Product & Brand Management

Important Notice: This file is intended only for use by the students of Alliance University’s MBA 2011-13 Batch, Semester III, Section B as part of the Product & Brand Management course. Please do not share or upload on the Internet

Product & Brand Management MBA July 2011-13 Semester III Marketing Section B

Four Parts within the Course 1. Brand Introduction, Customer Equity, Customer Value 2. Brand Elements, Product Strategy, Integrated Marketing Communications 3. Secondary Brand Associations, Equity Measurement 4. Implementation, extension, managing brands over time & geographies ©Dr. Thomason Rajan, Alliance University 2012

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Part 1:

Introduction Customer Based Brand Equity Creating Customer Value Brand Positioning

Brands versus Products

Brands versus Products • Product: anything offered to the market that satisfies a want or need • Brand: a product with a difference compared to other products that satisfy the same need

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Evolution of Branding Brands as Icon

•Brand owned by consumers •Extensive knowledge + associations •Starts belonging to a group

Unbranded Goods

•Treated as commodities •High level of substitutability

Brands as Company

•Complex identity • Many points of contact •Brand is same as the Co. •Customers involved in brand creation

Brands as Reference

•Companies start to differentiate based on physical attributes of product (clothes get “cleaner”) •Mainly due to competition

Brands as Policy

•Alignment of company with ethical, social causes •Consumers commit to the cause

Brands as Personality

•Differentiation by product attributes becomes difficult • Many similar claims •Gives the brand a personality •Also adds emotion (caring mother)

Post-modern marketing Classical marketing

7 Source:: McEnally, Martha R. and de Chernatony, L, The Evolving Nature of Branding: Consumer and Managerial Considerations, Academy of Marketing Science Review, 1999, pp.1.

©Dr. Thomason Rajan, Alliance University 2012

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Too early for brand as policy?

8 © 2010. Thomason Rajan, Alliance Business School, Bangalore 562106.

Branding Challenges and Opportunities • Savvy customers: customers check websites, blogs, reviews • Brand proliferation: many similarities • Media fragmentation: high cost, high clutter, technologies (TiVo, AdBlocker) • Increased competition and costs • Greater accountability (short-term quarterly view) ©Dr. Thomason Rajan, Alliance University 2012

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Customer Based Brand Equity

Customer Based Brand Equity • CBBE: The differential effect that brand knowledge has on customer response to marketing. (both positive/negative)

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Customer Based BE: Sources • Two sources: 1. Brand Awareness: ability to recognize and recall the brand 2. Brand Image: creating strong, favorable and unique associations

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Four Steps in Brand Building • Identity: identification of the brand • Meaning: what does it stand for? • Response: what is the customer response? • Relationships: how can an intense loyal relationship be made?

Identity

Meaning

Response

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Relationship 13

Four Steps in Brand Building Identity

Meaning

Response

Relationship

The world’s local bank

Superior customer care

Let’s build a smarter planet

Hiring & grooming top software talent

Express yourself Cosmetic Element

Provide options for people to express Internal Transformation

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Keller’s Pyramid: Six Blocks • Salience: awareness-depth (recall) and breadth (range of products) • Performance: how well it meets functional needs-features, price, consistent (reliable), long life(durable) • Imagery: intangible links (e.g. Nivea + family) • Judgments: evaluation of quality • Feelings: emotional reactions (warmth, fun, social approval) • Resonance: loyal, attached, engaged buyer ©Dr. Thomason Rajan, Alliance University 2012

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Keller’s Pyramid: Six Blocks Resonance

Judgments

Feelings

Performance

Imagery

Intense active loyalty “Relationships”

Positive, evaluations and emotional reactions “Response” Points-of-parity & difference, “Meaning”

Salience

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Deep awareness, “Identity”

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Creating Customer Value

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Customer Value • Companies must study whether their product offers value-will customers pay for their product? • Two concepts: – Customer Relationship Marketing uses a company’s own data systems to track consumer activity & interactions – Customer Equity: sum of lifetime value of customers (cost to acquire customers, retain them and cross-sell other products) ©Dr. Thomason Rajan, Alliance University 2012

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Customer Relationship: Retention dynamics Suspects

Prospects

First-time customers

Most traditional marketing efforts directed to this region (attracting customers) Disqualified

Repeat customers

But retention is key!

Clients

(special)

Members

(membership)

Advocates Ex-customers (Inactive) Partners ©Dr. Thomason Rajan, Alliance University 2012

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Engaging customers is the key to Lifetime Value and Retention

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e.g. Engaging an airline customer with a 360o view

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Customer Equity: 3 Key Drivers 1. Value Equity: objective assessment of utility (quality, price, convenience) 2. Brand Equity: subjective assessment of the brand (customer’ brand awareness, attitude & perception of brand ethics) 3. Relationship Equity: tendency to stick with the brand (loyalty programs, special care, community building, knowledge building) ©Dr. Thomason Rajan, Alliance University 2012

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Power shift to customers #ccdsucks: A hashtag propagated by a group of twitterers who had a poor experience at CCD in Chennai. The CCD Manager had demanded that the group shell out a cover charge if they wanted to use their premises for a tweetup: CCD sucks… @cafecoffeeday at Ispahani center is kicking twitter out.. #ccducks Tweet from @PPrakash (Prakash P) at 7:50 PM Feb 4th from Snaptu

#ccdsucks cover chrg not defined but threats turng up frm mgr Tweet from @idlee_amin (Tushar R) at 7:51 PM Feb 4th from Snaptu

Cover charge for sitting in this place RT @PPrakash: CCD sucks… @cafecoffeeday at Ispahani center is kicking twitter out.. #ccducks Tweet from @metalsaint (gautham govind) at 7:52 PM Feb 4th from Snaptu ©Dr. Thomason Rajan, Alliance University 2012

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Next morning, CCD wakes up and smells the coffee @gopal_b :O We're v sorry about this! It is not CCD's policy to charge a cover. Thanks for letting us know. We're checking on it right away!

Tweet from @CafeCoffeeDay (Café Coffee Day) at 10:44 PM Feb 5th via web

@narayananh @bombaylives @additiyom @wiredvijay @ubiquitense CCD does not charge a cover. Thanks a lot for letting us kno n we're v sorry! Tweet from @CafeCoffeeDay (Café Coffee Day) at 10:47 PM Feb 5th via web

@PPrakash @AmolMathur @ahmedhussain @idlee_amin @CreativeWolf Tnks for leting us kno ppl! We don have a policy to chrg a cover. Chking rt nw Tweet from @CafeCoffeeDay (Café Coffee Day) at 10:52 PM Feb 5th via web

@AmolMathur @PPrakash We really want to resolve this issue. pls help us do that. Give us a no. to call so we can personally apologize. Tweet from @CafeCoffeeDay (Café Coffee Day) at 12:14 PM Feb 5th via web

#ccdsucks #ccd CCD does not have a policy to charge a cover anywhere in India. We apologize for the goof up. This will nt be taken lightly. Tweet from @CafeCoffeeDay (Café Coffee Day) at 12:17 PM Feb 5th via web

#ccdsucks #ccd Like we said, give us an opportunity. Give us a no. to call. When resolved, we'll tell evryone bout it on Twitter. Publicly Tweet from @CafeCoffeeDay (Café Coffee Day) at 12:40 PM Feb 5th via web ©Dr. Thomason Rajan, Alliance University 2012

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CCD : Digital Troubles For/Against Analysis

Sentiment Analysis Number of #ccdsucks tweets (1-week period) 68

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126

49 488

36% For CCD 64% Against CCD

10% Positive 72% Neutral 18% Negative

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@CafeCoffeeDay Followers 300

250

200

@CafeCoffeeDay’s followers increased exponentially in the week of the #ccdsucks crisis

150

100

50

0 Jan 19

Jan 24

Jan 29

Feb 3

Feb 8

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Feb 13

Feb 18

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Customer’s subjective assessments

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Brand Equity versus Customer Equity • Both BE and CE are related and linked to each other. • A few differences: Brand Equity Strategic in nature, focuses on longterm profits, less focus on segmentation

Customer Equity Obsessed with short-term revenues, does not focus on brand building, employees or competition

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Brand Positioning

Brand Positioning • The heart of marketing strategy • Designing the company’s offer & image to occupy a distinct place in the customer’s mind Brand X

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Brand Positioning Guidelines • Two Parts 1. Define the competition: understand the product and the category 2. Chose POP and POD Brand Y

Brand X

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POP and POD 1. Points of Parity (POP): attributes shared with other brands. Two types:

– Category POP: match the product category (e.g. bank cheques) – Competitive POP: match the competition (e.g. banks and online banking)

2. Points of Difference (POD): attributes or benefits that are positive, strong and different from competitive brands.

– Desirable: relevant, unique, believable – Deliverable: feasible, provable, sustainable ©Dr. Thomason Rajan, Alliance University 2012

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Establishing POP and POD • Attributes & benefits must be correctly correlated. Trade-offs happen: Price

Quality

Taste

Health

Strong

Safe

• Update the positioning over time: – Laddering: explore motivations (Maslow); move from attributes to higher values – Reacting: defend, attack competition ©Dr. Thomason Rajan, Alliance University 2012

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Laddering hidden motivations True potential Self esteem esteem from others Love, affection, group belonging Safety, shelter Health, food, sleep

My private drink

CEO’s drink

Friend’s drink Safe drink Soft drink

Maslow’s Needs Hierarchy

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Core Brand Associations • Abstract associations that show 5-10 most important aspects of a brand • To create this, customers asked to draw a mental map, then grouped. Intellect

Human Connection

Values

Murthy

Pyramid

Green campus

Good Brand

Search

Larry, Sergey

Principles Conservative

Doodle

Free food

Great Brand

Blue logo

Funny Risk taking

Colorful logo ©Dr. Thomason Rajan, Alliance University 2012

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Brand Mantra •

Heart and soul of the brand (the spirit, the essence) in 3-5 words – – –

•

Usually has three parts: – – –

•

Mc Donald’s: “Food, folks and fun” Nike: “Authentic athletic performance” Fedex: “Peace of mind” Emotional modifier: benefit (authentic) Descriptive modifier: attribute (athletic) Brand Function: product nature (performance)

Key: Communicate, simplify and inspire ©Dr. Thomason Rajan, Alliance University 2012

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Internal Branding • Members of the company must be aligned to the brand. • Employees must be up-to-date and have an understanding of the brand • Helps create a brand “culture” • Critical for service companies

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Internal/External Branding Example: Tata Code of Conduct

Too elaborate with 25 clauses ; looks like a legal document ©Dr. Thomason Rajan, Alliance University 2012

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Internal Branding Example: Southwest Airlines Culture

Work Hard Desire to be the best Be courageous Display urgency Persevere Innovate

Follow The Golden Rule Adhere to the Principles Treat others with respect Put others first Be egalitarian Demonstrate proactiveCustomer Service Embrace the SWA Family

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Have FUN Don't take yourself too seriously Maintain perspective Celebrate successes Enjoy your work Be a passionate Team-player

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Internal Branding Example: Defining the Zappos Culture

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1. 2. 3. 4. 5. 6.

Deliver WOW Through Service Embrace and Drive Change Create Fun and A Little Weirdness Be Adventurous, Creative and Open-Minded Pursue Growth and Learning Build Open and Honest Relationships With Communication 7. Build a Positive Team and Family Spirit 8. Do More With Less 9. Be Passionate and Determined 10. Be Humble Employees document their thoughts on Zappos Culture in the Culture Book ©Dr. Thomason Rajan, Alliance University 2012

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Brand Audit • Examination of a brand to discover its sources of brand equity. Two parts: 1. Brand Inventory: how products are sold, competitor profiling (POP, POD), brand extensions 2. Brand Exploratory: understand customer’s thoughts, feelings, perceptions •

Can be Qualitative (Free association, story telling, projective techniques) or Quantitative

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Part 2:

Brand Elements New Perspectives Product, Price, Channel Strategy Integrated Marketing -Communications

Brand Elements

Choosing brand elements: Six criteria • • • • • •

Memorable - how easily it is recalled-Lux, LG Meaningful - is it credible to the categoryClose-up Likeable - is it aesthetically appealing-Scorpio Transferable - is it good for related productsClose-up Mouthwash, Scorpio Minivan? Adaptable - can the brand be updatedDettol liquid hand wash Protectable - can it be legally protected, risk of becoming generic e.g. Kleenex, Xerox, Fiberglass I have a Meaningful Memory of this girl/boy. I Like him/her cause he/she is so APT (Adaptable, Protectable and best of all -Transferable!!!)

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Tactics for Brand Elements •

Brand Name – – –

• • • • • •

Awareness: simple and easy (Lux, Coke) Associations: meaningful (Close-up) Legally Protectable

Anand Ramnath Mani

URL: simple, avoid cliches, armani.com Logos and Symbols: visual appeal Characters: human element (Pillsbury) Slogans: short phrases, verbal imagery Jingles: musical messages (Intel tone) Packaging- display, storage, transport; visual & verbal appeal ©Dr. Thomason Rajan, Alliance University 2012

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Elements of Look & Feel Graphic element + The colour palette + Typography (font)

+ Image style + Tone of voice (angry, sweet) Look & Feel ©Dr. Thomason Rajan, Alliance University 2012

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The Personality-like Associations of Colors

BLUE

Commands respect, authority

YELLOW

Caution, novelty, temporary, warmth

GREEN

•America’s favored color •IBM holds the title to blue •Associated with club soda •Men seek products packaged in blue •Houses painted blue are avoided •Low-calorie, skim milk •Coffee in a blue can perceived as “mild”

•Eyes register it faster •Coffee in yellow can perceived as “weak” •Stops traffic •Sells a house Secure, natural, •Good work environment relaxed or easy•Associated with vegetables and going, living things chewing gum •Canada Dry ginger ale sales increased when it changed sugar-free package ©Dr. Thomason Rajan, Alliance 46 University 2012 to green and white from red

Human, exciting, hot, passionate, strong

•Makes food “smell” better •Coffee in a red can perceived as “rich” •Women have a preference for bluish red •Men have a preference for yellowish red •Coca-Cola “owns” red

ORANGE

Powerful, affordable, informal

•Draws attention quickly

BROWN

Informal and relaxed, masculine, nature

•Coffee in a dark-brown can was “too strong” •Men seek products packaged in brown •Suggests reduced calories •Pure and wholesome food •Clean, bath products, feminine

RED

WHITE

Goodness, purity, chastity, cleanliness, delicacy, refinement, formality

BLACK

Sophistication, power, authority, mystery

•Powerful clothing •High-tech electronics

SILVER, GOLD

Regal, wealthy, stately

•Suggests premium price ©Dr. Thomason Rajan, Alliance University 2012

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Gold helps in creating class

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White helps to simplify

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The New Pepsi Logo • Industry estimates suggest Pepsi paid the designer firm close to $1 million for it.

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Pepsi to Logo-Designer’s Response the New Pepsi Logo Response

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Brand Identity • The entire set of brand elements is called the brand identity • Marketers must ensure that the identity is consistent • Rich, concrete visual imagery usually helps

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Legalities of Branding • Trademark: Visual representation that can be registered. Helps fight counterfeits – Name, logo, pack design can be trademarked

• In India, protection is through Trademark Act 1999

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Legalities of Branding • Kraft sued Britannia over infringement of Oreo product design ®

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New Perspectives on Marketing

The New Economy • Four major drivers: – Digitization: Internet, mobile – Disintermediation: new middlemen •

e.g. eBay charges its stores insertion and subscription fees plus 1-7% of final sale

– Customization: tailored products – Industry convergence: blurring boundaries and products

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Industry &Product Convergence Personal computer

Alarm Clock

FM transmitter Video Player

Television

Digital Camera

Music Player

Gaming Console

Book Reader

Document Scanner

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Internet Browser

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The New Economy: 2 keys •

First Key-Integration: Every point of contact matters. Marketers must use all possible means to create product knowledge. –

e.g. P&G “Moms” for Olympics

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The New Economy: 2 keys •

Second Key-Personalization: 3 parts – – –

Experiential Marketing: the time customers spend with you is key, dazzle their senses, appeal to their hearts, let them think, act, relate (Schmidt) One-to-one Marketing: database (Readers Digest) Permission Marketing: offer incentive to customer to volunteer, teach about product, reinforce guarantees that customer retains permission, get more permission, try to get profits

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Experience Counts Coffee Cup

Identity

Experience (charging for time spent)

‘It’s not about the coffee - we are in the “Time Pass” business.’ -K. Ramakrishnan, President – Marketing, Cafe Coffee Day ©Dr. Thomason Rajan, Alliance University 2012

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Product, Pricing and Channel Strategies

Product Strategy

Basic Concept: Product Levels Potential Augmented Expected Generic

Core Product

All possible future transformations Additional features, benefits and service What the customer normally expects

Basic, no-frills version

Fundamental Need

Chocolates on pillow, free spa Cable TV, flowers Clean bed, fresh towels Bed, towels

Rest and sleep

Product: Anything offered to the market to satisfy a need or want ©Dr. Thomason Rajan, Alliance University 2012

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Part 1: Perceived Quality & Value •

Perceived Quality: Customer’s perception about overall quality compared to alternatives. Depends on: – Functional dimensions: performance, features, reliability, durability, service, style, design etc. – Intangibles: abstract product imagery, symbols, personality •

McKinsey 3-D: 3 dimensions-functional, process (purchasing), relationship benefits

– Value Chain: Porter’s tool to create value ©Dr. Thomason Rajan, Alliance University 2012

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Porter’s Value Chain Four Support Activities: Firm’s infrastructure, HRM, Procurement , Technology development

Five Primary Activities Inbound Operations Outbound Marketing Service Logistics Logistics & Sales

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Margin

Competitive Advantage

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Part 2: Relationship Marketing • RM: current customers are key to longterm success. • Three issues: – Mass customization: built to order (Dell, Nike ID) – After-marketing: marketing after purchase (user manuals, toll-free, blogs) – Loyalty programs: maintaining and increasing yield from best customers ©Dr. Thomason Rajan, Alliance University 2012

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Pricing Strategy

Value versus EDLP • Commanding price premiums is crucial for a brand. Most products have a “Price band”- a range of acceptable prices – Value Pricing: right blend of product quality, costs and prices. Design helps – Everyday Low Pricing (EDLP): long-term price discounts for retailers. •

Discounts did not reach customers, so P&G reduced list price on all its products worldwide. ©Dr. Thomason Rajan, Alliance University 2012

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Value in Luxury?

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3 way balance to fix prices Product Design (new tech, new styles)

Product Costs (lower costs)

Product Price (perceived value)

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Design helps improve prices: Cartier Love Bangle

• Cartier designer Aldo Cipullo designed “Lovers Bangle” in 1969. Features a unique screw design that can only be opened by couples with a special screwdriver, symbolizing eternal love. • Premium pricing as there is “value” in it (GBP 3000). ©Dr. Thomason Rajan, Alliance University 2012

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Channel Strategy

Channel Strategy: Direct, indirect and web • •

Design and management of distributors, wholesalers, retailers (intermediaries) Design (direct and indirect) – Direct: through contacts. Better for B2B •

Company owned stores, shop within stores, directly

– Indirect: sell through 3rd party • • •

Push (through retailers) and Pull (through customers) Retail Segmentation (branded variants for shops) Co-operative ads (company & store share 50-50)

– Web strategies: Though e-stores ©Dr. Thomason Rajan, Alliance University 2012

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Channel Strategy: Private Labels

Real brands

“Similar” Store brands

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Channel Strategy: Private Labels •

Private label: product marketed by stores, 25-30% margins (twice that of brands) – Costs less, so customers prefer it – Focuses on broad category, challenge for brands

•

How brands respond: – – – –

Product and packaging innovation Increase ad and promotion budgets Introduce “fighter” brands Reduce costs for critical POP ©Dr. Thomason Rajan, Alliance University 2012

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Integrated Marketing Communications (IMC)

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Marketing Communications • •

Media landscape is changing rapidly Various options to choose from: Media

TV, Radio, Newspaper, Mags

Trade promos

Trade deals, POP allowance, incentives

•

Direct Response Mail, phone, print

Customer promos

Samples, contests

Online

Web, email, social media

Event Marketing Sports, arts, fairs, entertainment

Place

Purchase Point

Billboard, movies, airports, lounges

Shelf, aisle, shopping cart, instore TV

Publicity and PR

Personal selling

Key is to find out ways to pick the right media & judge effectiveness of the ads ©Dr. Thomason Rajan, Alliance University 2012

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Communication Options: Advertising • Advertising: Paid form of promotion of ideas, goods or services by a sponsor. • Several mediums. 2 aspects: – Message strategy: Positioning of the ad (what to convey), scientific – Creative Strategy: Expressing the claim, artistic

• At times, testing is done to gauge initial reactions of customers to new ads ©Dr. Thomason Rajan, Alliance University 2012

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Simple test for Marketing Communication Effectiveness • • •

What is your current brand knowledge? (Detailed map) What is your desired brand knowledge? (POP, POD, Brand Mantra) How does the communication option help get the brand from current to desired knowledge? Current Brand Knowledge

Communication

©Dr. Thomason Rajan, Alliance University 2012

Desired Brand Knowledge

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Advertising Guidelines •

TV: easy way is to find borrowed interest devices that capture attention: Cute babies: Frisky puppies: Hutch ‘pug’ Popular music: most Coke ads Celebrities: Lux Amusing situations: Chlormint, Centerfresh “Security” – Provocative sex appeal: Axe – Threat: Saffola, Max Bupa – – – – –

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Advertising Guidelines • • • • • • • • •

Radio: identify brand early, repeat Print: clear headline, images Direct response: database driven, personalized Websites: eye catching, experience Billboards, lounge, POP: must sell in “15 seconds” Promotion: must drive consumer/trade loyalty Event Marketing & Sponsorship: corporate image, social issues, reward- ‘optimum’ use PR and Publicity: buzz (e.g. Apple media leaks) Personal Selling: train the team, talk to customers ©Dr. Thomason Rajan, Alliance University 2012

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Sales Promotions: (for sales decline or excess stock)

01July -28 September, 2010 The “Achieving 30 lakh sales” promotion ©Dr. Thomason Rajan, Alliance University 2012

29 September, 2010 Launch of re-designed i10 82

Billboards-15 second rule

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IMC: Six Criteria • • • • • •

Coverage: proportion of audience reached Contribution: ad’s ability to get desired response Commonality: Consistent image across different elements Complementarity: Combine communication options (e.g. ads + promos) Versatility: ads must affect different consumers (multiple or broad campaign) Cost: most effective & efficient per Rupee spent ©Dr. Thomason Rajan, Alliance University 2012

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Commonality across media

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Part 3:

Secondary Brand Associations Brand Equity Measurement & Tracking Relationship Models Measuring Sources and Outcomes

Secondary Brand Knowledge

Secondary Brand Knowledge •

Linking the brand to some other entity. Two outcomes: – –

•

Creation of new associations: customer may form a new mental association, especially of they don’t care about the original brand Effects existing brand associations: transfer of judgment and feelings occur

Key is to look for commonality(similar) or complementary associations Attributes, Images, Thoughts, Experiences

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Sources of Secondary Brand Knowledge • • • •

Company itself (Corporate) Countries/geography (American Tourister) Distribution channels (Exclusive rights, licensing) Co-brands (Tata-AIG, Wipro-GE) – –

• • • •

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Ingredient co-brand (Dolby, Lycra) Advertising alliances

Characters Spokespersons (Celebrities, employees-IBM) Sporting or cultural events (Rolex Cup) Third party sources (awards, reviews) ©Dr. Thomason Rajan, Alliance University 2012

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Brand Equity Measurement

Brand Equity Measurement: Overview • Marketing spends have to be justified • Key word is ROMI (Return on Marketing Investment) • The Brand Value Chain is a good starting point to assess the sources and outcomes of Brand Equity •

Marketers much create value by investing in the chain and then “maximizing” it using multipliers ©Dr. Thomason Rajan, Alliance University 2012

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The Brand Value Chain Marketing Programs Stages

Multipliers

(ads, promotions)

Customer’s Mindset

(awareness, attitudes, activity)

Quality of Programs •Clarity •Relevance •Distinctiveness •Consistency

Market Performance

(market share, reaction to changing prices)

Conditions in the Marketplace •Superior competitors •Channel support •Customer size & profile

©Dr. Thomason Rajan, Alliance University 2012

Shareholder Value (stock price, P/E ratio)

Sentiment of Investors •Market dynamics •Growth potential •Risk profile •Brand Contribution

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The Brand Value Chain (e.g. Tata Motors) Marketing Programs Stages

(ads, promotions)

Impressive

Good quality of ads

Customer’s Mindset

(awareness, attitudes, activity)

Not Impressive (Total Mouthshut Rating)

Market Performance

(market share, reaction to changing prices)

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Shareholder Value (stock price, P/E ratio)

Impressive

Vehicle Market Share: Commercial: 61% Personal : 18%

Happy shareholders ©Dr. Thomason Rajan, Alliance University 2012

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Brand Tracking •

Brand Audit: intensive, customer-focused Assesses brand health, uncover sources of BE, suggest ways to improve equity

•

•

Brand Tracking Studies: Collect quantitative data periodically on how brands perform on key dimensions Tracking routine information from customers & documenting in Brand Equity Report

• • • • •

Product-Brand Tracking: awareness & image Corporate Brand Tracking: family brand (GE, Tata) Global Tracking: track many geographic areas ©Dr. Thomason Rajan, Alliance University 2012

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Brand Equity Management System: 4 steps 1. Formalize the company view of brand equity into a document: The Brand Equity Charter – Scope of key brands, actual and desired equity, measurements, tactical guidelines – Usually updated annually

2. Capture results of tracking surveys into Brand Equity Report (What’s happening and why) – Updated monthly, quarterly or annually ©Dr. Thomason Rajan, Alliance University 2012

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Brand Equity Management System: 4 Steps…Contd.

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3. Define organizational responsibilities: – Centralized with VP or Director (Brand Management) – Reports directly to CEO – Oversees Brand Equity Charter and Report – Long-term perspective (3-4 years)

4. Re-design the marketing function to optimize brand equity – Introduce Brand or Category managers – Manage suppliers and partners ©Dr. Thomason Rajan, Alliance University 2012

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Brand Equity Management System: 4 Steps 1. Document

2. Track and report

3. Define the structure

4. Redesign the function

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Measuring Sources of Brand Equity

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Qualitative Techniques •

Unstructured approach based on customer responses • • •

• •

Free Association: most powerful, asks “what comes to your mind when you think of” Focus groups: 6-10 carefully selected people freely discuss Projective Techniques: to uncover true hidden feelings-comparison, completion tests Brand Personality and Values: human character (if the brand is alive, who’d it be?) Experiential Methods: go out and observe ©Dr. Thomason Rajan, Alliance University 2012

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The Azerbaijan Car: what comes to your mind?

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Quantitative Techniques •

Definitive, numerical • • • •

Awareness: Recognition (Yes/No) and aided / unaided recall Image: use scale, rank to measure Strength, Favourability (like/dislike), Uniqueness Brand Response: measures likelihood of purchasing the brand Brand Relationships: measures loyalty (last brand purchased), substitutability (chose another brand) ©Dr. Thomason Rajan, Alliance University 2012

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Tests (Unaided & Aided) • HY_T_

HYATT

• D_ _ N E _

DISNEY

• M_ _ I N _ _ A

MAHINDRA

• K _ T_ _

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KOTAK

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Tests (Unaided & Aided)

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Zaltman Metaphor Elicitation Technique • Participants asked to select 12 images from their own sources that represent the research topic • These images are explored further in a 2 hour interview • Tries to understand consumer’s unconscious motives while buying stuff • Also helps to understand interconnected ideas or themes that influence thought ©Dr. Thomason Rajan, Alliance University 2012

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The 7 Universal Metaphors (Zaltman) • Balance: need for justice, equilibrium • Transformation: changes in substance and circumstances • Journey: meeting of past, present & future • Container: need for inclusion, exclusion • Connection: need to relate to oneself, others • Resource: need to acquire & its consequences • Control: sense of mastery, vulnerability, and well-being http://www.marketingmetaphoria.com ©Dr. Thomason Rajan, Alliance University 2012

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Examples of using 7 key metaphors

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ZMET Step 1: Interview

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ZMET Step 2: Getting metaphors from pictures Pictures of luxury products, individual women

Heavy Consumers Status Focused

Light Consumers Emotion Focused

Pictures of relationship and bonding

Driving statement is “I am rich, so I bought diamonds” for her birthday and I also love her!

Driving statement is “I love her and as it was a special occasion, I bought diamonds”! ZMET DE Beers Study Collage Creation among High Networth Individuals:

Key Insight: “Diamonds are mile-markers on life’s journey” ©Dr. Thomason Rajan, Alliance University 2012

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ZMET Step 3: fit into 3 levels and one of 7 key metaphors

Key Insight: “Diamonds are mile-markers on life’s journey” ©Dr. Thomason Rajan, Alliance University 2012

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ZMET Step 4: Campaign/ Product

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Key Idea: Buy a diamond for each step in your journey of love

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Relationship Models: BRQ, Brand Dynamic & BAV

Brand Relationship Quality • Susan Fournier measures brand strength using Brand Relationship Quality (BRQ) • Six facets: – – – – – –

Interdependence: routine rituals, addiction Self-concept connection: one with the brand Commitment: faithful, loyal Love/passion: warmth, affection Intimacy: deep familiarity Partner quality: empathy, reliability, faith ©Dr. Thomason Rajan, Alliance University 2012

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Brand Dynamics Model (Millward Brown) Strong Is it the best?

Bonding

Advantage Performance Relevance Presence

Does it offer anything better than others? Can it deliver? Does it offer me something useful? Do I know about it?

Weak ©Dr. Thomason Rajan, Alliance University 2012

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Brand Asset Valuator (Young & Rubicam)

•Differentiation (degree of difference) •Energy (ability to meet future needs) •Relevance

Energized Brand Strength (Future Value)

•Esteem (respect for the brand) •Knowledge (familiarity)

Brand Stature (Report Card)

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Brand Asset Valuator Grid High

Growing High Potential, Low Earnings, Niche

Future Financial Performance Strength (Differentiation, energy, relevance)

Leadership High Earnings with continuing High potential Leadership

Strong Current Performance

New

Eroding

Unfocused or New

Challenged Eroded

Low

High

Current Performance-Brand Stature (esteem/ knowledge) ©Dr. Thomason Rajan, Alliance University 2012

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Measuring Outcomes of Brand Equity

Measuring Outcomes of Brand Equity • Two methods: – Comparative: examine (by comparing with others) the consumer attitudes, awareness and unique associations toward a brand – Holistic: estimating an overall value either in abstract utility terms or concrete financial terms

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Measuring BE Outcomes: 1. Comparative Method • Comparative Method: approximate values – Brand based: customer response to different brands (e.g. blind tests) – Marketing based: customer response to changes in marketing – Conjoint analysis: response to see what customers insist and what they are willing to let go (e.g. utility vs. price trade-off) • value attached to each feature- “part worth”) ©Dr. Thomason Rajan, Alliance University 2012

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Response to Changes to Marketing • Skoda Rapid was launched in the Indian market in November 2011 • Initial campaign was typical formuladriven • Feb 2012, the Big Fat Indian Wedding campaign released • Sales growth starts • Sales in the month of June 2012 is 3246 units

+47% 3246

+46%

+16% 2204 10001200

Nov 11

Dec 11

1503

Jan 12

Wedding Campaign Feb 12

Mar 12

Apr 12

Source: Nov 11-Feb 12 http://www.carkhabri.com/carnews/skoda-rapid-overtakes-volkswagen-vento © Thomason Rajan 2012-14

May 12

Jun 12

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Utility Functions Based on Conjoint Analysis

Most preferred choice in red circles ©Dr. Thomason Rajan, Alliance University 2012

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Measuring BE Outcomes: 2. Holistic Method • Holistic Method: overall value (utility/ financial) 1. Residual: Unique Brand Value is Consumer Preference minus physical product attributes. Difficult to calculate precisely 2. Valuation: placing a financial value on brand equity for licensing/mergers. 2 parts • Brand Earnings: profitability • Brand Strength: leadership, stability, market, geographic spread, trends, support, protection ©Dr. Thomason Rajan, Alliance University 2012

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2.1 Holistic Method: Residual Approach Greater the difference between Coke’s perceived value and the final price, better the Residual Value

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2.1 Holistic Method: Residual Approach • If you control parts of the marketing mix, you get the unique brand preference • Several ways to check: – Brand Awareness: how popular the brand is – Equalization price: price that equates brand utility to the attribute utility (utility of brand name, brand image, usage) – Attribute-perception biased component: perceived value of the brand minus objective value collected from experts ©Dr. Thomason Rajan, Alliance University 2012

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2.2 Holistic Method : Brand Valuation • Helps during: • Mergers and acquisitions: evaluate purchases and to facilitate disposal • Brand licensing: to third parties and for tax calculations • Fund raising: as collateral on loans • Brand management decisions: allocate resources, develop brand strategy

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2.2 Holistic Method: Brand Valuation..Contd. • To calculate brand value, you need 2 numbers: Earnings (profit, margin) and Brand Strength (multiplier) – Earnings of Coke: $9 billion sales with 30% margin, so brand contribution (approximate) is $2.7 billion (9 billion X 30%) – Strength (multiplier) gives points to factors like leadership (2.5), stability (2.5), Market (2), geography(2.5) protection (0.5) and adds up the points. E.g. for Coke 10 – Final Coke brand value is 2.7X10 = $27 billion ©Dr. Thomason Rajan, Alliance University 2012

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Calculating brand value: Infosys methodology • Determine brand profits by eliminating the nonbrand profits & tax from the total profits • Calculate the brandstrength multiple.

Rs. Crores

• 4,486 X 09.03 = Rs. 40,509cr (2011) • 3,687 X 10.01 = Rs. 36,907cr (2010) Source: http://www.infosys.com/investors/reports-filings/annualreport/annual/Documents/AR-2010/Additional-Information/Brand-Valuation.html

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Part 4:

Designing and Implementing Brand Strategies New Products and Brand Extensions Managing Brands Over Time and Geographies

Designing & Implementing Brand Strategies

Brand Architecture • Simply put, it tells marketers which brand name, logo, symbols must be used for existing and new products • Two broad options: • Branded house: corporate or family name across all products (e.g. Tata group) • House of brands: collection of individual brands with different names (e.g. Unilever)

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Brand Product Matrix • Graphical way to show all brands of a firm with brands (row) and products (column) Home and Personal Care (Product Mix Width)

Product Line Length

Personal Wash

Laundry

Skin Care

Oral Care

Dove Pears Lux Lifebuoy Liril Hamam Breeze

Surf Excel Sunlight Rin Wheel

Fair & Lovely Pond’s Vaseline

Pepsodent Close-Up

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Brand Product Mix: Example

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Types of Lines • Product Line: group of related products in a category (more products means more length). • Set of all product lines is Product Mix

• Brand Line: products under one brand (more brands means more depth). • Set of all brand lines is called Brand Mix

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Depth and Breadth of Branding Strategy • Companies must decide on: • Product Mix Breadth: how many different product lines to carry • Product Mix Depth: how many variants to offer in each product line Breadth

Depth

Personal Wash

Laundry

Skin Care

Oral Care

Dove White Dove Green

Surf Excel Sunlight Rin Wheel

Fair & Lovely Pond’s Vaseline

Pepsodent Close-Up

Pears Lux Lifebuoy Liril

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Breadth of a Branding Strategy • The attractiveness of entering new products depends on three factors: • Aggregate Market Factors: large category, fast growing, in growth stage, non-cyclical sales, steady profits • Category Factors: structure of category • Low threat of new entrants due to entry barriers • Buyers, suppliers have low bargaining power • Competitive rivalry is low, few close substitutes

• Environment Factors: technological, political, economic, regulatory and social factors ©Dr. Thomason Rajan, Alliance University 2012

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Breadth ..Contd. Common Barriers to Entry • The idea is to have a wide moat, like those around castles to prevent intruders (competitors) from entering into the space. • Common barriers include:

• Economies of scale (cheapest production cost) • Product Differentiation Moat (superior brand) • Huge Capital Requirements The wider the moat, the better! • High Switching Costs (e.g. medical diagnostic equipment) • Intensive distribution (e.g. HUL) ©Dr. Thomason Rajan, Alliance University 2012

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Depth of a Branding Strategy • To pursue different segments • Low end entry level / highend prestige brands

• Flanker: “Fighter” brands (to create stronger Points of Parity) • Cash cows: Milking reserve brand equity of older brands ©Dr. Thomason Rajan, Alliance University 2012

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Brand Depth: Target Pharmacy Re-packing

Old packaging

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Re-designed pack

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Target Re-packing…Contd.

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Brand Hierarchy • Graphically portraying the brand strategy, displays the brand elements & it’s order • Level 1: Corporate (ownership) • Level 2: Family brand (more than one brand) • Level 3: Individual (one product category) • Level 4: Modifier (specific model) ©Dr. Thomason Rajan, Alliance University 2012

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Brand Hierarchy Decisions 1. Number of levels: Fewer the better, transparent logic (simplicity, clarity) 2. Awareness & associations for each level: Be relevant in an abstract way and differentiate for individual brands 3. Which products are to be introduced: Based on growth, survival, synergy (enhance equity of parent brand) 4. How to link brands from different levels: Relative prominence is key (primary brand, sub-brand) 5. How to link brand across products (commonality). E.g HP’s DeskJet, LaserJet, ThinkJet ©Dr. Thomason Rajan, Alliance University 2012

Prominence: Linking Corporate and Product Relationship • Single entity: One line of service with product and company image being the same (FedEx) • Brand dominance: Brand not related to corporate (HUL, P&G products) • Equal dominance: Corporate + Individual with equal prominence (Tata Docomo, Nano, Salt) • Mixed dominance: At times product is dominant, other times corporate (Bosch) • Corporate dominance: corporate name is dominant & applied to product range (Xerox) • Endorsement strategy: no explicit linkage ©Dr. Thomason Rajan, Alliance University 2012

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Corporate Image Dimensions • Product Attributes: quality, innovativeness • People & Relationships: employee and customer orientation • Values & Programs: socially responsible, environmentally concerned • Credibility: expertise, trustworthiness, likeable

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Corporate Rebranding Formula

Core Purpose

Pillar 1

Pillar 2

Pillar 3

Core Values ©Dr. Thomason Rajan, Alliance University 2012

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Rebranding Mahindra

“Rise defines our Group and succinctly sums up the aspirations of our stakeholders and employees. When we spoke to customers across the world, all of them without exception expressed a strong sense of optimism about the future and shared a common desire to Rise, to succeed and create a better future for themselves, their families and their communities.” ©Dr. Thomason Rajan, Alliance University 2012

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Using Cause Marketing to Build Brand Equity • Cause marketing: offer from firm to contribute to a designated cause when customer pays • Builds awareness, enhances image • Makes brand more credible • Evokes feelings and engages people • Green Marketing: marketing that shows concern for the environment • Customers not always willing to pay extra • Implementation is difficult ©Dr. Thomason Rajan, Alliance University 2012

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Chipotle’s Green Marketing

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New Products and Brand Extensions

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Ansoff’s Growth Share Matrix

Current Markets

Current Products

New Products

Market Penetration

Product Development

Totally New Brand

OR New Markets

Market Development

Diversification

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Brand Extension •Sub brand •Line: different flavour •Category: different product

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Brand Extensions • Brand Extension: using an established brand name to launch a new product. 3 choices: • Family brand: parent brand with many extensions (e.g. iPod) • Parent brand: Existing brand giving birth (iPod- Nano, iPod is parent and Nano is the child) • Sub-brand: New brand combined with existing brand (e.g. iPod Nano Shuffle) ©Dr. Thomason Rajan, Alliance University 2012

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Brand Extensions • Two categories: • Line extension: a new segment within the same category (shower gel in soaps) • Category extension: new product category (shower gel in laundry care)

• Ways to launch new category: • New shape or form (e.g. HUL’s Pureit) • Companion products (paste + brush) and related products • Based on firm’s expertise, brand feature (e.g. ‘mild’ Dove) or brand image (Porsche pens) ©Dr. Thomason Rajan, Alliance University 2012

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Category Extensions: Changing Form

Same service tweaked to attract new customers!

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Brand Extensions and Brand Equity • Success of extension depends on equity of new category & the parent brand • Salient parent, favorable inferred and unique inferred brand associations • Compelling, relevant, consistent and strong associations of new brand to parent brand

• Vertical brand extensions: brand is extended up into premium segments or down to more value conscious segments. ©Dr. Thomason Rajan, Alliance University 2012

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Brand Extension Based on Image

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Brand Extension: Advantages • Advantages: • Facilitates new product acceptance, improves brand image, increases trials, provides variety to consumers • Clarifies brand meaning, enhances parent brand image, revitalizes the brand • Reduces perceived risk and the costs of developing and introducing products • Reduces follow-up marketing & promotion expenses and packaging inefficiencies ©Dr. Thomason Rajan, Alliance University 2012

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Brand Extension: Disadvantages • Disadvantages: • Can confuse or frustrate customers with too many choices • Can dilute brand meaning, fail and hurt brand image • Can encounter retailer resistance • Can succeed, but: • Cannibalize sales of parent brand • Hurt brand image of parent brand • Reduce identification with a category ©Dr. Thomason Rajan, Alliance University 2012

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Managing Brands Over Time

How to Manage Brands Over Time: 3 options 1. Brand Reinforcement 2. Brand Revitalization 3. Adjusting the Brand Portfolio

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How to Manage Brands Over Time: Option 1

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• Brand Reinforcement: “evolution” of brand meaning • Maintain brand consistency (Lux-the“film star” soap) • Protect sources of Brand Equity • Fortify (unique) or leverage (3rd party) • Fine-tune supporting programs: innovate

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Brand Reinforcement Brand Awareness •What products does the brand represent? •What benefits does it supply? •What needs does it satisfy

Innovation in product design, manufacturing merchandizing

Consistent marketing support Continue Brand Meaning, change tactics

Protect sources of Brand Equity

Brand Image •How does the brand make products superior? •What strong, favorable and unique associations exist in customer’s minds?

Relevance in user and usage imagery

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Fortify versus leverage

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Parachute Brand Reinforcement

100 ml Rs. 28

100 ml Rs. 33

100 ml Rs. 38

100 ml Rs. 47

28

100 ml Rs. 49

How to Manage Brands Over Time: Option 2 • Revitalization: “revolution” for brands that have fallen on hard times. If old associations not working, go “Back to basics”/ “Re-invent” • Expand awareness: • Improve brand image: reposition / change brand elements • Enter new markets: go global Rin’s “lightning”back to basics

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Brand Revitalization Refresh old sources of Brand Equity

Create new sources of Brand Equity

Expand Brand Awareness and Brand Usage

Increase consumption quantity

New users

Increase usage frequency New uses

Improve strength of unique Brand Associations

Strengthen fading associations Neutralize negative associations Create new associations

©Dr. Thomason Rajan, Alliance University 2012

Retain vulnerable customers Recapture lost customers Target neglected customers Attract new customers

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Brand Revitalization-Piaggio

LML Vespa 125

Option 3: Making adjustments to the Brand Portfolio • Acquire new customers: – Make brand relevant to the ‘young’ – Create segment-customized campaigns – Introduce a new extension or new outlet

• Retire brands that are fading by reducing support and milking profits. – Orphan brand: once popular brands with support withdrawn from parent company ©Dr. Thomason Rajan, Alliance University 2012

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Adjustments to the Brand Portfolio….Contd. • Fortify (make it stronger) and leverage (capitalize on existing strengths) • Expand awareness & improve image • Enter new markets • Attract new customers • Migrate-from entry level to premium • Retire brands that are fading ©Dr. Thomason Rajan, Alliance University 2012

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Managing Brands Over Geographies

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Regional versus global • Regionalization: tailoring products, advertising and sales to fit different regions or nations – Better targeting, but complex production

• Going global: triggered by – Slow growth and increased competition in domestic markets – Reduced cost from economies of scale – Need to diversify risk – Globally mobile customers ©Dr. Thomason Rajan, Alliance University 2012

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Standardization: world-wide leverage of good ideas

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Standardization: world-wide leverage of good ideas

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Global Marketing: Advantages & Disadvantages • Advantages: – – – – –

Production, distribution economies of scale Lower marketing costs Power and scope-brand becomes ‘expert’ Consistent brand imagery, uniform marketing Quick leverage of good ideas

• Disadvantages: Differences in – Consumer needs, wants, usage – Brand, product development & competition – Legal and administrative procedures ©Dr. Thomason Rajan, Alliance University 2012

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Standardization versus Customization • Standardization: based on assumption that the world is shrinking and that everyone needs advanced, reliable and low-priced products. – Doesn’t always work

• Customization: tailoring products to local and regional concerns • Hybrid: using both approaches ©Dr. Thomason Rajan, Alliance University 2012

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Global Brand Strategy: Renaming

• Axe renamed Lynx in UK because it evoked negative murder associations • Nescafe- in Portugal the brand did badly as the name translated into ‘n-es-café’ which means ‘it’s not coffee’ • Rolls Royce- its Silver Mist line renamed as Silver Shadow because in German areas mist refers to a ‘dung cart’ • Fiat Uno- was not able to succeed in Finland because it meant ‘dope’ Pepsi renamed to Pecsi in Argentina ©Dr. Thomason Rajan, Alliance University 2012

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Global Brand Strategy: Launch Failures • Hallmark launch failed in • French write their own cards & hate syrupy sentiment France • Philips coffee makers • Japanese have smaller hands than Europeans failed in Japan • Coca Cola withdrew 2 • Spaniards have small fridges litre bottles from Spain • Mexicans do not care about • Crest launch failed in decay prevention Mexico • Kellogg’s Pop Tarts initially • Too sweet for British taste failed in UK

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Global Brand Strategy: Tips • Understand similarities and differences in global branding • Don’t take shortcuts (study market carefully) • Embrace IMC (ads, promos, sponsorships) • Cultivate brand partnerships (JVs, distributors, ad agencies) • Leverage brand elements • Balance standardization & customization • Establish marketing infrastructure and operable guidelines • Implement global equity measurement system ©Dr. Thomason Rajan, Alliance University 2012

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The Process

The Strategic Brand Management Process STEPS

KEY CONCEPTS

Identify and Establish Brand Positioning and Values

Mental maps Competitive frame of reference Points-of-parity and points-of-difference Core brand values Brand mantra

Plan and Implement Brand Marketing Programs

Mixing and matching of brand elements Integrating brand marketing activities Leveraging of secondary associations

Measure and Interpret Brand Performance

Grow and Sustain Brand Equity

Brand Value Chain Brand audits Brand tracking Brand equity management system Brand-product matrix Brand portfolios and hierarchies Brand expansion strategies Brand reinforcement and revitalization 176

©Dr. Thomason Rajan, Alliance University 2012

Thank you. All the best!