INTRODUCTION TO BRANDING

by Robert Jones (Author)

Why Brand?
 Why do companies such as Coca-Cola,
Microsoft, IBM and Disney seem to achieve
global marketing success so easily? Why does it
seem such an effort for others?
 Why do we, as consumers, feel loyal to such
brands that the mere sight of their logo has us
reaching into our pockets to buy their
products?
The meaning of brands
 Brands are a means of differentiating a
company’s products and services from those of
its competitors.
 There is plenty of evidence to prove that
customers will pay a substantial price premium
for a good brand and remain loyal to that
brand. It is important, therefore, to understand
what brands are and why they are important.
The Importance of Brands
 McDonalds sums this up nicely in the following
quote emphasizing the importance of brands:
 “…it is not factories that make profits, but
relationships with customers, and it is company
and brand names which secure those relationships”
 Businesses that invest in and sustain leading brands
prosper whereas those that fail are left to fight for
the lower profits available in commodity markets.
Coca-Cola
 “If Coca-Cola were to lose all of its production-related
assets in a disaster, the company would survive. By
contrast, if all consumers were to have a sudden lapse
of memory and forget everything related to Coca-Cola
the company would go out of business.”

 Coca-Cola
 What is a brand?
 One definition of a brand is as follows:
 “A name, term, sign, symbol or design, or a
combination of these, that is intended to identify
the goods and services of one business or group of
businesses and to differentiate them from those
of competitors”.
 Interbrand - a leading branding consultancy - define
a brand in this way:
 “A mixture of tangible and intangible attributes
symbolized in a trademark, which, if properly
managed, creates influence and generates value”.
 Brand Equity

 “Brand equity” refers to the value of a brand. Brand equity is

based on the extent to which the brand has high brand
loyalty, name awareness, perceived quality and strong product
associations. Brand equity also includes other “intangible” assets
such as patents, trademarks and channel relationships.
Brand image

 “Brand image” refers to the set of beliefs that

customers hold about a particular brand. These
are important to develop well since a negative
brand image can be very difficult to shake off.
Brand extension
 “Brand extension” refers to the use of a successful
brand name to launch a new or modified product in a
new market. Virgin is perhaps the best example of how
brand extension can be applied into quite diverse and
distinct markets.
Branding gives the seller several
advantages

 Seller’s brand name and trademark provide legal

protection of unique product features
 Branding gives the seller the opportunity to attract a
loyal and profitable set of customers.
 Branding helps the seller segment markets.
 Strong brands help build corporate image, making it
easier to launch new brands and gain acceptance by
distributors and consumers.
Benefits of Branding to A BUYER
 Help buyers identify the product that they like/dislike.
 Identify marketer
 Helps reduce the time needed for purchase.
 Helps buyers evaluate quality of products especially if
unable to judge a products characteristics.
 Helps reduce buyers perceived risk of purchase.
 Buyer may derive a psychological reward from owning the
brand, IE Rolex or Mercedes.
BRANDS - BUILDING A BRAND

 What factors are important in building brand

value?
 Professor David Jobber identifies seven main
factors in building successful brands, as given next:
 Quality

 Quality is a vital ingredient of a good brand. Remember the

“core benefits” – the things consumers expect. These must
be delivered well and consistently. The branded washing
machine that leaks, or the training shoe that often falls
apart when wet, or a watch which needs frequent
adjustments will never develop brand equity.
 Research confirms that, statistically, higher quality brands
achieve a higher market share and higher profitability than
that of their inferior competitors.
Positioning

 Positioning is about the position a brand occupies in a

market in the minds of consumers. Strong brands have a
clear, often unique position in the target market.
 Positioning can be achieved through several means,
including brand name, image, service standards, product
guarantees, packaging and the way in which it is
delivered. In fact, successful positioning usually requires a
combination of these things.
 Repositioning
 Repositioning occurs when a brand tries to
change its market position to reflect a
change in consumer’s tastes. This is often
required when a brand has become
tired, perhaps because its original market
has matured or has gone into decline.
 Communications
 Communications also play a key role in building a
successful brand. We suggested that brand
positioning is essentially about customer
perceptions – with the objective to build a clearly
defined position in the minds of the target
audience.
 All elements of the promotional mix need to be
used to develop and sustain customer perceptions.
Initially, the challenge is to build awareness, then to
develop the brand personality and reinforce the
perception.
First-mover advantage
 Business strategists often talk about first-
mover advantage. In terms of brand
development, by “first-mover” they mean
that it is possible for the first successful
brand in a market to create a clear
positioning in the minds of target customers
before the competition enters the market.
There is plenty of evidence to support this.
Long-term perspective
 The need to invest in the brand over the long-
term is utmost essential. Building customer
awareness, communicating the brand’s
message and creating customer loyalty takes
time. This means that management must
“invest” in a brand, perhaps at the expense of
short-term profitability.
 Internal Marketing
 Finally, management should ensure that the brand is
marketed “internally” as well as externally. By this we
mean that the whole business should understand the
brand values and positioning. This is particularly
important in service businesses where a critical part of
the brand value is the type and quality of service that a
customer receives.
 Think of the brands that you value in the
restaurant, hotel and retail sectors. It is likely that your
favorite brands invest heavily in staff training so that the
face-to-face contact that you have with the brand helps
secure your loyalty.
An Effective Brand Name
● Is easy to pronounce
● Is easy to recognize and remember
● Is short, distinctive, and unique
● Has a positive connotation
● Reinforces the product image
● Is legally protectable
 Branding Strategies
Brand No Brand

Manufacturer’
Private Brand
s Brand

Individual Family Combi- Individual Family Combi-

Brand nation Brand
Brand Brand nation
Manufacturers’ Brands Versus
Private Brands

Manufacturers The brand name of a manufacturer.

’ Brand

Privat A brand name owned by a

wholesaler or a retailer. Also
e known as a private label or store
Brand brand.
Types of brand
 There are two main types of brand – manufacturer
brands and own-label brands.
 Manufacturer brands
 Manufacturer brands are created by producers and
bear their chosen brand name. The producer is
responsible for marketing the brand. The brand is
owned by the producer.
 By building their brand names, manufacturers
can
gain widespread distribution (for example by
retailers who want to sell the brand) and build
customer loyalty (think about the manufacturer
brands that you feel “loyal” to).
 Private Label brands
 Own-label brands are created and owned by businesses
that operate in the distribution channel – often referred
to as “distributors”.
 Often these distributors are retailers, but not exclusively.
Sometimes the retailer’s entire product range will be own-
label. Own-label branding – if well carried out – can often
offer the consumer excellent value for money and provide
the distributor with additional bargaining power when it
comes to negotiating prices and terms with manufacturer
brands.
 Advantages of Private Brands
 Earn higher profits
 Less pressure to mark down prices
 Ties customer to wholesaler or
retailer
Advantages of Manufacturers’ Brands

 Develop customer loyalty

 Attract new customers
 Enhance prestige
 Ensure dealer loyalty
Individual Brands Versus Family Brands

Individual Using different brand names for

Brand different products.

Family Marketing several different

products under the same
Brand brand name.
Branding Policies
 First question is whether to brand or not to brand.
Homogenous products are difficult to brand Branding
policies are:
 Individual Branding: Naming each product differently P&G,
facilitates market segmentation and no overlap.
 Overall Family Branding: All products are branded with the
same name, or part of a name, IE Nokia, promotion of one
item also promotes other items.
 Line Family Branding: Within one product line.
 Brand Extension Branding: Use one of its existing brand
names as part of a brand for an improved or new product,
usually in the same product category.
75% new products are brand extensions!!
 1. Coca-Cola

 $67,000 million
 Based in U.S.
 Flagging appetite for soda has cut demand for Coke, but the beverage
giant has a raft of new products in the pipeline that could reverse its
recent slide.
2 Microsoft

 $56,926 million
 Based in U.S.
 Threats from Google and Apple haven't yet offset the power of its
Windows and Office monopolies.
 3 IBM

 $56,201 million
 Based in U.S. Having off-loaded its low-profit PC business
to Lenovo, IBM is marketing on the strategic level to
corporate leaders.
4.GE

 $48,907 million
 Based in U.S. The brand Edison built has extended its reach from ovens
to credit cards, and the "Ecomagination" push is making GE look like a
protector of the planet.
5.Intel

 $32,319 million
 Based in U.S. Profits and market share weren't the only things
slammed by rival AMD. Intel's brand value tumbled 9%, as it
loss business from high-profile customers.
6.Nokia

 $30,131 million
 Based in Finland .Fashionable designs and low-cost models
for the developing world enabled the mobile phone
maker to regain ground against competitors.
7.Toyota

 $27,941 million
 Based in Japan. Toyota is closing in on GM to become the world's
biggest automaker. A slated 10% increase in U.S. sales this year will
help even more.
8. Disney

 $27,848 million
 Based in U.S. New CEO Robert Iger expanded the brand by buying
animation hit-maker Pixar and beefing up digital distribution of TV shows
through the Internet and iPods.
9.McDonald's

 $27,501 million
 Based in U.S. A new healthy-living marketing campaign—and the
premium-priced sandwiches and salads that came with it—have led
to a fourth year of sales gains.
10.Mercedes-Benz

 $21,795 million
 Based in Germany The new S-Class sedan and M-Class SUV are
helping repair a tarnished quality reputation. High costs and weak
margins will take longer to fix.
Here's how we calculate the power in
a name
 INTERBRAND TAKES lots of ingredients into account when ranking the
world's most valuable brands. To even qualify for the list, each brand must
derive about a third of its earnings outside its home country, be
recognizable outside of its base of customers, and have publicly available
marketing and financial data. One or more of those criteria eliminate such
heavyweights as Visa, Wal-Mart, Mars, and CNN. Interbrand doesn't rank
parent companies, which explains why Procter & Gamble doesn't show up.
And airlines are not ranked because it's too hard to separate their brands'
impact on sales from factors such as routes and schedules.
Evaluation
 BUSINESSWEEK CHOSE Interbrand's methodology because it
evaluates brands much the way analysts value other assets:
on the basis of how much they're likely to earn in the future.
The projected profits are then discounted to a present
value, taking into account the likelihood that those earnings
will actually materialize.
THE FIRST STEP IS figuring out what percentage of a company's revenues can be
credited to a brand. (The brand may be almost the entire company, as with
McDonald's Corp., or just a portion, as it is for Marlboro.) Based on reports from
analysts at J.P. Morgan Chase, Citigroup, and Morgan Stanley, Interbrand projects
five years of earnings and sales for the brand. It then deducts operating costs, taxes,
and a charge for the capital employed to arrive at the intangible earnings. The
company strips out intangibles such as patents and management strength to assess
what portion of those earnings can be attributed to the brand.
Summary
 FINALLY, THE BRAND'S strength is assessed to
determine the risk profile of those earnings
forecasts. Considerations include market
leadership, stability, and global reach—or the
ability to cross both geographic and cultural
borders. That generates a discount rate, which is
applied to brand earnings to get a net present
value. BusinessWeek and Interbrand believe this
figure comes closest to representing a brand's true
economic worth.