McGraw-Hill/Irwin

1. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

2. Chapter NineStrategic BrandManagement McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

3. STRATEGIC BRAND MANAGEMENT • Challenges in Building Strong Brands • Strategic Brand Analysis • Brand Identity Strategies • Managing Products/Brands • Managing the Brand Portfolio

4. CHALLENGES IN BUILDING STRONG BRANDS 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

5. Abrandis a name, term, sign, symbol, or design, or combination of them, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of competitors. American Marketing Association Goods Versus Services Services are intangible consumed at the time they are produced, often linked to the people who produce the services.* * Leonard Berry, “Services are Different,” Business, May-Jun 1980, 24-30.

6. 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.

7. 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. 97422, 1997

8. 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.

9. 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 TM 5-1

10. Marketing’s Role in Product Strategy • Market sensing • Identifying the characteristics and performance features of products • Guiding target market and program-positioning strategies Strategic brand management decisions are relevant to all businesses, including suppliers, producers, wholesalers, distributors, and retailers. TM 5-1

11. Strategic Brand Management Brand Identity Brand Equity Identity Implementation Brand Strategy Over Time Strategic Brand Analysis Managing the Brand Portfolio Leveraging the Brand

12. Strategic Brand Analysis

13. Tracking Product Performance Set Performance Objectives Select Method(s) for Product Evaluation Identify Problem Products Decide How to Eliminate the Problems

14. Product life cycle analysis Product grid analysis Financial analysis Analyzing Brand Performance Brand Positioning maps Research studies Standardized information services

15. 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

16. Product Grid 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

17. 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.* • 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. * David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15. **Ibid, 102-120.

18. BRAND IDENTITY STRATEGIES 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.

19. Specific Product Line of Products Private Branding Basis of Identification Combination Basis Company Name

20. MANAGING PRODUCTS/BRANDS • Building the Product/Brand Over Time • Product Line Strategies • Product/Brand Portfolio Strategies

21. Strategies for Improving Product Performance Product improvement Alter marketing strategy Cost reduction Product line Strategy Add new product(s) Eliminate specific product(s) Product mix strategy Delete product line(s) Add new product line(s) Change product line priorities

22. 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

23. 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

24. Brand Leveraging Strategy LINE EXTENSION Minor variants of a single product are marketed under the same brand name BRAND EXTENSION • Extensions of the brand name to other product categories • --Similar • --Dissimilar

25. Leveraging Alternatives LINE EXTENSIONS BRAND EXTENSIONS Horizontal Extension Vertical Extension Another Product Class Co- Branding Range Brand Up from Core Brand Down from Core Brand

26. 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

27. SEVEN DEADLY SINS OF BRAND MANAGEMENT* • Failure to fully understand the 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 the complexity of brand equity measurement and management. *Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.

28. MANAGING THE BRAND PORTFOLIO • Objectives: • Leverage commonalities to generate synergy • Reduce damage to brand identity • Obtain clarity of product offering • Enable change and adaptation • Guide resource allocations among brands Source: Aaker, Building Strong Brands, 1996.

29. GLOBAL BRANDS • International markets: strategic branding challenges • Global brands supported by increasingly cosmopolitan consumers in many countries • Don’t build global brands but strive for global brand leadership • Challenge for MNCs: managing brand systems containing global, regional, and local brands

30. Internet Brands • Interactivity enhances brand relationships and corporate reputation • Guidelines for a website used to reinforce an existing brand • Create a positive experience (ease of use, value, interactive, personalized, timely) • Reflect and support the brand • Synergy with other communication programs • Provide home for loyalists • Differentiate with strong sub-branded content Source: Aaker and Joachimsthaler, Brand Leadership, 2000, 242.

31. HOW MANY BRANDS? • Is it different enough to merit a new name? • Will the brand identity add value? • Are there risks in using an existing brand name? • Is the new brand a viable business venture?