Strategic Brand

Management
 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
SUGGESTED READINGS

Strategic Marketing
by
David Cravens, 8th edition.
Chapter 9

Strategic Marketing
by
Wilson & Gilligan
Chapter 8
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
 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.
 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.
 Management Audit
PROBLEMS AT UNILEVER
• Declining revenues for three years
• Late 90s
• Challenges for CEO
• Worldwide portfolio of 1600 brands
• 400 brands generated 75% of sales
• 1200 brands contribute 25% of sales
• Most brands contribute less than 1% of sales

7
 Management Audit
PROBLEMS AT UNILEVER
• Consume time and other resources of management
• Marketing under pressure
• How to increase marketing and financial performance by rationalizing
the brand portfolio?

8
 Management Audit
STRATEGIC INITIATIVES AT UNILEVER
• CEO
• How to arrest declining sales
• Five year program of ‘path to growth’
• Focus 400 brands
• Delete 1200 brands

9
 Management Audit
PROBLEMS AT UNILEVER
• Purpose
• Increase annual sales to 6%
• Operating margins from 11 to 16%
• Generate earnings per share growth over the period of the plan in the
low double digits.

10
 Management Audit
PROBLEMS AT UNILEVER
• How to identify 400 brands
• Three factors
• Brand scale
• Brand power
• Brand growth potential
• Further research
• 400 brand actually occupied 200 distinct brand positions

11
 Management Audit
Brand scale
• Adequate scale
• Margins
• Justify investment

12
 Management Audit
PROBLEMS AT UNILEVER
• How to identify 400 brands
• Three factors
• Brand scale
• Brand power
• Brand growth potential
• Further research
• 400 brand actually occupied 200 distinct brand positions

13
 Management Audit
Brand scale
• Adequate scale
• Margins
• Justify investment

14
 Management Audit
Brand Power
• Potential to be number one or two in its market
• Must carry brand to drive retailer’s store traffic

15
 Management Audit
Brand growth potential
• Brands which could potentially stretch across categories
• Sustained growth

16
Management Audit
PROBLEMS AT UNILEVER
• 200 core brands
• 40 were global
• Lipton, Dove, Knorr, Lifebuoy
• Rest 160 were regional

17
Management Audit
STRATEGIC INITIATIVES
UNILEVER EXPERIENCE
Based on Audit
• Reallocation of resources
• From 1200 to 400 core brands
• Reassigns innovators and brand marketers from non-core to core
• Attacks costs

18
Management Audit
UNILEVER EXPERIENCE
• Each core brand
• Identifying new opportunities
• How to
• Reach new consumers
• Launch new products
• Develop new delivery systems
• Generate new geographic markets
• New industry concepts

19
Management Audit
UNILEVER EXPERIENCE
Results
• Met its operating margins and EPS targets
• Sales were a bit short
• 4% against 6% targeted growth
• Still around 750 brands
• 40 core brands account for 64% of total sales

20
 Management Audit
Assessing brand portfolios
P&G
• 250 brands
• Top 10 brands 50% of sales
 Management Audit
P&G
The new strategy is to focus on a few successful global brands like
• Pantene and Head & Shoulders in hair care,
• Ariel in Laundry,
• Vicks in healthcare and
• Whisper in feminine protection.
 Management Audit
Flanker Brand
• it’s a new brand that is introduced or purchased in a category in which
you already play -- with the goal of expanding share without damaging
your pre-existing brand.
• And the concept rests on a central belief that you would rather
somewhat cannibalize your own sales than have someone else take
share from you.
 Management Audit
Flanker Brand
Coke
• For example, when it reentered the Indian market in the early 90’s, Coca Cola purchased
Thums Up, a local value segment brand.
• The original intention was that Coke would target the middle class and affluent customers
in urban and larger secondary cities, while Thums Up, which maintained dominant share at
the time, targeted less affluent urban consumers and those in secondary cities and rural
areas.
• Furthermore, Coca-Cola wanted to eventually transition consumers from Thumbs Up to
Coke. Surprisingly for Coke, Thumbs Up refused to die.
• Instead, that particular flanker brand remained exceptionally strong, keeping Pepsi at bay
and providing Coca-Cola with substantially more share than what would be possible
through its Coke brand alone.
 Management Audit
Flanker Brand
Coke
• In fact, when Coca-Cola previously tried to pull back on and
“suffocate” Thums Up as a means to transition customers to Coke,
they instead found substantial consumer defection to Pepsi.
• And having learned its lesson, Coca-Cola has since re-launched and
more fully resourced the Thums Up brand -- focusing it on specific
segments that are distinct from those targeted with the Coke brand.
Management Audit
HUL
• Surf main brand
• Nirma
• Substantial erosion of market share
• Rin and Wheel
• As flanker brands
• To counter low price detergent.
 Management Audit
Dabur
• By the late 1990s, Dabur found that it had accumulated a huge collection of
brands, which adversely affected its marketing efficiency.
• Dabur decided to trim its product mix and brand portfolio.
• Investors too had expressed fears that the company was plunging into too
many peripheral business lines and scattering attention and resources on too
many brands.
• The company hired the services of McKinsey & Co in 1996 to decide on an
ideal blend of products and brands.
 Management Audit
Dabur
• Dabur finally decided to stay with three product lines— foods, personal care
and healthcare and with 12 to 15 brands overall.
• The other brands were to be offered for sale.
• The company has decided to concentrate only on brands, which have the
potential to achieve a turnover of Rs 30 to 50 crore over the next five years.
• The chosen brands include Chyawanaparash, Hajmola, Pudin Hara,
Hingoli, Restora, Amla hair oil, Vatika, Anmol coconut oil, and Real fruit
juice.
• Dabur is also increasing the marketing and advertising spend by 50% on the
selected brands.
 Management Audit
Brand Proliferation is Costly
Each brand
• Target market
• Unique positioning
• Whether a company have too many brands
 Management Audit
Insufficient Differentiation
General Motors
• Buick
• Cadillac
• Chevorlet
• Pontiac
• Oldsmobile
• Opel
• Saab
• Saturn
 Management Audit
Insufficient Differentiation
General Motors
• Sold more than half brands
• Overlapping
• Losses
 Management Audit
Inefficiency
• Large portfolio
• Lower sales
• Issues in development
• Absence of scale
 Management Audit
Car Industry
• Minimum 1 Billion $
• Develop new model
• Collaborative route
• Toyota Suzuki
• Nissan Renault
• Risk of Brand Dilution
 Management Audit
Inefficiency
Lower Market Power
• Retailers
• Growing power
• Will retain top three brands
• Own private label
• Weaker brands will lose shelf space
 Management Audit
Management Complexity
• Multiple brands
• Cause conflicts
• Within brand managers
• Overall brand portfolio
 Management Audit
The Challenge of Brand Rationalization
• Hurts
• Delete/sell/delist
• Even smallest brands have loyal customers
 Management Audit
Brand Rationalization Process
• Conduct a Brand portfolio audit
• Determining Optimal Brand portfolio
• Select Appropriate brand deletion strategies
• Develop a growth strategy for surviving brands
 Management Audit
Conduct a Brand portfolio audit
• Unilever experience
• Focus on 400 brands
• Optimise the portfolio
 Management Audit
Determining Optimal Brand portfolio
• How many brands to be retained
• How many brands to be deleted
• What is the role of our corporate brand?
• Which brands are core to our Company
• Does our portfolio contain any potentially global brands?
• Should the company exit any category wherein all brands are poorly
positioned?
Unilever
• Decided 1200 brands account for 25 % of the sales
 Management Audit
Select Appropriate brand deletion strategies
• Sell
• Milk
• Merge
 Management Audit
Coca Cola
• Limca
• Gold Spot
• Are Milked
 Management Audit
Develop a growth strategy for surviving brands
Core Brands
• Coca Cola
• Thums Up
• Sprite
• The three leading Carbonated brands constitute a major portion of
soft drinks sale.
 Management Audit
Avenues for growth
• Reach new customers
• Launch new products
• New delivery systems
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
 Brand Management Challenges*

Internal and external forces create hurdles for product brand managers in their
brand building initiatives:

Intense Price and Other Competitive Pressures

Fragmentation of Markets and Media

Complex Brand Strategies and Relationships

Bias Against Innovation

Pressure to Invest Elsewhere

Short-Term Pressures

*David A. Aaker, Building Strong Brands, 1996, 26-35.

Responsibility for Managing Products

Product/Brand Management
 Planning, managing, and coordinating the strategy for a
specific product or brand
Product Group/Marketing Management
 Product director, group manager, or marketing manager
Product Portfolio Management
 Chief executive at SBU
 Team of top executives
 Strategic Brand Management

Brand Identity Strategy

BRAND
EQUITY
Identity Implementation
MANAGEMENT

Brand Strategy Over

Time
STRATEGIC
BRAND
ANALYSIS Managing the Brand
Portfolio

Leveraging the Brand

 GLOBAL FEATURE Recharging Sony’s Strategy Brand Management

Sir Howard Stringer, a Welsh-born American citizen, was appointed CEO of Sony, the
troubled Japanese electronics giant in 2005. Sony’s past strategic brand management
initiatives had failed to close the digital gap between software/services/content/
devices. During the CEO’s first year several cost reduction and portfolio initiatives
were implemented to launch the turnaround strategy: The Aibo, a beloved robotic pet,
was put to sleep. They shut down the Qualia line of boutique electronics that included
a $4,000 digital camera and a $13,000 70-inch television. They eliminated 5,700 jobs
and closed nine factories, including one in south Wales. (He took some flak back home
for that). They have sold $705 million worth of assets. You probably don’t know that
Sony owned a chain of 1,221 cosmetics salons and the 18 Japanese outlets of the
Maxim’s de Paris restaurant chain. They’re gone. Gone, too, is a group of salary-men
in their 60s, 70s, and 80s who, after retiring from senior management positions, were
given the title of “advisor,” a tradition established by Sony’s founders. “That was very
symbolic,” says Hideki (Dick) Komivama, a Sony executive and key ally of Stringer’s.
The 45 advisors each had a secretary, a car and driver, and worst of all, the ability to
gum up decision-making and second-guess people doing real jobs. No more.
Source: Marc Gunther, “The Welshman, the Walkman, and the Salary Men,” Fortune, June 12, 2006, 72.
 Strategic Brand Management
United Spirits (Diageo)
• United Spirits (UNSP) is the leader in the Indian spirits market, with ~33% volume share. It has an
established portfolio of ~120 brands across
• the price spectrum, with 13 millionaire (million cases sold per annum) brands including 4 brands with over
10mn cases per annum in sales.
• McDowell’s No.1, Royal Challenge, Signature, Antiquity, Black Dog, Director’s Special Black, McDowell’s
Rum, McDowell’s Brandy, Bagpiper,
• Old Tavern, Haywards are some of the marquee brands owned by the company. In addition, UNSP also
imports, manufactures, distributes
• and sells various iconic Diageo brands such as Haig Gold Label, Captain Morgan, Johnnie Walker, J&B,
Baileys, Lagavulin, Talisker, VAT 69,
• Black & White, Smirnoff and Ciroc in India under different licensing agreements. With over 50
manufacturing facilities spread across
• approximately 23 states and over 3 union territories in India, it has a pan-India manufacturing and
distribution footprint, and a sticky franchise.
Strategic Brand Management
United Spirits (Diageo)
• Earlier managed by Vijay Mallya
• Diageo took over in 2013
• Problems
• Low growth rates
• Profitability inconsistent
• Challenge is how to accelerate Growth and Profitability.
 Strategic Brand Management
United Spirits (Diageo)
• Their focus on premiumisation, de-focussing of popular category brands,
debt reduction, digital push, cost optimization, better product mix
• and supply chain management are well reflected in the higher margins
and superior growth rate of the company. The alcohol beverage
• industry which was already facing the heat due to strict regulatory
measures and weak consumer sentiment was further beaten down by
• Covid-19 and resulting lockdown, however with economy opening up, the
overall consumption is improving sequentially.
 Strategic Brand Management
United Spirits (Diageo)
Long Term Triggers:
• Demographics to ensure strong growth:
• Despite being a country with a population of 1.3 bn, of which 60% lies within the age
group of 15-55 years, India’s per-capita consumption
• of alcoholic beverages stands abysmally low at ~2.6 litres per annum. On the other
hand, for most countries, the per capita consumption of alcohol exceeds 10 litres per
annum.
• Rising income levels, fuelling discretionary spends - As per industry sources, the pace
of growth
• of consumption in Tier-2/3/4 cities as well as rural areas could outpace that of urban
cities.
 Strategic Brand Management
United Spirits (Diageo)
• Moreover, with the rise in discretionary income, consumers would tend
to upgrade their preferences, resulting in higher demand for prestige and
above segments.
• By virtue of its expansive portfolio across all price points, UNSP would
stand to benefit from these.
• An increasing portion of the population entering the legal drinking
bracket each year –
• An estimated ~25mn of the populace is touted to enter the legal drinking
bracket (which varies from 18 to 25 years across states) each year.
 Strategic Brand Management
United Spirits (Diageo)
• In the IMFL industry, Brown spirits (whiskey, brandy and rum) dominate the consumption
pattern in India, as compared to the white spirits(gin and vodka). Brown spirits account for
more than 90% of the consumption, in both volume and value terms. UNSP is the largest
spirits player in India, garnering 33% volume share of the market.
• UNSP has a strong product portfolio with 120 of its own brands, of which 13 aremillionaire
brands.
• UNSP’s product portfolio encompasses all categories of IMFL, namely whiskey, brandy, rum,
gin and vodka.
• A distinguishing characteristic of UNSP is its established product portfolio - across segments
and price points.
• Over the years, UNSP’s brands have developed a strong brand recall among consumers,
which is evident from its notable market share.
 Strategic Brand Management
United Spirits (Diageo)
• Segment-wise Key Brands:
Luxury
• Johnnie Walker Tanqueray Ketel One
• Gold Label Reserve Ciroc
• Glenfiddich
• Singleton
• Talisker
 Strategic Brand Management
Premium
• VAT 69 Captain Morgan Smirnoff
• Black & White
• Black Dog
Strategic Brand Management
Prestige
• McDowell's No.1 Original McDowell's
• VSOP
• McDowell's No.1 Cariba Romanov Red
• McDowell's No.1 Platinum Honey Bee
• McDowell's No.1 Luxury
• Royal Challenge
• Signature
• Antiquity
 Strategic Brand Management
Popular
• Director's Special McDowell's McDowell’s No.1 Celebration Blue
Riband Romanov
• Old Tavern Bagpiper Rum White Mischief
• Bagpiper
• Haywards
Strategic Brand Management
• Diageo is a global leader with 17% share in spirits and 40% in scotch
globally. India being the largest whiskey market, is very important for
• Diageo. Over the past few years, UNSP management has tightened
their seat belts and made a number of positive changes in the
company.
Strategic Brand Management
Transit to Premiumisation:
• Predominantly the whiskies in India are positioned in value segment. However,
UNSP has focused on premiumisation.
• This strategy has progressed well, considering that the prestige and above
segment currently contributes 68% to UNSP’s revenue and 51% to its
volumes,from ~55% to revenues and 36% to volumes in FY16.
• Belief that the Indian alcohol market is in a favourable phase of transition, led by
resence of global players as market leaders to upgrade industry standards,
aligning them to best global practices, (Diageo is the promoter of UNSP, Heineken
that of United Breweries) and Focus on premiumisation and improving the
product mix (shifting focus from volume to value) could result in improved
profitability and consequently better return ratios.
 Strategic Brand Management
Transit to Premiumisation:
• This premiumisation journey has facilitated UNSP to enhance its margins in spite of rising
input costs and multiple disruptions over the past few years. Pernod Ricard enjoys the
higher gross margins, of 50% ( vs UNSP’s 44.8%), as it operates only in the Prestige &
Above segment.
• UNSP leads the market in the lowerprestige sub-segment, while in the mid- and upper-
prestige sub-segments Pernod Ricard is the market leader.
• In order to gain traction in these sub-segments, UNSP recently renovated/relaunched its
core whiskey brands, McDowell’s No1 and Royal Challenge.
• Pernod Ricard’s high gross margin and operational efficiencies imply the underlying
potential that exists in the IMFL category.
• Though, the difference exists in the way companies operate their businesses, UNSP can get
close to PRI’s operating margins via premiumization drive and operational cost efficiencies
 Strategic Brand Management
Transit to Premiumisation:
• Strategic Review of Selected Popular Brands –UNSP is initiating a strategic review of
selected Popular brands, continuing the strategy towards long-term profitable
growth through premiumising the company’s portfolio. UNSP’s Popular portfolio
comprises around 30 brands and the strategic review will focus on approximately
half of this portfolio by volume.
• This review will not include the McDowell’s or Director’s Special trademarks.
• The strategic review is expected to be completed by the end of the 2022 calendar
year.
• This review reinforces UNSP’s commitment to deliver sustainable long-term growth
and improved profitability, through a sharpened focus on core Popular and Prestige
& Above brands, including international brands.
 Strategic Brand Management
Transit to Premiumisation:
Franchising: A win-win strategy:
• With a view to focus on its prestige and above brands and downsize its non-
profitable regular portfolio, UNSP has started franchising select regular brands in
certain states, starting January 2017.
• At present, UNSP has brand franchise agreements (typically for 3-5 years) across 13
states.
• UNSP has entered into a fixed-fee-based franchise model, wherein the company
would franchise its select regular brands in that particular state, and in turn,
receive a fixed annual fee from the franchisee partner.
• As per this arrangement, manufacturing, distribution, other variable costs, as well
as working capital would be borne by the franchisee partner.
 Strategic Brand Management
Transit to Premiumisation:
Franchising: A win-win strategy:
• Thereby, UNSP’s manufacturing and sales bandwidth would be focussed on their high-
margin prestige and above portfolio.
• On the other hand, the franchisee would also be incentivised to produce and sell
higher volumes, as they have to pay a fixed fee to UNSP.
• Any benefits incurred owing to operating leverage would benefit the franchisees.
• would continue to benefit UNSP in the form of improved profitability (non-profitable
regular brands being franchised and UNSP receiving a fixed fee in return) and
reduction in working capital.
• The company could also rationalise its manufacturing footprint like it has been doing
since past few years, going ahead.
Responsibility for Managing
Products

Product/Brand Management
 Planning, managing, and coordinating the strategy for a
specific product or brand
Product Group/Marketing Management
 Product director, group manager, or marketing manager
Product Portfolio Management
 Chief executive at SBU
 Team of top executives
Tracking Brand Performance
Performance
Objectives

Select Method(s) for

Evaluation

Identify Problem
Products

Decide How to
Resolve the
Problem
 Product life cycle
analysis
Financial Product
analysis performance
analysis

Analyzing Brand
Performance
Brand
Research positioning
studies analysis
Standardized
information
services
 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
• Product Performance Analysis
 Management’s performance criteria
 Strengths and weaknesses relative to portfolio

• Brand Positioning Analysis

 Perceptual maps for brand comparison
 Buyer preferences

• Other Product Analysis Methods

 Information Services
 Research studies
 Financial analysis
BRAND EQUITY

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

Determined by the
brand’s set of
assets (and liabilities)
 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.
Measuring Brand Equity. 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.
 BRAND IDENTITY 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.
 Specific
Product
Private Line
Branding of
Products
BRAND FOCUS

Combination Corporate
Branding Branding
MANAGING BRAND STRATEGY

Proactive efforts
should be devoted to
managing each brand
over time.
STRATEGIC BRANDING ISSUES
BRAND EXTENSIONS
• Rising consumer expectations
• Trade environment
• Sharp competition
• Strategic marketing tool
• Existing brand’s identity is duplicated to a new one

76
STRATEGIC BRANDING ISSUES
BRAND EXTENSIONS
• Often used by major brands to raise the admission price to the
category for new brands and drain the limited resources of 3rd and 4th
placed brands
• When extensions improve the overall image of the brand, it is likely to
improve the sales

77
STRATEGIC BRANDING ISSUES
BRAND EXTENSIONS
Satisfy needs of new segments
• New consumer’s preference
• Pudina flavor of Uncle Chipps
• Cater to specific taste of regional market
• Increase brand’s share of the consumer’s requirements within a
product category
• Wide variety of goods under a single umbrella

78
STRATEGIC BRANDING ISSUES
BRAND EXTENSIONS
Expand a brand’s core promise for new users
Diet Coke
• Extended appeal of Coke to those customers who are calorie
conscious

79
STRATEGIC BRANDING ISSUES
SURF
• Launch of Ariel in early 90’s
• How to defend
• Multiple extensions
• Surf ultramatic
• Surf easywash
• Surf ultra
• Surf excel
• Surf excelmatic

80
STRATEGIC BRANDING ISSUES
• To rejuvenate Surf’s image
• Strengthen the brand by providing relevant news on the brand

81
STRATEGIC BRANDING ISSUES
BRAND EXTENSIONS
Opportunity to offer a broad range of price points in order to capture
a wider audience

ITC Gold Flake

• Gold flake Kings

82
STRATEGIC BRANDING ISSUES
BRAND EXTENSIONS
Often used by major brands to raise the admission price to the
category for new brands and drain the limited resources of 3rd and
4th placed brands
Crest and Colgate
• Increase the shelf space
• Low cost, low risk route showing short-term results

83
STRATEGIC BRANDING ISSUES
• Whether it improves the margins
• Lux to Lux International
• Lux International is higher priced
• Better margins for the organizations

84
STRATEGIC BRANDING ISSUES
CRITICISM OF BRAND EXTENSIONS
• Contrary views
• Multiple extensions
• Dilute mother brand equity
• Dangerous situation
• Brands loose leadership because of extensions

85
STRATEGIC BRANDING ISSUES
ADVANTAGES
• New brands cost three times higher than extensions
• Higher trade acceptance
• Consumer familiarity is higher

86
STRATEGIC BRANDING ISSUES
BRAND EXTENSIONS
YAMAHA
• Pianos
• Bikes
WIPRO
• Started as FMCG company
• Later information technology products
• Credible brand extensions

87
STRATEGIC BRANDING ISSUES
COLGATE
• Toothpaste to shaving creams
• Capitalizing on synergies between core of its toothpaste and shaving
cream brands
• Brand has a personality that must be able to hold its own in the new
category

88
STRATEGIC BRANDING ISSUES
FAILURE OF BIG B
• One-man industry
• Corporate category
• Failure of ABCL
• Faulty execution
• Popular with masses
• Failed with corporate classes

89
MANAGING THE BRAND PORTFOLIO

Leverage
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.
Strategies for Improving Product Performance

Product
Cost improvement Alter
reduction marketing
strategy

Add Product line Eliminate

new Strategy specific
product(s) product(s)
 BRAND LEVERAGING STRATEGY

LINE Minor variants of a single product are

marketed under the same brand
EXTENSION name

BRAND Extensions of the brand name

to other product categories
EXTENSION --Similar
--Dissimilar
 Strategies for Brand Strength

 Brand-Building Strategies
• Developing the brand identification strategy
• Coordinate identity across the organization
 Brand Revitalization
• Find new uses for mature brands
• Add products related to heritage
 Strategic Brand Vulnerabilities
• Brand equity can be negative
• Retailer private brands compete with manufacturer brands
• Major shifts in consumer tastes
• Competitive actions
• Unexpected events
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
 STRATEGY FEATURE Limited Brands Shifts its Focus from
Apparel to Accessories

 Ten years ago apparel represented 70% of Limited’s sales.

By 2005 70% of sales were from skin-care
products, cosmetics, and lingerie
 Clothes are increasingly out of fashion—after declines for 3 years, U.S. apparel sales
increased only 4% in 2004 to $172.8 billion.
 Apparel $ sales declines are due to discount pricing and households spending more on
electronics, home improvement, and spa services.
 Limited is trying to make itself over as a high-end Procter & Gamble.
 Victoria’s Secret is adding hair and cosmetics lines to its beauty business (has 3 of the top
10 selling fragrances in the U.S.).

Sources: Limited Brands 2005 Annual Report; Value Line; and Amy Merrick, “For Limited Brands Clothes Become the Accessories,” The Wall Street
Journal, March 8, 2005, A1 and A14.
 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
BRAND LEVERAGING IN UPSCALE AND VALUE
MARKETS

Vertical Brand Extensions*

New
Core Brand Up-Market Brand

New Core
Down-Market Brand Brand

* ONE OF THE MOST DIFFICULT

BRAND PORTFOLIO CHALLENGES
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.
 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
 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
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
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
 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