PRODUCT and BRAND
MANAGEMENT
Session 6
Brand Management/ 1
A. Brands – an introduction
B. Brands as identifiers
C. Brands as assets
AGENDA
A. Brands – an introduction
B. Brands as identifiers
C. Brands as assets
AGENDA
Best Global Brand 2016interbrand
Marketing Advantages of Strong Brands
A. Brand - definition
2 very different definitions:
• A name, term, sign, symbol, design, or a combination of these,
that identifies the products or services of one seller or group of
sellers and differentiates them from those of competitors.
• The brand is simply a collection of perceptions held in the mind
of the consumer (Fournier)
• A synthesis
• Brands are the totality of perceptions and feelings that
consumers have about any item identified by a brand name,
including its identity (e.g. its packaging and logos), its quality
and performance, familiarity, trust, perceptions about the
emotions and values the brand symbolizes, and its user
imagery.
The scope of Marketing (1/3)
7
Goods Services
Modulo 1 – Cap. 1
The scope of Marketing (2/3)
8
Experiences People
PlacesEvents
Modulo 1 – Cap. 1
The scope of Marketing (3/3)
9
Property rights Organizations
IdeasInformations
Modulo 1 – Cap. 1
Factors Responsible for Branding Challenges
Savvy customers
Economic downturns
Brand proliferation
Media transformation
Increased competition
Increased costs
Greater accountability
Challenges to Brand Builders
A. Views on brands – the evolution
There has been a shift in the view on brands,
• FROM being an intangible component of the product/
identifier
• TO being an intangible asset/ resource
• The 2 views compared
• “old” view - brand as a component of the product, geared to
identify the product or firm or to synthesize its “meaning”.
• “new view” - brand as an asset, carrying firm’s values and
embodying its relational capital.
A. Brand Equity - definition
The differential effect that knowing the brand name has on customer response to the product or its marketing. (Keller - (CBBE) Customer-Based Brand Equity Model)
• Is a valuable asset that offers a competitive advantage
• Measures the brand’s ability to build strong and profitable
customer relationships that result in loyal customers
(customer equity).
• Brand equity is the financial value of a brand which
provides capital/value to products and services.
A. Brands – an introduction
B. Brands as identifiers
C. Brands as assets
AGENDA
B. The brand as an identifier
The brand is simply a collection of perceptions held in the
mind of the consumer (Fournier)
1. Brand associations
2. Brand “”dualism”
3. Brand as driver of experiences
4. Brand as a complex system (McKinsey – brand diamond)
5. Brand personality
6. Brand identity
Product AttributesCrest-Decay PreventionMichelin - Family Safety
Volvo – Durability-Safety
IntangiblesBayer - Fast Acting
Cadillac - Quality
Lexis - Luxury Technological Leadership
Customer BenefitsMcDonalds - Reward
Snickers - Reward
Rational: Thick, full body
Psych: Look, feel goodRelative PricePremium / QualityHotels:
Budget: Motel 6
Economy,: Fairfield Inn, HI
Expr
Midrange: Courtyard,
HolidayInn
Luxury: Marriott, HI
CrownPlaza
Super luxury: Hyatt Regency
Luxury suite: Embassy Suites
Use/ApplicationCampbells: lunch to meal
AT&T: Reach out and touch.
Food usage:start day, between meals,
between meals with
something, lunch, supper,
dinner w/ guests,
evening, weekends
User/CustomerCovergirl: Young, blonde
Revlon: SophisticatedMabelline: ??? to smart,
Cadbury, Schweppes: For
when your tastes grow up
Miller Lite: “Heavy drinkers”
Less filling
1. Brand Associations
The brand consists of a “network” of (subjective) associations,
made by customers and “resides” in their minds
Associative Network Memory Model
• Views memory as a network of nodes and connecting
links
– Nodes - Represent stored information or concepts
– Links - Represent the strength of association
between the nodes
• Brand associations are informational nodes linked to the
brand node in memory
Celebrity/PersonNike:Michael JordanReebok: ???
Mr. Clean, Pillsbury Dough
Life Style/Personal.Betty Crocker: Honest,
dependable, friendly,
specialist... old and traditional,
out of date
Product ClassHoover – vacuum cleanerMaxim - freeze dried
Parkay - butter
7-up Uncola
CompetitorsAvis - HertzPontiac - VW Rabbit
Country/Geog. AreaBenehana - JapanStolichnaya - Russia
Brand Associations/ 2
2. Brand “dualism”
Appealing to hearts and minds, to sentiment
and reason; with emotional and functional
overtones
• “The essential difference between emotion and
reason is that emotion leads to action while reason
leads to conclusions.” Donald B. Calne, Professor of
Neurology, University of British Columbia
• “Emotions are important determinants of economic
behaviour, more than rationality”, Dr Daniel
Kahneman, Nobel Laureate in Economics, 2002
3. Brand experience – a new approach
• Brand as identifier, built on brand associations before the purchase
• Purpose – increase awareness, develop a positive image
• Brand as driver of experience, built on experiences before, during and after the purchase
• Purpose – realize sensory stimulations, link to emotions and lifestyle
• Brand experience - subjective, internal consumer responses (sensations, feelings, cognitions, and behaviors) evoked by brand-related stimuli that are part of a brand’s design and identity, packaging, communications, and environments.
Brand experience scale (experience dimensions)
• Sensory– “I find this brand interesting in a sensory way”– “This brand makes a strong impression on my visual sense
or other senses”– “This brand does not appeal to my senses”
• Affective– “This brand induces feelings and sentiments”– “I do not have strong emotions for this brand”– “This brand is an emotional brand”
• Cognitive– “This brand stimulates my curiosity and problem solving”– “I engage in a lot of thinking when I encounter this brand”– “This brand does not make me think”
• Behavioral– “I engage in physical actions and behaviors when I use this
brand”– “This brand results in bodily experiences”– “This brand is not action oriented”
A comprehensive view:Brand diamond - McKinsey
Intangible (emotional
benefits and intangible
associations) and tangibles(rational benefits and
presence)
Benefits (what it provides –
rational and emotional
benefits) and identity (who
and what it is – intangible
associations and presence)
5. Brand personality
• Personality is the particular combination of emotional, attitudinal, and behavioral response patterns of an individual.
• Brand personality - a set of human characteristics associated with the name of a product, service or company” (anthropomorphic)
• “brand personality is the way a brand speaks and behaves”
• Marlboro ‘masculin’, Diana is ‘feminin’
• IBM is ‘old’, Apple is ‘young’
• Coke is ‘conforming’, while Pepsi is ‘irreverent’
Brand Personality - dimensions
Big Five – openness, conscientiousness, extraversion,
agreeableness and neuroticism
6. Brand identity
• Brand identity is a unique set of brand
associations…that represent what the brand stands
for and imply a promise to customers from the
organization members.
• Brand identity - the outward expression of a brand
(including its name, trademark, communications, and
visual appearance).
• Because the identity is assembled by the brand owner, it
reflects how the owner wants the consumer to perceive the
brand - and by extension the branded company, organization,
product or service. This is in contrast to the brand image, which
is a customer's mental picture of a brand
5. Brand identity
• Brand identity consists of twelve dimensions organized around
four perspectives - the brand-as-product (product scope,
product attributes, quality/value, uses, users, country of origin),
brand-as-organization (organizational attributes, local versus
global), brand-as-person (brand personality, brand-customer
relationship), and brand-as-symbol (visual imagery/metaphors
and brand heritage).
• The brand system:– Brand essence
– Core identity
– Extended identity
– Value proposition
– Relationship
Brand Image (Keller)
• More deeply a person thinks about product information and relates it to existing brand knowledge, stronger is the resulting brand association
Strength of Brand
Associations
• Is higher when a brand possesses relevant attributes and benefits that satisfy consumer needs and wants
Favorability of Brand
Associations
• “Unique selling proposition” of the product
• Provides brands with sustainable competitive advantage
Uniqueness of Brand
Associations
A. Brands – an introduction
B. Brands as identifiers
C. Brands as assets
AGENDA
C. The brand as an asset
1. The value of the brand for customers and firms
2. Brand relationships – different categories
3. Brand – lovemarks and brand love
4. Brand equity
1. Brand value (generic)
• Value to customers:
– Quality
– Reliability and
stability
– Hedonic
– Practicality (ease in
the buying process)
– Accessibility
• Value to firms:
– Profitability
– Monopolistic
competition
– Extensions
– Innovativeness
Brands “have value” for both customers and firms
Roles that Brands Play
2. Brand relationships
• Customers establish relationships with their
brands (and viceversa)
• Those relationships have very different
features and strenght (from very tight to very
loose)
• They are conceptualized in very different
ways (example by Fournier)
Brand relationshipFournier
• Arranged marriages• Casual friendship/
buddies• Marriages of
convenience• Committed
partnerships• Best frienships• Compartmentalized
friendship• Kinships
• Rebounds/ avoidancedriven relationships
• Childhood frienships• Courtships• Dependencies• Flings• Enmities• Secret affairs• Enslavements
Qualità della relazione della marca
Qualità della relazione della marca
3. Brand love
• Iconic brands …contribute to consumer's self-expression and
personal identity [with] such a strong identity that they become
more or less cultural icons.
• Lovemarks - products, services or entities that inspire Loyalty
Beyond Reason (emotional, individual bonds).
• You don’t just like them. You love them. Unconditionally. You really care about them and they’re major priorities in your life. They make you feel that way because they’re mysterious, sensual and intimate. Something mere brands simply are not.
• Brand Love – tight relation with following components:
high quality; linkages to strongly-held values; beliefs that the brand
provides intrinsic rather than extrinsic rewards; use of the loved brand
to express both current and desired self-identity; positive affect; a
sense of ‘rightness’ and a feeling of passion; an emotional bond;
investments of time and money; frequent thought and use; and length
of use.
Brand categories(saatchi&saatchi)
LOVEMARKS
Brand love – componentsBagozzi
• high quality
• linkages to strongly-
held values
• beliefs that the
brand provided
intrinsic rather than
extrinsic rewards
• use of the loved
brand to express
both current and
desired self-identity;
• positive affect
• a sense of
‘rightness’ and a
feeling of passion
• an emotional bond
• investments of time
and money
• frequent thought
and use
• length of use.
Brand love - aspects
• passion driven behaviors reflecting strong desires to use it, to
invest resources into it, and a history of having done so;
• self-brand integration including a brand’s ability to express the
consumers’ actual and desired identities, its ability to connect to
life’s deeper meanings and provide intrinsic rewards, and
frequent thoughts about it;
• positive emotional connection, broader than just positive
feelings, including a sense of positive attachment and having
an intuitive feeling of ‘rightness;’
• anticipated separation distress if the brand were to go away,
• long-term relationship which includes predicting extensive
future use and a long-term commitment to it;
• positive attitude valence;
• attitudes strongly held, with high certainty and confidence.
4. Brand equity
• A number of models have been devised to account
for brand equity. We report some of them:
a. Customer Based Brand Equity (Keller)
b. Brand asset valuator (Y&R)
c. Brand equity (Aaker)
d. Interbrand
a. Defining Customer Based Brand Equity (CBBE)
• Approaches brand equity from the perspective of the
consumer and stresses that the power of a brand lies in
what resides in the minds and hearts of customers
• Differential effect that brand knowledge has on
consumer response to the marketing of that brand;
based on brand awareness (recall and recognition) and
image
Salience - Brand Awareness (depth and breadth)PerformanceImageryJudgmentFeelings (strong and favourable)Resonance (intense and active)
CBBE Pyramid
CBBE PYRAMID
Step 1: Salience - talks about Brand Awareness (depth and breadth)
Identity – Ensure customers can identify the brand and can associate the brand with a specific product class or need.
Depth of brand awareness: how likely the brand will spring to mind (recognition and recall) much the customer knows your brand when they see/hear about it
Breadth of brand awareness: when the customer thinks about your brand, and the range of purchase/usage situations in which the brand comes to mind.
Step 2a. Performance (2, 3, 3, 2, 1)Meaning – Establish meaning to the brand so that when
customers think of the brand, they strategically link both tangible and intangible brand associations with the brand.
CBBE PYRAMID
Performance dimensions: 1a primary characteristics,1b secondary features, 2a product reliability, 2b durability, 2c serviceability, 3a service effectiveness, 3b service efficiency, 3c empathy, 4a style, 4b design, 5 price
Step 2b. ImageryUser profiles, purchase and usage situations, personality and
values, history, heritage and experiences.
usually intangible aspects of the brand, can be formed directly; via own experiences, can be formed indirectly; via external marketing communications, advertising, word-of-mouth
Step 3a. JudgmentResponses – Gauge customer responses to the brand
identification and brand meaning.
Brand judgments are personal opinions and evaluations about the brand.
Judgment dimensions: quality, credibility, consideration, superiority
CBBE PYRAMID
Step 3b. Feelings (strong and favourable)Feelings dimensions: warmth, fun, excitement, security, social approval, self-respect
Step 4. Resonance (intense and active)Relationships – Convert the brand response to create intense,
active loyalty relationship between the customer and the brand.
Loyalty, Attachment, Community, Engagement
b. BAV - Brand-Asset Valuator -
• Brand equity is determined by 4 different components:
1. Differentiation - ability of the brand to stand apart from its
competitors (unique)
2. Relevance – actual and perceived importance of the brand
(personally appropriate, tied to penetration)
3. Esteem - perceived quality and perceptions about the
growing or declining popularity of a brand (quality and
popularity)
4. Knowledge - extent of the consumer’s awareness of the
brand and understanding of its identity (awareness about
the brand and what it stands for, intimacy)
• 1 and 2 determine the strenght (or vitality) of a brand (its
potential for growth); 3 and 4 its stature (current strenght).
• These components develop in sequence
BAV – brand dimensions
How Brands are built
BAV – brand development
c. Brand Equity and its determinants (Aaker)
Brand equity is driven and measures (at the
same time) by 5 factors:
– Brand loyalty.
– Brand awareness.
– Perceived quality.
– Brand associations.
– Other proprietary assets.
Those factors have a broad impact, as in the
following slide.
AWARENESSAWARENESS
PERCEIVED QUALITYPERCEIVED QUALITY
ASSOCIATIONSASSOCIATIONSLOYALTYLOYALTY
PROPRIETARY ASSETS
PROPRIETARY ASSETS
BRAND EQUITY
Brand Equity – ComponentsAaker
d. Interbrand method
1. FINANCIAL PERFORMANCE2. ROLE OF BRAND3. BRAND STRENGTH
Interbrand method
FINANCIAL PERFORMANCE
Financial performance measures an organization’s
raw financial return to the investors. For this reason, it is analyzed as economic profit, a concept akin to Economic Value Added (EVA).
ROLE OF BRAND
Role of brand measures the portion of the decision to purchase that is attributable to brand – this is
exclusive of other aspects of the offer like price or feature.
BRAND STRENGTH
Brand strength measures the ability of the brand to secure the delivery of expected future earnings.
Interbrand – financial performance
FINANCIAL PERFORMANCE
Financial performance measures an organization’s raw financial return
to the investors. For this reason, it is analyzed as economic profit, a
concept akin to Economic Value Added (EVA).
To determine economic profit, we remove taxes from net operating profit
to get to net operating profit after tax (NOPAT). From NOPAT, a capital
charge is subtracted to account for the capital used to generate the
brand’s revenues; this provides the economic profit for each analyzed
year.
For purposes of the rankings, the capital charge rate is set by the
industry weighted average cost of capital (WACC). The financial
performance is analyzed for a five-year forecast and for a terminal
value.
The terminal value represents the brand’s expected performance
beyond the forecast period. The economic profit that is calculated is
then multiplied against the role of brand to determine the branded
earnings that contribute to the valuation total as noted earlier.
Interbrand – role of brand
FINANCIAL PERFORMANCE
Role of brand measures the portion of the decision to purchase that is
attributable to brand—this is exclusive of other aspects of the offer like
price or feature. Conceptually, role of brand reflects the portion of
demand for a branded product or service that exceeds what the demand
would be for the same product or service if it were unbranded.
Role of brand determinations for this study derive, depending on the
brand, from one of three methods: primary research, a review of
historical roles of brand for companies in that industry, or expert panel
assessment. The percentage for the role of brand is multiplied by the
economic profit of the branded products or services to determine the
amount of branded earnings that contribute to the valuation total.
Interbrand – brand strength
FINANCIAL PERFORMANCE
Brand strength measures the ability of the brand to secure the delivery
of expected future earnings. Brand strength is reported on a 0 to 100
scale, where 100 is perfect, based on an evaluation across 10
dimensions of brand activation. Performance in these dimensions is
judged relative to other brands in the industry, and in the case of
exceptional brands, relative to other world-class brands.
The brand strength inversely determines, through a proprietary
algorithm, a discount rate. That rate is used to discount branded
earnings back to a present value based on the likelihood that the brand
will be able to withstand challenges and deliver the expected earnings.
10 Principles of brand strength
1. Commitment
2. Protection
3. Clarity
4. Responsiveness
5. Authenticity
6. Relevance
7. Understanding
8. Consistency
9. Presence
10.Differentiation
10 Principles of brand strength
• 1 COMMITMENT
A measure of an organization’s internal commitment to or belief in its brand. Commitment is the extent to which the brand receives support in terms of time, influence and investment.
• 2 PROTECTION
This component examines how secure a brand is across a number of dimensions – from legal protection and proprietary ingredients to design, scale or geographic spread.
• 3 CLARITY
The brand’s values, positioning and proposition must be clearly articulated and shared across the organization, along with a clear view of its target audiences, customer insights and drivers. It is vital that those within the organization know and understand all of these elements, because everything that follows hinges on them.
• 4 RESPONSIVENESS
This component looks at a brand’s ability to adapt to market changes, challenges and opportunities. The brand should have a desire and ability to constantly evolve and renew itself.
• 5 AUTHENTICITY
This component is about how soundly a brand is based on an internal capability. Authenticity asks if a brand has a defined heritage and a well-grounded value set, as well as if it can deliver against customers’ expectations.
• 6 RELEVANCE
This component estimates how well a brand fits with customer needs, desires and decision criteria across all appropriate demographics and geographies.
• 7 UNDERSTANDING
Not only must customers recognize the brand, but there must also be an in-depth understanding of its distinctive qualities and characteristics, as well as those of the brand owner.
• 8 CONSISTENCY
This measures the degree to which a brand is experienced without fail across all touchpoints and formats.
• 9 PRESENCE
This measures the degree to which a brand feels omnipresent and how positively consumers, customers and opinion formers discuss it in both traditional and social media.
• 10 DIFFERENTIATION
This is the degree to which customers perceive the brand to have a positioning that is distinct from the competition.