Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
 Chapter 9

Strategic Brand
Management

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 STRATEGIC BRAND MANAGEMENT

 Strategic Brand Management

 Strategic Brand Analysis
 Brand Equity Measurement and Management
 Brand Identity Strategy
 Managing Brand Strategy
 Managing the Brand Portfolio
 Brand Leveraging Strategy
9-3
STRATEGIC BRAND MANAGEMENT

A product is anything that is potentially

valued by a target market for the benefits
or satisfaction it provides, including
objects, services, organizations, places,
people, and ideas

9-4
 A brand is a name, term, design, symbol, or any
other feature that identifies one seller’s good or
service as distinct from those of other sellers.
American Marketing Association

A compelling logic has been proposed that the

distinction between goods and services should be
replaced by a view that services are the dominant
perspective in the 21st century, consisting of both
tangible and intangible components.*

*Stephen LVargo and Robert F. Lusch, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, January 2004, 1-17. 9-5
9-6
9-7
9-8
 Strategic Role of Brands
A strategic brand perspective requires managers to be clear about what role
brands play for the company in creating customer value and share-holder value.
FOR BUYERS, BRANDS CAN:
• reduce customer search costs by
identifying products quickly and
accurately,
• reduce the buyer’s perceived risk by
providing an assurance of quality and
consistency (which may then be
transferred to new products),
• reduce the social and psychological
risks associated with owning and using
the “wrong” product by providing
psychological rewards for purchasing
brands that symbolize status and
prestige.

9-9
FOR SELLERS, BRANDS CAN FACILITATE:

• repeat purchases that enhance the company’s financial performance

because the brand enables the customer to identify and re-identify the
product compared to alternatives,
• the introduction of new products, because the customer is familiar with the
brand from previous buying experience,
• promotional effectiveness by providing a point of focus,
• premium pricing by creating a basic level of differentiation compared to
competitors,
• market segmentation by communicating a coherent message to the target
audience, telling them for whom the brand is intended and for whom it is
not,
• brand loyalty, of particular importance in product categories where loyal
buying is an important feature of buying behavior.

Source: Marketing Science Institute Report No. 97-422, 1997

9-10
Use brand strength to build customer
value 7 competitive advantage

9-11
 Responsibility for Managing Products
Brand Mgmt Responsibility extending to several organizational levels

Product/Brand Management
 Planning, managing, and coordinating the strategy for a
specific product or brand- marketing plans for brands
Product Group/Marketing Management
 Product director, group manager, or marketing manager
Product Portfolio Management
 Chief executive at SBU
 Team of top executives
Market-driven management
* Integrate sales, marketing, and other business functions
into cross-functional teams.

9-12
 Strategic brand management
Involves several interrelated activities
* Strategic brand Analysis- provides essential info for each
brand management activities
* Brand equity measurement and management-
positive/negative impact on the value of the brand
portfolio, build brand equity over time
* Brand identity strategy- the identity to be communicated to
target audience and how it will be achieved
* Managing brand strategy- pursue consistent initiatives,
build brand strength, and avoid brand damage
* Managing brand portfolio- coordinating the organization’s
portfolio with the objective of achieving optimal system
performance
* Leveraging brand- extending core brand identity to a new
addition to the product line, or to a new product category 9-13
 Strategic Brand Management
Involves several interrelated activities
Brand Identity Strategy
BRAND
EQUITY
Identity Implementation
MANAGEMENT

Brand Strategy Over

Time
STRATEGIC
BRAND
ANALYSIS Managing the Brand
Portfolio

Leveraging the Brand

9-14
 Strategic brand Analysis

* Provides essential info for each brand

management activities
* Includes market and customer, competitor,
and brand analysis.
* A company may have a single product or a
product line, or a portfolio of product lines.
* Evaluating the performance of the brand
portfolio helps guide decisions on the new
products, modified products, and eliminating
products

9-15
9-16
 STRATEGIC BRAND ANALYSIS

Analyses Product Product Line Portfolio of

Product Lines

□ Market and
Customer

□ Competition

□ Brand(s)

9-17
 Tracking Brand Performance
• Benchmarks
Performance • May include both financial and
Objectives nonfinancial factors

Select Method(s) for

Evaluation

Identify Problem
Products

Decide How to
Resolve the
Problem
9-18
Method(s) for Evaluation

Product life cycle

analysis
Financial Product
analysis performance
Analyzing Brand analysis
(Product
Portfolio)
Performance Brand
Research positioning
studies Standardized maps
information
services
9-19
 Product Life Cycle Analysis

Relevant issues in PLC analysis include:

* Determining the length and rate of change of the PLC
* Identifying the current PLC stage and selecting the
product strategy that corresponds to that stage
* Anticipating threats and finding opportunities for altering
and extending the PLC

9-20
9-21
* Product Performance Analysis
 Management’s minimum performance criteria
 Strengths and weaknesses relative to portfolio
 Comparative analysis of products: Market attractiveness X competitive
strength assessments

* Brand Positioning Analysis

 Perceptual maps for brand comparison
 Buyer preferences
 The map offers useful guidelines for strategic targeting and product
positioning

* Other Product Analysis Methods

 Information Services
 Research studies
 Financial analysis

9-22
 Brand equity measurement and
management-
* Positive/negative impact on the value of the brand portfolio,
build brand equity over time

Several measures are needed to capture all relevant aspects of

brand equity.**
* loyalty (price premium, satisfaction/loyalty),
* perceived quality/leadership measures (perceived quality,
leadership/popularity),
* associations/differentiation (perceived value, brand personality,
organizational associations),
* awareness (brand awareness), and
* market behavior (market share, price and distribution indices).
These components provide the basis for developing operational
measures of brand equity.

9-23
9-24
 BRAND EQUITY

Company/Customer Value
of Brand Name and
Symbol of
a Product

Determined by the
brand’s set of
assets (and liabilities)

9-25
 Brand Equity

Effective strategic brand management requires that we

understand brand equity and evaluate its impact when
making brand management decisions:
“Brand equity is a set of brand assets
and liability linked to a brand, its name,
and symbol, that add to or subtract
from the value provided by a product or
service to a firm and/or to that firm’s
customers.*

* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15.
**Ibid, 102-120.

9-26
* Brand Equity can be measured on the basis of three important parameters which
are:
* 1.Consumer Metrics: This measure of brand equity focuses on evaluating brands
& products on the basis of factors like customer perception, attitude, belief, brand
association etc.
* 2.Financial Metrics: Financial factors like revenue, profits, cost of new acquisition,
growth, market share etc help in measuring brand equity.
* 3.Strength Metrics: The strength of the brand in terms of brand recall, brand
awareness, brand loyalty etc are used in the measurement of brand equity.
9-27
Brand Equity Pyramid

9-28
Based on the Keller’s Brand Equity Model where it is stated
that “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”.

9-29
 Characteristics of Strong Brand

* Excels at delivering benefits customers truly desire

* Stays relevant
* Pricing strategy based on consumers’ perceptions of value
* Properly positioned
* Consistent
* Portfolio and hierarchy make sense
* Make use of and coordinates full repertoire of marketing
activities to build brand equity
* Managers’ understand what brand means to customer
* Given proper support sustained over the long run
* Company monitors sources of brand equity

9-30
9-31
Brand identity strategy- the identity
to be communicated to target BRAND
audience and how it will be IDENTITY
achieved
STRATEGY
Brand identity is a unique set of brand associations
that the brand strategist aspires to create or
maintain. These associations represent what the
brand stands for and imply a promise to customers
from the organization members.*

Four Brand Identity Perspectives

Product
Organization
Person
Symbol
* David A. Aaker, Building Strong Brands, 1996, 68. 9-32
Alternatives for brand identification
“Getting to the heart of the brand”

9-33
9-34
 Specific
Product
Private Line
Branding of
Products
BRAND FOCUS

Combination Corporate
Branding Branding
9-35
 Brand Focus
Options as to where to focus the brand identity:
* Product-line branding- A strategy places brand name on one or
more product lines representing different product categories (e.g.
colgate toothpaste, brushes and floss)

* Corporate branding- A strategy builds brand identity using

corporate name to identify entire product offering (e.g. BMW in
automobiles; IBM in computers)

* Combination branding- A strategy uses combination of

product line and corporate branding. (e.g. Sears)

* Private branding- Retailers brand name (eg. Target, Wal-mart).

Eliminate cost of marketing to customers

9-36
MANAGING BRAND STRATEGY

Proactive efforts should

be devoted to managing
each brand over time.

9-37
Strategies for Improving Product Performance

Product
Cost improvement Alter
reduction marketing
strategy

Add Product line Eliminate

new Strategy specific
product(s) product(s)

9-38
 MANAGING THE Managing brand portfolio-
coordinating the organization’s
BRAND PORTFOLIO portfolio with the objective of
achieving optimal system
Leverage performance
Commonalities to
Generate Synergy

Allocate Reduce
Resources Brand
BRAND PORTFOLIO Identity
OBJECTIVES Damage

Facilitate Change Achieve Clarity

and Adaptation of Product
Offerings

Source: David A. Aaker, Building

Strong Brands, New York: The Free
Press, 1996, 241-242.

9-39
9-40
9-41
 Strategies for Brand Strength
A cohesive and clearly defined brand portfolio is essential
* Adding a new line
* Internal development, purchase of an entire company/product line,
acquisition, strategic alliance

 Brand-Building Strategies
* Build, maintain and manage Brand Equity (awareness, perceived quality,
brand loyalty & brand association)
* Developing the brand identification strategy
* Coordinate identity consistently across the organization

* Fighter brands
* To combat low price competitors while protecting company’s premium
priced offering (value conscious)

 Brand Revitalization
* Find new uses for mature brands

* Removing orphan brands

* remove unrelated brands which do not fit well with the brand portfolio
9-42
 Product Mix Modifications

Motivation for changing the product mix:

* Increase the growth rate of the business
* Offer a more complete range of products to
wholesalers and retailers
* Gain marketing strength and economies in
distribution, advertising, and personal selling
* Leverage an existing brand position
* Avoid dependence on one product line or
category

9-43
 BRAND LEVERAGING STRATEGY
Established brand names may be useful to introduce other
products by linking the new product to an existing brand name

LINE Minor variants of a single

product are marketed under
EXTENSION the same brand name (new
flavors, forms, colors, package size)

Extensions of the brand

BRAND name to other product
EXTENSION categories
--Similar
--Dissimilar
9-44
9-45
 LEVERAGING ALTERNATIVES

LINE EXTENSIONS BRAND

EXTENSIONS

Horizontal Vertical Another Range Co-

Extension Extension Product Brand Branding
Class
Up from Down from
Core Core
Brand Brand

9-46
 BRAND LEVERAGING IN UPSCALE AND VALUE
MARKETS

Vertical Brand Extensions*

New
Core
Up-Market
Brand
Brand

New Core
Down-Market Brand
Brand

* ONE OF THE MOST DIFFICULT

BRAND PORTFOLIO CHALLENGES
9-47
 MOVING DOWN IS EASY BUT RISKY

 Affects perceptions of the brand –perhaps even more

significantly than other brand management options.
We are influenced more by
unfavorable information than by favorable
information.
 The brand’s ability to deliver self-expressive benefits
may be reduced.
 Potential cannibalization problem.
 Potential failure risk.
 Problem when the value entry is perceived to be
inconsistent with the quality expected from the
brand.
9-48
 MOVING A BRAND UP

THE DRIVERS
•Enhanced Margins at the High End
•Energy & Vitality
•Enhance Credibility and Prestige of
the Brand
THE RISKS OF DAMAGING THE CORE
BRAND
•Lacks Credibility
•Lacks Self-Expressive Benefits
•Falls Short of Expectations
9-49
 BRAND EXTENSION DECISIONS

Extending into Different Product Classes

THE PROCESS
◊Identify product categories for which the product fits and
adds value.
Determine existing brand associations and the brand identity.
◊Identify related product category opportunities
Screening should be limited
◊Evaluate each category
Attractive
Growing
Good margins
Competition
Assets/Capabilities
◊Select the most promising extension concept
◊Develop a viable Brand Strategy

9-50
 CO-BRANDING

Co-branding (dual branding) involves two or more

established brands making a joint offer of their product
brands —

The participant’s brand names

are identified on the good or
service.

Several different forms –

* Component co-branding
(Volvo and Michelin)
* Same company co-branding
* Alliance co-branding
(Delta and American Express)
* Ingredient co-branding 9-51
9-52
 BRAND LEVERAGING EVALUATION
CRITERIA
Brand Relevance/Differentiation
Capabilities/Perceived Value Match
Market/Segment Opportunity
Cannibalization Risks
Potential for Core Brand Damage
Clarity of Product Offerings
Estimated Financial Performance
Brand Equity Impact
9-53
 SEVEN DEADLY SINS OF BRAND
MANAGEMENT*
Failure to fully understand the meaning of the
brand.
Failure to live up to the brand promise.
Failure to adequately support the brand.
Failure to be patient with the brand.
Failure to adequately control the brand.
Failure to properly balance consistency and
change with the brand.
Failure to understand the complexity of brand
equity measurement and management.
*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736. 9-54