brand should be modified in accordance
with the changes in tastes and preferences of customers i.e. it should cater the need of target market.

• Nowadays Globalization has become an integral part of any business. In order to meet the different needs of
different customers residing in different countries the brand has to be revitalized accordingly.
• Sometimes Mergers and Acquisitions demand the brand revitalization. When two or more companies combine,
they want the product to be designed from the scratch in a way that it appeals to both and benefits each
simultaneously.

• Technology is something that is changing rapidly. In order to meet with the latest trend, the companies have to
adopt the new technology due to which the product can go under complete revitalization.

• Some Legal Issues may force a brand to go under brand revitalization such as copyrights, bankruptcy, etc. In such
situations, the brand has to be designed accordingly, and the branding is to be done in line with the legal
requirements.

In order to overcome the problems mentioned above following are some ways through which Brand
Revitalization can be done:

• The Usage of a product can be increased by continuously reminding about the brand to customers through
advertisements. The benefits of the frequent use of a product can be communicated to increase the
consumption, e.g., the usage of Head & Shoulders on every alternate day can reduce dandruff.

• The untapped market can be occupied by understanding the needs of the new market segment. The brand
revitalization can be done to cater to the needs of new customers, e.g.; Johnson n Johnson is a baby product
company but due to its mild product line the same can be used by ladies to have a soft skin and hair.

• The brand can be revitalized by entering into an entirely New Market. The best example for this is Wipro, who
has entered into a baby product line.

• Another way of getting the brand revitalized is through the Re-positioning. It means changing any of the 4 P’s of
marketing mix viz. Product, price, place and promotion.The best example of re-positioning is Tata Nano. On its
launch, it was tagged as the “cheapest Car” that hurt the sentiments of customers, and the sales fell drastically. To
revive the sales, the new campaign was launched “Celebrate Awesomeness” that re-positioned its image in the
minds of the customer.
• A brand can be revitalized by Augmenting the Product and Services. The company should try to give something
extra along with the product that is not expected by the customer. Some additional benefits can revive the brand in
the market e.g. A plastic container comes with a surf excel 1 Kg pack that can be used for any other purpose.

• The brand can be modified through the Involvement of Customer The feedback about the product and services
can be taken from ultimate consumer and changes can be made accordingly. Customer’s involvement is best seen
in service sector wherein feedback forms are filled in at the time of availing the services such as hotels,
restaurants, clubs, flights, trains, etc.

This shows that brand revitalization is an essential to the success of any product. The firm takes all the necessary
steps to keep its product very much alive in the market.

DEFINITION OF BRAND CRISIS

.A special form of a product-harm crisis where the negative event centers on one particular brand or a set
of brands belonging to the same company In the long term, the incident can severely damage the affected
brand’s reputation.