Transcript (Brand) is
BRAND MANAGEMENT By: Vicente C. Dinglasan 2 Mass Marketing Mass Production Mass Distribution Mass Promotion 3 Creates Largest Potential Market Lowest Lower Costs Prices (or, Higher Margins) 4 But *Proliferation of Advertising Media & Distribution Channels makes it More Difficult and Increasingly Expensive to reach a Mass Audience 5 Micro Marketing Segments Niches Local Areas Individuals 6 Target Marketing Effective Target Marketing Requires : That marketers identify and profile distinct groups of buyers who differ in their needs and preferences (Market Segmentation). That they select one or more market segments to enter (Market Targeting). That, for each market segment, they establish and communicate the distinctive benefit/s of the company’s market offering (Market Positioning). Market Segment 7 A market segment consists of a group of customers who share a similar set of needs and wants. Task of Marketer: Identify the segments and decide which one/s to target. It is not his task to create segments. Niche Marketing 8 Niche – A more narrowly defined customer group seeking a distinctive mix of benefits. Identified by dividing a segment into sub segments. Customers willing to play a premium (their distinct needs are satisfied). Adequate profitability and growth potential. Not big enough to attract other competitors. “Guerrillas vs. Gorillas” 9 Demographic Segmentation Age and Life-Cycle stage Income Generation Social Class 10 Psychographic Segmentation Buyers divided into different groups on the basis of Psychological / Personality Traits, Lifestyle or Values. (People within the same demographic group can exhibit very different Psychographic Profiles.) Behavioural Segmentation 11 Occasions Benefits User Status Usage Rate Buyer – Readiness Stage Loyalty Status Attitude 12 Behavioural Segmentation Breakdown Not yet repeated Tried Aware Target Market Rejector Loyal to other Brand Repeated Switcher Light User Loyal to brand Heavy User Favourable Opinion Not tried Unaware Neutral Negative Opinion Regular User 13 Strong Brands are Good for Business “The ability to Create, Maintain, Enhance and Protect Brands” – The most distinctive skill of Professional Marketers. Strong Brands Command a Price Premium. Elicit Deep Customer Loyalty. They capture the Imagination of the Consumers and the Financial Community alike. Defining a Brand 14 A Brand is a name, term, sign, symbol, or design, or a Combination of them, intended to Identify the Goods or Services of one seller of group of sellers to Differentiate them from those of Competitors. The Role of Brands 15 Brands identify the source or maker of a product and allow consumers to assign responsibility for its performance to a particular manufacturer. Brands simplify Consumers’ decision – making and reduce their risks when they select brands. Brands simplify product handling or tracing. Brands help organize inventory and accounting records. Legal Protection for the Brand 16 • A brand offers the company legal protection for unique features or aspects of the product. (Brand Name – Registered Trademark) (Manufacturing Process – Patents) (Packaging – Copyrights and Proprietary Designs) (IPR – Intellectual Property Rights) Build Brand Loyalty 17 Brand loyalty can be built. Creates barriers to entry. Loyalty translates into customer willingness to pay a higher price. Secures a competitive advantage even if manufacturing processes and product designs are matched by competitors. Be cautious about changing a crucial element of a brand. Branding is endowing products and services with the power of a brand. 18 “ A brand resides in the minds of consumers. It is a perceptual entity rooted in reality but reflecting the perceptions and idiosyncracies of consumers.” Branding is about creating differences between products. Consumers must be convinced there are meaningful differences among brands in the product or service category, for branding strategies to be successful and brand value to be created. 19 Differentiation Between Brands Brand differences may be related to the attributes or benefits of the product itself. They may also be the brand owner’s ability to understand consumer motivations and desires and to create relevant and appealing images around their products. Branding can be applied to a physical good, a service, a retail outlet, a person, a place, an organization, or an idea. 20 What is Brand Equity? The added value endowed on products and services. Reflected in the way consumers think, feel and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands for the firm. Premise of customer-based brand equity models: The power of a brand lies in what customers have seen, read, heard, learned, thought and felt about the brand over time. 21 Customer-Based Brand Equity The differential effect that brand knowledge has on consumer response to the marketing of that brand. 3 Key Ingredients: 1. 2. 3. Brand equity arises from differences in consumer response. If no differences occur, the brand name product is essentially a commodity or generic version of the product. Differences in response are a result of the consumer’s knowledge about the brand. (Thoughts, feelings, images, experiences, beliefs.) Brands must create strong, favourable and unique brand associations with customers. Differential response by consumers that makes up brand equity is reflected in perceptions, preferences and behaviour related to all aspects of the marketing of a brand. Stronger brands lead to greater revenue. 22 Marketing Advantages of Strong Brands •Improved perceptions of product performance •Greater loyalty •Less vulnerability to competitive marketing actions •Less vulnerability to marketing crises •Larger margins •More inelastic consumer response to price increases •More elastic consumer response to price decrease •Greater trade cooperation and support •Increased marketing communications effectiveness •Possible licensing opportunities •Additional brand extension opportunities 23 Investing in Brand Knowledge Marketing funds spent on products and services each year are investments in consumer brand knowledge. -Quality of the investment is the critical factor. -Quantity of the investment must meet the minimum threshold amount. Brand Promise 24 The Marketer’s vision of what the brand must be and do for consumers. The true value and future prospects of a brand rest with consumers – their knowledge about the brand and their likely response to marketing activity as a result of this knowledge. Understanding consumer brand knowledge (Everything linked to the brand in the minds of consumers.) is the foundation of Brand Equity. Brand Equity Models 25 Brand Asset Valuator (BAV) -developed by Young & Rubicam (Y&R) Differentiation – degree of difference from others Energy – sense of momentum Relevance – breadth of brand’s appeal Esteem – how well brand is regarded and respected Knowledge – consumers’ familiarity and intimacy with the brand Brand Z - developed by Milward Brown and WPP 26 Brand Dynamics Pyramid - consumers move up the pyramid from presence to bonding. 27 Brand Equity Models AAKER Model - Developed by Professor David Aaker of Berkely. Brand Equity = Brand Awareness Brand Loyalty Brand Associations Brand Management – starts with developing Brand Identity. Brand Identity - core identity elements (“team solutions”) - extended identity elements (“Global Network of Local Experts”) - brand essence ( “Commitment to Excellence”) Brand Resonance Model 28 Stages of Brand Development Branding Objective at Each Stage 4. Relationships = What about you and me? 3. Response = What about you? Intense. active loyalty Resonance Judgements Positive, accessible reactions Feelings 2. Meaning = Who are you? Points of parity & difference Performance 1. Identity = Who are you? Imagery Salience Deep, broad brand awareness Resonance: Intensity of the Psychological Bond customers have with the brand. 29 Building Brand Equity A) Choosing Brand Elements - “Trademarkable devices that identify and differentiate the brand.” e.g. Nike’s “swoosh” logo “Just do it” slogan “Nike” name based on the winged goddess of victory. 6 Criterias for Choosing Brand Elements: 1. Memorable 2. Meaningful 3. Likeable 4. Transferable 5. Adaptable 6. Protectible 30 Building Brand Equity B) Designing Holistic Brand-Building Marketing Programs 3 New Themes for Holistic Marketing 1. 2. 3. Personalization: One-to-one marketing through the internet. Integration: Mix and match marketing activities to maximize individual and collective efforts. Internalization: Internal perspective needed to ensure that employees and marketing partners appreciate and understand basic branding notions and how they can HELP – OR HURT – Brand Equity. “The brand promise will not be delivered unless everyone in the company lives the brand.” “Walk the Talk” 31 Building Brand Equity C) Leveraging Secondary Associations Create Brand Equity by linking the brand to other information in memory that conveys meaning to consumers. Sources of “Secondary” Brand Associations: The company itself Countries by identifying product origin Channels of distributions Other brands (e.g. Co-branding) Characters ( Through Licensing) Spokespeople (Through Endorsements) Sporting or Cultural events (Through Sponsorships) Others ( Awards or Reviews) 32 Measuring Brand Equity 2 Basic Approaches 1. 2. Indirect – assesses potential sources of brand equity by identifying and tracking consumer brand knowledge structures. Brand Audit – consumer focused series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. Direct – assesses the actual impact of brand knowledge on consumer response to different aspects of marketing. Brand – Tracking Studies – collect quantitative data from consumers on a routine basis over time to provide marketers with consistent, baseline information about how their brands and marketing programs are performing on key dimensions. Brand Valuation 33 The job of estimating the total financial value of the brand Rank Brand 2006 Brand Value (Billions) 1 Coca-Cola $67.00 2 Microsoft $56.93 3 IBM $56.20 4 GE $48.91 5 Intel $38.32 6 Nokia $30.13 7 Toyota $27.94 8 Disney $27.85 9 McDonald’s $27.50 10 Mercedes-Benz $22.13 Managing Brand Equity 34 Brand Reinforcement Brand Revitalization “A brand needs to be carefully managed so that its value does not depreciate.” 35 Brand Reinforcement Reinforce brand equity by marketing actions that consistently convey the meaning of the brand in terms of: 1. What products the brand represents, what core benefits it supplies, and what needs it satisfies; 2. How the brand makes products superior, and which strong, favourable, and unique brand associations should exist in the minds of consumers. 36 Brand Reinforcement Reinforcing brand equity requires innovation and relevance throughout the marketing program. Provide marketing support that is consistent in amount and kind. The brand must always be moving forward in the right direction. - New and compelling offerings and ways to market them. - Well-received new product improvement or creativelydesigned Ad campaign vs. short-term Promotional Price Discount. 37 Brand Revitalization In revitalizing a brand – 1. 2. 3. 4. Understand what the sources of brand equity are. Are positive associations losing their strength or uniqueness? Have negative associations become linked to the brand? Decide wether to return the same positioning or create a new one – and if, so – which one? If the actual marketing program fails to deliver on the brand promise, then a “Back to Basics” strategy may make sense. ( At the opposite end is “Reinvention .”) Almost all brand reinventions start with the product. 38 Devising a Branding Strategy Branding strategy – reflects the number and nature of both common and distinctive brand elements it applies to its products. When a Company introduces a new product it has 3 choices: 1. 2. 3. Develop new brand elements for the new product. Apply some of its existing brand elements. Use a combination of new and existing brand elements. Brand Extension – established brand is used to introduce a new product. 39 Devising a Branding Strategy Sub Brand – new brand combined with an existing brand. Parent Brand – The existing brand that gives birth to a brand extension or sub brand. Family Brand – parent brand is already associated with multiple products through brand extensions. Brand Extensions: Line Extension – parent brand covers a new product within a product category it currently serves. Category Extension – parent brand is used to enter a different product category from the one it currently serves. 40 Devising a Branding Strategy Brand Line – consists of all products - original as well as line and category extensions – sold under a particular brand. Brand Mix (or, Brand Assortment) is the set of all brand lines that a particular seller makes available to buyers. Brand Variants – specific brand lines supplied to specific retailers or distribution channels. These could be the retailers’ own “House” brands. Line Product – one whose brand name has been licensed to other manufacturers that actually make the product. Companies use licensing to push their company name and image across a wide range of products. Branding Decisions 41 Individual Names – major advantage – the company does not tie its reputation to the product. Blanket Family Names – corporate brand is used across a company’s range of products. Sales of new products are likely to be strong if the manufacturer’s name is good. Separate Family Names for All Products – company produces different products so that one name may not be applicable – more logical to have separate family names. Corporate names combined with Individual Product Names – company name legitimizes, and the individual name individualizes, the new product. Selecting a Brand Relationship Spectrum Position 42 Toward a Branded House Toward a House of Brands Does the parent brand contribute to the offering by adding: • Associations enhancing the value proposition? • Credibility through organizational associations? • Visibility? •Communication efficiencies? Is there a compelling need for a separate brand because it will: • Create and own an association? • Represent a new, different offering? • Retain/capture customer/brand bond? • Deal with channel conflict? Will the master brand be strengthened by associating with the new offering? Will the business support a new brand name? Brand Extensions – Advantages and Disadvantages 43 Advantages Increased odds of new product success. Positive feedback effects. Easier to convince retailers to stock up. Marketing communications – can focus on product, brand awareness already exists. Reduces cost of introductory launch campaign Increase brand’s visual impact in retailer’s shelf space. Can renew consumer interest in the brand. Disadvantages Brand name may become less strongly identified with any one product in the range. Brand dilution may occur. Cannibalization of parent brand may occur. ( Unless it is a form of Pre-emptive Cannibalization.) 44 Process Insights on Brand Extensions Academics have studied brand extensions closely. Here is a summary of some of their key research findings. Successful brand extensions occur when the parent brand is seen as having favourable associations and there is a perceptions of fit between the parent brand and the extension product. There are many bases of fit: product-related attributes and benefits, as well as nonproduct-related attributes and benefits related to common usage situations or user types. Depending on consumer knowledge of the categories, perceptions of fit may be based on technical or manufacturing commonalities or more surface considerations such as necessary or situational complementarity. High-quality brands stretch farther than average-quality brands, although both types of brands have boundaries. A brand that is seen as a prototypical of a product category can be difficult to extend outside the category. Concrete attribute associations tend to be more difficult to extend than abstract benefit associations. Consumers may transfer associations that are positive in the original product class but become negative in the extension context. Consumer may infer negative associations about an extension, perhaps even based on other inferred positive associations. It can be difficult to extend into a product class that is seen as easy to make. A successful extension can not only contribute to the parent brand image but also enable a brand to be extended even farther. An unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two. An unsuccessful extension does not prevent a firm from “backtracking” and introducing a more-similar extension. Vertical extensions can be difficult and often require subbranding strategies. The most effective advertising strategy for an extension emphasizes information about the extension (rather than reminders about the parent brand). Brand Portfolios 45 Multiple brands may be needed to pursue multiple segments. Why introduce multiple brands in a category: 1. 2. 3. 4. Increasing shelf presence and retailer dependence in the stores. Attracting consumers seeking variety (potential switchers). Increasing internal competition within the firm. Yielding economies of sales in advertising, sales, merchandising and physical distribution. Basic principle in designing a brand portfolio: “ Maximize market coverage but Minimize brand overlap.” Specific Roles of Brands in a Portfolio 46 Flankers – “Fighter” brands are positioned vs. competitors’ brands so that the more important and more profitable brands in the portfolio can retain their desired position. Cash Cows – Former big brands are kept in the portfolio because their remaining volume is still sizable. They can be “milked” for profit. Low-End Entry Level – Used to attract customers to the brand franchise. “Traffic builders” – “Trade Up.” High – End Prestige – Adds prestige and credibility to the entire portfolio. “Halo Effect.” Brand Positioning 47 “No company can win if its products and services resemble every other product and offering. As part of the strategic brand management process, each offering must represent a compelling, distinctive big idea in the mind of the target market.” “All marketing strategy is built on STP – segmentation, targeting and positioning. A company discovers different needs and groups in the market place, targets those it can satisfy in a superior way, then positions its offering so the target market recognizes the company’s distinctive offering and image.” Positioning (In general) 48 Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. Good brand positioning helps guide marketing strategy by clarifying the brand’s essence, what goals it helps the consumer achieve, and how it does so in a unique way. Customer – Focused Value Proposition 49 Company and Product Perdue Farms (chicken) Target Customers Qualityconscious consumers of chicken Benefits Tenderness Price Value Proposition 10% More tender golden Premiu chicken at a moderate m premium price Volvo (station wagon) SafetyDurability 20% The safest, most durable conscious and safety Premiu wagon in which your “upscale” m family can ride The result of positioning is the successful creation of a customer-focused value proposition, a cogent reason families why the target market should buy the product. Deciding on a positioning requires determining frame of reference target market and the Domino’s ConvenienceDelivery 15%by identifying A goodthehot pizza, competition and identifying the ideal points-of-parity (P-O-P) and points-of difference (P-O-D) brand (pizza) minded pizza speed and Premiu delivered promptly to your associations. lovers good quality m door, at a moderate price 50 Competitive Frame of Reference for Brand Positioning Category Membership – How to convey Announce category benefits Compare to exemplars Relying on the product descriptor P-O-D – Attributes or benefits that consumers strongly associate with a brand, evaluate positively, and believe they could not find to the same extent with a competitive Brand, Brand must demonstrate clear superiority. P-O-P – Associations that consumers view as essential to a legitimate and credible offering. The “Green fee” to be able to play the game. Judging Desirability and Deliverability for P-O-D 51 Desirability Criteria Deliverability Criteria Relevance Target Consumers must find the POD personally relevant and important. • The Western Stamford hotel in Singapore advertised that it was the world’s tallest hotel, but a hotel’s height is not important to many tourists. Distinctiveness Target consumers must find the POD distinctive and superior. • Splenda sugar substitute overtook Equal and Sweet’N Low to become the leader in its category in 2003 by differentiating itself on its authenticity as a product derived from sugar, without any of the associated drawbacks. Believability Target consumers must find the POD believable and credible. A brand must offer a compelling reason for choosing it over the other options. •Mountain Dew may argue that it is most energizing than other soft drinks and support this claim by noting that it has a higher level of caffeine. •Chanel No.5 perfume may claim to be the quintessential elegant French perfume and support this claim by noting the long association between Chanel and haute couture. Feasibility The product design and marketing offering must support the desired association. Does communicating the desired association require real changes to the product itself, or just perceptual shifts in the way the consumer thinks of the product or brand? The latter is typically easier. • General Motors has had to work to overcome public perceptions that Cadillac is not a youthful, contemporary brand. Communicability Consumers must be given a compelling reason and understandable rational as to why the brand can deliver the desired benefit. What factual, verifiable evidence or “proof points” can ensure consumers will actually believe in the brand and its desired associations? •Substantiators often come in the form of patented, branded ingredients, such as Nivea Wrinkle Control Crème with Q10 co-enzyme or Herbal Essences hair conditioner with Hawafena. Sustainability The firm must be sufficiently committed and willing to devote enough resources to create an enduring positioning. Is the positioning preemptive, defensible, and difficult to attack? Can the favorability of a brand association be reinforced and strengthened over time? •It is generally easier for market leaders such as ADM, VISA and SAP, whose positioning is based in part on demonstrable product or service performance, to sustain their positioning than for market leaders such as FENDI, PRADA, and HERMES, whose positioning is based on fashion and is thus subject to the whims of a more fickle market. Negatively Correlated Attributes and Benefits 52 Low price vs. High quality Powerful vs. Safe Taste vs. Low calories Strong vs. Refined Nutritious vs. Good tasting Ubiquitous vs. Exclusive Efficacious vs. Mild Varied vs. Simple The Positioning Statement 53 To (target group and need), our (Brand) is (the concept) that (What the Point-Of-Difference is or does). Examples “To busy professionals who need to stay organized, Palm Pilot is an electronic organizer that allows you to back up files on your PC more easily and reliably than competitive products.” “To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine. With Mountain Dew, you can stay alert and keep going even when you haven’t been able to get a good night’s sleep.” Lux Beauty Soap 54 Previous 4 Colors Pink Ordinary Sampaguita Green Soap Fragrance Yellow Shape Plain Wrapper Blue Design Consumer Benefit: You can select a color that matches the color of your bathroom. Lux Beauty Soap 55 New Pure White Color New delicate, sophisticated fragrance (ULW 88) – thoroughly consumer tested New cushion-shape New Package Scroll Blue and Gold Metallic Box Lux Beauty Soap 56 New Advertising Endorsed by leading young actresses with a strong fan base. “ 9 out of 10 movie stars prefer Lux.” Rapid Product Sampling Campaign Functional Marketing Organization 57 Marketing vice president Marketing administration manager Advertising and sales promotions manager Sales Manager Marketing research manager New-products manager The Product Manager’s Relationships 58 Marketing and Distribution Advertising Agency Media Research and Development Promotion Services Product manager Legal Packaging Fiscal Purchasing Market Research Publicity Sales Force 59 (a) Organizing the Product Team Vertical Product Team (b) Triangular Product Team (c) Horizontal Product Team PM= product manager R= market researcher D= distribution specialist AP= associate product manager C= communication specialist F= finance/accounting specialist PA= product assistant S= sales manager E= engineer PM PM APM PM R PA R C C S D F E Category Management 60 Market Managers Menswear Rayon Acetate Product Managers Nylon Orlon Dacron Women’s Wear Home furnishings Industrial markets What steps can a CEO take to create a market and customer focused company? 1. 2. 3. 4. 5. 6. 7. 61 8. Convince senior management of the need to become customer focused. The CEO personally exemplifies strong customer commitment and rewards those in the organization who do likewise. For example, former CEOs Jack Welch of GE and Lou Gerstner of IBM are said to have spent 100 days a year visiting customers, in spite of their many strategic, financial, and administrative burdens; current Starbucks CEO 9. Jim Donald visits 10-20 stores a week to go to the back of the counter and talk to store partners (employees) and customers. Appoint a senior marketing officer and marketing task force. The marketing task force should include the CEO; the vice presidents of 10. sales, R&D, purchasing, manufacturing, finance and human resources; and other key individuals. Get outside help and guidance. Consulting firms have considerable experience in helping companies move toward a marketing orientation. Change the company’s reward measurement and system. As long as purchasing and manufacturing are rewarded for keeping costs low, they will resist accepting some costs required to serve customers better. As long as finance focuses on short-term profit, it will oppose major investments designed to build satisfied, loyal customers. Hire strong marketing talent. The company needs a strong marketing vice president who not only manages the marketing department but also gains respect from and influence with the other vice presidents. A multidivisional company will benefit from establishing a strong corporate marketing department. Develop strong in-house marketing training programs. The company should design well-crafted marketing training programs for corporate management, divisional general managers, marketing and sales personnel, R&D personnel, and others. GE, Motorola, and Accenture run these programs. Install a modern marketing planning system. The planning format will require managers to think about the marketing environment, opportunities, competitive trends, and other forces. These managers then prepare strategies and sales-and-profit forecasts for specific products and segments and are accountable for performance. Establish an annual marketing excellence recognition program. Business units that believe they’ve developed exemplary marketing plans should submit a description of their plans and results. Winning teams should be rewarded at a special ceremony and the plans disseminated to the other business units as “models of marketing thinking.” Accenture, Beckton-Dickinson, and DuPont follow this strategy. Shift from a department focus to a process-outcome focus. After defining the fundamental business processes that determine its success, the company should appoint process leaders and cross-disciplinary teams to reengineer and implement these processes. Empower the employees. Progressive companies encourage and reward their employees for coming up with new ideas and empower them to settle customer complaints to save the customer’s business. IBM, for example, lets its frontline employees spend up to $5,000 to solve a customer problem on the spot. 62 PRC Marketing Organization A Chairman & CEO Advertising Manager Marketing Director Advertising Manager Product Managers Promo Managers Support Services Sales Manager Sales Force PM – Breeze Tempo Market Research manager Marketing Research Staff PM – Rama Blue Band PS – Golf Cup Camia PS – Lux WhiteBand RedBand PM- Lifebuoy PS Royco PRC Marketing Organization - B 63 PRC Marketing Organization - C 64 Profit Center - Based Detergents & Toilet Preps Profit Center Foods Profit Center Managing Director Same General Marketing Manager Same General Sales Manager Same General Technical Manager Same Financial Controller Same Shared Central Services • Finance • HR • Purchasing • IT • Marketing Research • Corporate Affairs (Legal, PR)