11.1

CHAPTER 11:

DESIGNING AND IMPLEMENTING

BRANDING STRATEGIES

Kevin Lane Keller

Tuck School of Business

Dartmouth College

Review from previous chapters

Part II and III examined strategy for building Brand

Equity

Next part takes the broader perspective and consider

how to create, maintain and enhance brand equity

under various situation and circumstances

(after that we will examine how to measure brand

equity in session 12)

This chapter will consider issues related to branding

strategies, and how to maximize brand equity accross all

the different brands and products the firm might sell.

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Branding strategy

Branding strategy (or brand architecture) is critical because it is the means by which the firm can help consumers understand its products and services and organize them in their minds.

Two important strategic tools: The brand-product matrix and the brand hierarchy help to characterize and formulate branding strategies by defining various relationships among brands and products.

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Branding Strategy or Brand

Architecture

The branding strategy for a firm reflects the number and nature of

common or distinctive brand elements applied to the different

products sold by the firm.

Which brand elements can be applied to which products and

the nature of new and existing brand elements to be applied to

new products

We often distinguish branding strategy by whether a firm is or

should be employing an umbrella corporate or family brand for

all its product (“branded house”) or a collection of individual

brands all with different names (“house of brands”)

Example: Federal Express

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The role of defining Brand

Strategies/ Brand Architecture

Clarify: brand awareness

Improve consumer understanding and communicate

similarity and differences between individual

products

Motivate: brand image

Maximize transfer of equity to/from the brand to

individual products to improve trial and repeat

purchase

e.g. Intel Brand Architecture

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Brand-Product Matrix

Must define:

Brand-Product relationships (rows)

Line and category extensions

Product-Brand relationships (columns)

Brand portfolio

1 2 3 4

A

B

C

Products

Brands

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Important Definitions

Product line

A group of products within a product category that are closely related

because they function in a similar manner, are sold to the same customer

groups, are marketed t the same type of outlets or fall within given price

range

A product line may include different brands or a single family brand or

individual brand that has been line extended

Product mix (product assortment)

The set of all product lines and items that a particular seller makes

available to buyers

While product line represent differen sets of coloumns in the brand-

product matrix that, in total, make up the product mix

Brand mix (brand assortment)

The set of all brand lines that a particular seller makes available to buyers

Illustration: Product Mix and Product Line

11.10 Source: http://www.learnmarketing.net/Product%20Mix%20and%20Product%20Lines.jpg

Example product line+mix

(Disregard the Brand)

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A. Breadth of a Branding Strategy

Describe the bumber and nature of different

products linked to the brand sold by a firm

The firm has to make strategic decisions about

how many different product lines it should carry

(the breadth of the product mix), as well as how

many variants to offer in each product line (the

depth of product mix)

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BoBS: Breadth of Product Mix

(Lehmann and Winer)provide n in-depth consideration of factors affecting product category attractiveness (when having breadth of product mix is desirable)

Aggregate market factors: descriptive characteristics of the market itself. All else being equal, a category is atttractive if it is relatively large (measure both units and dollars), fast growing (in current and projected terms)and in growth stage of product life cycle; noncyclical and nonseasonal in sales patters; and characterized by relatively high, steady profit margins

Category factors: underlying structural factors affecting the category; and it is attractive if the treat of new entrants low (competitive barriers high), bargaining power of buyers is low, current category rivalry is low, few close product substitute and the market operating at or near capacity

Environmental factors: external forces unrelated to product’s customers and competitors that affect marketing strategies. A host of technological, economic, regulatory, and social factors will affect the duture prospects of a category

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BoBS: Depth of a Product Mix Depth of product mix

once the marketers have made their broad decisions concerning appropriate product categories and market in which to compete, they need to choose the optimal product line strategy, which requires a clear understanding of the market and cost interdependencies between product, i.e.:

Examining the percentage of sales and profits contributed by each item in the product line

Deciding to increase the length of the product line by adding new variants or items typically expands market coverage and therefore market share but also increases costs. A product line is too short if managers can increase long term profits by adding items; too long if the profit increases by dropping items

The length the product line by adding new variants or items typically expand market coverage and market share but increase cost

From a branding perspective, longer product lines may decrease the consistency of the associated brand image if all items use the same brand

B. Depth of a Branding Strategy The number and nature of different brands marketed in the product

class sold by a firm ; Referred to as brand portfolio

The reason is to pursue different market (and price) segments,

different channels of distribution, or different geographic boundaries

(market coverage)

Maximize market coverage and minimize brand overlap

Many firm have to introduce multiple brands because no one brand

is view equally favorably by all different market segments

Some other reasons for introducing multiple brands in a category

include the following:

To increase shelf presence and retailer dependence in the store

To attract consumer seeking variety who may switch to another brand

To increase internal competition within the firm

To yield economies of scale in advertising, sales, merchandising, and physical

distribution 11.15

Example: Depth and Breadth of

Product Mix

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Designing a Brand Portfolio

In designing optimal brand portfolio, marketers

generally need to trade off market coverage anf these

other considerations with cost and profitability

Basic principles:

Maximize market coverage so that no potential customers are

being ignored

Minimize brand overlap so that brands aren’t competing among

themselves to gain the same customer’s approval (each brand

should have a distinct target market and postioning)

Accor’s Brand Portfolio

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Ford Brand Portfolio

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Brand Roles in the Portfolio Flankers (as a fighter brand) the purpose is to create stronger points of

parity with competitors (e.g. Private) brand so that more important (and

more profitable) flagship brands can retain in the desired positioning (e.g.

P&G with Luvs and Pampers)

Note: flanker brand be so attractive,but not be designed so cheaply

Cash cows: despite its dwindling sales, but as long as still manage to

hold on sufficient number of customers and maintain its profitability

with no virtually marketing support – “milk” the brand by capitalizing on

their reservoir brand equity (e.g. Gillete (old) Trac II)

Low-end entry-level or High-end prestige brands these sub-brands

leverage associations from other brand while distinguishing themselves

on the basis of their price and quality dimensions. Low end is to attract

customer to the brand franchise (e.g. BMW 3-series to 1-series/retailer);

high price is to add prestige and credibility to the entire brand portfolio

(e.g Chevrolet Corvette sports car)

e.g. Role of the Brand in Portofolio

Flanker or to protect

Cash cow (despite old)

Low priced to “attract to the brand franchise”

High priced to add prestige

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Brand Hierarchy The brand-product matrix helps to highlight the range of product

and brands sold by a firm.

While Brand Hierarchy is a useful means of summarizing the

branding strategy by portraying/ displaying the number and

nature of common and distinctive brand elements across the

firm’s products, revealing the explicit ordering of brand elements

A useful means of graphically portraying a firm’s branding

strategy/

It is based on the realization that we can brand a product in

different ways depening on how many new and existing brand

elements we use and how we combine them for any one product

The constructed hierarchy is to represent how (if at all) products

are nested with other product because of their common brand

elements

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Brand Hierarchy Tree: Toyota

Toyota

Corporation

Toyota

(Trucks)

Toyota

(SUV/vans) Lexus Toyota

Financial

Services

Toyota

(Cars)

Corolla Prius Avalon Celica ECHO Matrix MR2

Spyder Camry

CE

S

LE

SE

LE

XLE

Platinum

Edition

XL

XLS SE

SLE

Brand Hierarchy Example Microsoft

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Brand Hierarchy: Isa Knox

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Brand Hierarchy Levels

Family Brand (Buick)

Corporate Brand (General Motors)

Modifier: Item or Model (Ultra)

Individual Brand (Park Avenue)

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Corporate Brand

Corporate or company brand is the highest level of the brand

hierarchy; sometimes for legal reasons the company brand have to

present somewhere on the product package; either virtually

present (e.g.General Eectric, Hewlett-Packard) combine with

famiy brand or individual brand (Siemens Transportation system,

sony walkman), or virtually invisible (Black & Decker on their

high-end brand: De Walt Professional tools)

Corporate Brand Equity occurs when relevant constituents hold

strong, favorable, and unique associations about the corporate

brand in memory

Encompasses a much wider range of associations than a product

brand

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Family Brands

Brands applied across a range (more than one)

of product categories but it is not necessarilly

the name of corporation or company for

example Tropicana Juices and PepsiCo’s

Gatorade Sports drink.

If the corporate brand is applied to a range of

products, then it fuctions as a family brand too,

and two level collaps to one for those products

An efficient means to link common associations

to multiple but distinct products

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Individual Brands

A brand that is Restricted to essentially one

product category, although there may be

multiple product types offered on the basis of

different models, package sizes, flavors, etc. (e.g.

Frito Lay in the “salty snacks” product class

offers: Fritos corn chips, Doritos tortilla chips,

Lays and Ruffle potato chips, Rold Gold Pretels

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Modifiers

A means to designate a specific item/model type or a

particular version or a configuration of the product

Signals refinements or differences in the brand related

to factors such as quality levels, attributes, functions,

etc.

Plays an important organizing role in communicating

how different products within a category that share the

same brand name are

e.g. Land O’Lakes offers: whipped, unsalted, and

regular version of its butter; Yoplait comes with “light”

and “original” or “custard style” flavours

Example levels of brand hierarchy

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Building Equity at Different Hierarchy Levels Before considering how the brand hierarchy can help to formulate branding

strategies, let’s first examine some of the specific issues in building brand

knowledge structures-and thus brand equity-at each of different level of the brand

hierarchy

Corporate/Company Level : corporate BE is the differential response by

consumer, customers, employees, other firms, or any relevant constituency to the

words, action, communication, products, provided by company. It occurs when

they respond more favorably to any corporate marketing activities

Family brand (range brands/umbrella brands) level: some reasons to choose

family bands instead corporate brand e.g. Product (development) become more

dissimilar, the product meaning is ineffective, therefore need to create distinct

family brands. Family brand can be efficient means to ink common associations to

multiple but distinct product. It lower the cost of introducing a related product

under the same family brand name, and the likelihood of acceptance can be higher

(similar to corporate brand); but if the product linked is not well

developed/maintained, the family brand may become weaker and less favorable

and the failure of one product may adverse the ramificactions on other product

sold by the firm under the same brand 11.32

Building Equity at Different Hierarchy Levels contd

Individual brand level – main advantage: cuztomize the brand and all it

supporting marketing activity to meet the need of specific customer group,

and if it is failed, the risk to other brand within company is minimum.

Disadvantages: difficulty, complexity, and expense of developing separate

marketing program to build sufficient level of BE

Modifier level: regardless company/corporate or family, or idividual brand

name, modifier is to distinguish types/items/models. It may signals

refinements or differencesin brand related to factors such as: Quality levels

(Johnie walker red/black/gold/blue label scotch Whiskey); attributes

(Wringle’s spearmint, doublemint);function (kodak 100,200 speed) etc. Brand

modifier communicate the differences and how one brand with same brand

(different modifier) related, so it help to make product more understanable

and relevant to customers

Product Descriptor: not considered as brand element, but it might be

important ingredient of branding strategy – helps consumers understand what

the product is and does and also helps to define the relevant competition in

consumers’ mind

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e.g. Product Descriptor

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Corporate Image Dimensions Types of association that may exist at the corporate level

Common product attributes (Hershey’s w/ chocolate), benefits (type of user: BMW w/ “yuppies”)or attitudes (overall judgement: Sony w/ quality)

High-Quality corporate image association

Innovativeness

People and relationships

Customer orientation (e.g. Ritz Carlton, Wall-Mart, GE, etc)

Values and programs

Concern with the environment corporate image association (e.g Body Shop)

Social responsibility

Corporate credibility: the extent to which consumers believe a firm can design and deliver produccts that satisfy consumer needs/wants

Expertise (able to competently make and sell its products)

Trustworthiness (motivated to be hones, dependable, & sensitive to cust needs

Likability (see the company as likable,attractive, prestigious, dynamic etc.)

Designing Branding Strategy

Given different possible of brand hierarchy, a firm has a number of

branding options available, depending on how it employs each level – no

uniform agreement on the one type branding agreement on brand strategy

Brand hierarchy may not be symmentric; depends on compny objective,

consumer behavior or competitive activity faced

brand element at each level of the hierarcy may contribute to brand equity

through their ability to create awareness as well as foster strong, favorable,

ang unique brand association and positive responses

The challenge in setting up the brand hierarchy and arriving to brand

strategy:

1. Design the proper brand hierarchy with the right number and nature of brand

elements to use at each level

2. Design the optimal marketing program to create the deired amount of brand

awareness and type of brand association at each level

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Brand Hierarchy Decisions The number of levels of the hierarchy to use in general

Principle of simplicity

Employ as few levels as possible

Principle of clarity

Logic and relationship of all brand elements employed must be obvious and transparent

Decide on the level of awareness and types of associations to be created at each levels

Principle of relevance

Create global associations that are relevant across as many individual items as possible

Principle of differentiation

Differentiate individual items and brands

Decide on which product tobe introduced

Principle of growth

Principle of survival

Principle of synergy

How brand elements from different levels of the hierarchy are combined (or linked), if

at all, for any one particular product

Principle of prominence

The relative prominence of brand elements affects perceptions of product distance and the type of

image created for new products

How to link a brand accross products

Principle of commonality

The more common elements shared by products, the stronger the linkages

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Number of Hierarchy Levels

Most firm choose to use more than one level because each successive branding level allows the firm to communicate additional specific info about its product (The practice of combining existing brand with new brand is called: sub-branding)

Principle of simplicity: based on the need to provide right amount of branding information to consumers, no more and no less

Number of levels of hierarchy depends on the complexity of the product line/mix, and thus on the combination of shared and separated brand association the company would like to link to any one product in its product line/mix

In simple low involvement product: branding strategy often consist of an individual/family brand combined with modifier (e.g. GE softwhite/enrich lightbulbs; functionality (3way/super); performance (40/60watts)

A company with a strong corporate brand (e.g sony/philips) can easily use nondescriptive alpha numeric product names (e.g.Sony cybershot camera,Wega TV)

A complex set of products e.g. Cars, computers; requires more levels of hierarchy (although difficult if the level is more than three), one of the way out: introduce multiple brand at the same level and expand the depth of branding strategy

Brand & Sub-brand

Endorsement Corporate Brand

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Levels of Awareness and Associations How much awareness and what type of association should marketers create for brand element at each level? Assuming company using sub branding for two/more brand levels; to guide the brand knowledge creation process at each level, these two principles should be considered:

Principle of relevance: based on advantages of efficiency. Marketers should create associations that are relevant to as many brands nested at the level below as possible esp. At the family/corporate brand level. The more abstract (possibly) the more relevant for different product setting, brand with strong product category association might difficult to permit new extension in different product categories (e.g. Nike’s slogan “Just do it” relevant to all producct it sells)

Principle of differentiation: based on the disadvantages of redundancy. Marketers should distinguish brand at the same level as much as possible (esp inportant at the individual and modifier levels)

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Linking Brands at Different Levels If multiple brand elements from different levels are combined to brand new

product, we must decide how much emphasis to give each. e.g. If we adopt sub-

brand strategy, how much prominence should we give individual brands at the

expense of the corporate family brand? (PEPSI Vitacola of Vitacola by PEPSI?)

Principle of prominence: the relative prominence of the brand elements determines which

element /element become primary one(s) and which become secondary one(s). Primary brand

element should convey the main product positioning and point of difference.

Secondary brand element convey a more restrictes set of supporting association

such as point of parity/additional POD (and may facilitate awareness)

e.g.

RAZR (primary brand element)

[sleek, cutting-edge style]

MOTOROLA (secondary element)

[convey credibility, quality, proffesionalism]

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Linking Brands Across Products Previous steps highlight the “vertical aspect” of the brand hierarchy. Now

“horizontal aspect”

Principle of Commonality: more common brand elements product share, the stronger

the linkages between the products

the simplest way to link products is to use brand element “as is” accross the

different products involved. Adapting the brand, or some part of it, to make

the connection offers additional possibilities, e.g. Hewlett-Packard capitalized

on its highly succesfull LaserJet computer printers to introduce a number of

product using “jet” suffix: DeskJet, PaintJet, OfficeJet; Sony given its portable

audio equipment a “man” suffix: Walkman and Discman; McDonalds has use

its “Mc” prefix: McNuggets, McMuffin etc

We can also create relationship between brand and multiple product with

common symbols e.g. Prominent Nabisco logo as an endorser

Other possibility: logically order the brands in product line, to communicate

how they are related ad to simplify connsumer decision making (e.g. BMW 3, 5,

7 series; American Express offers Blue, Red, Green. Gold, Platinum and Black)

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Brand Architecture Guidelines

Adopt a strong customer focus

Avoid over-branding

Establish rules and conventions and be disciplined

Create broad, robust brand platforms

Selectively employ sub-brands as means of complementing and strengthening brands

Selectively extend brands to establish new brand equity and enhance existing brand equity

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Adjustment to the Marketing Program

Corporate Image Campaign. Different objectives are possible:

Build awareness of the company and the nature of its business

Create favorable attitudes and perceptions of company credibility

Link beliefs that can be leveraged by product-specific marketing

Make a favorable impression on the financial community

Motivate present employees and attract better recruits

Influence public opinion on issues

Brand Line Campaign. To build brand equity at the corporate brand or family brand

level. It emphasizes the breadth of product association of the brand. Unlike a

corporate image campaign that presents the brand in abstract terms with few,

if any, references to specific products, brand line campaigns refer to the range

of products associated with a brand line. By showing the difference uses and

benefir of the multiple product offered by a brand, brand ads may be

particularly useful in building brand awareness, clarifying brand meaning and

suggesting additional usage information

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Using Cause Marketing to Build Brand Equity

The process of formulating and implementing marketing activities that are characterized by an

offer from the firm to contribute a specified amount to a designated cause when customers engage in

revenue-providing exchanges that satisfy organizational and individual objectives

Advantages of Cause Marketing

Building brand awareness

Enhancing brand image

Establishing brand credibility

Evoking brand feelings

Creating a sense of brand community

Eliciting brand engagement and positive response

Example of cause-related programs:

Johnson &Johnson provide World Wildlife Fund (WWF) with a cut from sales of a special lin eof

children’s toiletries

Ronald McDOnalds Houses for sick children in 19 countries

Avon Breast Cancer Crusade

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Green Marketing

A special case of cause marketing that is particularly

concerned with the environment

Explosion of environmentally friendly products and

marketing programs

Obstacles that green marketing encounter:

Overexposure and lack of credibility (create doubts, become

a backlash- consumer thinks it is only a marketing gimmicks)

Consumer Behavior (corporate environmental awareness is

often fairly complex in reality and doesnt always fully match

public perception)

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Crisis Marketing Guidelines

The two keys to effectively managing a crisis are

that the firm’s response should be swift and that

it should be sincere.

Class Discussion

Hershey’s Kisses and hug

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Hershey’s Company Profile

Last Updated: Oct. 1, 2012

The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate in North America

and a global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey

Company has operations throughout the world and approximately 14,000 employees. With revenues of

more than $6 billion, Hershey offers confectionery products under more than 80 brand names,

including such iconic brands as HERSHEY'S, REESE'S, HERSHEY'S KISSES, HERSHEY'S BLISS,

HERSHEY'S SPECIAL DARK, KIT KAT, TWIZZLERS, JOLLY RANCHER and ICE

BREAKERS. Hershey also offers premium and artisan chocolate products under such brands as

SCHARFFEN BERGER and DAGOBA through the Artisan Confections Company, a wholly owned

subsidiary. The company is focused on growing its presence in key international markets such as China

and Mexico while continuing to build its competitive advantage in the United States and Canada.

For more than 100 years, The Hershey Company has been a leader in making a positive difference in

the communities where its employees live, work and do business. Corporate Social Responsibility is an

integral part of the company’s global business strategy, which includes goals and priorities focused on

fair and ethical business dealings, environmental stewardship, fostering a desirable workplace for

employees, and positively impacting society and local communities. Milton Hershey School, established

in 1909 by the company's founder and administered by Hershey Trust Company, provides a quality

education, housing, and medical care at no cost to children in social and financial need. Students of

Milton Hershey School are direct beneficiaries of The Hershey Company's success.

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Corporate Brand & Sub-brand

Individual branding

11.50

Hershey’s Commercial

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Hershe’s Hugs and Kisses

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Hershey’s Kisses

Hershey’s chocolate has a traditional homespun image, as

reflected by its 20-pus-year old advertising slogan, “Hershey’s.

The Great American Candy Bar”. As a result of a clever ad

campaign that transforms the teardrop-shape, foil wrapped,

Hershey’s kisses into animate object and places them in the

amusing, product relevant situation, however, the Kisses sub

brand has a much more playful and fun brand image than the

company brand. The successfull Hershey’s sub-brand led to a

further extension, Hershey’s Hugs (a Hershey’s Kisses with an

outside layer of white chocolate). Additional flavor extension

included caramel, peanut, butter and dark chocolate fillings

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Hershe’s Kisses commercial

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