Marketing Management 2nd Edition

Marshall Solutions Manual

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LEARNING OBJECTIVES

LO 8-1 Recognize the essential elements in a brand.

LO 8-2 Learn the importance of brand equity in product strategy.

LO 8-3 Explain the role of packaging and labeling as critical brand elements.

LO 8-4 Define the responsibility of warranties and service agreements in building consumer

confidence.

CHAPTER OUTLINE

I. BRAND: THE FUNDAMENTAL CHARACTER OF A

PRODUCT

A. Brands play many roles

i. Customer brand roles

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ii. Company Brand Roles

B. The Boundaries of Branding

II. BRAND EQUITY –OWNING A BRAND

A. Defining Brand Equity

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B. Benefits of Brand Equity

i. Perceived Quality

ii. Brand Connections

iii. Brand Loyalty

III. BRANDING DECISIONS

A. Stand alone or family branding

B. National or Store Branding

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C. Licensing

D. Co-Branding

IV. PACKAGING AND LABELING: ESSENTIAL BRAND

ELEMENTS

A. Package Objectives

i. Protect

ii. Communicate

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B. Effective Packaging

i. Aesthetics

ii. Harmonizes with all marketing mix elements

C. Labeling

i. Legal requirements

ii. Consumer requirements

iii. Marketing requirements

V. WARRANTIES AND SERVICE AGREEMENTS:

BUILDING CUSTOMER CONFIDENCE

A. Warranties help define the brand

i. Cost versus benefit

ii. Conveys a message to the customer

VI. SUMMARY

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ETHICAL DIMENSION 8

Ethical Perspective

1. Diageo: The company faces a challenge—to find effective digital technologies that connect
with younger customers while maintaining ethical standards regarding underage drinking.
How should the company deal with this challenge? If you were CEO at Diageo would you
sponsor a virtual bar in Second Life? Why or why not?

This challenge is the same that Diageo faces in the “brick and mortar” marketplace. They
could adopt current policies used in that channel. The Internet may provide some unique
issues that can be addressed through adaptation of current policies to this environment. A
virtual bar sponsorship is an acceptable promotional campaign. Diageo products are legal,
however, great care should be taken to address the unique challenges discussed.

2. Customers: Do younger customers have a responsibility to voluntarily not participate in

adult activities in virtual communities like Second Life?

Yes, all members of society have the responsibility to uphold ethical standards, younger
customers are not exempt.

3. Government: Given the growth of virtual communities, should the government create
stricter guidelines for underage access to adult content?

Yes, the government should recognize the unique challenges present in this type of
environment and create effective policies to address them.

KEY TERMS

brand A name, term, sign, symbol, or design, or a combination of these elements, intended to
identify the goods or services of one seller or groups of sellers and to differentiate them from
those of competitors.

brand strategy The unique elements of a brand that define the products sold by a firm.

brand identity A summary of unique qualities attributed to a brand.

brand equity A set of assets and liabilities linked to a brand’s name and symbol that adds to or
subtracts from the value provided by a product or service to a firm or that firm’s customers.

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brand awareness The most basic form of brand equity is simply being aware of the brand.
Awareness is the foundation of all other brand relationships.

brand loyalty The strongest form of brand equity and reflects a commitment to repeat
purchases.

perceived quality The conveyed perception of quality of a brand that is either positive or
negative.

brand association When customers develop a number of emotional, psychological, and

performance associations with a brand. These associations become a primary purchase driver,
particularly with brand loyal users.

brand assets Other assets brands possess such as trademarks and patents that represent a
significant competitive advantage.

stand-alone brands Brands created to be separate from a company brand that can insulate the
company if there is a problem with the brand.

family branding The creation of brands that have synergy between them in terms of the overall
company brand.

category extensions When a firm uses its brand to expand into new product categories.

national brands Products created, manufactured, and marketed by a company and sold to
retailers around the country and the world.

store brands Brands created by retailers for sale only in their store locations.

licensing When a fi rm offers other manufacturers the right to use their brand in exchange for a
set fee or percentage of sales.

co-branding Joins two or more well-known brands in a common product or takes two brands
and markets them in partnership.

general warranty Broad promises about product performance and customer satisfaction.

specific warranty Explicit product performance promises related to components of the product.

APPLICATION QUESTIONS

1. You are the product manager for Ralph Lauren’s Polo shirts. What specific information are
you trying to convey in the brand’s iconic polo pony logo? For example, what does the Polo
brand say about quality, features, style relative to the Tommy Hilfiger or Lacoste brands?

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According to Polo.com:” Ralph Lauren has always stood for providing quality products,
creating worlds and inviting people to take part in our dream.” The polo pony logo is meant
to embody this mantra.
“Messrs Hilfiger and Lauren, with their identical choice of target markets and relentless
pursuit of casual style, appear to have condemned themselves to compete with each other in
perpetuity.” (Tommy Hilfiger versus Polo (2008), Retrieved August 30, 2008 from
http://www.brandchannel.com/features_webwatch.asp?ww_id=276)

2. Johnson & Johnson have been able to establish strong brand equity for its line of baby
products. What benefits does J&J have because of its brand equity for these products?

Perceived Quality - All things being equal (value proposition, product features) the branded
product gives customers a reason to buy. First, the perception of J&J baby product’s quality
enables J&J to extend the product range. Second, the perception of quality can lead to a
price premium opportunity for J&J. Finally, the perception of quality is an excellent
differentiator in the market.
Brand Connections - First, customers process, store, and retrieve product information by
brand, which is a big advantage for J&J baby products. A second benefit is that a strong
brand generates a more positive attitude toward the J&J baby products. When customers
identify with J&J and then transfer that loyalty to baby products, it creates an additional
barrier to entry for new brands.
Brand Loyalty - Brand loyal customers do not spend as much time searching for new
information. A well executed branding strategy helps reduce long term marketing costs
giving J&J more flexibility in the marketing budgets. Brand equity gives J&J additional
channel leverage. Brand loyal customers are vocal and tell others about their experiences,
which attract new customers. Finally, brand loyal customers are forgiving which enables
J&J to respond to a negative experience.

3. You have been asked by Coke’s product manager to present the arguments for and against
extending the Coke brand to a new cola drink. What would be the arguments for and against
extending the Coke brand to a new cola drink?

Stand alone brands separate the company from the brand that insulates the company if there
is a problem with the brand. At the same time, stand alone brands are expensive to create
and maintain, as there is little or no synergy between company brands.
Family branding advantages and disadvantages are just the opposite. There is synergy
among members of a brand family but a negative event with one product often leads to
negative publicity for the entire brand family.

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4. SanDisk is introducing a new MP3 player and you are responsible for creating the package
design. What key information and other creative elements would you include on the
package?

Here is information that should be used to inform their responses:

Package design encourages product use. It does this in several ways. First, packages
frequently show the product being used by a happy customer, which supports the overall
marketing message (Exhibit 8.7). This connects the product to the target customer. Second,
in many cases, packages visually demonstrate a product. Third, marketers and package
designers make extensive use of blister packs (products encases in clear plastic) and other
package designs to visibly present and protect the product.
Consumers want to use products out of the box and package labeling is the most convenient
place for initial use instructions. Essentially, any information the consumer needs to make a
product choice, particularly at the point of purchase, needs to be on the package.
Brand, logo, product image, and other relevant marketing messages take up the dominant
space on the label.

MANAGEMENT DECISION CASE: Developing and Growing Brand Equity in an Iconic

Brand

Questions for Consideration

1. For the past several years, in order to sustain sales and profit growth Harley has relied
heavily on baby boomers to buy a motorcycle in an effort to recapture their youth and
rebellious. However, that market segment is quickly aging out of mainstream motorcycle-
buying consumers. Identify one other market segment that you believe Harley should target
more strongly in the future. What product modifications or other changes do you recommend
to make the brand even more valuable to this new target market?

Generation X includes those born between 1965 and 1976 and represents some 41 million
Americans. This means they are entering their prime earning years. Although fewer in
number than Generation Y or Baby Boomers, Gen Xers possess considerable spending power
because they tend to get married later and buy houses later in life.

2. Licensing the brand name and symbol is an important source of revenue for Harley. What
types of products do you think do not fit with the Harley image and therefore are not good
candidates for licensing by Harley? Develop a list and discuss your selections.

Students answers will vary. Those products that do NOT mesh well with the traditional
Harley-Davidson lifestyle (see below) will probably be poor choices (i.e., wine coolers,
perfumes, and cake decorating kits).
Harley Davidson – Brand Values

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• Freedom – Go wherever you want to, whenever you want to.

• Authenticity – Noted for the tradition of heavy customization, Oldest and quality
name in manufacturing bikes.
• Community Building– HOG has 1.4 million members, Ride Planner to plan trips, H-
D Photo Center for posting photos of memorable trips.
• Rituals – Community festivals and monthly or annual rides/events are conducted
regularly, buttons and pins from an activity/event are worn on jackets.
• Masculinity – Unique sound of the exhaust, association with icons in films.
• Toughness – Rugged heavy design and look of the bikes.

3. Warranties and service agreements play in important role in communicating a company’s

willingness to stand behind its products. Research the warranty coverage and how well the
Harley dealership network stands behind the product. How does the warranty coverage and
service provided by dealers enhance the brand value of Harley?

All new Harley-Davidson® motorcycles come with a 2 year, unlimited warranty. All used
Harley-Davidson motorcycles that fall within the original terms of the warranty are covered
by the warranty until the warranty expires. Any motorcycle that falls outside the original
warranty are not covered, however, warranty for these motorcycles can be purchased.
Any authorized Harley-Davidson Dealer can provide service and warranty work on the
motorcycle

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