55623439-Strategic-Brand-Management.pptx

STRATEGIC BRAND MANAGEMENTBUILDING, MEASURING, AND MANAGING

BRAND EQUITY

Kevin Lane KellerAmos Tuck School of Business

Dartmouth College

What is a Brand?

• A brand is a name, term, sign, symbol, or design which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

New Branding Challenges • Brands are important as ever

– Consumer need for simplification– Consumer need for risk reduction

• Brand management is as difficult as ever– Savvy consumers– Increased competition– Decreased effectiveness of traditional

marketing tools and emergence of new marketing tools

– Complex brand and product portfolios

The Customer/Brand Challenge

• In this difficult environment, marketers must have a keen understanding of:– customers– brands– the relationship between the two

The Concept of Brand Equity

• The brand equity concept stresses the importance of the brand in marketing strategies.

• Brand equity is defined in terms of the marketing effects uniquely attributable to the brand.– Brand equity relates to the fact that different outcomes

result in the marketing of a product or service because of its brand name, as compared to if the same product or service did not have that name.

The Concept of Customer-Based Brand Equity

• Customer-based brand equity– Differential effect– Customer brand knowledge– Customer response to brand marketing

Determinants of Customer-Based Brand Equity

– Customer is aware of and familiar with the brand

– Customer holds some strong, favorable, and unique brand associations in memory

Building Customer-Based Brand Equity

• Brand knowledge structures depend on . . .

– The initial choices for the brand elements

– The supporting marketing program and the manner by which the brand is integrated into it

– Other associations indirectly transferred to the brand by linking it to some other entities

Benefits of Customer-Based Brand Equity

• Enjoy greater brand loyalty, usage, and affinity

• Command larger price premiums• Receive greater trade cooperation &

support• Increase marketing communication

effectiveness• Yield licensing opportunities• Support brand extensions.

Customer-Based Brand Equityas a “Bridge”

• Customer-based brand equity represents the “added value” endowed to a product as a result of past investments in the marketing of a brand.

• Customer-based brand equity provides direction and focus to future marketing activities

The Key to Branding

• For branding strategies to be successful, consumers must be convinced that there are meaningful differences among brands in the product or service category.

• Consumer must not think that all brands in the category are the same.

• PERCEPTION = VALUE

Strategic Brand Management

• Strategic brand management involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity.

• The strategic brand management process is defined as involving four main steps:1) Identifying and establishing brand positioning and values2)  Planning and implementing brand marketing programs3)  Measuring and interpreting brand performance4)  Growing and sustaining brand equity

Strategic Brand Management Process

Mental mapsCompetitive frame of referencePoints-of-parity and points-of-differenceCore brand valuesBrand mantra

Mixing and matching of brand elementsIntegrating brand marketing activitiesLeveraging of secondary associations

Brand Value ChainBrand auditsBrand trackingBrand equity management system

Brand-product matrixBrand portfolios and hierarchiesBrand expansion strategiesBrand reinforcement and revitalization

KEY CONCEPTSSTEPS

Grow and SustainBrand Equity

Identify and EstablishBrand Positioning and Values

Plan and Implement Brand Marketing Programs

Measure and InterpretBrand Performance

Motivation forCustomer-Based Brand Equity Model

• Marketers know strong brands are important but aren’t always sure how to build one.

• CBBE model was designed to be …– comprehensive – cohesive – well-grounded – up-to-date– actionable

Complex,Varied

MarketingActivity

Comprehensive,Robust

MarketingMeasures

Detailed,Rich

MarketingModels

MARKETING PLANNING PROCESS

Rationale of Customer-Based Brand Equity Model

• Basic premise: Power of a brand resides in the minds of customers

• Challenge is to ensure customers have the right types of experiences with products & services and their marketing programs to create the right brand knowledge structures:– Thoughts– Feelings– Images– Perceptions– Attitudes

Building Customer-Based Brand Equity

• Building a strong brand involves a series of steps as part of a “branding ladder”

• A strong brand is also characterized by a logically constructed set of brand “building blocks.”– Identifies areas of strength and weakness– Provides guidance to marketing activities

CUSTOMER-BASED BRAND EQUITY PYRAMID

RESONANCE

SALIENCE

JUDGMENTS FEELINGS

PERFORMANCE IMAGERY

4. RELATIONSHIPS =

What about you & me?

4. RELATIONSHIPS =

What about you & me?

3. RESPONSE =

What about you?

3. RESPONSE =

What about you?

2. MEANING =

What are you?

2. MEANING =

What are you?

1. IDENTITY =

Who are you?

1. IDENTITY =

Who are you?

Salience Dimensions

• Depth of brand awareness– Ease of recognition & recall– Strength & clarity of category

membership

• Breadth of brand awareness– Purchase consideration– Consumption consideration

Performance Dimensions

• Primary characteristics & supplementary features

• Product reliability, durability, and serviceability

• Service effectiveness, efficiency, and empathy

• Style and design

• Price

Imagery Dimensions• User profiles

– Demographic & psychographic characteristics– Actual or aspirational– Group perceptions -- popularity

• Purchase & usage situations– Type of channel, specific stores, ease of purchase– Time (day, week, month, year, etc.), location, and context

of usage

• Personality & values– Sincerity, excitement, competence, sophistication, &

ruggedness

• History, heritage, & experiences– Nostalgia– Memories

Judgment Dimensions• Brand quality

– Value– Satisfaction

• Brand credibility– Expertise– Trustworthiness– Likability

• Brand consideration– Relevance

• Brand superiority– Differentiation

Feelings Dimensions

• Warmth• Fun• Excitement• Security• Social approval• Self-respect

Resonance Dimensions • Behavioral loyalty

– Frequency and amount of repeat purchases

• Attitudinal attachment– Love brand (favorite possessions; “a little pleasure”)– Proud of brand

• Sense of community– Kinship– Affiliation

• Active engagement– Seek information– Join club– Visit web site, chat rooms

Customer-Based Brand Equity Model

Consumer-BrandResonance

Brand Salience

Consumer Judgments

Consumer Feelings

BrandPerformance

BrandImagery

INTENSE, ACTIVE LOYALTY

INTENSE, ACTIVE LOYALTY

RATIONAL & EMOTIONAL REACTIONS

RATIONAL & EMOTIONAL REACTIONS

POINTS-OF-PARITY &

POINTS-OF-DIFFERENCE

POINTS-OF-PARITY &

POINTS-OF-DIFFERENCE

DEEP, BROAD BRAND

AWARENESS

DEEP, BROAD BRAND

AWARENESS

Sub-Dimensions of CBBE Pyramid

LOYALTYATTACHMENTCOMMUNITYENGAGEMENT

QUALITY CREDIBILITYCONSIDERATIONSUPERIORITY

WARMTHFUNEXCITEMENTSECURITYSOCIAL APPROVALSELF-RESPECT

CATEGORY IDENTIFICATIONNEEDS SATISFIED

PRIMARY CHARACTERISTICS &SECONDARY FEATURES

PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY

SERVICE EFFECTIVENESS, EFFICIENCY, & EMPATHY

STYLE AND DESIGN PRICE

USER PROFILESPURCHASE & USAGE

SITUATIONSPERSONALITY &

VALUESHISTORY, HERITAGE, & EXPERIENCES

Application:Identify the key drivers of brand equity

0.17 0.66

0.24

0.65

P-2

P-2

PerformancePerformance

P-1P-1

P-10 P-10

P-7

P-7

P-8P-8

P-9P-9

P-3P-3

P-4P-4

P-6P-6

P-5P-5

P-11 P-11 P-

12

P-12

I-2I-2

I-9I-9

ImageryImagery

I-1I-1

I-3I-3

I-6I-6

I-5I-5

I-10 I-10

I-7I-7

I-8I-8

I-11

I-11 I-12

I-12

I-4I-4

F-2

F-2

FeelingsFeelings

F-1F-1

F-3F-3

F-4F-4

F-6F-6

F-5F-5

F-7

F-7

F-8F-8

F-9F-9

F-11 F-11 F-

12

F-12

F-10F-10

J-2J-2

JudgmentJudgment

J-1J-1

J-3J-3

J-4J-4

J-6J-6

J-5J-5

J-10J-10

J-7J-7

J-8J-8

J-9J-9

J-11

J-11 J-1

2J-1

2

R-2R-2

ResonanceResonance

R-1R-1

R-3R-3

R-4R-4

R-6

R-6

R-5R-5

R-10 R-10

R-7

R-7

R-8

R-8

R-9R-9

R-11 R-11 R

-12

R-1

2

0.58

0.49

Brand Positioning• Define competitive frame of

reference– Target market– Nature of competition

• Define desired brand knowledge structures– Points-of-parity

• necessary• competitive

– Points-of-difference• strong, favorable, and unique brand

associations

Issues in Implementing Brand Positioning

• Establishing Category Membership• Identifying & Choosing POP’s & POD’s• Communicating & Establishing POP’s

& POD’s• Sustaining & Evolving POD’s & POP’s

Establishing Category Membership

• Product descriptor• Exemplar comparisons

Identifying & Choosing POP’s & POD’s

• Desirability criteria (consumer perspective)– Personally relevant– Distinctive & superior– Believable & credible

• Deliverability criteria (firm perspective)– Feasible – Profitable– Pre-emptive, defensible & difficult to

attack

Major Challenges in Positioning

• Find compelling & impactful points-of-difference (MacMillan & McGrath, HBR, ‘97)– How do people become aware of their need for your

product and service?– How do consumers find your offering?– How do consumers make their final selection?– How do consumers order and purchase your product

or service?– What happens when your product or service is

delivered?– How is your product installed?– How is your product or service paid for?

Major Challenges in Positioning

• Find compelling & impact points-of-difference (cont.) – How is your product stored?– How is your product moved around?– What is the consumer really using your product for?– What do consumers need help with when they use

your product?– What about returns or exchanges?– How is your product repaired or serviced?– What happens when your product is disposed of or

no longer used?

Communicating & Establishing POP’s & POD’s

• Create POP’s and POD’s in the face of attribute & benefit trade-offs– Price & quality– Convenience & quality– Taste & low calories– Efficacy & mildness– Power & safety– Ubiquity & prestige– Comprehensiveness (variety) & simplicity– Strength & refinement

Strategies to Reconcile Attribute & Benefit Trade-Offs

• Establish separate marketing programs

• Leverage secondary association (e.g., co-brand)

• Re-define the relationship from negative to positive

Sustaining & EvolvingPOP’s & POD’s

• Core Brand Values &Core Brand Proposition

Core Brand Values

• Set of abstract concepts or phrases that characterize the 5-10 most important dimensions of the mental map of a brand.

• Relate to points-of-parity and points-of-difference

• Mental Map Core Brand Values Brand Mantra

Brand Mantras

• A brand mantra is an articulation of the “heart and soul” of the brand. – Brand mantras are short three to five word

phrases that capture the irrefutable essence or spirit of the brand positioning and brand values.

• Nike– Authentic Athletic Performance

• Disney– Fun Family Entertainment

Building Customer-Based Brand Equity

• Brand knowledge structures depend on . . .

– The initial choices for the brand elements

– The supporting marketing program and the manner by which the brand is integrated into it

– Other associations indirectly transferred to the brand by linking it to some other entities

Brand Elements• A variety of brand elements can be chosen

that inherently enhance brand awareness or facilitate the formation of strong, favorable, and unique brand associations:

– Brand Name– Logo– Symbol

– Character

– Packaging

– Slogan

Brand Elements Choice Criteria:General Considerations

• Memorable– Easily Recognized– Easily Recalled

• Meaningful– Credible &

Suggestive– Rich Visual & Verbal

Imagery

• Appealing– Fun & Interesting– Aesthetics

• Adaptable– Flexible & Updateable

• Protectable– Legally– Competitively

• Transferrable– Within & Across Product

Categories– Across Geographical

Boundaries & Cultures

Integrating the BrandInto Supporting Marketing Programs

• Product Strategy• Deliver tangible and

intangible benefits• Add value through

customer information

• Pricing Strategy• Understand

perceptions of value• Balance price, cost, &

quality

• Communication Strategy• Mix & match

communication options

• Channel Strategy• Blend channel “push”

with consumer “pull”• Develop & brand direct

marketing options

Supporting marketing mix should be designed to enhance awareness and establish desired brand image.

Personalizing Marketing

• Relationship Marketing – provide more holistic, personalized brand experiences to create stronger consumer ties– Mass customization– CRM– After-marketing & loyalty programs

• Examples– Experiential Marketing– Permission Marketing– One-to-One Marketing

Experiential Marketing

• Employ multiple touch points & multiple senses

• Often involves special events, contests, promotions, sampling, on-line activities, etc.

• Combine brand education & entertainment

• Distinctive and relevant

Permission Marketing (Seth Godin)

• Permission marketing “encourages consumers to participate in a long-term interactive marketing campaign in which they are rewarded in some way for paying attention to increasingly relevant messages.”– Anticipated– Personal– Relevant

• Permission marketing can be contrasted to interruption marketing

5 Steps in Permission Marketing

• Must offer overt, obvious, and clearly delivered incentive to prospect to volunteer

• Must offer a curriculum over time, teaching the consumer about the product or service

• Must reinforce the incentive over time• Must increase the level of permission the

marketer receives from the customer• Must leverage permission to generate

profits

10 Questions to Evaluate Permission Marketing Program

• What’s the bait?• What does an incremental permission cost?• How deep is the permission that so granted?• How much does incremental frequency cost?• What’s the active response rate to

communications?• What are the issues regarding compression?• Is the company treating the permission as an

asset?• How is the permission being leveraged?• How is the permission level being increased?• What is the expected lifetime of one

permission?

One-to-One Marketing:Competitive Rationale

• Consumers help to add value by providing information

• Firm adds value by generating rewarding experiences with consumers– Creates switching costs for consumers– Reduces transaction costs for consumers– Maximizes utility for consumers

One-to-One Marketing:Consumer Differentiation

• Treat different consumers differently– Different needs– Different values to firm

• current• future (life-time value)

• Devote more marketing effort on most valuable consumers (and customers)

One-to-One Marketing:Five Key Steps

• Identify consumers, individually and addressably

• Differentiate them, by value and needs

• Interact with them more cost-efficiently and effectively

• Customize some aspect of the firm’s behavior

• Brand the relationship

Buzz Marketing(Emanuel Rosen)

• Keep it simple – Simple messages spread across social networks more easily.

• Tell us what’s new – The message must be relevant and newsworthy for people to want to tell others about it.

• Don’t make claims you can’t support – Making false claims will kill buzz or, worse, lead to negative buzz.

• Ask your customers to articulate what’s special about your product or service – If customers can explain why they like the product or service, they can then communicate this to others.

• Start measuring buzz – This can help determine which strategies generate the most buzz.

• Listen to the buzz – Monitoring consumer reaction can yield insights such as how to improve the product or service.

Personalizing Marketing

• All of these approaches are a means to create deeper, richer, and more favorable brand associations

• Relationship marketing has become a powerful brand-building force – can slip through consumer radar– may creatively create unique associations– may reinforce brand imagery and feelings

• Nevertheless, there is still a need for the control and predictability of traditional marketing activities

• Models of brand equity can help to provide direction and focus to the marketing programs

Complex,Varied

MarketingActivity

Comprehensive,Robust

MarketingMeasures

Detailed,Rich

MarketingModels

MARKETING PLANNING PROCESS

Role of Integrated Marketing Communications

• Marketing communications …– are the “voice” of the brand and are a

means by which it can establish a dialogue and build relationships with consumers.

– allow marketers to inform, persuade, incent, and remind consumers directly or indirectly

– can contribute to brand equity by establishing the brand in memory and linking strong, favorable, and unique associations to it.

Role of Integrated Marketing Communications (Cont.)

– Consumers can be told or shown how and why a product is used, by what kind of person, and where and when;

– Consumers can learn about who makes the product and what the company and brand stand for

– Consumers be given an incentive or reward for trial or usage

– Brands can be linked to other …• People • Places • Events • Brands • Experiences• Feelings• Things

Simple Test for Marketing Communications

1. 3. 2. Current Desired

Brand Brand Knowledge Knowledge

Integrated Marketing Communications and Customer-Based Brand Equity

• One implications of the CBBE framework is that the manner in which brand associations are formed does not matter -- only the resulting strength, favorability, and uniqueness

Designing Integrated Marketing Communications Programs

• From the perspective of customer-based brand equity, marketers should evaluate all possible communication options available to create knowledge structures according to effectiveness criteria as well as cost considerations.

• Different communication options have different strengths and can accomplish different objectives.

Alternative Communication Options(Consumer)

• Media Advertising (TV, radio, newspapers, magazines)

• Direct Response Advertising• Interactive (on-line) Advertising & Web Sites• Outdoor Advertising (billboards, posters, cinema)• Point-of-Purchase Advertising• Trade Promotions• Consumer Promotions• Sponsorship of Event Marketing• Publicity or Public Relations

Alternative Communication Options(Business-to-Business)

• Media Advertising (TV, radio, newspaper, magazines)

• Trade Journal Advertising• Interactive (on-line) Advertising & Web Sites• Directories• Direct Mail• Brochures & Sales Literature• Audio-Visual Presentation Tapes• Giveaways• Sponsorship or Event Marketing• Exhibitions, Trade Shows, Conventions• Publicity or Public Relations

Print Ad Evaluation Criteria• Is the message clear at a glance?• Is the benefit in the headline?• Does the illustration support the

headline?• Does the first line of the copy support

or explain the headline and illustration?

• Is the ad easy to read and follow?• Is the product easily identified?• Is the brand or sponsor clearly

identified?

Ad Campaign Considerations

• Campaigns make brands -- not single ads• Be creative and develop creative themes

– Avoid slavishly sticking to executional formulas

• Brand communications should sing like a choir – Multiple voices– Multiple notes

• Find fresh consumer insights & compelling brand truths

• Productively conduct ad research

IMC Case StudyCMPB Success Factors

• Smart strategy – Relative deprivation

• Imaginative creative – Funny but relevant

• Clever hook – “Got milk?” slogan

• Timely secondary media– In store

• Right partners

Common Mistakes in Developing Advertising

• Failure to distinguish ad positioning (what you say) from ad creative (how you say it)

• Mistaken assumptions about consumer knowledge

• Improperly positioned• Failure to break through the clutter• Distracting, overpowering creative in

ads

Common Mistakes in Developing Advertising

(cont.)

• Under-branded ads• Failure to use supporting media• Changing campaigns too frequently• Substituting ad frequency for ad

quality

CommunicationOption A

Communication Option C

CommunicationOption B

Audience

Audience Communication Option Overlap

Note: Circles represent the market segments reached by various communication options. Shaded portions represent areas of overlap in communication options.

Evaluating IMC Programs• Coverage - what proportion of the

target audience is reached by each communication option employed, as well as how much overlap exists among options

• Cost - what is the per capita expense

Evaluating IMC Programs (cont.)

• Contribution - the collective effect on brand equity in terms of

– enhancing depth & breadth of awareness

– improving strength, favorability, & uniqueness of brand associations

• Commonality - the extent to which information conveyed by different communication options share meaning

Evaluating IMC Programs (cont.)

• Complementarity - the extent to which different associations and linkages are emphasized across communication options

• Versatility - the extent to which information contained in a communication option works with different types of consumers

• Different communications history• Different market segments

“Keller Be’s”

• Be analytical: Use frameworks of consumer behavior and managerial decision-making to develop well-reasoned communication programs

• Be curious: Fully understand consumers by using all forms of research and always be thinking of how you can create added value for consumers

• Be single-minded: Focus message on well-defined target markets (less can be more)

• Be integrative: reinforce your message through consistency and cuing across all communications

“Keller Be’s”

• Be creative: State your message in a unique fashion; use alternative promotions and media to create favorable, strong, and unique brand associations

• Be observant: Monitor competition, customers, channel members, and employees through tracking studies

• Be realistic: Understand the complexities involved in marketing communications

• Be patient: Take a long-term view of communication effectiveness to build and manage brand equity

Leveraging Secondary Associations

• Brand associations may themselves be linked to other entities, creating secondary associations:– Company (through branding strategies)– Country of Origin (through identification of product

origin)– Channels of Distribution (through channels strategy)– Other Brands (through co-branding)– Characters (through licensing)– Celebrity Spokesperson (through endorsement

advertising)– Events (through sponsorship)– Other third party sources (through awards & reviews)

• These secondary associations may lead to a transfer of:– Response-type associations

• Judgments (especially credibility)• Feelings

– Meaning-type associations • Product or service performance• Product or service imagery

Leveraging Secondary Associations

• This transfer of secondary associations will depend on:– Awareness and knowledge of entity– Perceived relevance of entity linkage

• Fit?• Cue overload?• Attributions?

– Evaluative consistency with brand associations

Leveraging Secondary Associations

Figure 2-9 Building Customer-Based Brand EquityBRAND BUILDING TOOLS AND OBJECTIVES CONSUMER KNOWLEDGE EFFECTS BRANDING BENEFITS

Choosing Brand Elements

Brand name MemorabilityLogo MeaningfulnessSymbol AppealCharacter TransferabilityPackaging AdaptabilitySlogan Protectability

Developing Marketing Programs

Product Tangible and intangible benefitsPrice Value perceptionsDistribution channels Integrate”push” and “pull”Communications Mix and match options

Leverage of Secondary Associations

CompanyCountry of originChannel of distributionOther brandsEndorsorEvent

AwarenessMeaningfulnessTransferability

Possible Outcomes

Greater loyalty

Less vulnerability to competitive marketing actions and crises

Larger margins

More elastic response to price decreases

More inelastic response to price increases

Greater trade cooperation and support

Increased marketing communication efficiency and effectiveness

Possible licensing opportunities

More favorable brand extension evaluations

Brand Awareness

Depth

Breadth

RecallRecognition

PurchaseConsumption

Brand Associations

Strong

Favorable

Unique

RelevanceConsistency

DesirableDeliverable

Point-of-parityPoint-of-difference

Brand Equity Measurement System

• A brand equity measurement system is a set of research procedures that is designed to provide timely, accurate, and actionable information for marketers so that they can make the best possible tactical decisions in the short run and strategic decisions in the long-run.

Brand Equity Measurement System

• Implementing this system involves:– Conducting brand audits.

• Brand Inventory• Brand Exploratory

– Developing tracking procedures.– Designing a brand equity management

system• Brand Equity Charters• Brand Equity Reports• Brand Equity Overseers

Conducting the Brand Audit

• A brand audit is a comprehensive examination of a brand involving activities to assess the health of the brand, uncover its sources of equity and suggest ways to improve and leverage that equity.

• A brand audit requires understanding sources of brand equity from the perspective of both the firm and the consumer.

• Specifically, the brand audit consists of two activities:– Brand Inventory– Brand Exploratory

Brand Inventory

• The purpose of the brand inventory is to provide a complete, up-to-date profile of how all the products and services sold by a company are marketed and branded.

• For each product, the relevant brand elements must be identified, as well as the supporting marketing program. This information should be summarized both visually and verbally.

• Although primarily a descriptive exercise, some useful analysis can be conducted.– Consistency

Brand Exploratory• The brand exploratory is research activity

designed to identify potential sources of brand equity.

• The brand exploratory provides detailed information as to what consumers think of and feel about the brand.

• Although reviewing past studies and interviewing relevant personnel provides some insights, additional research is often required.

• To allow a broad range of issues to be covered and also permit those issues to be pursued in-depth, qualitative research techniques are often employed first.

• To provide a more specific assessment of the sources of brand equity, a follow-up quantitative phase is often necessary.

Brand Equity Management System:Three Steps

1. Formalize company position and philosophy into a Brand Equity Charter to provide relevant guidelines to marketing managers.

- Importance of brands and brand equity- History of brand- Brand positioning

- Core brand values- Core brand promise (“brand mantra”) - POP/POD

- Brand guidelines- Strategic- Tactical

The Knicks

The Fans

The Knicks Brand Charter

Emotional Bond

•Uniquely authentic

•An incomparable event, scene and energy.

•Relentless, resourceful, and tough

•Championship caliber

•A vital part of New York City

•Unlimited in its possibilities

•Sensory fulfillment

–Looks, feels, and sounds

•Visceral Thrill

– eager anticipation/excitement

– war: winning/losing

•Psychological Benefits

– personal identification (with heroes)

– social currency/belonging

•Emotional Awards

– intense experience

– childhood

– sustaining

–exceeds

An intensely passionate, professional, unparalleled New York City experience.

Brand Equity Management System: Three Steps

2.Assemble results of tracking survey and other relevant outcome measures into a Brand Equity Report distributed to managers on regular basis

–Provides descriptive information as to what is happening with a brand as well as diagnostic information as to why

Brand Equity Management System: Three Steps

3. Establish position of VP or Director of Equity Management to oversee implementation of Brand Equity Charter and Reports

– Ensure that, as much as possible, marketing of the brand is done in way that reflects the spirit of the Charter and the substance of the Report

Developing Tracking Procedures• Tracking studies involve information collected

from consumers on a routine basis over time– Often done on a “continuous” basis

– Provide descriptive and diagnostic information

– Key decisions• What to track• Who to track• When and where to track• How to interpret tracking studies

Understand ROI of Marketing Investments

MarketingProgram

Investment

CustomerMindset

MarketPerformance

ShareholderValue

VALUESTAGES

- Product- Communications- Trade- Other

- Awareness- Associations- Attitudes- Attachment- Activity

- Price premiums- Price elasticities- Market share- Expansion success- Cost savings- Profitability

- Stock price- P/E ratio- Market capitalization

Brand Value Chain

ProgramMultiplier

MarketingProgram

Investment

CustomerMindset

MarketPerformance

ShareholderValueVALUE

STAGES

- Product- Communications- Trade- Employee- Other

- Awareness- Associations- Attitudes- Attachment- Activity

- Price premiums- Price elasticities- Market share- Expansion success- Cost structure- Profitability

- Stock price- P/E ratio- Market capitalization

ConsumerMultiplierFILTERS

- Clarity- Relevance- Distinctiveness- Consistency

- Channel support- Consumer size & profile - Competitive reactions

- Market dynamics- Growth potential- Risk profile- Brand contribution

MarketMultiplier

Interbrand

• To estimate brand value, Interbrand determines:– Projected future earnings for the brand

-- AND --– The discount rate to adjust earnings for

inflation & risk.• Brand earnings are based on a 3-year

weighted average of historical profits that exclude a number of considerations that do not relate to the brand identity.

Interbrand

To adjust these earnings, an in-depth assessment of brand strength based on seven factors is conducted:

LEADERSHIP (25%)Market ShareAwarenessPositioningCompetitor Profile

STABILITY (15%)LongevityCoherenceConsistencyBrand IdentityRisks

SUPPORT (10%)Consistency of messageConsistency of spendAbove vs. below lineBranch franchise

MARKET (10%)What is the market?Nature of the market (e.g., volatility)Size of marketMarket dynamicsBarriers to entry

PROTECTION (5%)Trademark registration & registrabilityCommon lawLitigation/disputes

TREND (10%)Long term market share performanceProjected brand performanceSensibility of brand plansCompetitive actions

INTERNATIONALITY (25%)Geographical spreadInternational positioningRelative market sharePrestigeAmbition

Financial World began their calculation of the value of the Coca-Cola brand in 1993 with the world-wide sales figure for the Coca-Cola brand family of $9 billion. Based on estimates of consultants and beverage experts, they assumed that Coke's operating margin was around 30%, resulting in operating profits for the Coke brand of $2.8 billion.  With Coke's product-related profits in place, Financial World next deducted from these operating profits an amount equal to what could have been expected to be earned on a basic or generic version of the product. To do so, they assumed, based on analysts' calculations, that it required on average 60 cents worth of capital -- which is generally a little higher than net property, plant and equipment plus net working capital -- to produce each dollar of sales. Thus, Financial World calculated the capital used in production for Coke to be $5.5 billion.

They next assumed that a 5% net return on employed capital after inflation could be expected from a similar non-branded product and therefore deducted 5% of Coke's capital employed ($273 million) from the $2.7 billion in operating profits to obtain the profit attributable to the brand name alone. The resulting adjusted operating profit figure was $2.4 billion. After adjusting for taxes, the remainder was deemed to be net brand-related profits.

The final adjustment was made on the basis of brand strength. Coke was assigned the highest multiple, resulting in a brand value of $33.4 billion.

In 2001, that figure rose to $68.95 billion, and Coke was deemed the world’s most valuable brand.

Four Primary Aspects

How Brands Are Built

KnowledgeKnowledge• The culmination of brand building efforts; acquisition of consumer experience

EsteemEsteem • Consumer respect, regard, reputation; afulfillment of perceived consumer promise

RelevanceRelevance • Relates to usage and subsumes the 5 P’s of marketing; relates to sale

DifferentiationDifferentiation • The basis for consumer choice; the essence of the brand, source of margin

Room to grow... Brand has power to build Relevance.

D > R

0

10

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90

100

Differentiation Relevance

Healthy brands have greater Differentiation than Relevance

Examples:

Harley DavidsonYahoo!America On-LineWilliams-SonomaIkeaBloomberg Business News

R > D

0

10

20

30

40

50

60

70

80

90

100

DIFFERENTIATION RELEVANCE

Uniqueness has faded; Price becomes dominant reason to buy.

Brands with greater Relevance than Differentiation are in danger of

becoming commodities

Examples:

ExxonMott’sMcDonald’sCrestMinute MaidFruit of the LoomPeter Pan (peanut butter)

E > K

0

10

20

30

40

50

60

70

80

90

100

ESTEEM KNOWLEDGE

Brand is better liked than known.

More Esteem than Knowledge means, “I’d like to get to know you better”

Examples:

Coach leatherwearTag HeuerCalphalonMovadoBlaupunktPella WindowsPalm PilotTechnics

K > E

0

10

20

30

40

50

60

70

80

90

100

ESTEEM KNOWLEDGE

Brand is better known than liked.

Too much Knowledge can be dangerous“I know you and you’re nothing special”

Examples: PlymouthTV GuideSpamWoolworthsChryslerMaxwell HouseNational EnquirerSanka

BrandAsset® Valuator

Leading

Brand Strength

Differentiation Relevance

Lagging

Brand Stature

Esteem Knowledge

A Two Dimensional Framework for Diagnosing Brands: The Power Grid

Power Leaders

New

Niche/Unrealized Potential

Declining Leaders

Unfocused

BRAN

D S

TREN

GTH

(Diff

eren

tiatio

n &

Rel

evan

ce)

BRAND STATURE(Esteem & Knowledge)

Eroded

Brand Health Is Captured on the PowerGrid

Base: USA Total Adults BAV 2000

BRAND STATURE

BRAN

D S

TREN

GTH

Base: USA Total Adults BAV 1999

0

20

40

60

80

100

0 20 40 60 80 100

PlymouthBazooka

Ivory SnowPert

RolaidsKeds

Howard JohnsonTWA

Greyhound

AriZona Iced TeaAeropostale

Newman’s OwnSundance Channel

DreamWorksBloomberg Business

NewsCDnow

IKEA

Coca-ColaOcean Spray

NikePepperidge Farm

M&M’sDisney

Jeopardy!Hallmark

San PellegrinoSun Microsystems

WiredQuest Telecomm

NokiaiVillage.comNetGrocer

Iridium

USA 1999 PowerGrid Sample

Y&R Resonance Research

Usage

Loyalty (60%)

Attachment (30%)

Community Engagement

ResonanceACE

(10%)

15%

Base: 2001 BAV Data

0

50

100

0 50 100

Brand Stature

Bra

nd

Str

en

gth

Attached

Loyal

Community

ResonanceEngaged

Non-Loyals

Resonance

Engaged

Community

Attached

Loyal Users

Non-Loyal Users

Base: BAV USA Adults 2001

Differentiation

Y&R Resonance Research With BAV

Comparison to Other Models

• WPP BRANDZ & Millward Brown Brand Dynamics Pyramid– Bonding– Advantage– Performance– Relevance– Presence

Average U.S. Packaged Goods Brand

Proportion of Consumers

Consumer Loyalty

7%Bonded

32%Advantage

35%Performance

43%Relevance

76%Presence

38%

19%

17%

13%

20%

Comparison to Other Models

• Research International (Affinity & Performance)– Authority

• Heritage• Trust• Innovativeness

– Identification• Bonding• Caring • Nostalgia

– Approval• Prestige• Acceptability• Endorsement

Managing Brand Equity

• Managing brand equity concerns those activities that take a broader and more diverse perspective of a brand’s equity– Understanding how branding strategies

should reflect corporate concerns and be adjusted, if at all, over time or over geographical boundaries or market segments

Branding Strategies

• The branding strategy for a firm reflects the number and nature of common or distinctive brand elements applied to the different products sold by the firm

– Which brand elements can be applied to which products and the nature of new and existing brand elements to be applied to new products

Brand Hierarchy Levels

Corporate Brand

Family Brand

Individual Brand

Individual Item or Model (Modifier)

– A brand hierarchy can involve multiple levels:

Brand Hierarchy Decisions

• In creating the hierarchy, it is important to decide:– The number of levels of the hierarchy to

use in general– How brand elements from different

levels of the hierarchy are combined, if at all, for any one particular product

– How any one brand element is linked, if at all, to multiple products

– Desired brand awareness and image at each level

Designing the Brand Hierarchy

– Decide on the number of levels• Principle of simplicity: Employ as few levels

as possible• Principle of clarity: Logic and relationship of

all brand elements employed must be obvious and transparent.

– Decide on the levels of awareness and types of associations to be created at each level

• Principle of relevance: Create global associations that are relevant across as many individual items as possible

• Principle of differentiation: Differentiate individual items and brands

Designing the Brand Hierarchy

– Decide on how to link brands from different levels for a product

• Principle of prominence: The relative prominence of brand elements affects perceptions of product distance and the type of image created for new products

– Decide on how to link a brand across products

• Principle of commonality: The more common elements shared by products, the stronger the linkages

Brand-Product Matrix

• Must define . . .– Brand-Product Relationships (ROWS)

• Line & Category Extensions

– Product-Brand Relationships (COLUMNS)• Brand Portfolio

1 2 3 4

A

B

C

Products

Brands

• Multiple brands are often employed in a category for market coverage

– Target different market segments

• Basic principle of brand portfolios…– Maximize coverage– Minimize overlap

• Basic economics guideline ...– A portfolio is too big if profits can be increased

by dropping brands. – A portfolio is not big enough if profits can be

increased by adding brands

Managing Brand Portfolios

Brand Consolidation & Focus

• Number of factors are driving this trend– Movement from transactions to

relationships with consumers– Value of strong “power” brands– Difficulty of brand management

• Cost• Need for efficiencies

– Importance of “top-down” brand management

Advantages of Extensions

• Extensions can potentially provide the following benefits to facilitate new product acceptance:– Reduce risk perceived by customers &

distributors– Decrease cost of gaining distribution & trial– Increase efficiency of promotional

expenditures– Avoid cost (and risk) of developing new

names– Allow for packaging and labeling efficiencies– Permit consumer variety seeking

Advantages of Extensions

• Besides facilitating new product acceptance, extensions can also provide “feedback” benefits to the parent brand and the company as a whole– Enhance the parent brand image

• Improve strength, favorability, and uniqueness of brand associations

• Improve perceptions of company credibility

– Convey broader brand meaning to consumers• Clarify core benefit proposition and business definition

of the company

– Bring new customers into the franchise and increase market coverage

Managing Brands Over Time

• Effective brand management requires taking a long-term view of marketing decisions– Any action that a firm takes as part of its

marketing program has the potential to change consumer knowledge about the brand

– These changes in consumer brand knowledge from current marketing activity also will have an indirect effect on the success of future marketing activities

Reinforcing Brand Images

• Brand equity is enhanced by marketing actions that consistently convey the meaning of the brand to consumers– What products does it represent? What

benefits does it supply? What needs does it satisfy?

– How does it make those products superior? What strong, favorable, and unique brand associations exist in the minds of consumers?

Innovation in ProductDesign, Manufacturing and Merchandising

Relevance in Userand Usage Imagery

Consistency in amount and natureof marketing support

Continuity in brand meaning; changes in marketing tactics

Trading off marketingactivities to fortify vs. leverage brand equity

Protecting sources of brand equity

Brand Awareness

•What products does the brand represent?•What benefits does it supply?•What needs does it satisfy?

BRANDREINFORCEMENTSTRATEGIES

Brand Image

•How does the brand make products superior?•What strong, favorable, and unique brand associations exist in customers’ minds?

Revitalizing a Fading Brand

• Because of changes in the marketing environment, brand equity can be eroded over time.

• Reversing a brand’s fortunes involves ...– Recapturing lost sources of brand equity

(e.g., Harley-Davidson)– Identifying and establishing new sources of

brand equity (e.g., Mountain Dew)

• More “revolutionary” changes than “evolutionary” changes

Revitalization Strategies

• Expand the depth and/or breadth of awareness by improving consumer recall and recognition of the brand during purchase or consumption settings.

• Improve the strength, favorability, and uniqueness of brand associations -- either existing or new -- making up the brand image.

Expanding Brand Awareness

• Increasing usage– Increasing the level or quantity of consumption– Increasing the frequency of consumption

• Identifying new or additional usage opportunities– Communicate appropriateness of more frequent

use in current situations– Reminders to use

• Identifying new and completely different ways to use the brand

Improving the Brand Image• Go “back to basics” and tap into

existing sources of brand equity (e.g., Harley-Davidson)– product strategy– pricing strategy– channel strategy– communication strategy

• Create new sources of brand equity (e.g., Mountain Dew)

BRAND REVITALIZATIONSTRATEGIES

Refresh Old Sourcesof Brand Equity

Create New Sourcesof Brand Equity

Expand Depth and Breadth of Awareness and Usage of Brand

Increase Quantityof Consumption(How Much)

Increase Frequencyof Consumption(How Often)

Improve Strength,Favorability, and Uniqueness of BrandAssociations

Bolster Fading Associations

Neutralize Negative Associations

Create New Associations

Identify AdditionalOpportunities toUse Brand in SameBasic Way

Identify CompletelyNew and DifferentWays to Use

Retain VulnerableCustomers

Recapture LostCustomers

Identify NeglectedSegments

Attract New Customers

Disadvantages of Extensions

• Extensions have risks, too. Certainly, they can fail.

• Moreover, extensions can potentially result in the following costs:– Cannibalize sales of the parent brand– Hurt the image of the parent brand

• If the extension fails• Even if the extension is successful

– Forego the chance to develop a new brand name or market the parent brand differently (opportunity cost)

• In introducing a brand extension, it is typically assumed that:– Consumers have some awareness of

and positive associations about the brand in memory

– Some of these positive associations are evoked by the brand extension

– Negative associations are not transferred from the parent brand

– Negative associations are not created by the brand extension

Brand Extensions Assumptions

Extension Failures• Campbell's tomato sauce• LifeSavers chewing gum• Cracker Jack cereal• Harley Davidson wine coolers• Hidden Valley Ranch frozen entrees• Bic perfumes• Ben-Gay aspirin• Kleenex diapers• Levi's Tailored Classics suits• Nautilus athletic shoes• Domino's fruit-flavored bubble gum• Smucker’s ketchup• Fruit of the Loom laundry detergent

When are Brand Extensions Appropriate?

• Brand extensions are more likely to be favorably evaluated by consumers if they see some basis of “fit” or similarity between the proposed extension and parent brand.

• It is important that the extension achieve some brand equity and contribute to the equity of the parent brand. Therefore, the extension must also have a sufficiently high level of awareness and some strong, favorable, and unique associations.

• The major mistake in evaluating extension opportunities is failing to take all of consumers’ brand knowledge structures into account.

• Often, marketers mistakenly focus on one or so brand associations and ignore other potentially important brand associations in the process.

Successful Extensions

• Must create points-of-parity & points-of-difference in extension category– Must recognize competitive reactions

• Must enhance points-of-parity & points-of-difference of parent brand

• Must maximize the advantages & minimize the disadvantages of brand extensions

Model of Extension Evaluations

Creating extension equity depends on 3 factors:

1. Salience of parent brand associations in extension context

2. Favorability of any inferred associations in the extension context

3. Uniqueness of any inferred associations in the extension context

Model of Extension Feedback

• Effects of an extension on parent brand equity depends on 4 factors:1. How compelling the evidence is concerning

the corresponding attribute or benefit association in the extension context

2. How relevant or diagnostic the extension evidence is concerning the attribute or benefit for the parent brand

3. How consistent the extension evidence is with the corresponding parent brand associations.

4. How strong existing attribute or benefit associations are held in consumer memory for the parent brand

Evaluating Brand Extension Opportunities

1. A useful baseline case to study is when consumers evaluate brand extensions based on the extension itself with no other information

2. Create mental map of parent brand & identify key sources of equity.

3. Identify possible extension candidates on basis of parent brand associations and overall similarity or fit of extension to parent brand.

4. Evaluate candidate potential for a) extension equity according to the three-factor model and b) extension feedback effects according to the four-factor model.

5. Consider possible competitive advantages as perceived by consumers and possible reactions initiated by competitors.

Establishing Brand EquityOver Market Segments

To build brand equity, it is often necessary to create different marketing programs to address different market segments by:

1. Identify differences in consumer behavior

• How they purchase & use products• What they know & feel about brands

2. Adjust branding program• Choice of brand elements• Nature of supporting marketing program• Leverage of secondary associations

Building a Global Brand

• How valid is the mental map in the new market? – What is the level of awareness? – How valuable are the associations?

• What changes need to be made to the mental map?

• By what means should this new mental map be created?

Ten Commandments of Global Branding

• Understand similarities and differences in the global branding landscape

• Don’t take short-cuts in brand-building• Establish marketing infrastructure• Embrace integrated marketing communications• Cultivate brand partnerships• Balance standardization and customization• Balance global and local control• Define operable guidelines• Implement a global brand equity measurement system• Establish effective lines of communication

Characteristics of Strong Brands

• Understand brand meaning and market appropriate products and market product appropriately–Disney

–Nike

–Southwest Airlines

Characteristics of Strong Brands

• Properly position brands–Visa

Characteristics of Strong Brands

• Provide superior delivery of desired benefits–Starbucks

–Federal Express

–Amazon

–Dockers

Characteristics of Strong Brands

• Maintain innovation and relevance for the brand–Gillette

–Charles Schwab

Characteristics of Strong Brands

• Establish credibility and create appropriate brand personality and imagery–Apple

–Virgin

Characteristics of Strong Brands

• Communicate with a consistent voice at one point in time and over time–Coca-Cola

–Accenture (Andersen Consulting)

Characteristics of Strong Brands

• Employ a full range of complementary brand elements and supporting marketing activities– Intel

–Merrill Lynch

–Yahoo

Characteristics of Strong Brands

• Strategically design and implement a brand hierarchy and brand portfolio–BMW

–DuPont

–The Gap

–Ford

Characteristics of Strong Brands• Understand brand meaning and market

appropriate products• Properly position brands• Provide superior delivery of desired benefits• Maintain innovation and relevance for the brand• Establish credibility and create appropriate brand

personality and imagery• Communicate with a consistent voice• Employ a full range of complementary brand

elements and supporting marketing activities• Strategically design and implement a brand

hierarchy

Service Branding Addendums

• Surpass customer expectations– Nordstrom

• Maximize service efficiency– McDonalds

• Develop employee equity– Disney

• Establish productive partnerships– American Airlines

B-to-B Branding Addendums• Emphasize corporate or family brand• Establish strong corporate credibility &

other intangibles– service delivery

• Employ full range of IMC• Leverage equity via secondary

associations– other companies

• Develop market-specific branding programs

Seven Deadly Sins of Brand Management

• Failure to understand the full meaning of the brand–Bic

Seven Deadly Sins of Brand Management

• Failure to live up to the brand promise–United Airlines

Seven Deadly Sins of Brand Management

• Failure to adequately support the brand–Coors–Shell

Seven Deadly Sins of Brand Management

• Failure to be patient with the brand–Michelob

Seven Deadly Sins of Brand Management

• Failure to adequately control the brand–Reebok

Seven Deadly Sins of Brand Management

• Failure to properly balance consistency and change with the brand–Kodak–Levi-Strauss

Seven Deadly Sins of Brand Management

• Failure to understand complexity of brand equity measurement and management– Numerous “dot.com” brands

Seven Deadly Sins of Brand Management

• Failure to understand the full 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 complexity of brand

equity measurement and management