21MM101 – BRAND MANAGEMENT

LECTURE MATERIAL – LP12

UNIT 4 –MANAGING BRANDS
Brand Re-positioning, Brand Revitalization
&
Brand Valuation: Methods, Brand Elimination
Brand Re-positioning
Brands are built with the purpose of making a business more memorable and appealing
to a given audience. They achieve this by identifying a unique point of difference and
communicating that difference through an offer and a message that resonates with that
audience.

What Is Repositioning? (A Definition)

Repositioning in marketing is the process a brand goes through to adjust or overhaul its
perception in the market to better appeal to its target audience.

There are many reasons a brand’s leadership team may decide on a strategic change (which
we’ll dive into a little later), though ultimately the goal is the same…

The purpose of brand repositioning is, quite simply, to reposition the brand in the mind of
the audience so they see the brand and its offering as a more viable option.

1
Or to put it another way, to change how the market perceives the brand.
Why Reposition A Brand?

There are many reasons a brand’s leadership team might decide on a rebrand.
More often than not, rebrands are reactionary and happen as a result of lower than expected
results which could mean low brand awareness, low market share, low sales and low revenue.

But rebrands are not always a strategic decision based on poor performance.

Quite often rebrands happen as a result of good performance and subsequent opportunities to
grow and expand into bigger markets.

Let’s take a look at some common reasons for repositioning.

Evolving Markets

2
Markets aren’t static.

They’re made up of people so by nature, they’re always changing and evolving.

What’s important to consumers today may not be as important tomorrow or may be twice as
important.

Whether it’s a change in demand a change in knowledge or a change in society or any other
countless ways people change, markets aren’t a place for static entities.

SEND ME THE FREE REPORT

Change in Target Audience

As businesses grow, so do their capacity to help more of the same people or more people in
general.
What works at a brand level in appealing to one specific market segment may not work when
appealing to a broader market made up of multiple segments.

Segments are simply groups of people so if a brand’s plan is to expand, they may need to
consider their position to have broader appeal across a broader market.

3
Brands that want to go after a broader or a completely different target audience, may need to
consider whether their existing position will cut the mustard.
Change or Growth in Product Portfolio

Positioning happens at both a brand and a product level.

Product positioning happens less frequently than brand positioning because products rarely
change and intended purpose for an intended audience.

That said, as new products are introduced and the portfolio of products grows, brand
repositioning may be required if the portfolio expands out of alignment with the brand’s
original position.

Signal a New Approach & Era

4
Heritage brands with decades or even centuries of brand equity may need to refresh their
position over time to adapt to the changing landscape.

Like a crab shedding its skin, some brands will go through a transformation to signal the
end of an old era and the beginning of a new one, often with an adjustment to how it wants
to be seen in the market.

Advantages of Repositioning

The cost of repositioning can vary dramatically depending on the branding agency or
service provider being used but there are many advantages to brand repositioning if the
strategy is warranted.

Advantage #1:
Refocused Target Audience

The repositioning process, much like the positioning process, requires an in-depth analysis of
the target audience.

5
By identifying the segments that make up the market, then zeroing in on the target segments
of choice, the leadership team can drill down into the detail of their audience including their
goals, challenges, fears and desires.

This level of laser focused targeting enhances the brand’s ability to connect with their
audiences’ needs.

Advantage #2:
Enhanced Competitive Advantage

A positioning strategy that considers more up-to-date market conditions and a better
understanding of the competitive landscape should, by virtue of its purpose, provide a more
enhanced competitive advantage.

Whether the advantage highlights the outcome, the benefits, the meaning or the big idea, the
way the advantage is delivered through the brand’s messaging should strengthen the brand’s
perceived edge.

Advantage #3:
A Fresh Perception

6
A brand repositioning exercise might have little or nothing to do with the product or service
offering.

In this case, the repositioning strategy is built around a better way to convey the value of the
brand and its products to the audience.

But many of the world’s most successful brands have completely reinvigorated the trajectory
of the brand with little more than creating a fresh perception in the market.

Disadvantages of Repositioning

Although there are many advantages to brand repositioning, it doesn’t mean it’s the best
approach for every brand considering a change.

In fact, there are some disadvantages of repositioning you should be aware of.
Disadvantage #1:
Repositioning Can Be Expensive

7
A brands position in the market is shaped by the brands perception which ultimately stems
from the brand experience.

Throughout a given brand, there may be upwards of 100 touchpoints which can include:

Website

Social Channels

Physical Store

Printed Collateral

Packaging

Traditional Ads

Digital Ads

Vehicle Fleets

Distribution Channels

This cost only represents the visual and verbal adjustment on the front lines of the brand though
there is also lost investment on any equity built up over time.

Disadvantage #3:
Alienating Existing Customers

Many rebrands happen as a result of expansion into bigger markets.

More often than not, this requires the brand to adopt more inclusive language and

8
communication which could well be an important factor in their success with their core
audience.

Adjusting the brand’s positioning strategy too much can leave that core group of loyal
customers feeling alienated or abandoned if the brand changes its position with less
specificity and “looser fitting” communication.

Successful Repositioning Examples

Repositioning success stories are a big motivator to pull the trigger to enhance the fortunes of
the brand.
Here are some of the most successful brand repositioning examples.

Example #1:
Taco Bell

9
Taco Bell is a Mexican fast-food restaurant that carried a “Cheap” perception and reputation
that was hampering its growth.
With increasing competition and healthier options such as Chipotle stealing market share,
Taco Bell needed a new approach.

It’s repositioning took on a fresh young approach and instead of competing on the
nutritional value of their food, they gave their customers the freedom to make the “lifestyle
choices” that worked for them.

Their “Live Mas” tagline (Live More in English), points to the idea that “Living more” means
not always having to be on your best behaviour and giving yourself the freedom to live life on
your terms.

Along with a refresh of their messaging and identity, their introduction of higher-
end “Cantina” venues and revamped interior designs helped them to shake
the “Cheap” perception to give their customers a modern lifestyle choice.
Example #2:
Old Spice

10
I created an entire article and video of the Old Spice rebrand, where I got into much more
detail about this heritage brand repositioning strategy.
But after decades of allowing their aging “old man’s” brand to become stale and outdated,
P&G, the Old Spice parent brand saw the writing on the wall and knew they needed to
change their approach.

Ditching the outdated slippers and cardigan approach, they stripped down, bulked up,
mounted a white horse and smashed the old man’s perception with bags of personality and
humour.

Their “Man Your Man Can Smell Like” campaign was a Youtube sensation which helped to
alter the trajectory of the struggling brand to become the #1 Men’s Body Wash brand in the
world inside 12 months.

No product formula changes here, just a truck full of character and “laugh out loud”
humour.
Example #3:
MailChimp

11
In contrast to the two previous examples, Mailchimp wasn’t a struggling brand reacting to
underperformance but a change in market conditions that created an opportunity.

Mailchimp was a brand that had built a solid reputation as a small business email provider
with a loyal fan base.

Though their brand identity looked dated, it still aligned with the quirkiness of the brand’s
cheeky personality and they probably would have gotten away with it for many years to come.

But Mailchimp saw an opportunity in the expanding small business market to push into a
more holistic “marketing solutions” platform, leaving their “email only” reputation that
catapulted them to success behind.

Their bold brand identity revamp along with a subtle shift in their messaging has positioned
Mailchimp to enable them to guide their small business audience with their evolving marketing
needs as they grow.

7 Step Repositioning Strategy Process

12
If yours or your client’s brand hasn’t been performing or you want to take advantage of
changing conditions, then you need processes for your repositioning strategy.
Follow these steps closely and you’ll give your brand the best change for a successful
repositioning campaign. (Note: Complete steps one and two before committing to
repositioning your brand).

Step 1: Audit the Existing Brand

If the brand you’re working on consists only of visuals or lacks a strategy, then it’s a
positioning project (not a repositioning project).
Repositioning can only occur, when there has been decisive action taken to position the brand
in the first place.
So conduct an extensive audit to analyse the brand to uncover the following:

Target Audience Segments

Differentiation Strategy

Brand Personality

Language & Voice

Key Messages / Stories

Brand Name & Tagline

Visual Identity

Identify any misalignment and divergence throughout the brand beginning with who the
audience is and what they want.

13
Step 2: Confirm Assumptions

Conduct market analysis to confirm the assumptions made and to better understand the
original target audience.

Although this target audience may or may not remain the same, it’s important to understand
the failings of the brand or to confirm any assumptions that will be used in the repositioning
process.

Focus groups can offer qualitative results while market surveys can offer quantitative results
to achieve statistical significance.

Step 3: Redefine the Audience

Before defining a new position in the market, it’s critically important to redefine the
audience.

14
Although your new position might simply aim to change the perception of the same group of
people, repositioning is an opportunity to discover new opportunities and other possible market
segments the brand may want to appeal to.

Only when you’re crystal clear on exactly who your audience is (with all audience personas
/ buyer personas included), can you define a position that will appeal to all.

Step 4: Redefine the Competition

Although redefining your target audience is top of the pile in terms of importance, redefining
your competitors is not far behind.
As I mentioned earlier, markets aren’t static, they’re constantly evolving and new competitive
players are constantly coming in, in the hope of disrupting the status quo or at a minimum,
stealing market share.

Defining a new position needs to consider the options that already exist in the market to
ensure the new repositioning strategy offers as compelling a reason as possible for the
audience to choose the brand.
Step 5: Identify Gaps & Define Your Difference

15
Redefining the audience and the competitive landscape arms you with the tools you need to
identify what the market wants and what’s already available.

What’s already available is an indication of where not to play to avoid falling into the ever
growing “market noise” and giving your brand some breathing room to be noticed.

Gaps represent opportunities to bring attract your audience’s attention with a unique
perspective on value and / or experience.
What are your competitors not saying or doing throughout their offer or experience that your
audience would place value on?

Identify the most valuable opportunity and expand this into a unique difference that will
appeal to your audience.
Step 6: Write Your Positioning Statement

Once you’ve carved out a unique point of difference you can use to attract your audience, it’s
time to document that difference in a little detail.

Your brand positioning strategy (or repositioning strategy) defines who you’re for, why
you’re different, who and what you’re different to and the benefit of that difference.

16
 Brand Revitalization
Brand Revitalization Meaning – It 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.
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.

Why Brand Revitalization is needed?

Increased Competition in the market is one of the major reasons for the product to go under
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.

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 to the
need of the 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 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.

How Brand Revitalization can be done?

17
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 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 Re-positioning. It means changing any
of the 4 Ps of marketing mix viz. Product, price, place, and promotion.

18
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” which re-positioned its image in
the minds of the customer.
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 adventurous sports.
This led Mountain Dew to the fifth position in the beverage industry.

What is Rebranding, Brand Refreshing and Relaunching?

Rebranding and relaunching can take many guises from the complete wholesale
change of a company or product, inside and out, including name, culture, values,
behaviours, tone, visual collateral and all that entails with no connections to the
legacy entity, to something less dramatic and of a more evolutionary nature in the
form of a brand refresh.
In each instance though, the transformation, to whatever degree, affects a change in the minds
of the target market in terms of their perceptions of the brand. That change is a process of
giving a company, product or service a new positioning, relative to competitors and image in
order to make it more successful.

19
Positioned and developed correctly brands offer a means of generating sustained growth,
enabling companies to charge a premium. Equally, they also assist a company to resist or
bounce back from competitor attack.
Brands are key to a company’s long-term survival and market leadership. Accountants
and auditors the world over calculate the value of brands when determining book values on the
company balance sheets. In the case of strong brands, the brand can be 70% – 90% of the stock
market value (intangible assets).

Rebranding is a complex process and should not be engaged lightly. You should most
definitely conduct a brand audit to evaluate your brand’s weak spots and identify new
areas for innovation and growth. Handled badly, rebranding can be damaging to business.
Equally in the words of a Chinese proverb “if you do not plan for the future, you will get the
one that shows up” and successful rebranding, relaunching and revitalisation adds
significantly to a company’s long-term success.

Why Rebrand, Refresh Your Brand or Relaunch?

The Reasons for rebranding and or relaunching a company, product or service are numerous
and should not be taken on lightly without sound strategic reasons for engaging in the process.
Brands are constantly evolving to ensure they keep abreast of changing needs in the
market place. It’s the level of change required that is the critical issue. A brand audit and
market research will help assess the rate of change required amongst other things.

Even some of the greatest brands in the world need rejuvenation. Brands like Guinness, Coca-
Cola and Kellogg’s are iconic, global in their status. Yet when you look at their market
leadership over the decades, they have all changed even if it has been in a more evolutionary
sense over time, rather than radical overhauls.

However, some branding does require an extensive change in order for the business to
achieve the required regeneration for growth and profitable returns.
Revitalisation maintains and celebrates the history and heritage of the brand but shows its target
audience (current and future) that you are adaptive to change. Change is necessary to stay
relevant to the times in which a brand exists and to ensure its future success.

20
The Reasons for Rebranding, Relaunching and revitalising a brand include
the following:

1. Relevance
Brands need to stay relevant to their target market, to keep up with the times and keep pace
with changing customer needs (e.g. services, accessibility, convenience, choice, changing
trends, technology). A brand that has become old-fashioned in the eyes of its audience is
in danger of stagnation if not already in a state of erosion and loss of market share.

2. Competition
In a fast moving environment with aggressive competition, rebranding may be required to
change the offering to the market in order to create a more compelling reason to buy in the
minds of the target audience. Rebranding can be used as a means of blocking or
outmanoeuvring competitors or a way of handling increased price competitiveness.

3. Globalisation
Sometimes rebranding is required because of globalisation where the same product sold across
multiple markets is inconsistent or different e.g. Marathon’s change to Snickers, Opal Fruits
change to Starburst, Jif’s change to Cif.

4. Mergers & Acquisitions

When two entities combine there are typically two unique audiences left to communicate with.
Sometimes this can require a rebrand or relaunch in a way that will appeal to both. In other
cases one of the brands may be more dominant requiring more of a revitalisation or refresh
with it becoming the sole dominant player.

5. Innovation
Technology is constantly evolving and the rate of change often exponential. If a brand is
technology related e.g. internet, software, hardware and the product offering constantly
innovating then a rebrand frequently follows the natural and fast rate of
change. Rebranding or revitalisation becomes an outward expression of the companies
evolution and ensures the brand’s change hungry customers keep coming back to see “what’s
new”.

21
6. Repositioning
Taking a brand to a new position is an involved process e.g. from an economy price fighter
to premium position, and invariably requires a rebrand to signal a change in direction, focus,
attitude or strategy to its target market. Also again rebranding used as a means of blocking
or outmanoeuvring competitors or a way of handling increased price competitiveness.

7. Rationalisation
Rebranding can be used to decrease business development and operational costs, or a way
of countering declining profitability or consumer confidence. It can also be used where
there are complex and sometimes confusing mixes of product portfolios which frequently
undermine the brands impact, (along with considerable advertising, branding clutter and media
proliferation) all of which causes brand incongruence and audience fragmentation and
consequently badly needs consolidation through rebranding to achieve brand impact and
strong growth again.

8. Outgrowth
When small companies grow into bigger entities they and/or their products frequently require
a rebrand or revitalisation to meet the needs of the bigger business. Typically smaller
companies start with more modest brand offering, due to budget restrictions, which are
inadequate to meet the needs of a bigger more sophisticated business and a rebrand is required.

9. Legal Requirements
Occasionally legal issues may arise that require a company to make changes to their branding
such as copyright issues or bankruptcy e.g. similarities between naming and designs. For
example The Jelly Bean Factory became The Jelly Bean Planet in Ireland to ensure
differentiation from the USA brand Jelly Belly.

10. Morale & Reputation

If a company brand has demoralised employees or confused customers then a rebrand may be
required. A thorough rebrand process will work to unearth the issues that need addressing
and could be solved through key changes, including a completely new look and feel to the
organisation. A rebrand in this instance can improve a brand’s competitiveness by creating
a common sense of purpose and unified identity, building staff morale and pride, as well as a

22
way of attracting new customers, enhancing relationships with existing customers and
attracting the best talent to the business.

The Different Aspects of Rebranding

Rebranding, a brand refresh and brand revitalization can be as small scale as some subtle
changes to the company or product graphics e.g. brand identity, packaging tweaks, sales
literature updates, vehicle livery, staff uniforms and website refresh or as major as a full blown
positioning, name and culture change affecting both the intangible and tangible aspects of the
brand.

Rebranding or brand revitalisation can be categorised to include one or a combination of all

the items listed:
1. Brand positioning
2. Brand strategy development
3. Brand hierarchy / brand architecture
4. New brand name
5. Brand identity, brand logo, trademark, tagline or slogans
6. Graphics, brand imagery, online presence i.e. website, Facebook pages etc.
7. Marketing campaigns
8. Company or product livery, uniforms, stationery, digital presentations
9. Packaging
10. Product displays, exhibition stands, signage & way-finding systems
11. Exterior and interior design
12. Advertising, on and offline
13. Movies, videos and show reels
14. New product launches, differentiations, extensions or enhancements
15. A change in brand profile, purpose, vision, values, mission, goals, story, message,
promise, offerings, personality, emotion, behaviours, tone of voice, culture, brand
experience, customer care and so forth.
16. Potential changes in some of your target market and re-evaluating purchaser
personas, also known as buyer personas …and more

23
What’s involved in the Rebrand Process?

When considering a rebrand you typically need to include:

1. Rebrand planning, a brand audit health check, research and recommendations
2. Brand strategy re-evaluation and update
3. Application design for all touch points
4. Brand implementation, launch and rollout
5. Internal brand launch, team brand induction and brand champion training
6. External communications of rebrand to all relevant stakeholders; customers, media and
shareholders
7. Measure of impact and commercial return

While the debate, in term of pros and cons, on whether to rebrand or not can be as complex as
the process itself, the following reasons not to are largely worth reflection too.

1. A young brand
If a brand has only been on the market a short time e.g. 3 years, bearing in mind time can be
measured differently depending on your market/industry, then it’s probably premature to
rebrand. It takes time to build a brand and evolve it into something authentic and meaningful
to its target audience. Rebranding to “sell” more in such instances might be better served by a
different approach to marketing or a new campaign unless the existing brand solution is very
flawed.

2. Change for the sake of change

It’s not a good idea to rebrand just because “you want to” or because somebody wants to stake
their next career move on a rebrand. If there is no compelling commercial reason e.g. new
innovation, behaviours, culture and all the other reasons mentioned above, then the target
audience will be left with an empty experience. On top of that, you’ve wasted a lot of money!

Top Rebranding Mistakes to Avoid

1. Do not think branding or a rebrand for that matter is just the logo, stationery or
corporate colours in isolation.
Effective branding encompasses both tangible and intangible elements, a large part of what has
been listed previously e.g. target audience, customer experience and perception, product

24
quality, look, feel, online and offline environments, customer facing staff, the tone of all
communications both visual, auditory and written etc.

2. Don’t cling to the old unless it has key brand provenance that is still relevant to the
current target market.
Powerful rebranding means being connected to what really matters to your bull’s eye customer.
Don’t assume because it worked in the past it’s still relevant now. Research, review and analyse
changes in your target market when investigating new opportunities for repositioning,
expansion or revitalization.

3. Don’t overlook existing brand equity and goodwill.

Ignoring brand equity when rebranding can alienate existing customers and potentially damage
a brand’s perception. A massive overhaul may be excessive when a smaller evolution would
be more appropriate. Ensure you are fully up-to-date on the mind-set and needs of your target
market before engaging in the process.

4. Don’t forget to step into your customer’s shoes.

Hire a secret shopper with a profile that matches your target market and have them engage with
your brand at all relevant touch points e.g. ring your receptionist with an enquiry, navigate your
website, buy your products, make a customer complaint to see how it’s handled or not as the
case may be. Have them record their experiences in detail and report back. Perceptions
internally are often a mismatch between realities on the ground. It can be very revealing and is
an essential aspect of your rebrand research and brand audit health check.

5. Don’t rebrand without research.

How much do you know about your current and prospective customers – their needs, wants,
loves, hates, aspirations and behaviours etc.? What is their compelling reason to buy? Do you
need to re-evaluate your purchaser personas as part of your brand audit health check? They
should be front of mind when creating new solutions and revitalising old ones too. They are
your ultimate litmus test.

6. Don’t treat your rebrand superficially.

A rebrand must be authentic and believable throughout, internally and externally. It must be a
liveable story that meets and exceeds customer perceptions and experiences. It must hold
25
credibility and deliver down to the last detail both amongst your day-to-day staff and target
audience or it’s largely tokenism, a waste of time and money.

7. Don’t rebrand without a well thought out plan.

Rebranding requires clearly defined briefs to keep everyone on track as the project evolves.
Your plan should include every aspect of the rebrand e.g. situation analysis, objectives, target
markets, budget, resources, time frames, appointed project leader, known parameters, approval
structures, stakeholders and metrics for assessing results.

8. Don’t overlook the basics.

Having a stunning website, market materials, physical environment or amazing product
solution is wasted if the fundamentals of your customer services sucks. Equally, if your brand
purchasing or processing experience falls short, the brand becomes undermined. Keep all your
customer touch points and basic interactions in mind as much as the more glamorous aspects
when rebranding. Review, fine tune and improve and don’t underestimate the ordinary
essentials, they are just as important.

9. Don’t overlook feedback from customer facing staff.

The staff who interact with your customers on a daily basis can yield valuable information and
insights into your target market. This is where customers are typically at their most candid and
the information garnered from the real world is just as valuable if not more in some cases, then
other forms of research.

10. Don’t think you’re too small to rebrand.

Every brand needs revitalising to stay relevant as markets evolve whether the brand is a global
multinational or smaller national brand, even non-profits and artisan brands are not immune.
Like larger brands, smaller brands have target markets, positions etc. that need to be kept
relevant and enhanced. They too have to move with the changes of their market and customer
preferences or disappear into the mists of time.

BRAND REVITALISATION AND BRAND REPOSITIONING

It is commonly understood that products have a life cycle. They are introduced to the
marketplace; hopefully they catch on with target consumers and sales volumes grow;

26
 eventually growth slows and the product becomes mature in the market; finally, the product,
through changing consumer tastes or through new technologies, goes into decline.

Where marketers are working with mature or declining products, their focus tends to be on
maintaining the position of the mature product in the market or in slowing the products decline.

It is also recognised that brands have a lifespan. For example, who in the UK drives a Datsun
car? Who watches a Thorn television? Who shops at Safeway?

Of course, brands are rarely linked to a single product offering. So a brand’s life cycle tends
to be longer than a product life cycle.

Brand revitalisation is the process of gaining sales volume for the brand by expanding its
market. Six distinct opportunities exist to revitalise a brand:

1. You enter a new market with the brand. This can be geographic (Irn Bru is now sold in
Russia) or it can be selling a brand previously associated with a business to business market
to consumers. For example, four by four vehicles were seen as suitable for farmers and the
military; now they are used by mothers on the school run.
2. You can enter new market segments. For example, Johnson and Johnson changed the
marketing of their baby shampoo to target adult users. Listerine started life as a floor
cleaning detergent: It is now sold as a mouthwash.
3. You can increase the frequency of use. Kellogg’s has just started to re-run a campaign
advising that their cereals are not just for breakfast and they can be eaten as a snack at any
time of the day.
4. You can create incentives for purchase. This could mean offers where collecting tokens
gets you free gifts such as cheap airline flights. Airlines run frequent flyer programmes
where ‘club’ members get the use of exclusive departure lounges and priority
booking. Coffee shops stamp loyalty cards and when the card is filled, the customer gets a
free cup.
5. You can increase the quantity used. Fast food outlets make their standard sizes bigger
(with a price rise). Consumers get used to the higher price and to the larger standards
size. Chocolate biscuits are sold in packs of seven. This means, that a family with 2.4
children will buy two packs not one. Weetabix advertise on the slogan ‘Can you eat three’

27
 to promote the idea of bigger serving sizes. You can also remove barriers to consumption
through product reformulation e.g. sugar free soft drinks, low-calorie chocolate, etc. Many
breakfast cereals despite high sugar contents are advertised on the fact they are fortified with
vitamins and minerals. Such health claims became an issue and now the EU strictly
regulates their use.
6. You can move a brand into a new category e.g. Mars bars as an ice cream or as the
flavouring in a milk drink.
Brand repositioning is a strategy to increase or improve your competitive position in the market
place. In doing so, you aim to increase sales volumes and your market share. Often this means
seizing market share from your rivals. Repositioning is achieved via changing aspects of your
products or by changing the target market for a brand.

This leads to four strategic opportunities:

1. Image Repositioning – Product attributes are unchanged and the product is aimed at the
existing group of target consumers. This is the process of changing a product’s image
amongst target consumers. For example, Adidas was seen as a ‘dull’ brand. The Adidas
brand was repositioned to develop ‘street credibility’ amongst sports shoe wearers. Tango
was a minor player in the UK soft drink market but by creating its ‘You’ve been Tangoed’
anarchic image, it is now a major player in the market aimed at 18 to 24 year olds.
2. Market Repositioning – In this strategy, you change the target market whilst keeping the
product the same or similar. For example, Lucozade was sold as a drink for invalids,
particularly children (in my native Scotland, it’s a hangover cure!). The brand was
repositioned as an isotonic sports drink.
3. Product Repositioning – In this strategy you reformulate the product to adapt to changing
customer tastes. So the target market remains the same but the product changes. Castle
Maine XXXX beer upped its alcohol content from 3.7% to 3.9% (4% for pub sales) to match
changing tastes among lager drinkers.
4. Total Repositioning – This is where the brand’s target segment changes and the brands
products change. Skoda went through a total repositioning following the brand’s purchase
by Volkswagen. The quality of the company’s cars was vastly improved to attract more
affluent consumers.
Marketing is about creating sustainable competitive advantages which are profitable. Brand
Revitalisation and Brand Repositioning are critical strategies to ensure that sustainability.

28
 What is 'Brand Valuation?'
Definition:
“Brand Valuation is the process used to calculate the value of a brand or the amount of
money another party is prepared to pay for it”.
Description: A brand comprises tangible as well as intangible elements relating to the
company's style, culture, positioning, messages, promises and value proposition. Brand
Valuation, subsequently, is an estimate of the financial value of a brand. There is no
universally accepted method for determining brand value. But, each company uses a different
model. There are three main types of brand valuation methods –
a) The cost approach b) the market approach and c) the income approach.
Generally, brands are valued higher if the owner has already obtained appropriate legal
protection, such as registration. However, companies that choose to value their brands in their
balance-sheet use a consistent methodology so that the brands can be analysed and compared.
Determining a value for a brand can be complicated. But, the true value of a brand is
ascertainable only when a purchaser and a seller reach an agreement to sell a particular brand.
Brand valuation helps companies to find a buyer when it wants to sell it, value the assets in the
balance-sheet, and to provide information to investors. Brand valuation comes in handy as
security for a loan and tax reasons. It is also a useful tool used in merger and acquisition (M&A)
planning, joint venture negotiations, litigation support services, secured borrowing
transactions, bankruptcy administration, etc.

Brand Valuation Approaches and Methods

Introduction:

Brands today are not restricted to marketing or profits made by a company, but are a part of
our everyday life. In the light of emergence of concepts of consumer awareness and the new
world economy, brands have a quintessential role to play. The term brand, infers to names,
terms, signs, symbols and logos that identify goods, services and companies; Brand Value is
not just a financial number. As put forth by Ajimon Francis, Indian head and CEO for global
brand consultancy Brand Finance, “It (Brand Value) is a measure of several factors like loyalty
of customers, the ability of a brand to keep offering newer products and technology, and the
connect with consumers, who give it a premium.”

29
Brands have three primary functions – navigation, reassurance and engagement. To explain
this further – Navigation is when the brands help customers to select from the bewildering array
of alternatives while Reassurance ensures that they communicate the intrinsic quality of the
product or service and assure consumers at the point of purchase while Engagement
communicates a distinctive imagery and associations that encourage identification of the brand
by customers. It is an obvious assumption that the value that brands carry and the process of
their valuation is important.

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, Srivastava 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.

In order to further this discussion of the distinction between the two, let us consider an example.
This specific case concerns the $1.7 billion purchase of Snapple by Quaker Oats in 1994.
Quaker Oats’ primary distribution strength was confined to supermarkets and drugstores
whereas smaller convenience stores and gas stations constituted more than half of Snapple’s
sales. But despite the purchase, Quaker Oats was unable to increase supermarket and drugstore
sales enough to compensate for lost convenience and gas station sales and was forced to sell
Snapple for $ 300 million just three years later. As seen in this case, Snapple’s Brand Value
decreased enormously over the three years that Quaker Oats owned it, but this had nothing to
do with it brand equity, which could have been constant or increased owing to the additional
exposure in supermarkets and drug stores. What can be concluded from this example is that
neither a brand’s purchase price nor a dramatic change in its selling price provides information
about the magnitude or movement of a brand’s equity. This also means that while a company
may have the highest brand value, it is not necessary that it also has high brand equity. For
example, Apple’s Brand Value ID ranked #1 is worth $185 billion whereas its equity is #11
and Coca Cola has the highest Brand Equity.

Evaluating Brands:

30
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.

Prior Approach:

Earlier research with respect to Brand Valuation was limited to two areas: Marketing
measurement of brand equity and financial treatment of brands. The former was used by Keller
and included subsequent studies by Lassar et al on the measure of brand strength, by Park and
Srinivasan on the evaluation of the equity of brand extension, Kamakura and Russell on single
source scanner panel data to estimate brand equity and Aaker and Montameni and Shahrokhi
on the issue of valuing brand equity across local and global markets. The financial treatment
of brands has traditionally stemmed from the recognition of brands on the balance sheet
(Barwise et.al., 1989, Oldroyd, 1994, 1998), which presents problems to the accounting
profession due to the uncertainty of dealing with the future nature of the benefits associated
with brands, and hence the reliability of the information presented. Tollington (1989) has
debated the distinction between goodwill and intangible brand assets. Further studies
investigated the impact on the stock price of customer perceptions of perceived quality, a
component of brand equity (Aaker and Jacobson, 1994), and on the linkage between
shareholder value and the financial value of a company’s brands (Kerin and Sethuraman, 1998).

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

31
popularly followed by most firms indulging in valuation of brands like Interbrand, 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, Behavioural 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 valuer 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.

Behavioural analysis involves understanding and forming an opinion on likely stakeholder

behaviour 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

32
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:

1. 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.

2. 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.

3. Use of Conversion Model:

33
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.

4. 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 with 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 revenues 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:

1. 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

34
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.

2. 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.

3. 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;

35
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:

1. 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.

2. 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.

3. 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

36
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.

4. 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.

5. 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 under 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:

37
 1. 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.”

2. 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.

3. 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,

38
looks at the customer loyalty dimension of brand equity and the measures to create a
measurement instrument.

4. 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.

CONCLUSION:

Having looked at the above mentioned methods and approaches, it is clear that brands and the
process of valuing them is essential for marketing purposes and profits for the firm that owns
them and that the developed literature in this arena is indicative of interest taken by various
stakeholders and academicians. However, despite the variety of methods available and their
respective comprehensibility, the prominent problem that emerges time and again is the lack
of uniformity in the methods adopted and the results so achieved as there exists large amounts
of variations in the valuation amount obtained. This can be clearly understood upon considering
the case of Kingfisher Airlines and their valuation as when the brand was evaluated by Grant
Thornton LLP in 2011, the amount was Rs. 4,100 Crores but when SBI, after obtaining the
brand as collateral had evaluated the brand after acquiring it as a collateral against the loan of
over Rs 9,000 Crores, the brand was valued at a mere Rs. 160 Crores.This case is indicative
not only of the lack of uniformity in valuation but factors like time, market reputation or
adverse circumstances like the company declaring bankruptcy being variable and affecting the
process of brand valuation. Depending on the method adopted for brand valuation, these factors
may or may not affect the value. It is true that this process of evaluating concerns only the firm
owning the brand or the one acquiring it, the existence of a supervising authority would evade
the variation and subsequent disputes that arise in addition to preventing companies from
alleging inflated cost of the brand. ISO 10668 has provided a uniform standard for brand
valuation but the lack of administrative or controlling authority to not only decide disputes but
scrutinize and approve of the brand valuation done by the firm would go miles to reduce the
problem of ambiguity attached to the resultant amount. Hence, though there has been a lot of
progress in the field of brand valuation, there is still scope for more. After all, what is a product,

39
if the consumers don’t relate and recognize it; Brands are here to stay and certainly are assets
worth encashing in.

Brand Elimination

1. Brand Elimination: - Sometimes the methods of brand revitalization may not prove
to be sufficient & effective to change the brand’s fortunes.
This may happen due to:
i. A brand’s existing associations may be so firmly entrenched that it becomes
difficult to change them so as to make the brand relevant in new conditions.
ii. New usage & new user opportunities do not show up.
iii. A brand’s current customer franchise may be declining, making the
continuance of the brand unviable. When brands get cornered from all
directions, the only solution left is to work out a plan for the brand’s
elimination.
2. The Brand Elimination process vary in its forms & shades. Some brands are milked
over time, i.e., selectively supported over time to exploit its potential, some are left
without any support to fade away gradually. Some companies even resort to brand
consolidation, i.e., two or more declining brands are merged into a consolidated brand,
or the brand portfolio is pruned (number of variations & pack sizes) so that costs are
reduced & profitability is maintained. Brand consolidation can considerably reduce
costs and improve marketing efficiencies. Finally, the most painful of all actions is to
discontinue the brand. This happens when a brand loses its source of brand equity or
the market has completely changed & does not offer any scope for the brand.
3. Nirmalya Kumar’s studies over brand portfolios revealed that firms earn almost the
whole of their profits from a very few brands in their portfolio. P&G once had over 250
brands, but its top 10 brands contributed to over 50% to company’s sales & profits.
Same was the case with HUL. Out of a portfolio of nearly 2000 brands, more than 90%
of its profits was contributed by just about 400 brands. The implications are very clear.
Firms can improve their bottom lines by eliminating brands. Deletion of loss making
brands would free precious resources and help brands that deserve support. Kumar also
suggested a systematic framework to approach brand elimination decisions: - i. The
First step is to make a case for brand deletion, which requires calculating the
profitability of the brand in the portfolio.

40
4. Both fixed & shared costs must be allocated to each brand in this exercise. Further, this
data could be supplemented with each brand’s position classified as: ‘Dominant’,
‘Strong’, ‘Weak’, or ‘Not Present’ for each region a brand is marketed in. o In addition,
a brand’s profit contribution could be assessed as to whether a brand is a Cash
Generator, Neutral or Cash User. ii. The Second step for the firm is to decide about the
number of brands to be kept in the portfolio. Two models may guide here: Portfolio and
Segment approach. Under the Portfolio approach, strict criteria are laid down for brand
selection. For instance, HUL used a three-pronged criteria for this purpose: Brand
Power, Brand Growth Potential and Brand Scale (Size & Profitability).
5. Under the Segment approach, the firm decides about the brand’s retention or
elimination on the basis of segment requirements. General criteria like the one used in
portfolio approach could be used to decide, whether the brand should be retained in a
segment or not. iii. The Last step suggested in the elimination process is about making
sure of the growth of the surviving brands in the portfolio. Brand deletion often results
in shrunk sales & to some extent profits. But, at the same time, it also frees precious
resources. The surviving brands need to be invested with both financial & non-financial
resources to put them into higher orbits. Once the elimination candidates are identified,
the next issue is to devise an appropriate strategy to handle their way to the exit, because
though these brands do not fit in the organizational context, they have some hidden
revenue or market potential.
6. Four options are available: - i. Merging Brands: - When a brand to be eliminated enjoys
a niche market following, the brand’s customers could be transferred to another brand.
• This may be done in a number of ways: If the brand to be eliminated enjoys customer
following & is liked for its attributes or benefits, the attributes or benefits can be
transferred with an existing brand. Ex: - If a toilet soap enjoys customer support for say
its Sandal fragrance, but it is to be eliminated, an existing brand could be launched with
Sandal fragrance, & it could woo back its customer following. The other migration
option is to launch a new brand with new identity. Ex: - Sandoz & Ciba-Geigy merged
to emerge as Novartis. Finally, when both the brands are equally strong, a dual brand
could be launched to retain both the camps with one brand and later the weak brand is
dropped.
7. Ex: - Standard Chartered Grind Lays Bank, where the Grind Lays brand was dropped
after a passage of time. ii. Selling Brands: - Some brands that do not get with company
priorities may still be profitable. In such a case these brands could be sold to other firms.
41
 Ex: - Thompson, Kenstar, Kelvinator, Sansui brands have been sold to Videocon.
Pantaloon has been sold to Aditya Birla Group. iii. Milking: - Some brands, though
elimination candidates, may still have loyal following in some parts of the market. But,
due to some reason or the other they can’t be sold. In such cases, these brands could be
left with no or bare minimum advertising & marketing support and limited distribution.
Ex: - Godrej’s shaving round continues to hang on without any active support of the
company. iv. Eliminating Brand: - This is the most drastic of all strategies. The brand
is dropped without any further considerations of its impact on trade & customers. Ex: -
HUL dropped its Sunlight Laundry Bar.
8. Most companies have grown into behemoths with multi-brand portfolios, with brand
extension, new brand launches, line extension and sub-branding. But, often, brand
portfolios hide brands that, instead of making positive contribution to business
performance, create a burden. They consume both financial & managerial resources.
Under such circumstances, firms stand to gain, if these loss making brands are identified
and eliminated. Many companies with big portfolios of brands are beginning to take a
serious look at this unpleasant task, because Brand Creation along with Brand
Elimination is essential for effective brand management as the cycle of creation and
destruction is a natural process.

B Companies frequently eliminate brands. Kodak recently discontinued Kodachrome. Procter

& Gamble sold off Folgers, Jif, Noxzema, Crisco and Comet. Shell Oil shuttered Texaco. GE
may shed its major appliance division. GM is closing Saturn.

The firm-side strategic benefits of brand elimination have been exhaustively documented. But
what about consumer reaction? A new study co-authored by Shailendra Pratap Jain, an
associate professor of marketing at the University Of Washington Foster School Of Business,
sheds the first empirical light on consumer response to brand elimination.

Three Perspectives on Brand Elimination

An opening foundational study established that consumers view the elimination of a weak
brand—defined as lacking both in image and profitability—as good for a company.
“Consumers reason that getting rid of a losing brand will free up resources, and potentially
help the firm become stronger,” Jain said.

42
A second study, concerning the communication of a brand elimination decision, found that
firms are better off publicly explaining their rationale for eliminating a strong brand. However,
the reasons for discarding a weak brand are better left unsaid. “When a strong brand is being
eliminated, we found that it’s better to tell the consumers why,” Jain said. “When a weak brand
is eliminated, it’s better to let the consumers speculate. Offering an explanation may actually
hurt a company’s reputation.”

A final study, considering the response of loyal versus non-loyal consumers, suggested that
shedding a weak brand is seen as positive by both. But eliminate a strong brand, and you’ll
have some trouble with loyal customers. “In other words,” Jain explained, “As a consumer,
I’m loyal to this brand, and it’s a strong brand in my mind—so what’s going on with this
company?”

Know your own brand’s strength

According to Jain, understanding the repercussions of brand elimination is vital because it’s
such a common practice. According to studies, only 20 percent of products launched survive
five years on the market. Companies even sometimes divest themselves of strong brands due
to a lack of strategic fit or advancing technology.

“One of the lessons of this study is: you must have a very clear handle on your brand’s
strength,” Jain said. “It’s not the firm’s perception of the brand that matters; it’s the consumer’s
perception that matters. So if you’re GM eliminating a brand like Saturn that people perceive
as weak, it’s probably going to be viewed as a positive move. But if you’re GE eliminating a
brand that most of the world thinks is strong and you don’t explain why, you might have a PR
problem with loyal customers who will not take this news well.”

*********************

43