Ch.

9 BRANDING
 By studying this chapter, students will be
familiar with:
- Brand equity
- The scope of brand
- Brand knowledge
- Brand promise
- Branding strategy
- Brand line
- Brand dilution
- Brand portfolio
 What is Brand Equity
Brand as a “name, term, sign, symbol, or
design, or a combination of them, intended to
identify the goods or services of one seller or
group of sellers & to differentiate them from
those of competitors”.
A brand is thus a product or service that adds
dimensions that differentiate it in some way
from other products or services designed to
satisfy the same need. These differences may
be functional, rational, or tangible - related to
product performance of the brand. They may
also be more symbolic, emotional or intangible -
related to what the brand represents.
 Branding
Building a strong brand requires careful
planning & a great deal of long-term
investment. At the heart of a successful brand
is a great product or service, backed by
creatively designed & executed marketing.
Perhaps the most distinctive skill of
professional marketers is their ability to create,
maintain, enhance,& protect brands. Branding
has become a marketing priority. Successful
brands such as Starbucks, Sony, & Nike
command a price premium & elicit much
loyalty.. Strategic brand management involves
the design & implementation of marketing
activities & programs to build, measure, &
manage brands to maximize their value.
 The Scope of Branding
Branding is all about creating differences. To brand
a product,it is necessary to teach consumers “who”
the product is - by giving it a name & using other
brand elements to help identify it - as well as “what”
the product does & “why” consumers should care.
Branding involves creating mental structures & helping
consumers organize their knowledge about products &
services in a way that clarifies their decision making &,
in the process, provides value to the firm.
For branding strategies to be successful & brand
value to be created, consumers must be convinced
that there are meaningful differences among brands in
the product or service category.
• Your marketing mix means the
combination of 4P you chose for your
business. Our focus will be on short-run
tactical marketing strategies designed
around the marketing mix for a particular
target market.
• Businesses lacking a market orientation
are likely to price their products simply by
checking the competition or by marking up
costs to achieve a desired profit margin.
• Under flagship umbrella brands; Intel, Apple,
Sony, P%G, and many others are more
profitable than weaker brand names.
• A brand is a name or symbol used to identify
the source of a product. A strong brand adds
significant value and profits as a result of the
benefits derived from the name:
 High brand awareness
 Emotional connection
 Brand loyalty
 Price premiums
 Product line extensions
 Brand Knowledge
Consists of all the thoughts, feelings,
images, experiences, beliefs, and so on
that become associated with the brand. In
particular, brands must create strong,
favorable, and unique brand associations
with customers, as has been the case with
Volvo (safety), and Harley-Davidson
(adventure).
 Marketing Advantages of Strong
Brands
 Improved Perceptions of Product Performance
 Greater Loyalty
 Less Vulnerability to Marketing Crises
 Larger Margins
 More Inelastic Consumer Response to Price increases
 More Elastic Consumer Response to Price decreases
 Greater Trade Cooperation and Support
 Increased Marketing Communication Effectiveness
 Possible Licensing Opportunities
 Additional Brand Extension Opportunities
• “People want to express themselves through
brands. Brands express a person’s personality
and the people they like to be with.” Jack Trout
• “A brand for a company is like a reputation for a
person. You earn reputation by trying to do
hard things well.” Jeff Bezos
• Why Branding?
- External: Branding seeks to distinguish your
company, product/service from the competition
and create a lasting impression in your
prospect’s mind.
- Internal: Powerful brands increase employee
satisfaction, loyalty and achievement drive.
 What is Brand Equity
Brand as a “name, term, sign, symbol, or
design, or a combination of them, intended to
identify the goods or services of one seller or
group of sellers & to differentiate them from
those of competitors”.
A brand is thus a product or service that adds
dimensions that differentiate it in some way
from other products or services designed to
satisfy the same need. These differences may
be functional, rational, or tangible - related to
product performance of the brand. They may
also be more symbolic, emotional or intangible -
related to what the brand represents.
 The Scope of Branding
Branding is all about creating differences. To brand
a product,it is necessary to teach consumers “who”
the product is - by giving it a name & using other
brand elements to help identify it - as well as “what”
the product does & “why” consumers should care.
Branding involves creating mental structures & helping
consumers organize their knowledge about products &
services in a way that clarifies their decision making &,
in the process, provides value to the firm.
For branding strategies to be successful & brand
value to be created, consumers must be convinced
that there are meaningful differences among brands in
the product or service category.
Brand differences often are related to attributes
or benefits of the product itself. Gillette, Merck,
Sony, 3M, & other have been leaders in their
product categories for decades due, in part, to
continual innovation. Other brands create
competitive advantages through non-product-
related means.
Coca-Cola, Calvin Klein, Gucci, Tommy Hilfiger,
Marlboro, & others have become leaders in
their product categories by understanding
consumer motivations & desires & creating
relevant & appealing images around their
products.
• Under flagship umbrella brands; Intel, Apple,
Sony, P%G, and many others are more
profitable than weaker brand names.
• A brand is a name or symbol used to identify
the source of a product. A strong brand adds
significant value and profits as a result of the
benefits derived from the name:
 High brand awareness
 Emotional connection
 Brand loyalty
 Price premiums
 Product line extensions
• “People want to express themselves through
brands. Brands express a person’s personality
and the people they like to be with.” Jack Trout
• “A brand for a company is like a reputation for a
person. You earn reputation by trying to do
hard things well.” Jeff Bezos
• Why Branding?
- External: Branding seeks to distinguish your
company, product/service from the competition
and create a lasting impression in your
prospect’s mind.
- Internal: Powerful brands increase employee
satisfaction, loyalty and achievement drive.
 Roles
CONSUMERS That Brands Play MANUFACTURERS

1. Identification of source of
product 1. Means of identification to
simplify handling or tracing
2. Assignment of responsibility 2. Means of legally protecting
to product maker unique features
3. Signal of quality level to
3. Risk reducer
satisfied customers
4. Search cost reducer 4. Means of endowing
products with unique
5. Promise, bond, or pact with associations
maker of product 5. Source of competitive
advantage
6. Symbolic device
6. Source of financial returns
7. Signal of quality
The World’s 10 Most Valuable Brands
Rank Brand 2004 Brand Value

(Billions)
1 Coca-Cola $67.39
2 Microsoft $61.37
3 IBM $53.79
4 GE $44.11
5 Intel $33.50
6 Disney $27.11
7 McDonald’s $25.00
8 Nokia $24.04
9 Toyota $22.67
When a firm uses an established brand to
introduce a new product, it is called a brand
extension. When a new brand is combined
with an existing brand, the brand extension can
also be called a sub-brand, as with Adobe
Acrobat software, Toyota Camry automobiles,
and American Express Blue cards.
An existing brand that gives birth to a brand
extension is referred to as the parent brand. If
the parent brand is already associated with
multiple products through brand extensions,
then it may also be called a family brand.
Brand extensions can be broadly classified into two
general categories:
In a line extension, the parent brand is used to
brand a new product that targets a new market
segment within a product category currently
served by the parent brand, such as through new
flavors, forms, colors, added ingredients, and
package sizes.
Danone has introduced several types of Dannon
yogurt line extensions through the years - Fruit on
the Bottom, Natural Flavors,etc.
• In a category extension, the parent brand
is used to enter a different product
category from that currently served by the
parent brand, such as Swiss Army
watches.
Honda has used its company name to
cover such different products as
automobiles, motorcycles,, lawnmowers,
marine engines, and snowmobiles. This
allows Honda to advertise that it can fit “six
Hondas in a two-car garage.”
Line extension may cause the brand name to be
less strongly identified with any one product;
this is called “line-extension trap”. By linking its
brand to mainstream food products such as
mashed potatoes, powdered milk, soups, and
beverages, Cadbury run the risk of losing its
more specific meaning as a chocolates and
candy brand.
Brand dilution occurs when consumers no
longer associate a brand with a specific product
or highly similar products and start thinking less
of the brand.
 A brand line consists of all products - original
as well as line and category extensions - sold
under a particular brand.
A brand mix (or brand assortment) is the set
of all brand lines that a particular seller makes
available to buyers. Many companies are now
introducing branded variants, which are
specific brand lines supplied to specific
retailers or distribution channels.
BRAND PORTFOLIOS:
All brands have boundaries - a brand can only be
stretched so far. Multiple brands are often necessary
to pursue multiple market segments. Any one brand
is not viewed equally favorably by all the different
market segments that the firm would like to target.
Some other reasons for introducing multiple brands
in category include:
1. To increase shelf presence and retailer dependence
in the store;
2. To attract consumers seeking variety who may
otherwise have switched to another brand;
3. To increase internal competition within the firm; and
4. To yield economies of scale in advertising, sales,
merchandising, and physical distribution.
• Brand Assets:- A variety of many
influences can create brand assets, the
following five can be found to some
degree in all top brand names.
1. Brand awareness
2. Emotional connection
3. Brand loyalty
4. Product line extension
5. Price premium
• Brand liabilities:- Brands can also incur
brand liabilities due to the product failure,
lawsuits, or questionable business
practices. Arthur Andersen, Enron. The
following five are particularly harmful:
1. Customer dissatisfaction
2. Product or service failure
3. Questionable practices
4. Poor record on social issues
5. Negative associations
• An umbrella brand is the core product of a
business.
 American Express > credit cards (core)
 Whirlpool > washers and dryers (core)
 Johnson & Johnson > baby shampoo (core)
From a consumer’s point of view, the core
product is the most visible embodiment of the
brand name.
Umbrella branding involves the transfer of quality
perceptions derived from a core product to
product line extensions that use the same
brand name.
• Umbrella brands create a base to introduce
flanker brands (a product extension of a
business’s core brand) that enhance market
penetration at a lower cost.
• Below are four ways a flanker brand benefits
from a strong umbrella brand, adding to a
business’s overall profitability:
1. Brand awareness
2. Known quality
3. Market reach
4. Product mix
• Product Line Extensions:-
a) A successful brand can be franchised; can be
extended to other versions of the product.
This can be accomplished most easily with
vertical brand extensions of the core brand.
b) Horizontal brand extensions within a product
class are possible by adding complementary
products.
c) Co-branding (combining two brand names to
create a new brand) takes advantage of the
potential synergy of two brands that share a
common market space.