Strategic Brand Management Lecture 31

1. Strategic Brand ManagementLecture 31

2. The World's 10 Most Valuable Brands - 2003 VALUE ($billions) 1 COCA-COLA 70.45 2 MICROSOFT 65.1 3 IBM 51.7 4 GE 42.3 5 INTEL 31.1 6 NOKIA 29.4 7 DISNEY 28.0 8 McDONALD'S 24.7 9 MARLBORO 22.2 MERCEDES 21.4 Data: Interbrand Corp., J.P. Morgan Chase & Co / Business Week AUGUST 4, 2003 THE BEST GLOBAL NDS2003 Global Brands ScoreboardThe table that follows ranks 100 global brands that have a value greater than $1 billion. The brands were selected according to two criteria. They had to be global in nature, deriving 20% or more of sales from outside their home country. There also had to be publicly available marketing and financial data on which to base the valuation. Strategic Brand Management

3. The World's 10 Most Valuable Brands - 2002 VALUE ($billions) 1 COCA-COLA 69.6 2 MICROSOFT 64.1 3 IBM 51.2 4 GE 41.3 5 INTEL 30.9 6 NOKIA 30.0 7 DISNEY 29.3 8 McDONALD'S 26.4 9 MARLBORO 24.2 10 MERCEDES 21.0 Data: Interbrand Corp., J.P. Morgan Chase & Co / Business Week AUGUST 5, 2002 Strategic Brand Management Interbrand’s Assessment is of Brand Power – the fullest possible view of each brand’s strengths and potential as a marketing and financial asset.

4. The World's 10 Most Valuable Brands – 2003 Data: Interbrand Corp., J.P. Morgan Chase & Co / Brandchannel.com Feb 2004 Strategic Brand Management

5. Generic Product CORE BENEFIT Expected Product Augmented Product What is a Product? • Kotler’s Five levels to a product: Potential Product

6. Potential Product • The Fundamental Need or Want that consumers satisfy by consuming the product or service Generic Product Expected Product Augmented Product What is a Product? • Kotler’s Five levels to a product: CORE BENEFIT

7. Potential Product • Basic Version of the product containing only those elements absolutely necessary to function. No distinguishing features. CORE BENEFIT Expected Product Augmented Product Generic Product What is a Product? • Kotler’s Five levels to a product:

8. Potential Product • Attributes and Characteristics that buyers normally expect and agree to when they purchase a product CORE BENEFIT Augmented Product Generic Product Expected Product What is a Product? • Kotler’s Five levels to a product:

9. Additional product attributes, benefits, or related services that distinguish the product from competitors Potential Product CORE BENEFIT Generic Product Expected Product Augmented Product What is a Product? • Kotler’s Five levels to a product:

10. All the augmentations and transformations that a product might ultimately undergo in the future Potential Product CORE BENEFIT Generic Product Expected Product Augmented Product What is a Product? • Kotler’s Five levels to a product:

11. Generic Product CORE BENEFIT Expected Product Augmented Product Generic Product Expected Product Augmented Product What is a Product? • Kotler’s Five levels to a product: • All the augmentations and transformations that a product might ultimately undergo in the future Potential Product Potential Product • Additional product attributes, benefits, or related services that distinguish the product from competitors • Attributes and Characteristics that buyers normally expectand agree to when they purchase a product • Basic Version of the product containing only those elements absolutely necessary to function. No distinguishing features. • The Fundamental Need or Want that consumers satisfy by consuming the product or service

12. What is a Brand? • Not simply a product -- anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. • A product can be: • Physical good • Service • Retail Store • Person • Organization • Place • Idea

13. What is a Brand? • Product = Commodity • A product is a produced item always possessing these characteristics: • Tangibility • Attributes and Features Brand = “Mind Set” The sum of all communications and experiences received by the consumer and customer resulting in a distinctive image in their “mind set” based on perceived emotional and functional benefits. Timothy D. Ennis, Ennis Associates, Inc

14. What is a Brand? • Derivation • Old Norse “brandr” = to burn • branding livestock • Heritage • A means to distinguish goods from one producer vs another. • AMA (technical definition) • “Name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition”

15. What is a Brand? • AMA defines a brand vs a Brand. • What does the AMA definition leave out?

16. What is a Brand? • Keller’s Definition: • A product, but one that adds other dimensions that differentiate it in some way from other products designed to satisfy the same need. • Rational and tangible • Symbolic, emotional and intangible • The psychological response to a brand can be as important as the physiological response.

17. What is a Brand? • Product = Commodity • A product is a produced item always possessing these characteristics: • Tangibility • Attributes and Features Brand = “Mind Set” The sum of all communications and experiences received by the consumer and customer resulting in a distinctive image in their “mind set” based on perceived emotional and functional benefits. Timothy D. Ennis, Ennis Associates, Inc

18. Why Does A Brand Matter? MANUFACTURERS • ID to simplify handling or tracing • Legal protection of unique features • Signal of quality level to satisfied customers • Means of endowing products w/unique associations • Competitive Advantage • Financial Returns CONSUMERS • ID Product Source • Assignment of responsibility to maker • Risk reducer • Search cost reducer • Promise, bond, or pact w/make of product • Symbolic Device • Signal of Quality

19. What is a Brand? • Products don’t exist in a void… • They are bought because consumers have found something they relate to in them, something which they value • Brand = Credible Guarantee

20. Products (Commodities) No Difference Except Price Brand Name Well Known But Similar Brand Distinctive What is a Brand? • Relative Brand Distinction • The more distinctive or different a brand is in the consumers “mind set”, the stronger brand preference becomes. This is critical to keeping competition from the consumer’s consideration. Strong Brand Perceived by the Consumer as Unique Timothy D. Ennis, Ennis Associates, Inc

21. Products (Commodities) No Difference Except Price Brand Name Well Known But Similar Brand Distinctive Strong Brand Perceived by the Consumer as Unique What is a Brand? • Relative Brand Distinction • A brand’s preference is primarily built through differentiation and relevance • Insulate product from competition • OWN Something Timothy D. Ennis, Ennis Associates, Inc

22. Kotler’s Five Levels of A Product Potential Product BRAND DISTINCTION by Timothy D. Ennis Products (Commodities) No Difference Except Price Brand Name Well Known But Similar Brand Distinctive Strong Brand Perceived by the Consumer as Unique Generic Product CORE BENEFIT Expected Product Augmented Product What is a Brand?

23. What is a Brand? • What Makes the Best Brands? • Source of company wealth for generations • Improves with Age • Develop clearly defined personalities • Develop affection & loyalty of the public • Become parents to sub-brands and brand extension • Brands = Powerful emotional tools

24. What Is a Brand? • Truly understood brands are the things which patrol the boundary between people and the world outside them. • A brand with an emotional difference can potentially command a premium forever.

25. Strategic Brand Management Corporation vs Service vs Product vs Brand

26. Alternative Branding Models Company dominates Brands Company is equal to Brands Brands dominate the Company American Express (cards) BMW (Motorcycles) Colgate (Total toothpaste) Disney (Films) General Electric (appliances) IBM (Technology) L’Oreal (Cosmetics) Sony (Electronics) Holiday Inn (Crowne Plaza) Anheuser Busch = Budweiser Campbell Soup = Godiva Chrsyler = Jeep Estee Lauder = Clinique Kraft = Maxwell House PepsiCo = Mountain Dew Time Warner = Warner Bros 3M = Scotch Tape Marriott = Courtyard Skol (Am Bev) Claridge Hotel(Savoy) Crest (P&G) Healthy Choice (Con-Agra) Hidden Valley Ranch (Clorox) Kleenix (Kimberly-Clark) Marlboro (Philip Morris) MCA Records (Universal Studios) Wranlger (VF Jeans) Kevin Clancy, Copernicus

27. POWER BRANDS • The Successful Brands • Don’t JUST sell products • Communicate Clear Values • Stretch Across a Number of Products • Attached to Consumers/ NOT Products • Individualized Relationships

28. POWER BRANDS • Allow Consumers to clearly identify and specify products which genuinely offer added value. • Deep respect for the way products fit into consumer’s lives = “core” of success • Consumer Relationship = Loyalty • Social Changes in their favor

29. POWER BRANDS • Assessing BRAND POWER BRAND DEPTH BRAND LENGTH BRAND BREADTH POWER BRAND WEIGHT Interbrand

30. POWER BRANDS • Assessing BRAND POWER • The influence or dominance that a brand has over its category or market (more than just market share) BRAND WEIGHT Interbrand

31. POWER BRANDS • Assessing BRAND POWER • The stretch or extension that the brand has achieved in the past or is likely to achieve in the future (especially outside its original category) BRAND LENGTH Interbrand

32. POWER BRANDS • Assessing BRAND POWER • The breadth of franchise that the brand has achieved both in terms of age spread, consumer types and international appeal BRAND BREADTH Interbrand

33. POWER BRANDS • Assessing BRAND POWER BRAND DEPTH • The degree of commitment that the brand has achieved among its customer base and beyond. The proximity, the intimacy and the loyalty felt for the brand. Interbrand

34. POWER BRANDS • Assessing BRAND POWER BRAND DEPTH BRAND LENGTH BRAND BREADTH POWER BRAND WEIGHT Interbrand

35. Power Brand = Master Brand? • Manifestation of Brand Essence • A term that USED TO apply only to overarching family brands (Nestle) • NOW applies to entire companies that rally around a single brand identity • Focus on entire value proposition rather than a single product’s functionality

36. Branding the Corporation • Brands are not just products but companies: • Ford • IBM • Sony • Why has marketing refocused efforts on the potential of corporate brands?

37. Branding the Corporation • Cost of creating and supporting product brands has become prohibitive • $1Bil to develop a brand across US, EC, FE • Increasing retailer power • Traditional brand management not as effective/efficient • Focus moving up the value chain

38. Brand Relationship Spectrum Master Branding the Corporation Enhances Brand… • Clarity • Clear brand priorities • Synergy • Every exposure generates awareness • Leverage • Corporate brand in all Company strategies

39. Branding the Corporation • Thus, Benefits of Corporate Branding: • Every marketing dollar benefits each one of a company’s division/products • Attracts and inspires employees, stakeholders and business partners • Supplier and Vendor relationships deeper and longer term • Connects up goodwill generated by operations + adds public support/PR in crisis

40. Branding the Corporation • Benefits of Corporate Branding: • New product launches/extensions cheaper and quicker • Long Term strategic focus • Financial performance and value creation can be enhanced

41. Branding the Corporation • What Might be Some of the Difficulties? • Organizations can be extremely complex • Wide variety of audiences make consistent proposition communication difficult • Too many businesses: Easier to build a rep & image when one is known for one product or service

42. Branding the Corporation • What Might be Some of the Difficulties? • Led from the top. CEOs are difficult to pin down for day-to-day brand management • Business Directors often have finance or operations backgrounds – not marketing

43. Master Brands Class Examples of Master Brands

44. Branding • Different outcomes result from the marketing of a product or service because of its • brand name • brand element • brand identification • WHAT ELSE?

45. Brand Equity • Common Denominator to interpret the potential effects and trade offs of various strategies and tactics • Common Denominator for assessing the value of a brand