Keys to Successful Branding Prof. David Dunne, Rotman School of Management, University of Toronto,...

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Keys to Successful Branding

Prof. David Dunne, Rotman School of Management, University of Toronto, October 2009

Oct 09 2

Questions/Agenda

• What is a brand?

• Why would people buy brands in a poor country?

• Why would a business invest in building a brand?

• What should you do to make a brand successful in Nepal?

Oct 09 3

Starbucks

Oct 09 44

xperience

ervice

roduct

The Rock and the Pond

Oct 09 5

Third place

Lighting

Seating

Atmosphere

Training

Autonomy

Profit share

Recruitment

Buying

Roasting/ blendingNew products

Culture

Oct 09 6

The 360o brand

Company/brand Image

SocialConduct

BusinessConduct

SalesForce

CommunicationsCommunications

ProductProduct

EmployeesConduct

ContributionsConduct

DistributionChannels

DistributionChannels ServiceService SupportSupport

PricePrice

Oct 09 7

As you prepare for the FY 08 strategic planning process, I want to share some of my thoughts with you.

Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have led to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.

Howard SchulzFebruary 2007 …

Oct 09 8

The romance is fading in the Starbucks customer relationship. First-quarter numbers told a dire tale: a 1-per-cent decline in U.S. comparable store sales and a 3-per-cent decrease in U.S. transactions, causing the dreaded words "negative traffic" to fall from the lips of research analysts. There is the increasing noise in what Mr. Schultz calls the "coffee space," including the announcement from McDonald's that it is entering the barista business with coffee bars. And there is the relentless layering of grim economic news south of the border, causing, simply, the U.S. consumer to spend less.

… and February 2008

Oct 09 9

Marketing Myopia

September 2009 9

Oct 09 10

No Customer, No Business

MakingSelling

Buying

(Counting, employing, planning ...)

COMPANY CUSTOMER

Oct 09 1111

Factory QualityCost

Mass productionMass selling

Profits throughSales volume

Production Concept

StartingPoint

Focus Means Ends

Targetmarket

Customerneeds

Integratedmarketing

Profits throughcustomer satisfaction

Marketing Concept

Lab Cures formajor illnesses

Profits throughscientific reputation

Science ConceptDevelop first, then sell

Some Business Concepts

Oct 09 12

Customer Value and Company Value

CompetitorsCustomer segments

Value Zone

Goals Resources

Tribes

Buying behaviour UsageRelationships Competences

People

Assets

Networks

Leadership

Performance Measures

PositioningPositioningValueValue

Oct 09 13

Questions/Agenda

• What is a brand?

• Why would people buy brands in a poor country?

• Why would you invest in building a brand?

• What should you do to make a brand successful in Nepal?

What is a brand?

Oct 09 15

“Official” definitions …

• A brand is a name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition (Keller).

• Brand equity is a set of assets such as name awareness, loyal customers, perceived quality, and associations (e.g. being “pure” and “it floats” that are linked to the brand (its name and symbol) and add (or subtract) value to the product or service being offered (Aaker, Managing Brand Equity).

Oct 09 16

Unofficially (and more powerfully) …

• A brand is the promise you make to consumers

• Brand equity is your reputation for delivering on that promise

Oct 09 17

• A brand is the relationship between a product and the consumer

• Every point of contact builds and modifies the impression the brand creates … the 360-degree brand

• “Consumers build brands (!) like birds build nests, from scraps and straws they chance upon”

O&M’s Perspective on Branding

Why would people buy brands in a poor country?

Why would you invest in building a brand?

Oct 09 19

Brand Equity:Name, Symbol

Enhances:Interpretation/processing of informationConfidence in the purchase decisionUse satisfaction

Customer Value

Company Value

BrandLoyalty

NameAwareness

PerceivedQuality

BrandAssociations

OtherProprietary BrandAssets

Aaker, Building Strong Brands

The Value of Brands

Enhances:Efficiency/effectiveness of Marketing programsBrand loyaltyPrices/marginsBrand extensionsTrade leverageCompetitive advantage

Oct 09 20

What does it take to make a brand successful?

Oct 09 21

Ten Do’s of Branding

1. Understand your customers’ needs, wants, desires and values

2. Deliver what they really want3. Develop an emotional connection with them4. Provide adequate support5. Price appropriately6. Be consistent7. Integrate marketing communications8. Integrate the company’s efforts behind the brand9. Plan for and manage crises effectively10. Monitor and protect brand equity

Oct 09 22

Four Don’ts

1. Overextend2. Confuse consumers3. Devalue your brand4. Offend, frighten or insult consumers

Oct 09 23

A Model of Marketing

September 2009 23

Desirability Viability Feasibility

Value Creation

Integrated Value Delivery

Contextualization & Communication

PricingPerformance Measurement

Understand

Create

Deliver

Capture

Oct 09 24September 2009 24

Desirability Understanding Customers

Market Segmentation

Buyer Behaviour

25Oct 09

Oct 09 26

How Coke Forgot Itself

Viability Understanding Markets

Markets

Competition

Oct 09 28

Market Environment

Political and regulatoryEconomic

Social and demographicTechnological

Societal (sustainability)

Turbulence…

• Political/regulatory

• Economic

• Social/Demographic

• Technological

• Societal/Sustainability

Feasibility Understanding Resources & Fit

People

Relationships

Assets & liabilities

Core competencies

Value Creation Matching Offering to Needs

CompetitorsCustomer segments

Value Zone

Goals Resources

Tribes

Buying behaviour UsageRelationships Competences

People

Assets

Networks

LeadershipPerformance Measures

Providing ValueIntegrated Value Delivery

What you deliver

How you get it to customers

What you charge for it

Oct 09 3333

xperience

ervice

roduct

The Rock and the Pond

Oct 09 34

Managing the Experience

How Delivers

Oct 09 36

• “Marlboro Friday”: April 2, 1993• Collapse in share prices of all major branded manufacturers: observers questioned the future of brands• The real lesson: value is relative

The Day the Marlboro Man Fell Off His Horse

Contextualization & Communication

Demonstrating Relevance

Integrated Marketing Communications

What You Say

How You Say It

Where You Say It

How You Build a Relationship

Oct 09 38

Doing a Lot With Very Little

PricingPerformance Measurement Reaping Rewards

How You Make Money

How You Know How You’re Doing

Oct 09 40

Making Money

Attitudes Behaviour RelationshipsBrand equity

Short term accounting

Long term accounting

Net IncomeNet Income

MarginMargin VolumeVolume

Total Market SizeTotal Market Size Market ShareMarket SharePricePrice CostCost X

Oct 09 41

• In the late 1980’s, Disney conducted a brand audit and tracking study

• Found :– Widespread endorsements with little logic– Characters were seen as overused– Annoyed that children were involved in

purchase decisions– All product endorsements had an effect on

Disney’s brand equity• As a result, Disney established a brand equity

team to ensure a consistent image for Disney across all product endorsements

Monitors Its Brand

Oct 09 42

Integration and the 360o brand

Company/brand Image

SocialConduct

BusinessConduct

SalesForce

ProductProduct

EmployeesConduct

PricePrice

Oct 09 4343

1984 1995 2006

How Apple Changed and Stayed the Same

Oct 09 44

The 360o brand

Company/brand Image

SocialConduct

BusinessConduct

SalesForce

ProductProduct

EmployeesConduct

PricePrice

Oct 09 45

Summary: Can You Answer the Following?

• Why do people buy brands?• How do brands create value for producers and

consumers?• What is customer value? How do successful brand

marketers deliver it?• Can you build a brand without investing huge

amounts of money?• How do marketers measure success?

September 2009 45

What should you do to make a brand successful in Nepal?

Keys to Successful Branding Prof. David Dunne, Rotman School of Management, University of Toronto,...

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