West, Ford & Ibrahim: Strategic Marketing 2e

West, Ford & Ibrahim: Strategic Marketing 2e Chapter 6: Branding strategies

Structure A. INTRODUCTION 1. Overview and Strategy Blueprint 2. Marketing Strategy: Analysis & perspectives B. WHERE ARE WE NOW? 3. Environmental & Internal Analysis: Market Information & Intelligence C. WHERE DO WE WANT TO BE? 4. Strategic Marketing Decisions, Choices & Mistakes 5. Segmentation, Targeting & PositioningStrategies 6. Branding Strategies 7. Relational & Sustainability Strategies E. DID WE GET THERE? 14. Strategy Implementation, Control & Metrics D. HOW WILL WE GET THERE? 8. Product Innovation & Development Strategies 9. Service Marketing Strategies 10. Pricing& Distribution 11. Marketing Communications 12. E-Marketing Strategies 13. Social and Ethical Strategies

Learning Objectives Provide an overview of the complex nature of branding Examine the ways in which consumers attach meaning to brands Discuss ways in which brand managers can streamline brand costs Identify the various ways in which brand managers can strategically create relationships between their brands and consumers Present several strategic assessment tools that will aid the brand manager in assessing the nature of brand meaning and value

Introduction Branding is a major component of product strategy The ability to develop and nurture effective brands is probably the single most important skill set within the marketer’s professional toolkit Brands communicate valuable information to the consumer To the customer “perception is reality” The firm must regularly assess the nature of the brand image

Strategic Brand Management Two important questions raised in this chapter are: (1) How can we use brand strategy to reduce our overall costs ? and (2) How can brand strategy differentiate our offerings and help us build a meaningful relationship with our target consumer? Strategic brand management requires a sophisticated understanding of industry cost structure, brand efficiency and brand profitability and consumer perceptions of brand and the potential for differentiation and sustainable competitive advantage.

Branding and Functionality American Marketing Association defines a brand as a name, symbol, word, sign design or combination that differentiates one or more offerings of a seller or group of sellers from the competition. Brands perform a series of functions for both the buyer and seller. For the buyer brands help with product identification, signal quality, provide social status For the seller brands facilitate customer identification, breed customer familiarity, identify specific product offerings, differentiate offering, make the offering distinct, enhance brand loyalty

Brand Identity Brand has a core identity, which is its essence. The extended identity - psychological and physical aspects. Brand can be thought of as a product. Brand can also be imbued with organizational attributes (e.g., innovative, young, socially-responsible, etc.) and certain expectations in terms of geographic coverage (e.g., local vs. global). Brand can become synonymous with a particular person. Brand can also become a symbol (see Figure 6.3). A brand is a complex entity, and it potentially means different things to different people. Aaker (2004) emphasizes that successful brand companies have a clear idea of their brand identity.

Corporate vs. Product Branding There is an important difference between company or corporate branding and its effects versus the use of product brands or family branding. When a company uses a distinctive corporate brand name, then everything that it does using that name must be consistent as the name will become synonymous with a certain set of expectations. The unfortunate tendency is that once a brand is well known, the company will quickly begin to consider using that name awareness to leverage one or more additional offerings under that brand. This leads to quality inconsistencies. The use of different brand names for different quality levels is a good way to handle this kind of perceptual issue (see Mini Case 6.1). Where corporate branding becomes particularly critical is when the company produces a great variety of products that are quite distinct from each other and wants to present itself as a good corporate citizen.

Brand Equity The measurement of brand value. Compare brand assets and brand liabilities and maintain a strong and viable brand equity valuation. Brand equity comprises five different categories of assets: Brand name awareness Brand loyalty Perceived quality Brand associations Intellectual rights A strong foundation for brand equity involves various brand associations that customers will develop (Aaker,1996a). Brand identity is the driving force behind the development of brand associations.

Brand Architecture A brand portfolio can contain a variety of different types of brand. The brand relationship spectrum developed by Aaker & Joachimsthaler 2000b, helps with brand architectural analysis (see Fig 6.4). House of brands at one extreme to branded house at the other P&G and Colgate Palmolive represent a house of brands A house of brands allows the company to potentially: Avoid incompatible brand associations Signal breakthrough advantages Own a new product class association Avoid channel conflict

Brand Architecture The next category after house of brand is the endorsed brand. Subbrands are strongly connected to the parent brand and build additional associations. Branded house: The corporate name has the dominant driving position for a variety of product offerings.

Cost Reduction, Brand Efficiency and Brand Profitability Strategic brand decisions will have an impact on the firm’s profitability Operational efficiencies can be achieved by the following: Brand leveraging – attaching the name to other company offerings Co-branding Bringing together two separate company brands to be marketed together to create a new joint offering and additional value for the customer Abratt & Motlana, 2002, suggest that co-branding makes sense for acquisitions (see Mini Case 6.2)

Non-traditional communication / promotional channels Joachimsthaler & Aaker, 1997: European brand managers used a variety of efficient and effective promotional channels New brand valuation mechanisms Advertising turnover- relationship between advertising expenditure and brand value Brand ROI - Brand ROI = Brand Sales Net Income Brand value Brand sales Cost Reduction, Brand Efficiency and Brand Profitability X

New brand valuation mechanisms Brand health – Berg, Matthews and O’Hare (2007) suggest that the proper assessment of brand health involves the interrelating of five metrics: - Brand leadership - Brand liabilities - Brand attractiveness - Brand distinctiveness - Brand satisfaction Cost Reduction, Brand Efficiency and Brand Profitability

Differentiation: Consumer Perceptions of Brand and Sustainable Competitive Advantage Customer brand involvement and perceptual connections Build strong relationships with customers by enhancing customer experience with the brand, its personality and its heritage (Joachimsthaler & Aaker, 1997)

Differentiation: Consumer Perceptions of Brand and Sustainable Competitive Advantage Brand perceptual reinforcement and revitalization Keller (1999) suggests that brand management must always take a long term perspective Reinforcement of equity occurs when marketing tactical decisions convey consistent meanings to the consumer There may be times in a brand’s lifetime when strategic chances will be taken that may not be successful Revitalizing the brand Brand audit Expanding brand awareness, improving brand image, balancing both old and new target segment, retiring/consolidating brands

Internal brand marketing Papasolomou and Vrontis (2006) found that when the company treats its own employees as customers, it enhances the potential for the creation of a service culture, which in turn will help to create a stronger brand. In order to create a service culture, a company should view employees as internal customers, meet or exceed service standard expectations, provide training and development for employees to make service their first priority, and offer a series of employee incentives to improve performance. The brand wheel (see Figure 6.5) Differentiation: Consumer Perceptions of Brand and Sustainable Competitive Advantage

Figure 6.5: Brand Wheel

Lovemarks, the latest brand thinking Kevin Roberts (CEO , Worldwide operations of Saatchi & Saatchi): Branding is flawed as brands are not actually making strong emotional connections with the people There are six reasons for this : Brands worn out from overuse Brands no longer mysterious Brands cant understand new consumer Brands struggle with old fashioned competition Brands have been captured by formula Brands have been smothered by creeping conservatism What is needed is to build an emotional bond with the consumer to such an extent that he feels a love for the product Roberts (2004) provides a comparison of brands and lovemarks in Table 6.1.

Lovemarks, the latest brand thinking Source: (Roberts, 2004)

Lovemarks, the latest brand thinking • Pawle and Cooper (2006) developed a measure for emotion that combines qualitative analyses with quantitative measurement to allow metrics to be used for lovemark assessment. • They develop a grid for measuring the level of love on one axis and the level of respect on the other axis (see Figure 6.6). • They developed scales for measuring emotional, social, cultural and functional relationships between consumers and brands and combined these with qualitative projective techniques to gain insight into emotional relationships. • The way for companies to win over the consumer is to create an approach which makes the emotional connection and builds a strong emotional bond.

Figure 6.6: Lovemarks Measurement Matrix Brands: Low Love High Respect Lovemarks: High Love High Respect Love Products: Low Love Low Respect Fads: High Love Low Respect Respect Source: Pawle, John and Peter Cooper (2006) “Measuring Emotion – Lovemarks, the Future Beyond Brands,” Journal of Advertising Research, (March), pp. 38-48.

Brand Simple, additional new brand thinking • Adamson (2007) suggests that the best brand strategies are ones in which the brand becomes clearly synonymous with the organization and embodies its values. • Brands need to be simplified – not complicated. • The basic foundation for everything begins with a simple brand idea. This is the basic concept or meaning behind the brand. • The company embraces the brand idea, commits to it throughout the organization and then maintains the simplicity of that idea in all brand signaling and ensures that it reiterates the brand story (the brand message derived from the brand idea)in all communications to its consumers. • Anything which is not consistent with the brand story and basic idea should be eliminated. This serves to keep the brand message clear in the mind of the consumer.

Conclusion Strategic Brand management not only requires understanding of brand costs and profits but also consumer perceptions of brand meaning, image and value. Tactical decisions must never be attempted without a clear understanding of the perceptual implications of those decisions. The company that regularly assesses its brand equity will be in a better position to maintain its relevance with its target markets and ensure not only its long-term brand survival, but also its profitability and market leadership.

West, Ford & Ibrahim: Strategic Marketing 2e