Brand Management 3.0 MBA Class Notes Brand Management- MBA Notes- Dr Amit Rangnekar Dr Amit Rangnekar
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[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar About the Author Dr Amit Rangnekar, MBA (Marketing) and PhD (Business Strategy) from NMIMS, Mumbai, has over 2 decades of progressively responsible pharma industry experience with Centaur Pharmaceuticals. In 2006 Dr Rangnekar was awarded a 10 nation scholarship to Europe by the Government of Denmark to complete his doctoral research. His co-authored book "Cases in Indian Management" was launched in Mumbai, Dubai and London in 2008. Embarking onto teaching as a hobby in 2003, Dr Rangnekar is a visiting faculty at Mumbai's leading B-Schools. His repertoire of insightful notes and compelling case studies have added value to over 10,000 MBA students. He shares his thoughts and knowledge with a global audience through his immensely popular website and blog, which have together clocked over 900,000 hits. Dr Rangnekar has presented on various business case studies on marketing, branding and business strategy, at B-schools and corporates across India and Europe. He has been a faculty at global leadership programmes of numerous Fortune 100 companies in Europe and Asia. He is also an external guide for two PhD research scholars. Co-ordinates Email
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[email protected] Visit www.dramitrangnekar.com … the homepage for MBA students worldwide Home What's New MBA Notes Case Study PPTs Knowledge Publications Contact Me Concise class notes on marketing, branding and strategic management Researched Case studies in power point presentation (ppt) Tips on PhD, Pharma and deliverables Various publications of the author, Insights into pharmaceutical industry Notes adapted through readings, cases and notes from- Harvard Business School/ Review, Ivey, Stanford, Kellogg, MIT Sloan, LBS, Insead, Wharton, Emory; publications by Porter, Kotler, Keller, Kapferer, Nirmalya Kumar & Mckinsey; Economic Times, Indian and international business magazines, and the internet. Garnished with my own experience, insights & knowledge. www.dramitrangnekar.com 2
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Objective: Help students understand the concepts of brand-development/ management/ building, and crafting the brand strategy, through interaction and cases. Evaluation (%): Group Presentations 40%, Class Participation10%, Final Exam 50% = 100% Course Outline: (Total 30 Hours) Topics 1 Analysing- Environment, Competition, Market opportunities, Gaps, 2 Product- concepts, packaging, brand hierarchy 3 New Product Development 4 Brand management - Concept, Associations, Company‘s/ Customer‘s brand decision making, Brand Personality, Keller‘s CBBE, Brand Value Chain 5 Brand positioning strategy, Frame of reference 6 Brand Identity- concept, execution, Kapferer‘s Prism, Brand Identity Planning Model 7 Brand Architecture & portfolio management 8 Brand Equity9 Brand valuation Pg 3 7 9 11 18 23 27 34 41 Cases from among (Most cases available on www.dramitrangnekar.com) Adidas v Nike- Brand Identity Dolce & Gabbana- Fashion Brand Parle G- Brand Building Aircel- Service Branding Dominant Brands Rolex- Luxury Branding Amar Chitra Katha- Kid Brand Gillette- Brand Extensions Tata Nano- NPD Amul- Umbrella Branding Horlicks v Complan- Brand Equity Titan- Brand Architecture Audi- Brand Identity Kellogg- Brand Valuation Vodafone-Speed Branding Bisleri- Brand Building Kellogg- Brand Failure Wipro- B2B Branding Chanel- Branding to ladies Mont Blanc- Luxury Branding ZooZoos- Brand Campaign Chic Shampoo- Rural Brand Natural Ice Cream- Buzz Branding Kancheepuram Sari- Ethnic References Brand Management Notes www.dramitrangnekar.com Brands & Branding- The Economist Strategic Brand Management- Keller 3e / Kapferer 4e Marketing Management- Kotler 13e Brand Equity- Aaker, Brand Leadership- Aaker Asian Brands- Martin Roll Websites- Mckinsey Quarterly, Harvard Business school, India knowledge @ Wharton Notes adapted through readings, cases and notes from- Harvard Business School/ Review, Ivey, Stanford, Kellogg, MIT Sloan, LBS, Insead, Wharton, Emory; publications by Porter, Kotler, Keller, Kapferer, Nirmalya Kumar & Mckinsey; Economic Times, Indian and international business magazines, and the internet. Garnished with my own experience, insights & knowledge. Best Wishes Dr Amit Rangnekar www.dramitrangnekar.com www.dramitrangnekar.com 3
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 1 Analysing market opportunities Strategic gap analysis Intensive Growth Strategies Ansoff’s Product-Market Expansion Grid- Case- Maruti Suzuki Current Products Market Penetration Launch 800, grabbed market share on styling, fuel economy, affordability Market Development Launch in class II-IV towns, easy loans, higher payback periods New Products Product Development New models Van, Zen, Esteem, Wagon R, Baleno, Swift, SX4 Diversification Training schools, Auto insurance, True Value cars, Current Markets New Markets Integrative growth- Vertical-Backward (Reliance- Polyesters), forward (Videocon-Next), Horizontal- M&A (HLL-Lakme) Diversification growth- Reliance Retail BCG Matrix- Growth Share Matrix- Case Classifies product portfolio into categories, firms should have a healthy balance. Dogs- Low market share & low market growth. Phase out / tweak, invest & build Question Mark/Problem Child- Low market share, operate in high market growth. Entry level, brand may ascend / descend / stagnate- important to build. Star- High market share, operate in growing market. High growth but high promotional cost, need to be sustained. Cash Cow- Mature products generate high cash, but low growth. Sustain, they generate funds for new projects and maintaining portfolio. www.dramitrangnekar.com 4
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Strategic Marketing Environment www.dramitrangnekar.com 5
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Marketing Plan A marketing plan aims to help organize and implement the marketing strategy for its products or services. Part of the overall corporate objectives. Situation Analysis Marketing Objective Leadership Rank Geographic Share Profits Growth Marketing Strategy Mktg Research Segmentation Targeting Positioning Differentiation Mix- 4Ps Prod Life Cycle Execution Control Corporation Customer Competition Conditions Opportunities Dynamics Projections Orgl Structure Implementation Performance Review Where do we want to go? Competitive forces Where are we? How do we get there? Are we getting there? Barriers & profitability www.dramitrangnekar.com 6
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Analysing Competition: Consolidated / fragmented, Monopoly/ duopoly/ oligopoly, Industry structure Leader, challenger, follower, nicher Market structure Broad competition Generic competition Direct competition Broad / narrow Lines Competitor rating on critical success factors Competitor Awareness Quality Availability A B C Key variables in analyzing competition: What segments do they serve? What products do they offer? What channels do they use? What pricing strategies have they pursued? What management resources do they have? What financial resources do they have? What are their objectives? What are their core competencies? What alliances are they pursuing, and for what purpose? How successful are they in the marketplace? Share of market /voice /mind /heart? Competition Direct Category Need fulfilled Basic requirement Range Technology Service Brand Competitors Market products similar customer features, benefits & price Coke, Pepsi Thums Up Dairy Milk, 5Star Celebrations PVR Fame Adlabs Maruti, Hyundai Tata Indirect Product Generic Competitors Competitors Compete in same class, but differ in features, benefits & price Tea, Nimbu Pani Mineral water Mithai, Namkeens Ice creams, Fruits Single screen Drama theatre Small cars, Big cars, SUVs Market different products to solve same problem, satisfy same basic need Regular water Aniseed/Saunf Candy, Sugar TV, Shopping Reading, Internet Taxi, Auto, BEST, Local train, Walk Beverages Chocolates Films Cars Refreshment Dessert/ snack Entertainment Transportation www.dramitrangnekar.com 7
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 2 Product ―We lead the public with new products than ask them what products they want. They don‘t know what‘s possible, but we do. So instead of doing a lot of market research, we try to create a market for a product by educating them‖ (Akio Morita, Sony) Product- offered to satisfy a want or need. Judged on features, quality, services mix and price. Product differentiation- Choice of form, features, performance quality, conformance quality, durability, reliability, repairability, and style. PQRSTUV Services differentiation- Ordering ease, delivery installation, customer training, customer consulting, maintenance and repair Convenience items purchased frequently, immediately, with minimum effort. Capital goods last long and are purchased infrequently by consumers. Commodities- where physical differentiation is difficult Exercise- 3 examples of products performing at exceptional levels despite intense competition Exercise- Select 1 convenience & 1 capital good, compare & contrast consumers value hierarchy. Product Strategy-Coordinate product mix/lines, brands, packaging & labeling- decisions Product Levels: The Customer Value Hierarchy To plan the market offering, a marketer must consider 5 product levels that encompass the augmentations & transformations the product ultimately undergoes. Each level adds more customer value, the 5 levels constitute a customer value hierarchy. Product Levels Core Basic Expected Augmented Potential What it means Product bought Benefits Attributes & conditions Exceed expectations New ways to satisfy/differentiate Marketers Job Provide benefits Turn benefit to product Minimum buyer expectations, price, convenience, location- important (EM) Augmented benefits become expected benefits, competitors step in- important (developed markets) Anticipate & innovate Hotel Customer Place to sleep Bed, bath, closet Clean bed & toilets, peace Satellite TV, Tea machine, Internet Customised service ITC Hotels Budget-Fortune 5-Star- Welcome Super deluxe ITC Welcom Heritage Palaces, forts Product Mix - HUL Portfolio- Consumer Product-Mix Width Product line- group of brands closely related by functions & benefits- Dell PC, Nokia mobiles Product mix- total set of brands marketed by a firm, may contain product lines Width- product lines in the mix- HP PCs, Laptops, Printers within home & business segments HUL 11 lines (Personal wash, laundry, skin care…….) Length- total number of items in the mix- 25, average length is 25/11 = 2 Depth- Variants of each product in the line- Lux has 4 fragrances and 2 sizes, so 8 Deciding which product lines to grow, maintain, harvest, and divest? www.dramitrangnekar.com 8
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Home & Personal care Deodorants Hair care Oral care Colour cosmetics Skin care Foods Ice cream Kwality Walls Laundry Personal wash Coffee Bru Product line Length Lux Lifebuoy Liril Hamam Breeze Dove Pears Rexona Surf Excel Rin Wheel Fair & lovely Ponds Sunsilk Natural Clinic Pepsodent Close Up Axe Rexona Lakme BB Lipton Kissan Knorr Annapurna Product line strategy Upgrade customers - Maruti 800, Alto, Zen , Wagon R Cross-sell- HP printers, PC & Laptops, Godrej- Washing machine, TV, fridge, microwave, AC Line-stretch- popular(Titan), mass(Sonata), premium(Xylys), youth (Fastrack), ethnic (Raga) Line fill- Maruti variants AX, LX, VX; I-Pod- nano, shuffle, classic, 80/40/20/8/4gb Line prune- Reduce unwanted / unprofitable- Maruti Gypsy Packaging and labeling- The 5th P, part of product strategy Packaging- 3 levels: Primary, Secondary, Shipper, Insert Promotional value- packaging is buyer‘s 1st product encounter- can turn on or off Functional components- protection in transportation & storage, usage, convenience, ease of use, storage, convey usage information & instructions Aesthetic components- Design, size, shape, material, color, text, graphics- harmonizing Labeling- Identifying product or brand, grading, describing the product, adhering to regulatory requirements, promote through attractive graphics. Warranties & Guarantees- Expected product performance level by manufacturer, reduces a buyer‘s perceived risk, helps when not so well-known product‘s quality is superior to competition. A Brand Is More Than a Product www.dramitrangnekar.com 9
[email protected] Foods Tea Brand Management- MBA Notes- Dr Amit Rangnekar 3 New Product Development (NPD) NPD- risky but if based on a sound foundation- market segmentation, understanding and targeting customers - reduces risk. If NPD is first and then you figure out how to market, it usually leads to disaster. Exception- Alexander Bell invented the Telephone, but it was an innovation. Today- NPD compete with similar products /effective substitutes and customers are spoilt for choice as well as bombarded by product and marketing messages. New Products Types – Breakthrough or incrementally altered products Breakthrough Incremental New to the world performance features Improvement in existing product Huge advances in performance Derivative of existing platform Dramatic cost reduction Exploits existing forms / technology Higher risk Lower risk Infrequent More frequent Costlier Less costly Targets new /existing markets Targets existing/ adjacent markets Marketer’s responsibility Envision market Create demand Educate market Change the basis of industry competition: • Electric lighting, antibiotics, microwave, credit card, transistor, heart pacemaker, hip and knee replacements, GPS Listen to existing market Accommodate current demand Intel‘s Pentium IV computer chip- incremental improvement over Pentium III as they share same fundamental technology Incorporated design improvements that enhanced chip performance Windows, MS Office, Play station Exercise: Course of NPD in your industry over L10Y- what changed the basis of competition, what were the real breakthroughs, which were only incremental? What are the new technologies / products lined up, how will they affect your company and competitors when launched, in terms of sales and profitability? Identifying new product opportunities Unexplored Opportunities Exercise: For an industry of your choice, identify the unexplored opportunities in every quadrant, and identify the players who operate in each quadrant. www.dramitrangnekar.com 10
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar New product development (NPD) Stages Idea generation- Employees, Sales force, Trade, Competitors, Customers Idea screening- Feasible, Workable, Practical Concept development and testing- Feedback from target audience Marketing strategy- Mix (4Ps), STPD, Targets, Projections, Geographies Product development- Final touches & Mfrg Test Marketing- Geography or Segment Commercialisation- National / Global launch Why new product development (NPD) Changing customer needs – Diet Coke, Saffola New Segment Entry- Maruti SX4 Changing market needs- Scooters to Bikes Own successes- Brand / line extensions- Maggi Competitive Successes- Krackjack- 50:50, Marie New Capabilities- UB Group New Concepts- Suzuki Swift, Tata Ace / 1L Car New technology- I-Pod, I-Phone, TV Product lifecycle- MS Office, Play Station 1,2,3 Portfolio / Business realignment- Reliance Mobile Environmental changes- Music downloads Source: Harvard Business Review www.dramitrangnekar.com 11
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 4 Brand Management Brand ―Promise‖ Harish Bijoor ―Strategic Asset‖ Nirmalya Kumar “Functional, Economic & Emotional Value Propositions” –Deepak Jain “A collection of perceptions held in the mind of the consumer” Susan Fournier “A name, term, sign, symbol or design, or their combination, intended to identify goods & services of a business or group of businesses and differentiate them from competitors” Kotler “A mixture of tangible and intangible attributes symbolised in a trademark, which, if properly managed, creates influence and generates value” Interbrand Brand exists in our mind, as a collection of associations or feelings. Branding endows the product with the power of a brand by creating signals that generate these associations. Blend tangible and intangible attributes to differentiate in an attractive, meaningful and compelling way that target consumers care about. Brands command premium, high margins, better availability & wide customer loyalty. Products deliver series of core benefits to consumers (Watches- time) but consumers pay a premium for added value (lifestyle accessory) that enables a brand to differentiate itself from competition. This helps a customer choose or prefer the brand. Mercedes, Sony, Apple. US brand leaders in the 1930s- J&J, Heinz, Colgate, Disney, Coke- are leaders even today Company’s brand decision making: To Brand or Not to Brand? www.dramitrangnekar.com 12
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Brand associations The brand stays as a set of associations in the mind of the customer eg Amul may mean- Indian, butter, milk, cheese, co-operative, value, or even the ads. These associations are stored as links to the brand that include the brand, company, category, visuals, celebrity, design, usage experience, feelings. These links help the customer prefer a brand over competitors but a negative link can be disastrous for the brand. Eg Cadbury is generic in India for milk chocolates and common associations could be dairy milk, taste, value, satisfaction, international quality etc but the negative association of the worm-controversy hurt the brand. Creating a solid network of associations helps create a strong brand preference, where the customer demands for a brand and also knows what to expect with the brand. If the brands delivers on expectations, brand credibility builds up which helps deter competition and brand switching. Eg Titan, Nokia, Amul, Levis, Santro 13 www.dramitrangnekar.com
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Customer’s brand decision making (Buying a Shirt upto Rs 1000) Brands Unknown Manzoni, Pedroni, Zegna, Known Louis Phillipe, Van Heusen, Arrow, Color Plus, Peter England, Dockers, Charagh Din, Oxemberg, Indian Terrain, Zodiac, Austin Reed, Allen Solly, JohnPlayer, Armani, M&S, Wills LS, Park Avenue, Acceptable Louis Phillipe, Van Heusen, Arrow, Austin Reed, JohnPlayer, Unacceptable Cambridge, Peter England, Oxemberg Indifferent Allen Solly, CD, Dockers, Indian Terrain Overlooked Armani, M&S, Wills, Zodiac, Color Plus, Arrow Purchased Van Heusen Not Purchased Louis Phillipe, Arrow, Austin Reed, JohnPlayer The company‘s marketing efforts are focused on pushing the brand first into the known stage and then to take it up to the purchased stage. Surrounding the consumer with the right kind of links in an associated network, created through brand experiences and marketing communication helps form thoughts, feelings, images, beliefs, perceptions, opinions, and preferences. These links form strong associations deep into the mind of the customer which drives purchase preference. Exercise: Create a customer’s brand decision making model and a company’s brand decision making model for a company and a category, similar to the illustrations above Brand Personality Brand Personality (Aaker)- Consumers perceive brand‘s personality in terms of human personality traits. Like human relationships, as brands grow, emotional dimension dominates. Consumers easily attracted to brand personality traits- dependability (LIC), trust (Tata), honesty (Peter England), reliability (Titan), safety (Volvo), fun (Disney) Exercise- Identify brands with personality-sincere, sophisticated, cheerful, old fashioned, progressive Brand Personality Drivers Product related characteristics Non Product related characteristics Product category (Bank) Package (Bisleri, Parle-G) Price (Rolls Royce, Louis Vuitton, Big Bazaar) Attributes (Kingfisher Beer) User imagery (Levi's 501) Sponsorships (Rolex, Femina) Symbol (Marlboro Country) Ad style (Obsession, Absolut) Country of origin (Audi) Company image (The Body Shop) CEO (Vijay Mallya, Steve Jobs) Celebrity endorsers (Aircel Dhoni) www.dramitrangnekar.com 14
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar A Brand Personality Scale (BPS): The Big Five Sincerity Down-To-Earth Honest Wholesome Cheerful Excitement Daring Spirited Imaginative Up-To-Date Competence Reliable Intelligent Successful Sophistication Upper Class Charming Ruggedness Outdoorsy Tough Raymond, Hallmark, LIC, Parle-G, Rolex family-oriented, small-town, conventional, blue-collar sincere, real, ethical, thoughtful, caring original, genuine, ageless, classic, old-fashioned sentimental, friendly, warm, happy Porsche, Absolut, Benetton, Virgin, Kingfisher trendy, exciting, off-beat, flashy, provocative cool, young, lively, outgoing, adventurous unique, humorous, surprising, artistic, fun independent, contemporary, innovative, aggressive Titan, Fedex, Dabbawallas, IBM, Moov, Nokia hardworking, secure, efficient, trustworthy, careful technical, corporate, serious leader, confident, influential Lexus, Mercedes, Revlon, Apple, glamorous, good-looking, pretentious, sophisticated feminine, smooth, sexy, gentle Levi's, Marlboro, Nike, Woodland, Enfield Bullet, Tag Heuer masculine, Western, active, athletic rugged, strong, no-nonsense Brand personality of 2 brands competing in premium vodka market for decades Both are expensive, high quality, and pure yet have different personalities Stolichnaya as a person is experienced, self assured and successful in a traditional career- law, banking. He is male, recognizes quality, drives a Lexus, and follows the latest trends Absolut person is younger, more contemporary and flashier. He is also male, works in a creative occupation- advertising or arts, more likely to go to trendy bars For both, brand personality is the glue that holds together the identity and communication effort. How does Brand Behaviour speak for Brand Personality Personality traits Brand Flighty, schizophrenic Cheap, uncultured Outgoing, popular Approachable Familiar, comfortable Snobbish, sophisticated Friendly Culturally aware Coke India Big Bazaar Nokia, Airtel Maruti Parle-G Rolex Disney Times of India Brand behaviour Frequent changes- position, product forms, symbols, advertising, etc. Frequent deals and coupons Advertises extensively Strong customer service, easy-to-use, etc Continuity of characters, packaging High price, exclusive, ads in upscale print Friendly advertising, endorsers Association with cultural events Brand identity- add personality, set of values, perceptions and brand aspirations… all the pieces converging. Swoosh replaces Nike brand name, Coke slanted flourish, Mont Blanc star Brand image- Sum total of consumer perceptions, firms fit perceptions to communicationSwatch trendy, Nokia value, Titan performance, Volvo safe Corporate identity- Visual aspects/image of firm's presence-eg logo, collaterals-Tata Brand repositioning- customer preferences change- Petrol pumps, typical to vibrant www.dramitrangnekar.com 15
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Customer Based Brand Equity Pyramid- Keller (Brand Resonance Pyramid) Brand resonance characterized by strong brand & consumer connect, thro‘usage & experience Strong resonant brands- increased loyalty & decreased vulnerability to competitive actions Brand challenge- ensure right customer experiences to create right brand knowledge Brand equity- customers develop differential towards a brand hence prefer it over others Understanding differential critical to interpret the past, design effective future programmes Building resonance involves a series of steps Identity- Who are you- consumers begin to understand what a brand stands for, means Meaning- What are you- consumers link in/tangible associations, understand PoD & PoP Response- What about you- judge brands on credibility, expertise & trustworthiness Relationships- What about you and me- How to connect, create intense, active loyalty Building blocks- structure to build brands with customers Salience- consumer‘s brand recall in a purchase situation- depth & breadth of brand awareness Performance- What a brand does to meet customers' functional needs- intrinsic properties Imagery- Think abstractly than physically about brand, intangibles- extrinsic brand properties Judgments- Customer brand evaluation (performance+ imagery association)- brand opinions Feelings- emotional brand response/ reaction (mild/intense; +/-, or experiential / enduring) Experiential feelings (warmth, fun and excitement)- immediate & short-lived Enduring feelings (sense of security, social approval, self-respect), private, of day-to-day life Resonance- Intense, active loyalty- customers feel a connect to brand, will miss it if it went away Nature of relationship, extent to which customers feel they are ―in sync‖ with a brand Behavioural loyalty- repeat purchase rates Attitudinal attachment- intensity or depth of psychological bond customers have with a brand Active engagement- level of activity engendered by this loyalty Sense of community- extent to which customers seek brand info, events, loyal customers www.dramitrangnekar.com 16
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Brand Value Chain (Kevin Keller) Helps assess financial return of developing the brand through 4 stages. Some relationships have not yet been directly measured, but are important to consider when valuing a brand. The value stages lead to shareholder value driven by multipliers, or filters, between the stages Multipliers are factors that influence impact of one stage on the subsequent stage. Marketing program investment in product, employees, advertising affect future brand value Program quality- ad distinctiveness, service consistency determine how much the first stage influences the second stage Customer mindset, includes 5 A‘s, hierarchical in nature- awareness supports consumers‘ brand associations, which drive attitudes, which lead to attachment & ultimately activity Market condition multipliers translate the 5 A‘s to brand value Market performance measures brand performance in the marketplace through price premium and elasticity, market share demonstrates brand‘s ability to drive sales, expansion success is brand‘s opportunity to increase revenue streams & lower costs- all lead to brand profitability These lead to shareholder value, driven by investor sentiment based on market forces like growth potential & risk profile which can affect the evaluation. Shareholder value is attained through stock price, PE ratios & market capitalization Together, these stages allow brand value evaluation & suggest areas of improvements Brand knowledge Brand knowledge creates a differential that drives brand equity. If customers carry strong, unique, favourable brand associations in mind, strong brand is built due to high brand awareness & +ve brand image. This convinces a customer of meaningful and valuable difference in one brand and compels him to prefer it over others. www.dramitrangnekar.com 17
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Cognitive brand dimensions Dimension Meaning Brand weight Brand dominance in a market Brand length Brand ability to diversify across categories Brand power Loyalty of the customer group Brand breadth Brand appeal across customer groups Company / brand Microsoft, J&J baby, Dettol Disney, Virgin, Tata Apple, Harley Davidson, Old Monk Coke, Parle G, Amul Butter 4Cs to create positioning Company What to offer and communicate Channel Where to sell it Customer To whom Competitor Differential www.dramitrangnekar.com 18
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 5 Brand Positioning Brand Positioning- Design firm‘s offering & image to occupy distinct place in target customer‘s mind Represent a distinctive big idea in the mind of the target market Identify different needs & groups in the market (segments) Target groups/markets it can satisfy in a superior way (targeting) Locate brand in the minds of consumers (positioning) Communicate (promotion) a value proposition to the target market that is distinctive, valuable & meaningful (differentiation) Brand Ladder (How does a brand get into customer‘s mind) Promise- Value proposition offered to customers, choice Affinity- Interest in the brand, differentials evident Brand Bonding- Perceived as delivering on promise Loyalty- +ve differential effect driving customer brand preference over identical competitive brands, willing to pay more /wait/ go places if unavailable Brand Equity- Brands financial value to the firm, includes sum total of factors besides sales. From a customer‘s perspective, the reason why he chooses that brand over competition Promotional strategies revolve across various brand purchase stages Crafting the brand positioning Positioning requires determining a competitive frame of reference. The frame defines associations that consumers use to evaluate directly and/or broadly competing brands, as under: 1. Identifying the target market(which brand for which market) 2. Understanding consumer behavior and their considerations in choosing brands- price points, culture, buying patterns, attitudes, preferences. 3. Nature of competition (direct, indirect, PLC stage, intense, consolidated, fragmented) 4. Points-of-parity (pop) associations- which consumers view as essential to be a credible offering in a certain product category. Shared values between brand & competitors, common denominators defining the category. They represent necessary conditions but not necessarily sufficient for brand choice. www.dramitrangnekar.com 19
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 5. Points-of-difference (pod) brand associations- attributes/benefits consumers associate with a brand, positively evaluate & believe they cannot find to the same extent with other brand. 6. Reason to Believe (RTB)- Why should a customer buy your brand- company consistency, credibility, heritage, innovation legacy, country of origin etc Choosing POPs and PODs POP driven by category membership needs, to achieve an attribute or benefit POP, consumers must believe brand is ―good‖ on that dimension, key is perception of clear superiority. Category POP change over time due to technology, legal, trends. Eg HTC v IPhone. Competitive POP- to negate competitors POP. HTC‘s features similar to IPhone helps position it as an IPhone competitor at a much lower price, which otherwise was difficult to command. Creating strong, favorable & unique POD associations essential to competitive positioning. Apple innovation, Parle- G value, Tatas- trust, Maruti- Service, Dabbawallas- reliability. POD should be desirable & relevant to consumers, which firm should be capable of delivering, communicating and sustaining. Marketers should decide level(s) to anchor the brand‘s PODlowest - brand attributes, Mid- brand benefits, Top- brand values. Creating POPs and PODs The mental map shows Nike‘s range of brand specific and category specific associations, Nike- PoD are MJ, Air & Basketball Adidas- PoD is Top athletes Reebok- PoD is Tennis All other associations are category PoPs Exercise- How Should Maruti position itself with respect to the Tata Nano? Exercise- POPs & PODs for Apple i-Phone, Rs 5000 mobile phone Executing the brand positioning Brand identity- how company aims to identify or position brand. Built through logo, jingle, ads, celebrities, product trial, exposure etc. Label- post identity, brand remains a label in customers mind. Customer may not associate anything with the brand, nor be inclined to purchase it, yet may identify it, remember the ad, logo, celebrity, pack. Brand Image- how customer www.dramitrangnekar.com 20
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar perceives the brand. What customer associates with the brand. Perception turns to position over time. Built by exposure to communications, word of mouth, product usage and experience, etc Brand congruence- Intended positioning (identity) should be congruent (match) with what exists in the ‗consumer‘s mind‘ (image) Brand credibility- how well brand delivers on its promise Moov- Backaches, NokiaPerformance, Titan- value Brand Position- Distinct place or a deeper perception in the customer‘s mind, achieved by exposure, association, usage, credibility. Positioning = combining internal (brand identity+ image) + outward brand expressions (guarantees, service, performance & packaging). The part of the brand identity and value proposition (central benefit) to be actively communicated to the target audience Positions that firms successfully have claimed in India Beauty- Lux Innovation- Sony, Casio Premium-Bose, Benz Macho- Enfield Bullet Thanda- Coke Performance- Nokia, Bata, Titan World scale- Reliance Friendly salesmen-Eureka Forbes Generic-Cadbury/ Xerox/ Amul Butter Reach-HLL, Glaxo,Colgate Delivery-Domino‘s/ Blue Dart Kids-McDonalds, Esselworld, J&J Service- Private Banks, Maruti Indian MNC-Ranbaxy, Infosys, Wipro Fast food- Udipi, VadaPav, Sandwich Economy- Big Bazaar Range- Vijay Sales, Alfa, Nokia Value-Dollar Shops, Factory outlets Youth- Pepsi, Swatch Tourism-Goa, Kerala, Rajasthan Fever- Crocin Headache-Saridon/Anacin Perceptual Map Watches www.dramitrangnekar.com 21
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Cars Premium stige Jaguar Audi M Benz BMW Ferrari Corolla Conser vative City Sporty / Hi Tech Swift Ritz i10 Indica Nano Popular P&G Positioning: distinct positions, even in same segments (Aaker & Joakimsthaler) Brand Segment Position Head & Shoulders Shampoos Anti-Dandruff Pert Plus Shampoos Conditioner + shampoo Pantene Shampoos Healthy + shiny hair Ariel Detergent High Tech Detergent Tide Detergent Tough cleaning Cheer Detergent All-temperature cleaning Bold Detergent Fabric softener Dash Detergent Concentrated powder Whisper Sanitary Products Hygienic protection Vicks Cold Clears blocked nose Old Spice After Shave Manliness Crest Toothpaste Cavities HUL- Axe and Rexona, both marketed by HUL, operate in the same segments- deodorants. Rexona is positioned against body odour targeting the working population, while Axe is positioned on seduction targeting the youth. Both use completely different communication strategies, although they target the same broad segment. 22 I20 www.dramitrangnekar.com
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Positioning the company Customers Where are my customers How do customers find me How customers perceive value How do we best deliver value Competition Benefits for customers of competitive brands How am I positioned Who, Demographics, Psychographics, How do I reach them Geographies, Segments Social / economic status Touch points, Media habits Media, Promotion (SPPASMDT, WoM), Internet Performance, VFM, 4Ps, technology, service, design, delivery Brick, click, brick and click, click & brick, mail order, catalogue Direct, indirect, generic What needs do they serve, serve better than us, do not serve better Unique, not unique, competitive advantage Product Differentiation Add a set of valuable, meaningful and compelling differences to distinguish your offering from that of the competition. Customers buy based on their perception of quality, value, price, performance, usage experience parameters, which should ideally be differentiated on. Brands differentiate on features/benefits irrelevant to customers. Most mobile phones features may hardly be used, newer management text book editions- bigger & costlier, not necessarily better Competitive advantage through differentiation , across 5 dimensions: Product (form, features, performance quality, conformance quality, durability, reliability, reparability, style, design) Services (order ease, delivery, installations, customer training, customer consulting, maintenance and repair, miscellaneous services) Personnel - better-trained people, 6 characteristics: Competence, Courtesy, Credibility, Reliability, Responsiveness & Communication. Channel - coverage, expertise, and performance. Image - Buyers respond differently to company & brand images, identity & image to be distinguished Sustaining brands What sustains What erodes Competitive advantage in its product Consumer needs and wants met by brands, change, differentiation dimensions (product, services, evolve, or die, leading to loss of brand POD or lack personnel, channel & symbols) sustains a brand of POP with other brands Continuously monitoring environmental Complacency, change in technology, lack of new changes, customer preferences, strategies, and products, not responding to competitive and technology, equip brand with POD/POP environmental threats and strategies, can spell doom Exercise- i-phone Key success factor? Brand positioning, innovation, Pop, Pod, brand image Where is iphone vulnerable? Economical competitors, imitators, higher technology. What should it watch out for? Changing preferences, value, new trends Key improvement areas? Price, promotion, features, customer service www.dramitrangnekar.com 23
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 6 Brand Identity ―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 organisation.‖ Aaker To be effective, a brand identity needs to resonate with customers, differentiate the brand from competitors, and represent what the organization can and will do over time. What does a brand stand for? How does it create a relationship with its customers? What is its value proposition? Differential? Brand‘s uniqueness‘? Brand identity- what a brand wants to convey to its customer - meaning, self image Brand Image- how a customer perceives the brand, through signals emanating from the brand‘s communications and usage experience Brand Essence- A brand’s fundamental nature or quality. The one constant across product categories and throughout the world. Adidas: Athletic Performance, Tata: Trust, Volvo: Safety, Disney: Fun Brand credibility- delivering on your promise builds brand credibility Trade Dress- aesthetic elements that provide legal protection for a brand‘s identity Coke bottle shape, Colgate Red & White Design, Harley-Davidson’s engine sound Brand Promise- What a brand can and must do for customers Must promise differentiated benefits, relevant & compelling to the consumer Benefits that are functional, experiential, emotional & self-expressive Support brand promises with compelling proof points (‘reasons to believe’) Address key consumer needs, manifest in organization‘s products and services Leverage organization‘s strengths, competitive advantage through differentiation Drive organizational decision, system, action, and process, inspire & energize Components of a brand’s identity: Names, logotypes, symbols & graphic devices- Mercedes tristar, Nike swoosh Distinctive shapes and colors- Colgate red Brand voice and visual style, sounds, jingles and other mnemonic devices Typography, theme lines or slogans- Nike Just do it Characters uniquely associated with a brand- Coke- Slanting flourish Textures, scents, flavors, and other sensory elements Choosing Brand Elements Brand elements are devices that identify and differentiate the brand, build brand equity The brand-building ability of these elements is ‗what consumers would think or feel about the product if they only knew about the brand element‘ Memorable, meaningful and likeable can be characterized as ―brand building‖ in terms of how brand equity can be built through the judicious choice of a brand element. Transferable, adaptable and protectable are more ―defensive‖ and concerned with how the brand equity contained in a brand element can be leveraged & preserved in the face of different opportunities and constraints. www.dramitrangnekar.com 24
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Developing Brand Elements Companies use marketing research firms to develop and test names. Name-research procedures include: Association, Learning, Memory & Preference tests. Brand-building roles- easily recognized, recalled, inherently descriptive, persuasive Memorable or meaningful brand elements reduce burden on marketing communications to build awareness and link brand associations Associations arising from likeability & appeal of brand elements enhance brand equity Slogans- build brand equity, help consumers grasp what brand is, what makes it special Kapferer’s Brand Identity Prism (1997) How 6 personality & physical facets define brand identity Helps marketers gauge brand identity, provide answers to questions likeIf the brand was a person, how would he look? What traits would he have? Warm, cold, aggressive, approachable or smart? Knowing identity helps design strategy, positioning & affects marketing collaterals Physical facet, brand relationship and customer reflection are externalization factors, rest represent internalization Physique Core, central purpose, foundation What is the product, what does it do, how does it add value, fill gaps Titan and Nokia performance, Head & Shoulders dandruff Soul, what the brand would be if it were a person, personality traits Disney fun, Woodland rugged, Raymond well-groomed man External mirror, how target identifies himself wrt brand Brand reflects customers‘ image outward, image of buyer using brand Lux- beauty, Pepsi young, Thums up adventurous Internal mirror, consumers attracted to brands where they see own traits Self image, how the targeted identifies brand wrt self, inner relationship Nike- athletic, sporty, Enfield Bullet- armed forces Intangible brand and consumer connect, exchanges, experiences How should brand be seen by customers in marketing communication? Nokia reliable friend Culture spawns brand values and principles which bind customers Strong dimension, differential, internalises in customer‘s conscience VW- German engineering, Amul- Indian, HSBC World's local bank 25
[email protected] Personality Reflection Consumer mentalisation Relationship Culture www.dramitrangnekar.com Brand Management- MBA Notes- Dr Amit Rangnekar Case- Brand identity of Adidas & Nike Promo strategy External Physique Relationship Reflection Internal Personality Culture Self-Image Nike focus on individual athletes Sports & fitness Sponsorship, ethics Aggressive, provocative, inyour- face Michael Jordan, Tiger Woods American, Just Do It Cool, trendy Adidas Sponsors teams & global events Sports & fitness Quality & heritage Sportsmanship, team player, strong work ethic Traditional, conservative, collective European, traditional Competitor, competent Nike Picture of Sender Physique: Sports and fitness Re lationshi p: Sponsorship, ethi cs Reflection: Aggressive, provocative, in-your-face Personal ity: Like Jordan, Woods… Culture: American, Just do It! Se lf-Image: Cool, I am an ‖Athlete ‖ Physique: Sports and fitness Re lationshi p: Quali ty and heritage Reflection: true sportsmanship, A good team player, strong work ethic Adidas Picture of Sender Personal ity: Tradi tional , conservati ve, collective Culture: European, Traditional Se lf-Image: Rel ates more to competing t han t o winning Picture of Recipient Picture of Recipient Key differences between the two companies are at the cultural and the self-image level. Adidas stands for European culture, traditional, conservative, collective & competent Nike symbolises American way: individual & aggressive- Michael Jordan, McEnroe Adidas connected to positive emotions, more to competing than to winning Adidas- challenging oneself is exciting; winning is reward, not reason for playing well Adidas personality reflects true sportsmanship, good team player & strong work ethic. Nike has a cool attitude, You don‘t win silver, you lose gold, winning is paramount Executing the Brand Identity- Combine visual, auditory & other sensory components that create recognition, brand promise, communication synergy & help differentiation. Starts from positioning & values and is executed through the marketing mix (4Ps) Product- consumers‘ brand experiences should meet/surpass expectations Pricing- perception of value, equate with quality Place- availability and visibility Promotion- integrated marketing communication (IMC) to drive home the message Brand Identity planning model (DAVID AAKER) To understand, develop, and apply the brand identity concept. Introduces 2 strategic brand components- strategic brand analysis and brand identity implementation system. www.dramitrangnekar.com 26
[email protected] Internalization Externalization Internalization Externalization Brand Management- MBA Notes- Dr Amit Rangnekar Strategic brand analysis-Helps firm understand self, brand, customers & competition Customer analysisunbiased customer opinions, firm experience and market situation Competitor analysis- current and potential competitor communication strategies Brand analysishow brand can be differentiated meaningfully Self-analysisSWOT + R&C, will to deliver Brand Identity system 12 brand identity element categories organized around 4 perspectives -brand associations in all 12 categories- hard Brand identity structure includes an essence, a core identity and extended identity Brand essenceglue to hold core identity elements together, drives value proposition Core identity should reflect firm value and strategy, brand differentiation and resonate with customers Extended identity includes brand personality and elements beyond the core identity www.dramitrangnekar.com 27
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 7 Brand Architecture An organizing structure, family tree or hierarchy of the brand portfolio that specifies brand roles and the nature of relationships between brands and sub brands (Aaker & Joakimsthaler) Brand architecture is like a soccer team with the football pitch as the market map, and each football player as a brand playing a major, minor or support role. Hence individual players/brands will benefit from identity and communication programs The ideal portfolio Typical market/brand portfolio Source: Designing brand architecture (Davidson, 2002, portfolio managing matters. Brand Strategy pp 28-29) Objectives of brand architecture are- creating effective & powerful brands, allocate brand building resources, create synergy, clarity of product offering, leverage brand equity, and provide platform for future growth. Brand portfolio- all brands, subbrands, cobrands; add /extend/ delete brands Portfolio roles of each brand Strategic Role- important source of future profits/vision- Virgin Air, Tata indicom www.dramitrangnekar.com 28
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Linchpin Role- brand provides key basis for customer loyalty. First Citizen Club for Shoppers Stop, J&J baby range Silver Bullet- brand positively influences image of another brand- IBM Thinkpad boosted public perceptions of IBM, Nano of Tata Motors Cash Cow- significant customer base may not require high level of investment but generates funds to be invested in strategic, linchpin, silver-bullet brands. Parle G, Nivea Creme Design Your Portfolio Graphics Visual representations across portfolio of brands- logos, packaging, symbols, product design, layout of print ads, taglines- look and feel of each brand presentation Do visual representations send right signals of relationships between brands in portfolio? Exercise: put all graphic representations of brand portfolio (logos, packs, mascots) on paper. Do they convey consistent message and support brand portfolio’s structure Develop Brand Portfolio Structure Brand portfolio structure is a way of grouping brands to clarify logical relationships Brand hierarchy tree for Indian Hotels- Taj Hotels, hallmark of luxury and service But Taj tag was on every group hotel, guests were confused what brand Taj stood for? Differentiated by quality & service standards , hive off hotels not fitting architecture Exercise- clarify relationships among brands by drawing a ―brand family tree‖. Specify the Product-Market context of each brand Endorser brands- Brand endorsed by parent or corporate brand where parent brand is identified with the brand, but, endorsed brand is given greater visual weight than parent brand. The corporate/parent brand lends credibility or assurance to endorsed www.dramitrangnekar.com 29
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar brand without overpowering it with its own associations. Cadbury’s Dairy Milk / Five Star. Xylys, Swiss Made- Brought to you by Titan Subbrand- A new brand combined with a product or corporate brand. The subbrand can make the parent brand more vital and relevant to a new consumer segment or within a new product category. Ford Ikon- Flair, Hyundai Getz- Prime, Gillette Sensor Excel Benefit brands- branded features, components, or services that augment the brand offering- Maruti Ritz with Kappa engine Cobrands- combine your brand with brand/s from another firm to create a unique offering- Citibank-Jet Platinum credit cards or highlight an ingredient of another firm in your brand communication- HP laptops with MS Office or Intel inside, Dolby system in Multiplexes, Teflon coating in Pans, Carl Zeiss in mobile cameras Titan Brand Architecture House of Brands or Branded House Branded House Master brand strategy 1 master brand across categories Harvard (HBR, HBS, Medical/Law), Nike Master brand does not connect in all markets (Nike Laptops, Harvard Entertainment) Low branding costs/synergy- 1brand leveraged Category failure may damage master brand House of brands Product brand strategy New brands /extensions / sub brands Maruti (800, Alto, SX4, Swift), P&G Easier for different brands to connect to different / adjacent markets Costlier- separate branding costs Brand failure may not affect firm www.dramitrangnekar.com 30
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Brand architecture types: Common branding systems are Brand Type Corporate brand Corporate Dominant Example Heinz GE Sony, Tata, Reliance, HP BMW Mont Blanc Nokia Calvin Klein, Disney Tommy Hilfiger Strategic Rationale Bear company name Highest in brand hierarchy Harnesses strong corporate image synonymous with product class CD common, FMCG rare, tech popular Dominant, highest level in hierarchy Typically, only brand in the system Corporate brands were master brands Name licensed out- fashion industryclothes, leather, eyewear, accessories Brand extended to multiple categories May resemble corporate brand Economical NPL, trust/assurance, marketing economies Diversified firms leverage corporate brand association across segments/ categories if 2 product lines are incompatible (Titan & Sonata premium & economy) Combine corporate + strong subbrand Subbrands help differentiate, drive brand preference Umbrella for a family of products extensions Raise perceived quality & familiarity of both brands Brand exposure in absent product class Strong brand identity, need focused Corporate brand insignificant, FMCG Expensive and risky but profitable Shelf space/market share/extensions New brand + parent/corporate brand in brand identity system Subbrand draws on parent brand to target new segment or category Enables existing consumer connect Master brand Licensed brand Parent brand Godrej, Videocon House brand (family brand) Mixed Brands Tata, Amul Dual brands (family / endorser brands) Co-brands (ingredient brands) Product/Mono brands (single brands) Sub Brand Cadbury- 5 Star Gillette- Mach3 Ford-Ikon Tata Indica Intel inside Teflon coated Dolby system Rexona, Crocin Nivea, Axe Brand Dominant Ford Ikon- Flair, Hyundai GetzPrime, Gillette Sensor Excel www.dramitrangnekar.com 31
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Brand Portfolio Strategies Brand Portfolio- Set of all brands/lines a firm offers to buyers in a particular category. Multiple brands increase shelf presence, attract variety seeking consumers, help new market entry & yield economies of scale in advertising, sales & distribution Portfolio maximises brand equity & market coverage, minimises brand overlap Differentiation appeals to a sizeable segment & justify marketing and production costs Critical- Portfolio monitoring & pruning of weak and unprofitable brands Maruti- 800, Alto, A-Star, Estilo, Wagon-R, Ritz, Swift, Desire, etc & their variants Product Branding Separate brand, own identity, image & set of associations, company not prominent Paras- Moov, DCold, Livon, Dermicool, Freshia, CavinKare- Chic shampoo, Spinx perfumes, Meera Herbal, Nyle Shampoo HUL- Rexona, Axe, Close Up, Taj Tea, Lipton Tea, Surf, Wheel Line Branding Brand successful in a category for a targeted consumer group, is extended to other product lines in the category/ adjacent categories, but catering to same group‘s needs. Product lines cater to different needs, cosmetics- lipstick, nail polish, moisturizers, beverages- flavours, ketchups/ mineral water/ biscuits- pack sizes, cars- variants. Identity of the main brand is leveraged across other extensions Line branding restricted to adjacent territories & complementary products. Gillette razors and cartridges- Vector, Sensor, Mach 3, Turbo; shaving gels, deos, L’Oreal- cosmetics, beauty, shampoos, skin, salons Amar Chitra Katha- comics (print), mobile, TV, Cinema, online Range Branding Built on common association, competence or promise of the main brand or firm Brand‘s common position/ association spread across related and unrelated categories Kingfisher symbolizes ‗the good times‘, hence extended across Beer, airlines and soccer. Godrej stands for a century of trust and reliability, extended across FMCG, CD, property, furniture and security systems. Umbrella Branding One brand for all products/categories, drawing on the strength of the master brand Safer, cheaper than building new brand, association should strategically fit categories Samsung- TV, fridge, washing machines, mobiles, hard disk, monitors, laptops Virgin- Airlines, Cola, Music, Moon travel, mobile, entertainment Source/Double Branding Corporate + new brand (combination of umbrella & product branding strategy) Equal prominence in communication and branding for both brands Brand benefits from corporate brand‘s image or adds subtracts to/ from it. Hyundai name precedes – Santro, Getz, i10, i20, Verna, Tucson www.dramitrangnekar.com 32
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Johnnie Walker Scotch Whisky– Red label, Green label, Black label & Blue label Endorsement Branding Similar to source branding, but product brand more significant than corporate brand Corporate brand conveys basic associations, augmented by the product brand Cadbury’s precedes Dairy Milk, 5 Star, Fruit & Nut, Celebrations, Temptations Polo by Ralph Lauren, Armani- Signature, Collezioni, Exchange, Junior Brand Extension Extend existing brand to new products, services, or consumer segments Existing brand + new brand, new brand is called subbrand If executed well, brand extensions broaden and clarify brand meaning, if not, dilute or confuse brand meaning. Kingfisher (Beer to Airlines) and Amul (Milk & Foods). Devising the Branding Strategy NPL 3 choices: Develop new brand elements for new product, apply some of its existing brand elements, use a combination of new and existing brand elements Brand extension- use an established brand to introduce a new product-Gillete Sensor Sub-brand- new brand combines with an existing brand- Gillete Sensor Excel Parent brand- the existing brand which gives birth to a brand extension- Gillette Family brand- Parent brand already associated with multiple products through brand extensions. Cadbury Product category Brand name Old Old New New Line extension-(New SKU, flavours- Category extension- (Titan Mirinda lemon, Rasna mango, Pepsi 1.5L) Raga, Junior Horlicks) Sub brand- (Gillette Sensor Excel, Ford New brand- (Maruti Ritz, Ikon Flair, Kellogg Frosties K) Tata Nano) Brand extensions can be broadly classified into two general categories: 1) Line extension- parent brand used to brand a new product, target new market segment within a product category currently served by parent brand – Maggi Noodle SKUs 2) Category extension- when parent brand is used to enter a different product category from that currently served by the parent brand- Kingfisher Beer to Airlines 3) Brand line- All products- original, line & category extensions, sold under a particular brand- Godrej, Videocon, Heinz 4) Brand mix (brand assortment) - all brand lines of a firm available to buyers – HULClose-up, Pepsodent www.dramitrangnekar.com 33
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Brands roles in a brand portfolio: Flankers- Flanker (―fighter‖) brands positioned wrt competitors‘ brands so that more important (and profitable) flagship brands can retain their desired positioning May cannibalise own brands or reflect poorly on other brands in the portfolio Celeron and Intel, Toyota & Lexus, I Pod range- nano, shuffle etc Cash Cows- retain brands retained as they hold on to a sufficient number of customers & maintain their profitability with virtually no marketing support. Parle G Low-End Entry-Level- a relatively low-price brand in the portfolio to attract customers to the franchise. Gucci accessories, Sony Vaio entry level, Armani Jeans High-End Prestige- Role of a relatively high-priced brand in the brand family often to add prestige and credibility to the portfolio. Armani Signature, Mont Blanc Pens Brand portfolio assessment matrix Competitive position Strong Medium Maximise dominance Challenge leader, build on strengths Challenge leader, build on Manage for cash strengths flow, flank Cash generator Milk, consider exit Weak Niche, acquire, flank, exit Milk and specialise Divest Market Attractiveness High Medium Low Line Extensions advantages Drive growth and add sales Consumers familiar with parent brand Strong brand identity, preferred Extensions gain retailer acceptance Economies of scale in marketing mix Cater to new markets/users Reduce cost & period of NPD Brand Extensions Advantages Leverage assets New product acceptance, safer, economical Brand name / trademark issues avoided Renew brand interest, future NPL base Expand market / segment coverage Line Extensions disadvantages Companies lose focus Consumers become confused Proliferation, parent brand loses identity Erodes brand equity for parent brand Brand extension failure may impact parent May cannibalise parent brand Opportunity loss of building new brand Disadvantages Dilute brand strength, confuse Line extensions weaken brand associations Extension cannibalises, failure harms brand Time to create unique image and equity Lack of ‗fit‘ in the consumer‘s mind www.dramitrangnekar.com 34
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Brand Equity The differential effect that brand knowledge has on consumer response to the marketing of that brand Added value endowed to products and services, the marketing effects uniquely attributable to a brand Brand assets linked to a brand‘s name & symbol that add to a product or service An important intangible asset to the firm, with a psychological and financial value Customer’s viewpoint- Brand equity is the differential in a customer‘s mind that makes him prefer one brand over another Firm’s viewpoint- Brand equity is value of the brand to the firm in monetary terms This asset can be created and analysed trough the four dimensions, brand awareness, perceived quality, brand associations, and brand loyalty. Brand Equity Brand Awareness Perceived quality Brand Associations Brand Loyalty Brand awareness- the base that affects consumer perception and even taste, people like the familiar and ascribe good attitudes to familiar items Perceived quality- how the customer perceive the brands quality status A brand association, as it influences associations in many contexts and also because it is empirically shown to affect profitability as measured by ROI and stock return Brand associations- anything that connects the customer to the brand Includes user imaginary, product attribute, use situations, organizational associations, brand associations, and symbols Brand loyalty- key to brand value, strengthen size & intensity of each loyalty segment Factors to influence Brand Equity www.dramitrangnekar.com 35
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar How Brand Equity Generates Value (Aaker) Source: Managing Brand Equity: David Aaker1991 Building Brand Equity The marketer‘s challenge in building a strong brand is to ensure customers have the right type of experiences with products and services and their marketing programs create the desired brand knowledge structures for the brand. Customer knowledge drives the differences that manifest themselves in brand equity Value may be reflected in how consumers, think, feel, and act wrt the brand as well as the prices, market share, and profitability that the brand commands for the firm www.dramitrangnekar.com 36
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Marketers and researchers use various perspectives to study brand equity Customer-based brand equity is the differential effect that brand knowledge has on consumer response to the marketing of that brand +ve customer-based brand equity- when consumers react more favorably to a product & the way it is marketed when the brand is identified, as compared to when it is not. -ve customer-based equity- when consumers react less favorably to marketing activity for the brand under the same circumstances. Measured by Brand audits- in-depth examination of brand health & to set strategic direction Tracking studies- information from consumers to provide valuable tactical insights into short-term effectiveness of marketing programs and activities. Strategic brand management involves the design and implementation of marketing activities and programs to build, measure, and manage brands to maximize their value. Building brand equity depends on Brand elements- brand names, logos, symbols, package designs The initial choices for the brand elements or identities making up the brand The way the brand is integrated into the supporting marketing programs The associations indirectly transferred to the brand by linking the brand to some other entity (company, country of origin, another brand) Strategic brand management process involves four main steps: Identifying and establishing brand positioning. Planning and implementing brand marketing. Measuring and interpreting brand performance Growing and sustaining brand value. Brand equity drivers- creating right brand knowledge structures with right consumers, 3 key drivers: The initial choice for the brand elements or identities making up the brand Product, service, accompanying marketing activities & supporting marketing programs Other associations indirectly transferred to the brand by linking it to some other entity. Designing Holistic Marketing Activities Brands are not built by advertising. Customers come to know a brand through a range of contacts and touch points: Personal observations, personal use, word of mouth, interactions with company personnel, on-line or telephone experiences and payment transactions. Brand contact- any (+/-) information-bearing experience a customer / prospect has with a brand, product category, or market relating to the marketer‘s product or service. Personalization- Making sure that the brand and its marketing is as relevant as possible to as many customers as possible. The Internet creates opportunities to personalize www.dramitrangnekar.com 37
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Integration- Integrating marketing is about mixing and matching marketing activities to maximize their individual and collective effects, especially marketing communications Brand awareness- the consumers‘ ability to identify the brand under different conditions, as reflected by their brand recognition or recall performance and whether it creates, maintains, or strengthens brand image. Brand image- perceptions and beliefs held by consumers, reflected in the associations held in consumer memory. Internalization- Marketers must adopt an internal perspective to appreciate and understand basic branding notions, and how they can help—or hurt brand equity. Key influence on brand perception is customers experience with company personnel. Internal branding- activities and processes that help to inform and inspire employees. Brand bonding- when customers experience the company as delivering on its brand promise. To deliver the brand promise, every employee should live the brand. Holistic marketers should train & encourage distributors / dealers to serve customers Leveraging Secondary Associations The third way to build equity is to ―borrow it‖. Brand associations may be linked to other entities that have their own associations, creating ―secondary‖ brand associations like: The company—through branding strategies. Countries or other geographical regions—identification of product origin Channels of distribution—channel strategy. Other brands—ingredient or co-branding. Characters—licensing. Spokespeople—endorsements. Sporting or cultural events—sponsorships. Other third party sources—awards or reviews. Measuring Brand Equity- Two complementary approaches employed by marketers Indirect approach- assesses potential sources of brand equity by identifying and tracking consumer brand knowledge structures. Direct approach- assesses the actual impact of brand knowledge on consumer response to different aspects of the marketing. Brand Audits- a consumer-focused exercise involving procedures that assess brand health, uncover sources of brand equity & suggest ways to improve & leverage its equity. Used to set the strategic direction for the brand Regular audits allow marketers to manage brands more proactively and responsively. Profound implications for the strategic direction and brands‘ resulting performance. Requires understanding sources of brand equity from the firm and the consumer perspective Brand audits consist of two steps Brand Inventory- To provide a current, comprehensive profile of how all the products and services sold by a company are marketed and branded. www.dramitrangnekar.com 38
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Profile each product/service, identify all associated brand elements & supporting marketing program Profile competitive brands in terms of their branding and marketing efforts. Suggest what consumers‘ current perceptions may be based on. Assess consistency of all the different products or services sharing a brand name. Brand Exploratory- To understand what consumers think and feel about the brand and its corresponding product category to identify sources of brand equity. Prior research studies and qualitative research techniques like word associations, projective techniques, visualization, brand personifications, and laddering. Gain understanding of the beliefs of company personnel about consumer perceptions. Brand Tracking - collect information from consumers on a routine basis over time. Quantitative measures to understand how brands & marketing programs are performing on key dimensions Understand where, how much, and in what ways brand value is being created Managing Brand Equity- requires a long-term view of marketing decisions. Brand Reinforcement- Manage firms strategic asset to ensure value does not depreciate. A) Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to consumers in terms of: What products the brand represents? What core benefits it supplies? What needs it satisfies? How the brand makes those products superior? Which strong, favorable & unique brand associations should exist in consumers mind? Reinforcing brand equity requires innovation & relevance through marketing program. B) Marketers must introduce new products and conduct new marketing activities that truly satisfy their target market. C) An important consideration in reinforcing brands is the consistency of the marketing support the brand receives, in terms of both amount and kind. D) In managing brand equity, it is important to recognize the trade-offs between those marketing activities that fortify the brand and reinforce its meaning and those that attempt to leverage or borrow from existing brand equity to reap some financial benefit. Brand Revitalization Changes in consumer tastes & preferences, emergence of new competitors/ technology, or regulatory or environmental developments may potentially affect fortunes of a brand. To reverse a fading brand‘s fortunes, restore lost brand equity sources or create new Understanding, what the sources of brand equity were, is the first step to a revival Expand depth &/or breadth of brand awareness by improving consumer recall & brand recognition during purchase / consumption settings. Improve strength, favorability & uniqueness of brand associations to build brand image. www.dramitrangnekar.com 39
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Brand crisis- Longer response time in a crisis increases chances of consumers forming negative impressions but sincerity in tackling the crisis will be appreciated by customers Brand Equity Models 1) Brand Asset Valuator (BAV)- Young & Rubicam ad agency measured brand equity for 450 global brands and 8,000 local brands in 24 countries, using a 32 item questionnaire on brand personality plus 4 dimensions: 1. Differentiation- Measures how distinctive the brand is in the marketplace 2. Relevance- Measures whether a brand has personal relevance for the respondent. Is it meaningful to him or her? Is it personally appropriate? 3. Esteem- Measures whether brand is held in high regard and considered best in its class. Closely relates to perceived quality and extent to which brand is growing in popularity. 4. Knowledge- an intimate understanding of the brand, consumer experience Differentiation + relevance= brand strength, describes the brand's growth potential Esteem + knowledge= brand structure, describes the brand's current power Brand strength+ brand structure= Powergrid, depicts brand development cycle stages Relationship among 4 pillars yields compelling information about brand's capacity to carry a premium price & fend off competition- the key to brand health. Y&R Power Grid- Stature Versus Strength Brand stature (knowledge + esteem) H Budweiser Brand strength Gap (differentiation Heinz + esteem) H Disney Sony Kodak Levis L Xerox L BMW Guinness Starbucks Vodafone Swatch HP Kellogg Reuters BAV can be used to gain a range of knowledge about a brand: Identify key perception drivers, potential target groups, problem areas and barriers Analyze own image/attribute/brand personality & competitive strengths & weaknesses Track brand movement over time on critical dimensions Investigate a corporate name as a potential parent/umbrella brand Determine marketing needs and possible common communications/programs Typical patterns of brand development www.dramitrangnekar.com 40
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 2) Aaker Model (Professor David Aaker) Brand equity is a set of 5 categories of brand assets & liabilities linked to a brand that add to or subtract from the value provided by a product / service to a firm and/or to that firm‘s customers. The categories of brand assets are: Brand loyalty Brand awareness Perceived quality Brand associations Other proprietary assets such as patents, trademarks, and channel relationships Brand identity- unique set of brand associations that represent what a brand stands for and promises to customers. Consists of 12 dimensions organized around 4 perspectives: Brand-as-product (product scope, attributes, quality/value, use, users, country of origin) Brand-as-organization (organizational attributes, local versus global) Brand-as-person (brand personality, brand-customer relationships) Brand-as-symbol (visual imagery/metaphors and brand heritage) Brand identity also includes Core identity- the central, timeless essence of the brand Extended identity- includes various brand identity elements, organized into cohesive and meaningful groups 3) Brandz model of brand strength (Marketing research consultants Brown and WPP) Brand building involves sequential steps, where each step is contingent upon successfully accomplishing previous step. Objectives at each step, in ascending order, are: Presence, Relevance, Performance, Advantage Bonding- bonded consumers, build stronger relationships with the brand, spend more of their category expenditures on the brand than those at lower levels of the pyramid. www.dramitrangnekar.com 41
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar 9 Brand valuation Top Brand values 2009 Interbrand 1. Coca-Cola 2. IBM 3. Microsoft 4. GE 5. Nokia 6. McDonald's 7. Google 8. Toyota 9. Intel 10. Disney 68,734 ($m) 60,211 ($m) 56,647 ($m) 47,777 ($m) 34,864 ($m) 32,275 ($m) 31,980 ($m) 31,330 ($m) 30,636 ($m) 28,447 ($m Interbrand list of Top 20 Brand Ranks 2000-2009 2000 Coca Cola 1 Microsoft 2 IBM 3 Intel 4 Nokia 5 GE 6 Ford 7 Disney 8 McDonalds 9 AT&T 10 Marlboro 11 Mercedes Benz 12 HP 13 Cisco 14 Toyota 15 Citi 16 Gillette 17 Sony 18 American Express 19 Honda 20 BMW Louis Vuitton Samsung Apple 2001 1 2 3 6 5 4 8 7 9 10 11 12 15 16 14 13 18 20 17 2002 1 2 3 5 6 4 11 7 8 9 10 14 16 12 13 19 15 18 2003 1 2 3 5 6 4 14 7 8 9 10 12 17 11 13 16 15 18 2004 1 2 3 5 8 4 19 5 7 10 11 12 16 9 13 15 14 18 2005 1 2 3 5 6 4 7 8 10 11 13 17 9 13 15 14 19 18 20 2006 1 2 3 5 6 4 8 9 12 10 13 18 7 12 16 14 19 17 20 2007 1 2 3 7 5 4 9 8 14 10 12 18 6 11 16 15 19 13 17 2008 2009 1 1 3 3 2 2 7 9 5 5 4 4 9 8 18 11 12 6 11 14 15 13 17 18 15 16 19 20 10 6 17 12 11 8 13 www.dramitrangnekar.com 42
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Interbrand’s Brand Equity Formula Brand earnings Brand sales Costs of sales Marketing costs Overhead expenses Remuneration of capital charge Taxation Brand strength Leadership (25%) Stability (15 %) Market (10 %) Geographic spread (25 %) Trend (10 %) Support (10 %) Protection (5 %) Brand value- the sum of all earnings that a brand is expected to generate. 3 steps: Establish company's intangible earnings and allocate them to individual brands and countries of operation, based on financial data Determine portion of intangible earnings attributable to brand alone (Brand Contribution), which reflects share of earnings from a product or service's most loyal consumers or users, as opposed to other factors such as price Project brand value based on market valuations, brand risk profile, & growth potential. Brand Valuation Approach (Interbrand) Companies like P&G- Gillette, Unilever, L‘Oreal and Nestle create significant brand value, from a portfolio of brands than from a single brand. Brand value model • Brand Value as net present value (NPV) of future earnings generated by the brand • Captures present and future value of a brand • Determines how brand creates value and aligns with customer‘s drive for purchases • The model comprises 4 key elements: 1) Financial forecasting Projections of all revenues from that brand in the future Deduct operating costs, taxes, capital costs to operate the brand Difference represents brand‘s Intangible Earnings (like EVA / intellectual capital) 2) Role of Branding Measuring how the brand influences customer demand at the point of purchase Analyse (Brand Earnings / Intangible Earnings) % solely attributable to the brand Identifies and weights key drivers of customer demand, their dependence on brands Calculated as a %age and applied to Intangible Earnings to derive Brand Earnings. 3) Brand Risk Brand specific risk rate at which forecast Brand Earnings are discounted to their NPV Discount based on risk free rate (yield on government bond + brand premium based on Brand Strength analysis) Assesses risk profile of projected Brand Earnings based on brand franchise security 4) Brand strength www.dramitrangnekar.com 43
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Measured against 7 key attributes- Market, Stability, Leadership, Support, Trend, Geography and Protection Provides brand specific discount rate for the Brand Earnings forecast 5) Brand Value Calculation A financial representation of a firm‘s earnings due to superior demand created for its products and services through the strength of its brand Brand value is the financial worth today, similar to market cap of a firm Brand value is calculated as the NPV of projected Brand Earnings Brand value depends on good financial performance + strong market/ing position Higher Brand Value looks at long term results than short-term performance Applications of Brand Valuation in Brand Management Strategic asset (M&A, licensing, valuation, PE) as economic value considered not sale Key brand value (Coke, Apple, Microsoft) is significant portion of company value Brand building becomes a corporate objective not a marketing initiative Compare brand value to shareholder value, intangible/ tangible assets ssess Brand value across customers, segments, geographies, channels, competition Brand value change to assess internal performance, increase accountability, ROI Part of value based management frameworks ( EVA, BSC, shareholder value) Establish best practices brand management, integrate brand value in corporate planning Performance benchmark (quarterly brand value score card review) Approaches to Brand Valuation: • Cost: Looks at all costs incurred in creating a brand or what it might cost to recreate a brand hypothetically. Rarely used as costs incurred are substantially less than actual brand value. Eg Property price cannot match cost in building it. • Market value: Estimate brand's value based on market transactions of comparable brands. Issues- all market transactions not publicly available, cannot be easily compared • Economic use: Earlier economic valuations were based on historical brand earnings, now on the discounted value of future brand earnings • Royalty relief: Assumes that company does not own that brand but needs to license it from its owner, hence a royalty rate based on sales is applicable. As company owns the brand it does not need to incur this charge hence the name ‗royalty relief'. Future sales (rather than future gross profit) are forecast, hence royalty rate applied to provide an income attributable to the brand that is then discounted back to a net present value. Briefly, brand's value is a product of 2 quantities (1) Annual "net" after tax profits, adjusted to exclude the earnings expected for an equivalent unbranded product, and averaged over time; (2) A "multiple" (or discount rate), reflecting brand's "strength" Brand strength factors (greater a brand's strength, the higher its multiple) (i) Leadership—ability to influence the market. (ii) Stability—ability to maintain a consumer franchise. (iii) Market—vulnerability of market demand to changes in tastes or technology. www.dramitrangnekar.com 44
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar (iv) International Scope—cross national/cultural potential. (v) Trend—long term appeal to consumers. (vi) Support—strength of communications. (vii) Protection—security of the brand owner's legal or property rights. Brand valuation approaches (http://www.brandchannel.com/papers_review.asp?sp_id=357) Earlier, intangibles (brands, technology, patents, employees) not financially valued Unexplained differences in book valuation and market capitalization 1980s M&A activity led to valuation of companies and brands, today majority business value is derived from intangibles Average corporation life is 25 years, average age of world‘s Top 100 brands 60 years A study (Interbrand- JP Morgan) concluded that on average brands account for over one-third shareholder value with McDonald‘s accounting for 70% and Coca-Cola 51% Approaches to brand valuation Financial values on brands is now widely accepted. With transfer pricing, licensing deals, M&A and value based management, brand valuation plays a key role in business today. Research-based approaches- Brand equity models measure consumer behavior and attitudes that have an impact on the economic performance of brands through consumer research where they interpret and measure consumers‘ perceptions that influence purchase behavior. Their integration into an economic model helps them assess economic value of brands Financially driven approaches- Cost-based approaches fail as there is no direct correlation between investment made and value added by a brand Comparables- brand value is arrived at on the basis of something comparable, but value creation of brands in the same category can be very different, even if most other aspects of the underlying business are similar. Comparables are useful for cross-checking Premium price- Brand value is calculated as NPV of future price premiums that a branded product would command over an unbranded or generic equivalent. However brand objectives are based on ability to secure future demand than current premium. Economic use- This approach combines brand equity and financial measures, and is widely accepted methodology for brand valuation 3,500 brand valuations worldwide. Brands help generate customer demand, which translates into revenues and long term repurchase and loyalty Brand‘s future earnings are identified and discounted to a NPV using a discount rate that reflects the risk of those earnings being realized www.dramitrangnekar.com 45
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Steps to capture complex value creation of a brand: 1. Market segmentation- Brands influence customer choice, but influence varies depending on market in which the brand operates. Split brand‘s markets into nonoverlapping and homogeneous groups of consumers according to applicable criteria such as product or service, distribution channels, consumption patterns, purchase sophistication, geography, existing and new customers etc. The brand is valued in each segment and the sum of the segment valuations constitutes the total value of the brand. 2. Financial analysis- Identify and forecast revenues and earnings from intangibles generated by the brand for each of the distinct segments determined in Step 1. Intangible earnings are brand revenue less operating costs, applicable taxes and a charge for the capital employed. The concept is similar to the notion of economic profit. 3. Demand analysis- Assess the role that the brand plays in driving demand for products and services in the markets in which it operates, and determine what proportion of intangible earnings is attributable to the brand measured by an indicator referred to as the ―role of branding index.‖ This is done by first identifying the various drivers of demand for the branded business, then determining the degree to which each driver is directly influenced by the brand. The role of branding index represents the percentage of intangible earnings generated by the brand. Brand earnings are calculated by multiplying the role of branding index by intangible earnings. 4. Competitive benchmarking- Determine the competitive strengths and weaknesses of the brand to derive the specific brand discount rate that reflects the risk profile of its expected future earnings (measured by an indicator called as the ―brand strength score‖). This comprises extensive competitive benchmarking and a structured evaluation of the brand‘s market, stability, leadership position, growth trend, support, geographic footprint and legal protectability. 5. Brand value calculation- Brand value is the NPV of the forecast brand earnings, discounted by the brand discount rate. NPV calculation comprises both the forecast period and the period beyond, reflecting the ability of brands to continue generating future earnings. An example of a hypothetical valuation of a brand in one market segment is shown in the Table below. This calculation is useful for brand value modeling in a wide range of situations, such as: www.dramitrangnekar.com 46
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar predicting the effect of marketing and investment strategies determining and assessing communication budgets calculating the return on brand investment assessing opportunities in new or underexploited markets tracking brand value management. Hypothetical brand value calculation: www.dramitrangnekar.com 47
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Applications Strategic brand management, where brand valuation focuses on internal audiences by providing tools and processes to manage and increase economic value of brands. Financial transactions, where brand valuation helps in a variety of brand-related transactions with external parties. Attributes of Strong Brands Excels at delivering desired benefits Stays relevant Priced to meet perceptions of value Positioned properly Communicates consistent brand messages Well-designed brand hierarchy Uses multiple marketing activities Understands consumer-brand relationship Supported by organization Monitors sources of brand equity The Role of Brands Identify the maker Simplify product handling Organize accounting Offer legal protection Signify quality Create barriers to entry Serve as a competitive advantage Secure price premium Marketing Advantages of Strong Brands Improved perceptions of product performance Greater loyalty Less vulnerable to competition Larger margins Inelastic consumer response to price increases Elastic consumer response to price decreases Greater trade cooperation Increase in effectiveness of IMC Licensing opportunities Brand extension opportunities www.dramitrangnekar.com 48
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Product Life Cycle (PLC) Increasing competition, technology & changing economic conditions make firms reformulate positioning and differentiation strategies during a PLC. Introduction & growth stage- Slow growth & low profits, but if successful, then high growth and increasing profits Maturity stage- Slow sales growth, stable profit, extend successful brands Decline stage- Identify weak brands and phase out or reformulate Markets evolve through 4 stages: emergence, growth, maturity & decline. Style- basic and distinctive mode of expression appearing in a field of human endeavor. Fashion- currently accepted or popular style in a given field. Length of a fashion cycle is hard to predict but fashions pass through 4 stages- Distinctiveness, Emulation, Massfashion & Decline. Fads- fashions that come quickly into public view, are adopted with great zeal, peak early & decline very fast. Fads do not satisfy a strong need, hence do not survive. Marketing Strategies: Introduction Stage and Pioneer Advantage Profits negative/ low, high promotional expenditure, to inform potential consumers, induce product trial and ensure availability Market pioneer- being first can be rewarding, but risky & expensive Coming in later makes sense if with superior technology, quality, or brand strength. Speeding up innovation time is essential in an age of shortening product life cycles. www.dramitrangnekar.com 49
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Pioneer has strong brand name recall, establishes brand attributes that product class should possess, advantages of economies of scale, technological leadership, patents & ownership of scarce assets. Pioneer weaknesses: crude new products, improper positioning, an idea before its time, high product-development costs, lack of resources, managerial incompetence or unhealthy complacency. A pioneer could also be an inventor, or a product pioneer or a market pioneer. Marketing Strategies: Growth Stage The growth stage marked by rapid sales climb, consumer base New competitors enter, attracted by the opportunities Prices may remain where they are or fall slightly. Companies maintain / increase promotional expenditures, educate market, take on competition, profits increase, costs fall due to volumes Strategies to sustain rapid market growth Improve product quality and add new product features and improved styling. Add new models, flanker products, enter new market segments. Increase distribution coverage and enter new distribution channels. Shift from product-awareness advertising to product-preference advertising. Lowers prices to attract the next layer of price-sensitive buyers. Trade-off between high market share and high current profits. By spending money on product improvement, promotion, and distribution, it can capture a dominant position. Marketing Strategies: Maturity Stage Growth declines, longer stage, marketing mature products is a key challenge. 3 phases: Growth, where the sales growth rate starts to decline. Stable, where sales flatten on a per capita basis because of market saturation. Decaying maturity, where sales level starts to decline, customers begin to switch. The sales slowdown creates industry overcapacity, intensifies competition Industry consolidation, few dominate firms, many nichers, profits through volumes Key issue- f become one of the ―big 3‖ or pursue a niching strategy Companies may abandon weaker products & concentrate on more profitable & new products. Market Modification Expand market for mature brand by working with 2 factors that drive sales volume = number of brand users x usage rate per user. Expand the number of brands users by converting nonusers. Expand the number of brand users by entering new market segments. Convert competitors‘ customers. Convincing current users to increase brand use, users, usage Product Modification www.dramitrangnekar.com 50
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Modifying product characteristics through quality, feature or style improvement Quality improvement aims at increasing the product‘s functional performance. New features that expand product‘s performance, versatility, safety, or convenience. Build image as an innovator, win loyalty of market segments that value these features Feature style improvement may only increase product‘s aesthetic appeal. Marketing Program Modification Modifying other marketing program elements the 4 Ps and services. Marketing Strategies: Decline Stage Sales decline- due to technology advance, shifts in consumer tastes & competition Over capacity, increased price-cutting, and profit erosion. As sales and profits decline, firms may withdraw from the market or reduce number of products offered Stop, increase or maintain investment. Drop unprofitable customer groups, strengthen investment in lucrative niches. Harvest firm‘s investment to recover cash quickly. Divest the business. Appropriate strategy depends on industry‘s relative attractiveness & company‘s competitive strength in that industry Companies successful in rejuvenating a mature product, often do so by adding value to the original product. The Product Life-Cycle Concept: Critique The PLC concept helps interpret product and market dynamics, used for planning, control, and forecasting. PLC focuses only on a brand than the market, customers or competition., or new needs, , technology, channels, and other developments. Markets evolve through four stages: emergence, growth, maturity, and decline. Emergence- Before a market materializes, it may exist as a latent market. Marketers either follow a single-niche or multiple-niche or a mass-market strategy. Growth- If new product sellsl, new firms enter, ushering in a market-growth stage. Maturity- Eventually, competitors cover and serve all the major market segments and the market enters the maturity stage. As market growth slows down, the market splits into finer segments, and high market fragmentation occurs, often followed by market consolidation caused by the emergence of a new attribute with strong appeal. Decline- Eventually, demand for present products begins to decrease, market enters decline stage. Total need level declines or new technologies replace the old. Brand Valuation Brand Equity • Brand worth/value- Levis Jeans sans logo or Nike sneakers without the swoosh? www.dramitrangnekar.com 51
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar • Nurtured and built over years through sustained performance and promotion to a loyal customer base by providing value- Parle-G, Mangola, Microsoft • High brand awareness and consumer loyalty, difficult to put a value on Brand Salience • Brand’s ability to be recalled (come to mind) by customers in a purchase situation • Propensity of a brand to be thought of or noticed in buying situations (Coburn) • Print ads more effective than TV. If print ads added to TV, then increase in brand salience, enhanced memorability of communication & strengthening of brand values. People multi task while watching TV but are not distracted while reading - INS 2004 • Advertising helps change consumer attitudes toward brand & influences market share by increasing brand salience, but has limited impact on brand image (Lisette 1998) MS NMIMS SDL p 98 P&G Positioning: distinct positions, even in same segments (Aaker & Joakimsthaler) Brand Segment Position Head & Shoulders Shampoos Anti-Dandruff Pert Plus Shampoos Conditioner + shampoo Pantene Shampoos Healthy + shiny hair Ariel Detergent High Tech Detergent Tide Detergent Tough cleaning Cheer Detergent All-temperature cleaning Bold Detergent Fabric softener Dash Detergent Concentrated powder Whisper Sanitary Products Hygienic protection Vicks Cold Clears blocked nose Old Spice After Shave Manliness Crest Toothpaste Cavities Lifestyle dimensions: (Plummer) Activities Interests Work Family Hobbies Home Social Events Job Vacation Community Entertainment Recreation Club Membership Fashion Community Food Shopping Media Sports Achievements Positioning the company; www.dramitrangnekar.com Opinions Own Social Political Business Economics Education Sports Products Culture Demographics Age Education Geography Income Sex Occupation Family size Dwelling Lifecycle stage 52
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Customers Who How do I reach them Demographics Geographies Segments Social / economic status Touch points Media habits Media Promotion (SPPASMDT, WoM) Internet Performance, VFM, 4Ps, technology, service, design, delivery Brick, click, brick and click, click & brick, mail order, catalogue Direct, indirect, generic What needs do they serve, serve better than us, do not serve better Unique, not unique, competitive advantage Where are my customers How do my customers find me How do my customers perceive value How do we best deliver value Competition Benefits for customers of competitive brands How am I positioned Brand Power Knowledge Matrix Customer knowledge Articulated Unarticulated Ethical brands Experiential brands (Concern about environment, (Engage and delight customers) tradition) Disney Body Shop Fab India Rational brands Emotional brands (Value proposition) (Satisfy psychological & sociological needs for identity & status) Domino’s- service Walmart- price HP Titan- performance Kellogg Reuters Customer power Unmet Met FCB Grid High Involvement Low Involvement Thinking Informative Learn-feel-do Habitual Do-learn-feel Feeling Affective Feel-learn-do Satisfaction Do-feel-learn Image (symbols, media, atmosphere, and events). An effective identity Establishes product‘s character & value proposition. Conveys the character in a distinctive way. www.dramitrangnekar.com 53
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Delivers emotional power beyond a mental image. To be conveyed through every available communication vehicle & brand contact. Can even be a seller‘s physical space, also a powerful image generator. Relevance- customer connect Diffferentiation- value addition Credibility- deliver on promises & perceptions Stretch- extensions, NPD Brand Resonance: Describes how to create intense, actively loyal relationships with customers. Brand Value Chain: Describes how to trace the value creation process to better understand financial impact of marketing expenditures & investments. Reason to Believe Co-Branding-Brands sold or marketed jointly with other brands that add value, have equity, and are perceived as an appropriate fit, exit clause critical- McDonalds- Coke, Shoppers Stop Citibank, HPCL- Jet Logical fit between 2 brands can maximize individual brand advantages, equity, image Generate more sales from existing target market, open additional channels & opportunities Promotional cost reduces, complementary effect Disadvantages- brand class, brand eclipse, negative repercussions of unsatisfactory performance, risk of overexposure, lack of focus Ingredient branding- Creating equity for materials, components, parts contained within other brands- Intel inside, Dolby system, Teflon coating, www.dramitrangnekar.com 54
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Core Identity McDonald's Brand Identity- Rich identity provides several links to customers Value offering McDonald's provides value as defined by the product, special offers, and the buying experience given the price Food quality Consistenly hot, good-tasting at any McDonald's in the world Service Fast, accurate, friendly, and hassle free Cleanliness The operations are always spotless on both sides of the counter www.dramitrangnekar.com 55
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar User Extended Identity Convenience Families and kids are a focus, but serves a wide clientele McDonald's is the most convenient quick-service restaurant — it is located close to where people live, work, and gather; features efficient, time-saving service; and serves easy-to-eat food Fast food, hamburgers, children's entertainment Big Mac, Egg McMuffin, Happy Meals, Extra Value Meals and others Ronald McDonald Children's Charities, Ronald McDonald House Family oriented, ail-American, genuine, wholesome, cheerful, fun The family/fun associations are inclusive, and McDonald's is part of the good times The Ronald McDonald Children's Charities engender respect, liking and admiration Golden arches Ronald McDonald; McDonald's dolls and toys Good-tasting hamburgers, fries, and drinks that provide value extras such as playgrounds, prizes, premiums, and games Kids — fun via excitement of birthday parties, relationship with Ronald McDonald and other characters, and feeling of special family times adults — warmth via link to family events and experiences reinforced by the Mc- Donald's emotional advertising Product scope Subbrands Corporate citizenship Brand personality Relationship Relationship Logo Characters Functional benefits Emotional benefits Value Proposition Core Identity Extended Identity Nike Brand Identity Nike ispresent in different segments like fitness and competitive sports Product thrust Sports and fitness User profile Top athletes, plus all those interested in fitness and health Performance Performance shoes based on technological superiority Enhancing lives Enhancing peoples' lives through athletics Brand personality Exciting, provocative, spirited, cool, innovative, and aggressive; into health and fitness and the pursuit of excellence www.dramitrangnekar.com 56
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Basis for relationship Subbrands Logo Slogan Organizational associations Endorsers Heritage Functional benefits Emotional benefits Self-expressive symbolic benefits Credibility Hanging out with a rugged, macho person who goes for the best in clothing, shoes, and everything else Air Jordan and many others "Swoosh" symbol "Just do it" Connected to and supportive of athletes and their sports; innovative Top athletes, including Michael Jordan, Andre Agassi, John McEnroe, Ronaldo Developed track shoes in Oregon High-technology shoe that will improve performance and provide comfort The exhilaration of athletic performance excellence; feeling engaged, active, and healthy Self-expression is generated by using a shoe with a strong personality associated with a visible athlete Makes performance shoes and clothing that are stylish Value Proposition Customer & Brand Laddering – Parameswaran Brand Associations- Strong, Unique, Favorable Brand Promise- Marketer‘s vision of what the brand must be and do for Consumers. Brand Elements- Brand names, Slogans, Characters, URLs, Logos, Symbols Brand Element Choice Criteria- Memorable, Meaningful, Likeability, Transferable, Adaptable, Protectable Exercise- Slogans (Guess the company / brand) The Complete man Just do it The Joy of Flying God’s Own Country We try harder Innovation at work This Bud’s for you Always low prices www.dramitrangnekar.com 57
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar Customer loyalty ladder Intent- Convert sale into long term customer relationship to mutual benefit The aim is to convert, retain and regain customers. By laddering stages of relationship between company and customers, company can devise specific strategies for customers at each level. Surveys- Attracting new customers 6 times costlier than retaining (Harvard) Suspect- Potential customer, exposed to your communication Prospect- Potential customer, interested in your promotion Customers- Purchasers of your product / service Clients- Those who return to re/purchase Advocates- Convinced and happy about the product / service, they now promote on your behalf to others Brand Laddering "Brand Laddering involves progression from attributes to benefits to more abstract values or motivations. Laddering involves repeatedly asking what the implication of an attribute or benefit is for the customer." Strategic Brand Management, Kevin Lane Keller Keller- means-end chain takes the following structure Attribute (descriptive features) lead to benefits (meaning attached to attributes) which leads to values (enduring personal goals and motivations). Laddering concept is applied in brand positioning. When brand is launched, attributes and benefits are the focus, but after the basic functionality is established in the consumers mind, the brand has to deepen the meanings associated with the brand. Laddering is not easy, as a clear understanding of the brand's core values is essential Failure of laddering up reduces strategic alternatives available to the brand Laddering works if consumers are convinced/satisfied with brand‘s basic functionality In laddering the brand will break free from product restrictions, which gives lot of flexibility in extending and communication to the brand manager Dove- from ‗moisturiser‘ to " celebrating real beauty " Nike- is all about Athletic Performance Raymond- classy apparels to "A Complete Man " Gillette- Razors to ‗The best a man can get‘ Moov- backache specialist to ‗ A Woman‘s inner voice‘ From Mike Parry www.dramitrangnekar.com 58
[email protected] Brand Management- MBA Notes- Dr Amit Rangnekar www.dramitrangnekar.com 59
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