STRATEGIC BRAND MANAGEMENTBUILDING, MEASURING, AND MANAGING
BRAND EQUITY
Kevin Lane KellerAmos Tuck School of Business
Dartmouth College
What is a Brand?
• A brand is a name, term, sign, symbol, or design which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.
New Branding Challenges • Brands are important as ever
– Consumer need for simplification– Consumer need for risk reduction
• Brand management is as difficult as ever– Savvy consumers– Increased competition– Decreased effectiveness of traditional
marketing tools and emergence of new marketing tools
– Complex brand and product portfolios
The Customer/Brand Challenge
• In this difficult environment, marketers must have a keen understanding of:– customers– brands– the relationship between the two
The Concept of Brand Equity
• The brand equity concept stresses the importance of the brand in marketing strategies.
• Brand equity is defined in terms of the marketing effects uniquely attributable to the brand.– Brand equity relates to the fact that different outcomes
result in the marketing of a product or service because of its brand name, as compared to if the same product or service did not have that name.
The Concept of Customer-Based Brand Equity
• Customer-based brand equity– Differential effect– Customer brand knowledge– Customer response to brand marketing
Determinants of Customer-Based Brand Equity
– Customer is aware of and familiar with the brand
– Customer holds some strong, favorable, and unique brand associations in memory
Building Customer-Based Brand Equity
• Brand knowledge structures depend on . . .
– The initial choices for the brand elements
– The supporting marketing program and the manner by which the brand is integrated into it
– Other associations indirectly transferred to the brand by linking it to some other entities
Benefits of Customer-Based Brand Equity
• Enjoy greater brand loyalty, usage, and affinity
• Command larger price premiums• Receive greater trade cooperation &
support• Increase marketing communication
effectiveness• Yield licensing opportunities• Support brand extensions.
Customer-Based Brand Equityas a “Bridge”
• Customer-based brand equity represents the “added value” endowed to a product as a result of past investments in the marketing of a brand.
• Customer-based brand equity provides direction and focus to future marketing activities
The Key to Branding
• For branding strategies to be successful, consumers must be convinced that there are meaningful differences among brands in the product or service category.
• Consumer must not think that all brands in the category are the same.
• PERCEPTION = VALUE
Strategic Brand Management
• Strategic brand management involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity.
• The strategic brand management process is defined as involving four main steps:1) Identifying and establishing brand positioning and values2) Planning and implementing brand marketing programs3) Measuring and interpreting brand performance4) Growing and sustaining brand equity
Strategic Brand Management Process
Mental mapsCompetitive frame of referencePoints-of-parity and points-of-differenceCore brand valuesBrand mantra
Mixing and matching of brand elementsIntegrating brand marketing activitiesLeveraging of secondary associations
Brand Value ChainBrand auditsBrand trackingBrand equity management system
Brand-product matrixBrand portfolios and hierarchiesBrand expansion strategiesBrand reinforcement and revitalization
KEY CONCEPTSSTEPS
Grow and SustainBrand Equity
Identify and EstablishBrand Positioning and Values
Plan and Implement Brand Marketing Programs
Measure and InterpretBrand Performance
Motivation forCustomer-Based Brand Equity Model
• Marketers know strong brands are important but aren’t always sure how to build one.
• CBBE model was designed to be …– comprehensive – cohesive – well-grounded – up-to-date– actionable
Complex,Varied
MarketingActivity
Comprehensive,Robust
MarketingMeasures
Detailed,Rich
MarketingModels
MARKETING PLANNING PROCESS
Rationale of Customer-Based Brand Equity Model
• Basic premise: Power of a brand resides in the minds of customers
• Challenge is to ensure customers have the right types of experiences with products & services and their marketing programs to create the right brand knowledge structures:– Thoughts– Feelings– Images– Perceptions– Attitudes
Building Customer-Based Brand Equity
• Building a strong brand involves a series of steps as part of a “branding ladder”
• A strong brand is also characterized by a logically constructed set of brand “building blocks.”– Identifies areas of strength and weakness– Provides guidance to marketing activities
CUSTOMER-BASED BRAND EQUITY PYRAMID
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
4. RELATIONSHIPS =
What about you & me?
4. RELATIONSHIPS =
What about you & me?
3. RESPONSE =
What about you?
3. RESPONSE =
What about you?
2. MEANING =
What are you?
2. MEANING =
What are you?
1. IDENTITY =
Who are you?
1. IDENTITY =
Who are you?
Salience Dimensions
• Depth of brand awareness– Ease of recognition & recall– Strength & clarity of category
membership
• Breadth of brand awareness– Purchase consideration– Consumption consideration
Performance Dimensions
• Primary characteristics & supplementary features
• Product reliability, durability, and serviceability
• Service effectiveness, efficiency, and empathy
• Style and design
• Price
Imagery Dimensions• User profiles
– Demographic & psychographic characteristics– Actual or aspirational– Group perceptions -- popularity
• Purchase & usage situations– Type of channel, specific stores, ease of purchase– Time (day, week, month, year, etc.), location, and context
of usage
• Personality & values– Sincerity, excitement, competence, sophistication, &
ruggedness
• History, heritage, & experiences– Nostalgia– Memories
Judgment Dimensions• Brand quality
– Value– Satisfaction
• Brand credibility– Expertise– Trustworthiness– Likability
• Brand consideration– Relevance
• Brand superiority– Differentiation
Feelings Dimensions
• Warmth• Fun• Excitement• Security• Social approval• Self-respect
Resonance Dimensions • Behavioral loyalty
– Frequency and amount of repeat purchases
• Attitudinal attachment– Love brand (favorite possessions; “a little pleasure”)– Proud of brand
• Sense of community– Kinship– Affiliation
• Active engagement– Seek information– Join club– Visit web site, chat rooms
Customer-Based Brand Equity Model
Consumer-BrandResonance
Brand Salience
Consumer Judgments
Consumer Feelings
BrandPerformance
BrandImagery
INTENSE, ACTIVE LOYALTY
INTENSE, ACTIVE LOYALTY
RATIONAL & EMOTIONAL REACTIONS
RATIONAL & EMOTIONAL REACTIONS
POINTS-OF-PARITY &
POINTS-OF-DIFFERENCE
POINTS-OF-PARITY &
POINTS-OF-DIFFERENCE
DEEP, BROAD BRAND
AWARENESS
DEEP, BROAD BRAND
AWARENESS
Sub-Dimensions of CBBE Pyramid
LOYALTYATTACHMENTCOMMUNITYENGAGEMENT
QUALITY CREDIBILITYCONSIDERATIONSUPERIORITY
WARMTHFUNEXCITEMENTSECURITYSOCIAL APPROVALSELF-RESPECT
CATEGORY IDENTIFICATIONNEEDS SATISFIED
PRIMARY CHARACTERISTICS &SECONDARY FEATURES
PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY
SERVICE EFFECTIVENESS, EFFICIENCY, & EMPATHY
STYLE AND DESIGN PRICE
USER PROFILESPURCHASE & USAGE
SITUATIONSPERSONALITY &
VALUESHISTORY, HERITAGE, & EXPERIENCES
Application:Identify the key drivers of brand equity
0.17 0.66
0.24
0.65
P-2
P-2
PerformancePerformance
P-1P-1
P-10 P-10
P-7
P-7
P-8P-8
P-9P-9
P-3P-3
P-4P-4
P-6P-6
P-5P-5
P-11 P-11 P-
12
P-12
I-2I-2
I-9I-9
ImageryImagery
I-1I-1
I-3I-3
I-6I-6
I-5I-5
I-10 I-10
I-7I-7
I-8I-8
I-11
I-11 I-12
I-12
I-4I-4
F-2
F-2
FeelingsFeelings
F-1F-1
F-3F-3
F-4F-4
F-6F-6
F-5F-5
F-7
F-7
F-8F-8
F-9F-9
F-11 F-11 F-
12
F-12
F-10F-10
J-2J-2
JudgmentJudgment
J-1J-1
J-3J-3
J-4J-4
J-6J-6
J-5J-5
J-10J-10
J-7J-7
J-8J-8
J-9J-9
J-11
J-11 J-1
2J-1
2
R-2R-2
ResonanceResonance
R-1R-1
R-3R-3
R-4R-4
R-6
R-6
R-5R-5
R-10 R-10
R-7
R-7
R-8
R-8
R-9R-9
R-11 R-11 R
-12
R-1
2
0.58
0.49
Brand Positioning• Define competitive frame of
reference– Target market– Nature of competition
• Define desired brand knowledge structures– Points-of-parity
• necessary• competitive
– Points-of-difference• strong, favorable, and unique brand
associations
Issues in Implementing Brand Positioning
• Establishing Category Membership• Identifying & Choosing POP’s & POD’s• Communicating & Establishing POP’s
& POD’s• Sustaining & Evolving POD’s & POP’s
Establishing Category Membership
• Product descriptor• Exemplar comparisons
Identifying & Choosing POP’s & POD’s
• Desirability criteria (consumer perspective)– Personally relevant– Distinctive & superior– Believable & credible
• Deliverability criteria (firm perspective)– Feasible – Profitable– Pre-emptive, defensible & difficult to
attack
Major Challenges in Positioning
• Find compelling & impactful points-of-difference (MacMillan & McGrath, HBR, ‘97)– How do people become aware of their need for your
product and service?– How do consumers find your offering?– How do consumers make their final selection?– How do consumers order and purchase your product
or service?– What happens when your product or service is
delivered?– How is your product installed?– How is your product or service paid for?
Major Challenges in Positioning
• Find compelling & impact points-of-difference (cont.) – How is your product stored?– How is your product moved around?– What is the consumer really using your product for?– What do consumers need help with when they use
your product?– What about returns or exchanges?– How is your product repaired or serviced?– What happens when your product is disposed of or
no longer used?
Communicating & Establishing POP’s & POD’s
• Create POP’s and POD’s in the face of attribute & benefit trade-offs– Price & quality– Convenience & quality– Taste & low calories– Efficacy & mildness– Power & safety– Ubiquity & prestige– Comprehensiveness (variety) & simplicity– Strength & refinement
Strategies to Reconcile Attribute & Benefit Trade-Offs
• Establish separate marketing programs
• Leverage secondary association (e.g., co-brand)
• Re-define the relationship from negative to positive
Sustaining & EvolvingPOP’s & POD’s
• Core Brand Values &Core Brand Proposition
Core Brand Values
• Set of abstract concepts or phrases that characterize the 5-10 most important dimensions of the mental map of a brand.
• Relate to points-of-parity and points-of-difference
• Mental Map Core Brand Values Brand Mantra
Brand Mantras
• A brand mantra is an articulation of the “heart and soul” of the brand. – Brand mantras are short three to five word
phrases that capture the irrefutable essence or spirit of the brand positioning and brand values.
• Nike– Authentic Athletic Performance
• Disney– Fun Family Entertainment
Building Customer-Based Brand Equity
• Brand knowledge structures depend on . . .
– The initial choices for the brand elements
– The supporting marketing program and the manner by which the brand is integrated into it
– Other associations indirectly transferred to the brand by linking it to some other entities
Brand Elements• A variety of brand elements can be chosen
that inherently enhance brand awareness or facilitate the formation of strong, favorable, and unique brand associations:
– Brand Name– Logo– Symbol
– Character
– Packaging
– Slogan
Brand Elements Choice Criteria:General Considerations
• Memorable– Easily Recognized– Easily Recalled
• Meaningful– Credible &
Suggestive– Rich Visual & Verbal
Imagery
• Appealing– Fun & Interesting– Aesthetics
• Adaptable– Flexible & Updateable
• Protectable– Legally– Competitively
• Transferrable– Within & Across Product
Categories– Across Geographical
Boundaries & Cultures
Integrating the BrandInto Supporting Marketing Programs
• Product Strategy• Deliver tangible and
intangible benefits• Add value through
customer information
• Pricing Strategy• Understand
perceptions of value• Balance price, cost, &
quality
• Communication Strategy• Mix & match
communication options
• Channel Strategy• Blend channel “push”
with consumer “pull”• Develop & brand direct
marketing options
Supporting marketing mix should be designed to enhance awareness and establish desired brand image.
Personalizing Marketing
• Relationship Marketing – provide more holistic, personalized brand experiences to create stronger consumer ties– Mass customization– CRM– After-marketing & loyalty programs
• Examples– Experiential Marketing– Permission Marketing– One-to-One Marketing
Experiential Marketing
• Employ multiple touch points & multiple senses
• Often involves special events, contests, promotions, sampling, on-line activities, etc.
• Combine brand education & entertainment
• Distinctive and relevant
Permission Marketing (Seth Godin)
• Permission marketing “encourages consumers to participate in a long-term interactive marketing campaign in which they are rewarded in some way for paying attention to increasingly relevant messages.”– Anticipated– Personal– Relevant
• Permission marketing can be contrasted to interruption marketing
5 Steps in Permission Marketing
• Must offer overt, obvious, and clearly delivered incentive to prospect to volunteer
• Must offer a curriculum over time, teaching the consumer about the product or service
• Must reinforce the incentive over time• Must increase the level of permission the
marketer receives from the customer• Must leverage permission to generate
profits
10 Questions to Evaluate Permission Marketing Program
• What’s the bait?• What does an incremental permission cost?• How deep is the permission that so granted?• How much does incremental frequency cost?• What’s the active response rate to
communications?• What are the issues regarding compression?• Is the company treating the permission as an
asset?• How is the permission being leveraged?• How is the permission level being increased?• What is the expected lifetime of one
permission?
One-to-One Marketing:Competitive Rationale
• Consumers help to add value by providing information
• Firm adds value by generating rewarding experiences with consumers– Creates switching costs for consumers– Reduces transaction costs for consumers– Maximizes utility for consumers
One-to-One Marketing:Consumer Differentiation
• Treat different consumers differently– Different needs– Different values to firm
• current• future (life-time value)
• Devote more marketing effort on most valuable consumers (and customers)
One-to-One Marketing:Five Key Steps
• Identify consumers, individually and addressably
• Differentiate them, by value and needs
• Interact with them more cost-efficiently and effectively
• Customize some aspect of the firm’s behavior
• Brand the relationship
Buzz Marketing(Emanuel Rosen)
• Keep it simple – Simple messages spread across social networks more easily.
• Tell us what’s new – The message must be relevant and newsworthy for people to want to tell others about it.
• Don’t make claims you can’t support – Making false claims will kill buzz or, worse, lead to negative buzz.
• Ask your customers to articulate what’s special about your product or service – If customers can explain why they like the product or service, they can then communicate this to others.
• Start measuring buzz – This can help determine which strategies generate the most buzz.
• Listen to the buzz – Monitoring consumer reaction can yield insights such as how to improve the product or service.
Personalizing Marketing
• All of these approaches are a means to create deeper, richer, and more favorable brand associations
• Relationship marketing has become a powerful brand-building force – can slip through consumer radar– may creatively create unique associations– may reinforce brand imagery and feelings
• Nevertheless, there is still a need for the control and predictability of traditional marketing activities
• Models of brand equity can help to provide direction and focus to the marketing programs
Complex,Varied
MarketingActivity
Comprehensive,Robust
MarketingMeasures
Detailed,Rich
MarketingModels
MARKETING PLANNING PROCESS
Role of Integrated Marketing Communications
• Marketing communications …– are the “voice” of the brand and are a
means by which it can establish a dialogue and build relationships with consumers.
– allow marketers to inform, persuade, incent, and remind consumers directly or indirectly
– can contribute to brand equity by establishing the brand in memory and linking strong, favorable, and unique associations to it.
Role of Integrated Marketing Communications (Cont.)
– Consumers can be told or shown how and why a product is used, by what kind of person, and where and when;
– Consumers can learn about who makes the product and what the company and brand stand for
– Consumers be given an incentive or reward for trial or usage
– Brands can be linked to other …• People • Places • Events • Brands • Experiences• Feelings• Things
Simple Test for Marketing Communications
1. 3. 2. Current Desired
Brand Brand Knowledge Knowledge
Integrated Marketing Communications and Customer-Based Brand Equity
• One implications of the CBBE framework is that the manner in which brand associations are formed does not matter -- only the resulting strength, favorability, and uniqueness
Designing Integrated Marketing Communications Programs
• From the perspective of customer-based brand equity, marketers should evaluate all possible communication options available to create knowledge structures according to effectiveness criteria as well as cost considerations.
• Different communication options have different strengths and can accomplish different objectives.
Alternative Communication Options(Consumer)
• Media Advertising (TV, radio, newspapers, magazines)
• Direct Response Advertising• Interactive (on-line) Advertising & Web Sites• Outdoor Advertising (billboards, posters, cinema)• Point-of-Purchase Advertising• Trade Promotions• Consumer Promotions• Sponsorship of Event Marketing• Publicity or Public Relations
Alternative Communication Options(Business-to-Business)
• Media Advertising (TV, radio, newspaper, magazines)
• Trade Journal Advertising• Interactive (on-line) Advertising & Web Sites• Directories• Direct Mail• Brochures & Sales Literature• Audio-Visual Presentation Tapes• Giveaways• Sponsorship or Event Marketing• Exhibitions, Trade Shows, Conventions• Publicity or Public Relations
Print Ad Evaluation Criteria• Is the message clear at a glance?• Is the benefit in the headline?• Does the illustration support the
headline?• Does the first line of the copy support
or explain the headline and illustration?
• Is the ad easy to read and follow?• Is the product easily identified?• Is the brand or sponsor clearly
identified?
Ad Campaign Considerations
• Campaigns make brands -- not single ads• Be creative and develop creative themes
– Avoid slavishly sticking to executional formulas
• Brand communications should sing like a choir – Multiple voices– Multiple notes
• Find fresh consumer insights & compelling brand truths
• Productively conduct ad research
IMC Case StudyCMPB Success Factors
• Smart strategy – Relative deprivation
• Imaginative creative – Funny but relevant
• Clever hook – “Got milk?” slogan
• Timely secondary media– In store
• Right partners
Common Mistakes in Developing Advertising
• Failure to distinguish ad positioning (what you say) from ad creative (how you say it)
• Mistaken assumptions about consumer knowledge
• Improperly positioned• Failure to break through the clutter• Distracting, overpowering creative in
ads
Common Mistakes in Developing Advertising
(cont.)
• Under-branded ads• Failure to use supporting media• Changing campaigns too frequently• Substituting ad frequency for ad
quality
CommunicationOption A
Communication Option C
CommunicationOption B
Audience
Audience Communication Option Overlap
Note: Circles represent the market segments reached by various communication options. Shaded portions represent areas of overlap in communication options.
Evaluating IMC Programs• Coverage - what proportion of the
target audience is reached by each communication option employed, as well as how much overlap exists among options
• Cost - what is the per capita expense
Evaluating IMC Programs (cont.)
• Contribution - the collective effect on brand equity in terms of
– enhancing depth & breadth of awareness
– improving strength, favorability, & uniqueness of brand associations
• Commonality - the extent to which information conveyed by different communication options share meaning
Evaluating IMC Programs (cont.)
• Complementarity - the extent to which different associations and linkages are emphasized across communication options
• Versatility - the extent to which information contained in a communication option works with different types of consumers
• Different communications history• Different market segments
“Keller Be’s”
• Be analytical: Use frameworks of consumer behavior and managerial decision-making to develop well-reasoned communication programs
• Be curious: Fully understand consumers by using all forms of research and always be thinking of how you can create added value for consumers
• Be single-minded: Focus message on well-defined target markets (less can be more)
• Be integrative: reinforce your message through consistency and cuing across all communications
“Keller Be’s”
• Be creative: State your message in a unique fashion; use alternative promotions and media to create favorable, strong, and unique brand associations
• Be observant: Monitor competition, customers, channel members, and employees through tracking studies
• Be realistic: Understand the complexities involved in marketing communications
• Be patient: Take a long-term view of communication effectiveness to build and manage brand equity
Leveraging Secondary Associations
• Brand associations may themselves be linked to other entities, creating secondary associations:– Company (through branding strategies)– Country of Origin (through identification of product
origin)– Channels of Distribution (through channels strategy)– Other Brands (through co-branding)– Characters (through licensing)– Celebrity Spokesperson (through endorsement
advertising)– Events (through sponsorship)– Other third party sources (through awards & reviews)
• These secondary associations may lead to a transfer of:– Response-type associations
• Judgments (especially credibility)• Feelings
– Meaning-type associations • Product or service performance• Product or service imagery
Leveraging Secondary Associations
• This transfer of secondary associations will depend on:– Awareness and knowledge of entity– Perceived relevance of entity linkage
• Fit?• Cue overload?• Attributions?
– Evaluative consistency with brand associations
Leveraging Secondary Associations
Figure 2-9 Building Customer-Based Brand EquityBRAND BUILDING TOOLS AND OBJECTIVES CONSUMER KNOWLEDGE EFFECTS BRANDING BENEFITS
Choosing Brand Elements
Brand name MemorabilityLogo MeaningfulnessSymbol AppealCharacter TransferabilityPackaging AdaptabilitySlogan Protectability
Developing Marketing Programs
Product Tangible and intangible benefitsPrice Value perceptionsDistribution channels Integrate”push” and “pull”Communications Mix and match options
Leverage of Secondary Associations
CompanyCountry of originChannel of distributionOther brandsEndorsorEvent
AwarenessMeaningfulnessTransferability
Possible Outcomes
Greater loyalty
Less vulnerability to competitive marketing actions and crises
Larger margins
More elastic response to price decreases
More inelastic response to price increases
Greater trade cooperation and support
Increased marketing communication efficiency and effectiveness
Possible licensing opportunities
More favorable brand extension evaluations
Brand Awareness
Depth
Breadth
RecallRecognition
PurchaseConsumption
Brand Associations
Strong
Favorable
Unique
RelevanceConsistency
DesirableDeliverable
Point-of-parityPoint-of-difference
Brand Equity Measurement System
• A brand equity measurement system is a set of research procedures that is designed to provide timely, accurate, and actionable information for marketers so that they can make the best possible tactical decisions in the short run and strategic decisions in the long-run.
Brand Equity Measurement System
• Implementing this system involves:– Conducting brand audits.
• Brand Inventory• Brand Exploratory
– Developing tracking procedures.– Designing a brand equity management
system• Brand Equity Charters• Brand Equity Reports• Brand Equity Overseers
Conducting the Brand Audit
• A brand audit is a comprehensive examination of a brand involving activities to assess the health of the brand, uncover its sources of equity and suggest ways to improve and leverage that equity.
• A brand audit requires understanding sources of brand equity from the perspective of both the firm and the consumer.
• Specifically, the brand audit consists of two activities:– Brand Inventory– Brand Exploratory
Brand Inventory
• The purpose of the brand inventory is to provide a complete, up-to-date profile of how all the products and services sold by a company are marketed and branded.
• For each product, the relevant brand elements must be identified, as well as the supporting marketing program. This information should be summarized both visually and verbally.
• Although primarily a descriptive exercise, some useful analysis can be conducted.– Consistency
Brand Exploratory• The brand exploratory is research activity
designed to identify potential sources of brand equity.
• The brand exploratory provides detailed information as to what consumers think of and feel about the brand.
• Although reviewing past studies and interviewing relevant personnel provides some insights, additional research is often required.
• To allow a broad range of issues to be covered and also permit those issues to be pursued in-depth, qualitative research techniques are often employed first.
• To provide a more specific assessment of the sources of brand equity, a follow-up quantitative phase is often necessary.
Brand Equity Management System:Three Steps
1. Formalize company position and philosophy into a Brand Equity Charter to provide relevant guidelines to marketing managers.
- Importance of brands and brand equity- History of brand- Brand positioning
- Core brand values- Core brand promise (“brand mantra”) - POP/POD
- Brand guidelines- Strategic- Tactical
The Knicks
The Fans
The Knicks Brand Charter
Emotional Bond
•Uniquely authentic
•An incomparable event, scene and energy.
•Relentless, resourceful, and tough
•Championship caliber
•A vital part of New York City
•Unlimited in its possibilities
•Sensory fulfillment
–Looks, feels, and sounds
•Visceral Thrill
– eager anticipation/excitement
– war: winning/losing
•Psychological Benefits
– personal identification (with heroes)
– social currency/belonging
•Emotional Awards
– intense experience
– childhood
– sustaining
–exceeds
An intensely passionate, professional, unparalleled New York City experience.
Brand Equity Management System: Three Steps
2.Assemble results of tracking survey and other relevant outcome measures into a Brand Equity Report distributed to managers on regular basis
–Provides descriptive information as to what is happening with a brand as well as diagnostic information as to why
Brand Equity Management System: Three Steps
3. Establish position of VP or Director of Equity Management to oversee implementation of Brand Equity Charter and Reports
– Ensure that, as much as possible, marketing of the brand is done in way that reflects the spirit of the Charter and the substance of the Report
Developing Tracking Procedures• Tracking studies involve information collected
from consumers on a routine basis over time– Often done on a “continuous” basis
– Provide descriptive and diagnostic information
– Key decisions• What to track• Who to track• When and where to track• How to interpret tracking studies
Understand ROI of Marketing Investments
MarketingProgram
Investment
CustomerMindset
MarketPerformance
ShareholderValue
VALUESTAGES
- Product- Communications- Trade- Other
- Awareness- Associations- Attitudes- Attachment- Activity
- Price premiums- Price elasticities- Market share- Expansion success- Cost savings- Profitability
- Stock price- P/E ratio- Market capitalization
Brand Value Chain
ProgramMultiplier
MarketingProgram
Investment
CustomerMindset
MarketPerformance
ShareholderValueVALUE
STAGES
- Product- Communications- Trade- Employee- Other
- Awareness- Associations- Attitudes- Attachment- Activity
- Price premiums- Price elasticities- Market share- Expansion success- Cost structure- Profitability
- Stock price- P/E ratio- Market capitalization
ConsumerMultiplierFILTERS
- Clarity- Relevance- Distinctiveness- Consistency
- Channel support- Consumer size & profile - Competitive reactions
- Market dynamics- Growth potential- Risk profile- Brand contribution
MarketMultiplier
Interbrand
• To estimate brand value, Interbrand determines:– Projected future earnings for the brand
-- AND --– The discount rate to adjust earnings for
inflation & risk.• Brand earnings are based on a 3-year
weighted average of historical profits that exclude a number of considerations that do not relate to the brand identity.
Interbrand
To adjust these earnings, an in-depth assessment of brand strength based on seven factors is conducted:
LEADERSHIP (25%)Market ShareAwarenessPositioningCompetitor Profile
STABILITY (15%)LongevityCoherenceConsistencyBrand IdentityRisks
SUPPORT (10%)Consistency of messageConsistency of spendAbove vs. below lineBranch franchise
MARKET (10%)What is the market?Nature of the market (e.g., volatility)Size of marketMarket dynamicsBarriers to entry
PROTECTION (5%)Trademark registration & registrabilityCommon lawLitigation/disputes
TREND (10%)Long term market share performanceProjected brand performanceSensibility of brand plansCompetitive actions
INTERNATIONALITY (25%)Geographical spreadInternational positioningRelative market sharePrestigeAmbition
Financial World began their calculation of the value of the Coca-Cola brand in 1993 with the world-wide sales figure for the Coca-Cola brand family of $9 billion. Based on estimates of consultants and beverage experts, they assumed that Coke's operating margin was around 30%, resulting in operating profits for the Coke brand of $2.8 billion. With Coke's product-related profits in place, Financial World next deducted from these operating profits an amount equal to what could have been expected to be earned on a basic or generic version of the product. To do so, they assumed, based on analysts' calculations, that it required on average 60 cents worth of capital -- which is generally a little higher than net property, plant and equipment plus net working capital -- to produce each dollar of sales. Thus, Financial World calculated the capital used in production for Coke to be $5.5 billion.
They next assumed that a 5% net return on employed capital after inflation could be expected from a similar non-branded product and therefore deducted 5% of Coke's capital employed ($273 million) from the $2.7 billion in operating profits to obtain the profit attributable to the brand name alone. The resulting adjusted operating profit figure was $2.4 billion. After adjusting for taxes, the remainder was deemed to be net brand-related profits.
The final adjustment was made on the basis of brand strength. Coke was assigned the highest multiple, resulting in a brand value of $33.4 billion.
In 2001, that figure rose to $68.95 billion, and Coke was deemed the world’s most valuable brand.
Four Primary Aspects
How Brands Are Built
KnowledgeKnowledge• The culmination of brand building efforts; acquisition of consumer experience
EsteemEsteem • Consumer respect, regard, reputation; afulfillment of perceived consumer promise
RelevanceRelevance • Relates to usage and subsumes the 5 P’s of marketing; relates to sale
DifferentiationDifferentiation • The basis for consumer choice; the essence of the brand, source of margin
Room to grow... Brand has power to build Relevance.
D > R
0
10
20
30
40
50
60
70
80
90
100
Differentiation Relevance
Healthy brands have greater Differentiation than Relevance
Examples:
Harley DavidsonYahoo!America On-LineWilliams-SonomaIkeaBloomberg Business News
R > D
0
10
20
30
40
50
60
70
80
90
100
DIFFERENTIATION RELEVANCE
Uniqueness has faded; Price becomes dominant reason to buy.
Brands with greater Relevance than Differentiation are in danger of
becoming commodities
Examples:
ExxonMott’sMcDonald’sCrestMinute MaidFruit of the LoomPeter Pan (peanut butter)
E > K
0
10
20
30
40
50
60
70
80
90
100
ESTEEM KNOWLEDGE
Brand is better liked than known.
More Esteem than Knowledge means, “I’d like to get to know you better”
Examples:
Coach leatherwearTag HeuerCalphalonMovadoBlaupunktPella WindowsPalm PilotTechnics
K > E
0
10
20
30
40
50
60
70
80
90
100
ESTEEM KNOWLEDGE
Brand is better known than liked.
Too much Knowledge can be dangerous“I know you and you’re nothing special”
Examples: PlymouthTV GuideSpamWoolworthsChryslerMaxwell HouseNational EnquirerSanka
BrandAsset® Valuator
Leading
Brand Strength
Differentiation Relevance
Lagging
Brand Stature
Esteem Knowledge
A Two Dimensional Framework for Diagnosing Brands: The Power Grid
Power Leaders
New
Niche/Unrealized Potential
Declining Leaders
Unfocused
BRAN
D S
TREN
GTH
(Diff
eren
tiatio
n &
Rel
evan
ce)
BRAND STATURE(Esteem & Knowledge)
Eroded
Brand Health Is Captured on the PowerGrid
Base: USA Total Adults BAV 2000
BRAND STATURE
BRAN
D S
TREN
GTH
Base: USA Total Adults BAV 1999
0
20
40
60
80
100
0 20 40 60 80 100
PlymouthBazooka
Ivory SnowPert
RolaidsKeds
Howard JohnsonTWA
Greyhound
AriZona Iced TeaAeropostale
Newman’s OwnSundance Channel
DreamWorksBloomberg Business
NewsCDnow
IKEA
Coca-ColaOcean Spray
NikePepperidge Farm
M&M’sDisney
Jeopardy!Hallmark
San PellegrinoSun Microsystems
WiredQuest Telecomm
NokiaiVillage.comNetGrocer
Iridium
USA 1999 PowerGrid Sample
Y&R Resonance Research
Usage
Loyalty (60%)
Attachment (30%)
Community Engagement
ResonanceACE
(10%)
15%
Base: 2001 BAV Data
0
50
100
0 50 100
Brand Stature
Bra
nd
Str
en
gth
Attached
Loyal
Community
ResonanceEngaged
Non-Loyals
Resonance
Engaged
Community
Attached
Loyal Users
Non-Loyal Users
Base: BAV USA Adults 2001
Differentiation
Y&R Resonance Research With BAV
Comparison to Other Models
• WPP BRANDZ & Millward Brown Brand Dynamics Pyramid– Bonding– Advantage– Performance– Relevance– Presence
Average U.S. Packaged Goods Brand
Proportion of Consumers
Consumer Loyalty
7%Bonded
32%Advantage
35%Performance
43%Relevance
76%Presence
38%
19%
17%
13%
20%
Comparison to Other Models
• Research International (Affinity & Performance)– Authority
• Heritage• Trust• Innovativeness
– Identification• Bonding• Caring • Nostalgia
– Approval• Prestige• Acceptability• Endorsement
Managing Brand Equity
• Managing brand equity concerns those activities that take a broader and more diverse perspective of a brand’s equity– Understanding how branding strategies
should reflect corporate concerns and be adjusted, if at all, over time or over geographical boundaries or market segments
Branding Strategies
• 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
Brand Hierarchy Levels
Corporate Brand
Family Brand
Individual Brand
Individual Item or Model (Modifier)
– A brand hierarchy can involve multiple levels:
Brand Hierarchy Decisions
• In creating the hierarchy, it is important to decide:– The number of levels of the hierarchy to
use in general– How brand elements from different
levels of the hierarchy are combined, if at all, for any one particular product
– How any one brand element is linked, if at all, to multiple products
– Desired brand awareness and image at each level
Designing the Brand Hierarchy
– Decide on the number of levels• 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 levels of awareness and types of associations to be created at each level
• Principle of relevance: Create global associations that are relevant across as many individual items as possible
• Principle of differentiation: Differentiate individual items and brands
Designing the Brand Hierarchy
– Decide on how to link brands from different levels for a product
• Principle of prominence: The relative prominence of brand elements affects perceptions of product distance and the type of image created for new products
– Decide on how to link a brand across products
• Principle of commonality: The more common elements shared by products, the stronger the linkages
Brand-Product Matrix
• Must define . . .– Brand-Product Relationships (ROWS)
• Line & Category Extensions
– Product-Brand Relationships (COLUMNS)• Brand Portfolio
1 2 3 4
A
B
C
Products
Brands
• Multiple brands are often employed in a category for market coverage
– Target different market segments
• Basic principle of brand portfolios…– Maximize coverage– Minimize overlap
• Basic economics guideline ...– A portfolio is too big if profits can be increased
by dropping brands. – A portfolio is not big enough if profits can be
increased by adding brands
Managing Brand Portfolios
Brand Consolidation & Focus
• Number of factors are driving this trend– Movement from transactions to
relationships with consumers– Value of strong “power” brands– Difficulty of brand management
• Cost• Need for efficiencies
– Importance of “top-down” brand management
Advantages of Extensions
• Extensions can potentially provide the following benefits to facilitate new product acceptance:– Reduce risk perceived by customers &
distributors– Decrease cost of gaining distribution & trial– Increase efficiency of promotional
expenditures– Avoid cost (and risk) of developing new
names– Allow for packaging and labeling efficiencies– Permit consumer variety seeking
Advantages of Extensions
• Besides facilitating new product acceptance, extensions can also provide “feedback” benefits to the parent brand and the company as a whole– Enhance the parent brand image
• Improve strength, favorability, and uniqueness of brand associations
• Improve perceptions of company credibility
– Convey broader brand meaning to consumers• Clarify core benefit proposition and business definition
of the company
– Bring new customers into the franchise and increase market coverage
Managing Brands Over Time
• Effective brand management requires taking a long-term view of marketing decisions– Any action that a firm takes as part of its
marketing program has the potential to change consumer knowledge about the brand
– These changes in consumer brand knowledge from current marketing activity also will have an indirect effect on the success of future marketing activities
Reinforcing Brand Images
• Brand equity is enhanced by marketing actions that consistently convey the meaning of the brand to consumers– What products does it represent? What
benefits does it supply? What needs does it satisfy?
– How does it make those products superior? What strong, favorable, and unique brand associations exist in the minds of consumers?
Innovation in ProductDesign, Manufacturing and Merchandising
Relevance in Userand Usage Imagery
Consistency in amount and natureof marketing support
Continuity in brand meaning; changes in marketing tactics
Trading off marketingactivities to fortify vs. leverage brand equity
Protecting sources of brand equity
Brand Awareness
•What products does the brand represent?•What benefits does it supply?•What needs does it satisfy?
BRANDREINFORCEMENTSTRATEGIES
Brand Image
•How does the brand make products superior?•What strong, favorable, and unique brand associations exist in customers’ minds?
Revitalizing a Fading Brand
• Because of changes in the marketing environment, brand equity can be eroded over time.
• Reversing a brand’s fortunes involves ...– Recapturing lost sources of brand equity
(e.g., Harley-Davidson)– Identifying and establishing new sources of
brand equity (e.g., Mountain Dew)
• More “revolutionary” changes than “evolutionary” changes
Revitalization Strategies
• Expand the depth and/or breadth of awareness by improving consumer recall and recognition of the brand during purchase or consumption settings.
• Improve the strength, favorability, and uniqueness of brand associations -- either existing or new -- making up the brand image.
Expanding Brand Awareness
• Increasing usage– Increasing the level or quantity of consumption– Increasing the frequency of consumption
• Identifying new or additional usage opportunities– Communicate appropriateness of more frequent
use in current situations– Reminders to use
• Identifying new and completely different ways to use the brand
Improving the Brand Image• Go “back to basics” and tap into
existing sources of brand equity (e.g., Harley-Davidson)– product strategy– pricing strategy– channel strategy– communication strategy
• Create new sources of brand equity (e.g., Mountain Dew)
BRAND REVITALIZATIONSTRATEGIES
Refresh Old Sourcesof Brand Equity
Create New Sourcesof Brand Equity
Expand Depth and Breadth of Awareness and Usage of Brand
Increase Quantityof Consumption(How Much)
Increase Frequencyof Consumption(How Often)
Improve Strength,Favorability, and Uniqueness of BrandAssociations
Bolster Fading Associations
Neutralize Negative Associations
Create New Associations
Identify AdditionalOpportunities toUse Brand in SameBasic Way
Identify CompletelyNew and DifferentWays to Use
Retain VulnerableCustomers
Recapture LostCustomers
Identify NeglectedSegments
Attract New Customers
Disadvantages of Extensions
• Extensions have risks, too. Certainly, they can fail.
• Moreover, extensions can potentially result in the following costs:– Cannibalize sales of the parent brand– Hurt the image of the parent brand
• If the extension fails• Even if the extension is successful
– Forego the chance to develop a new brand name or market the parent brand differently (opportunity cost)
• In introducing a brand extension, it is typically assumed that:– Consumers have some awareness of
and positive associations about the brand in memory
– Some of these positive associations are evoked by the brand extension
– Negative associations are not transferred from the parent brand
– Negative associations are not created by the brand extension
Brand Extensions Assumptions
Extension Failures• Campbell's tomato sauce• LifeSavers chewing gum• Cracker Jack cereal• Harley Davidson wine coolers• Hidden Valley Ranch frozen entrees• Bic perfumes• Ben-Gay aspirin• Kleenex diapers• Levi's Tailored Classics suits• Nautilus athletic shoes• Domino's fruit-flavored bubble gum• Smucker’s ketchup• Fruit of the Loom laundry detergent
When are Brand Extensions Appropriate?
• Brand extensions are more likely to be favorably evaluated by consumers if they see some basis of “fit” or similarity between the proposed extension and parent brand.
• It is important that the extension achieve some brand equity and contribute to the equity of the parent brand. Therefore, the extension must also have a sufficiently high level of awareness and some strong, favorable, and unique associations.
• The major mistake in evaluating extension opportunities is failing to take all of consumers’ brand knowledge structures into account.
• Often, marketers mistakenly focus on one or so brand associations and ignore other potentially important brand associations in the process.
Successful Extensions
• Must create points-of-parity & points-of-difference in extension category– Must recognize competitive reactions
• Must enhance points-of-parity & points-of-difference of parent brand
• Must maximize the advantages & minimize the disadvantages of brand extensions
Model of Extension Evaluations
Creating extension equity depends on 3 factors:
1. Salience of parent brand associations in extension context
2. Favorability of any inferred associations in the extension context
3. Uniqueness of any inferred associations in the extension context
Model of Extension Feedback
• Effects of an extension on parent brand equity depends on 4 factors:1. How compelling the evidence is concerning
the corresponding attribute or benefit association in the extension context
2. How relevant or diagnostic the extension evidence is concerning the attribute or benefit for the parent brand
3. How consistent the extension evidence is with the corresponding parent brand associations.
4. How strong existing attribute or benefit associations are held in consumer memory for the parent brand
Evaluating Brand Extension Opportunities
1. A useful baseline case to study is when consumers evaluate brand extensions based on the extension itself with no other information
2. Create mental map of parent brand & identify key sources of equity.
3. Identify possible extension candidates on basis of parent brand associations and overall similarity or fit of extension to parent brand.
4. Evaluate candidate potential for a) extension equity according to the three-factor model and b) extension feedback effects according to the four-factor model.
5. Consider possible competitive advantages as perceived by consumers and possible reactions initiated by competitors.
Establishing Brand EquityOver Market Segments
To build brand equity, it is often necessary to create different marketing programs to address different market segments by:
1. Identify differences in consumer behavior
• How they purchase & use products• What they know & feel about brands
2. Adjust branding program• Choice of brand elements• Nature of supporting marketing program• Leverage of secondary associations
Building a Global Brand
• How valid is the mental map in the new market? – What is the level of awareness? – How valuable are the associations?
• What changes need to be made to the mental map?
• By what means should this new mental map be created?
Ten Commandments of Global Branding
• Understand similarities and differences in the global branding landscape
• Don’t take short-cuts in brand-building• Establish marketing infrastructure• Embrace integrated marketing communications• Cultivate brand partnerships• Balance standardization and customization• Balance global and local control• Define operable guidelines• Implement a global brand equity measurement system• Establish effective lines of communication
Characteristics of Strong Brands
• Understand brand meaning and market appropriate products and market product appropriately–Disney
–Nike
–Southwest Airlines
Characteristics of Strong Brands
• Properly position brands–Visa
Characteristics of Strong Brands
• Provide superior delivery of desired benefits–Starbucks
–Federal Express
–Amazon
–Dockers
Characteristics of Strong Brands
• Maintain innovation and relevance for the brand–Gillette
–Charles Schwab
Characteristics of Strong Brands
• Establish credibility and create appropriate brand personality and imagery–Apple
–Virgin
Characteristics of Strong Brands
• Communicate with a consistent voice at one point in time and over time–Coca-Cola
–Accenture (Andersen Consulting)
Characteristics of Strong Brands
• Employ a full range of complementary brand elements and supporting marketing activities– Intel
–Merrill Lynch
–Yahoo
Characteristics of Strong Brands
• Strategically design and implement a brand hierarchy and brand portfolio–BMW
–DuPont
–The Gap
–Ford
Characteristics of Strong Brands• Understand brand meaning and market
appropriate products• Properly position brands• Provide superior delivery of desired benefits• Maintain innovation and relevance for the brand• Establish credibility and create appropriate brand
personality and imagery• Communicate with a consistent voice• Employ a full range of complementary brand
elements and supporting marketing activities• Strategically design and implement a brand
hierarchy
Service Branding Addendums
• Surpass customer expectations– Nordstrom
• Maximize service efficiency– McDonalds
• Develop employee equity– Disney
• Establish productive partnerships– American Airlines
B-to-B Branding Addendums• Emphasize corporate or family brand• Establish strong corporate credibility &
other intangibles– service delivery
• Employ full range of IMC• Leverage equity via secondary
associations– other companies
• Develop market-specific branding programs
Seven Deadly Sins of Brand Management
• Failure to understand the full meaning of the brand–Bic
Seven Deadly Sins of Brand Management
• Failure to live up to the brand promise–United Airlines
Seven Deadly Sins of Brand Management
• Failure to adequately support the brand–Coors–Shell
Seven Deadly Sins of Brand Management
• Failure to be patient with the brand–Michelob
Seven Deadly Sins of Brand Management
• Failure to adequately control the brand–Reebok
Seven Deadly Sins of Brand Management
• Failure to properly balance consistency and change with the brand–Kodak–Levi-Strauss
Seven Deadly Sins of Brand Management
• Failure to understand complexity of brand equity measurement and management– Numerous “dot.com” brands
Seven Deadly Sins of Brand Management
• Failure to understand the full meaning of the brand
• Failure to live up to the brand promise• Failure to adequately support the brand• Failure to be patient with the brand• Failure to adequately control the brand• Failure to properly balance consistency and
change with the brand• Failure to understand complexity of brand
equity measurement and management