Strategic Brand Management (Omnichannel Management), Sintesi del corso di Brand Management

Scarica Strategic Brand Management (Omnichannel Management) e più Sintesi del corso in PDF di Brand Management solo su Docsity! Strategic Brand Management, building, measuring, and managing brand equity Chapters: 4, 5, 6, 9, 10, 11, 12, 14, 15 Chapter 4: Choosing Brand Elements to Build Brand Equity Brand elements (brand identities): trademarkable devices that serve to identify and differentiate the brand. Main ones: brand names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages and signage. Test of the brand-building ability of a brand elements: what consumers would think or feel about the product if they knew only that particular brand element and not anything else about the product and how else it would be branded or marketed. Criteria for choosing brand elements Criteria for choosing brand elements: 1. Memorable (easy recognized; easy recalled): achieve high level of brand awareness, brand elements that promote that goal are inherently memorable and attention-getting. 2. Meaningful (descriptive; persuasive): two particularly important criteria are how well the brand element conveys the following: A. general information about the function of the product or service: does the brand descriptive meaning and suggest something about the product category, the needs satisfied or benefits supplied? Does the brand element seem credible in the product category? B. specific information about particular attributes and benefits of the brand: does it have persuasive meaning and suggest something about the particular kind of product? 3. Likeable (fun and interesting; rich visual and verbal imagery; aesthetically pleasing) 4. Transferable (within and across product categories; across geographic boundaries and cultures): it measures the extent to which the brand element adds to the brand equity for new products or in new markets for the brand. Several aspects: how useful is the brand element for line or category extensions? To what extent does the brand element add to brand equity across geographic boundaries and market segments? 5. Adaptable (flexible; updatable) 6. Protectable (legally; competitively): extent to which the brand element is protectable, both in legal and a competitive sense. Marketers should: a. Choose brand elements that can be legally protected internationally b. Formally register them with the appropriate legal bodies c. Vigorously defend trademarks from unauthorized competitive infringement The first three are the marketers’ offensive strategy and build brand equity. They offer many advantages cause consumers often do not examine much info in making product decisions. The latter three play a defensive role for leveraging and maintaining brand equity. Options and tactics for brand elements A well chosen brand name can make an appreciable contribution to the creation of brand equity. Ideally a brand name would be easily remembered, highly suggestive of both the product classe and the particular benefits that served as the basis of its positioning inherently fun or interesting, rich with creative potential, transferable to a wide variety of product and geographic settings, enduring in meaning and relevant over time, and strongly protectable both legally and competitively. Since it's very difficult to find a brand element which covers all these criteria, is preferable to have multiple brand elements. Let's look at the major consideration for each type of brand element: Brand Names, URLs, Characters, Slogans, Jingles, Packaging. Brand Names It often captures the central theme or key associations of a product in a very compact and economical fashion. They can be an extremely effective shorthand means of communication: customer can notice the brand and register its meaning or activate it in memory in just few seconds. By the way it's the most difficult element for marketers to change. Each years ten of thousand of new brands are registered as legal trademarks. Arriving at a satisfactory brand name for a new product can be a painfully difficult and prolonged process: “all the good ones are taken”. Naming guidelines Like any brand element, it has to have six general criteria: memorability, meaningfulness, likability, transferability, adaptability and protectability. Brand awareness: brand names that are simple and easy to pronounce or spell, familiar and meaningful, and different, distinctive and unusual can obviously improve brand awareness. Simplicity and ease of pronunciation and spelling: simplicity reduces the effort the consumers have to make to comprehend and process the brand name. to encourage word of mouth exposure it has also to be easy to pronounce. Ideally a brand name should have a clear, understandable and unambiguous pronunciation and meaning. The way a brand is pronounced can affect its meaning, so consumers may take away different perceptions if ambiguous pronunciation results in different meanings. However the way a brand is pronounced can affects its meaning, so consumers may take away different perceptions if ambiguous pronunciations results in different meanings. To improve pronounceability and recallability many marketers seek a desirable cadence and pleasant sound in their brand names (alliteration, assonance, consonance, rhythm...). Some words employ onomatopoeia (words composed of syllables that when pronounced generate a sound strongly suggestive of the word's meaning). Familiarity and meaningfulness: it should be a familiar and meaningful so it can tap into existing knowledge structuredì; it can be concrete or abstract in meaning. To help create strong brand category links and aid brand recall tha brand name may also suggest the product or service category (Ticketron ticket selling service). Brand elements that are highly descriptive of the product category or its attribute and benefits can be quite restrictive. Differentiated, distinctive and unique: distinctive brand names can also make it easier for consumers to learn intrinsic product information. It can be distinctive because it is inherently ungieu or because it is unique in the context of other brand in the category. They may be seldom used or atypical words for the product category or completely made up words. program. Extremely efficient, shorthand means to build brand equity. They can function as useful “hook” or “handles” to help consumers grasp the meaning of a brand. Indispensable mean of summarizing and translating the intent of a marketing program in a few short words or phrases. Benefits Some slogans help build brand awareness by playing off the brand name in some way, other do it even more explicitly by making strong links between the brand and the corresponding product category. Slogans can help reinforce the brand positioning. Slogans often become closely tied to advertising campaigns and serve as tag lines to summarize the descriptive or persuasive information conveyed in the ads. Slogans can be more expansive and more enduring than just ad tag lines, though campaign-specfici tag lines may help reinforce the message of a particular campaign instead of the brand slogan for a certain period of time. Designing Slogans they can play offthe brand name to build both awareness and image. They also can contain product related messages and other meanings. Updating Slogans Some slogans become so strongly linked to the brand that it becomes difficult to introduce new ones. The slogan can quickly become overexposed and lose specific brand or product meaning. Potential difficulty arises ifthe slogan continues to convey some product meaning that the brand no longer needs to reinforce. In changing slogans you must: 1. Recognize how the slogan is contributing to brand equity, if at all, through enhanced awareness or image 2. Decide how much of this equity enhancement, if any, is still needed 3. Retain the needed or desired equities still residing in the slogan as much as possible while providing whatever new twists of meaning are necessary to contribute to equity in other Ways. Sometimes modifying an existing slogan is more fruitful than introducing a new slogan with a completely new set of meanings. Jingles Musical messages written around the brand. Very important in the first half of the twentieth century (radio). It's extended musical slogans. They are not nearly as transferable as other brand elements. They can communicate brand benefits, but they often convey product meaning in a non direct and fairly abstract fashion. The potential association they might create for the brand are most likely to relate to feelings and personality and other intangibles. They are most valuable in enhancing brand awareness. Often they repeat the brand name in clever and amusing ways that allow consumers multiple encoding opportunities. Packaging Activities of designing and producing containers or wrappers for a product. They have to: a. Identify the brand b. Convey descriptive and persuasive information c. Facilitate product transportation and protection d. Assist in at-home storage e. Aid product consumption Marketers must choose the aesthetic (size, shape, material, color, text, graphics) and functional components of packaging correctly to achieve marketing objectives and meet consumer’s need. Functionally structural design is crucial. Benefits One of the strongest association is inspired by the look of packaging. Structural packaging innovations can create a point of difference that permits a higher margin. New packages can also expand a market and capture new market segment. One of the major packaging trends of recent years is to make both bigger and smaller packaged versions of products (as well as portions) to appeal to new market segment. Packaging at the Point of Purchase Because few product differences exists in some categories, packaging innovations can provide at least a temporary edge on competition. It is a cost-effective way to build brand equity. Packaging Innovations They can both lower costs and/or improve demand. One important supply-side goal for many firms is to redesign packages and employ more recyclable materials to lower the use of paper and plastic. On the demand side, in mature markets especially, package innovations can provide a short-term sales boost. Package Design Package design has become a more sophisticated process. Specialized package designers bring artistic techniques and scientific skills to package design in an attempt to meet the marketing objectives for a brand. They decide on the optimal look and content of each element and choose which elements should be dominant in any one package. Designers often refer to the “shelf impact” of a package: the visual effect the package has at the point of the purchase when consumer see it in the context of other packages in the category. Packaging is subject to some legal requirements, such as nutrition information on food products, there is plenty of scope for improving brand awareness and forming brand associations. One of the most important visual design elements for a package is its color; designers believe that consumers have a !color vocabulary” when it comes to product and expect certain types of product to have a particular look. Certain brands are thought to have “color ownership” such that it would be difficult for other brands to use a similar look. Packaging color can affect consumers’ perception of the product itself. Packaging Changes Packaging changes can be expensive, but they can be cost-effective compared with other marketing communication costs. Reasons to change: a. Signal a higher price, or to more effectively sell products though new or shifting distribution channels b. When a significant product line expansion would benefit from a common look c. To accompany a new product innovation to signal changes to consumers d. When the old package just look outdated Packaging changes have accelerated in recent years as marketers have sough to gain an advantage wherever possible. In making packaging change marketers need to recognize its effect on the original or current customer franchise for the brand. Consumers research is usually helpful. It would be a mistake to change the packaging so significantly that consumers don't recognize it in the store. Retailers opinions can be also important. Packaging can play an important role in building brand equity directly, through point of difference created by functional or aesthetic elements of the packaging or indirectly through the reinforcement of brand awareness and image. Putting it all together Each brand element can play a different role in building brand equity, so marketers mix and match to maximize brand equity. The entire brand elements makes up the brand identify, the contribution of all brand elements to awareness and image. Summary: Brand elements are those trademarkable devices that identify and differentiate the brand. The main ones are brand names, URLs, logos, symbols, characters, slogans, jingles, and packages. Brand elements can both enhance brand awareness and facilitate the formation of strong, favorable, and unique brand associations. Six criteria are particularly important. First, brand elements should be inherently memorable, easy to recognize, and easy to recall. Second, they should be inherently meaningful to convey information about the nature of the product category, the particular attributes and benefits of a brand, or both. The brand element may even reflect brand personality, user or usage imagery, or feelings for the brand. Third, the information conveyed by brand elements does not necessarily have to relate to the product alone and may simply be inherently appealing or likable. Fourth, brand elements can be transferable within and across product categories to support line and brand extensions, and across geographic and cultural boundaries and market segments. Fifth, brand elements should be adaptable and flexible over time. Finally, they should be legally protectable and, as much as possible, competitively defensible. Brand Focus 4.0 outlines some of the key legal considerations in protecting the brand. Chapter 5: Designing Marketing Programs to Build Brand Equity The strategy and tactics behind marketing programs have changed dramatically in recent years (rapid technological developments, greater customer empowerment, fragmentation of traditional media, growth of interactive and mobile marketing options...). Marketers are abandoning the mass-market strategies that built brand powerhouses in the twentieth century to implement new approaches for a new marketing era: integration and personalization have become increasingly crucial factors in building and maintaining strong brands. Integrating marketing Channel strategies, communication strategies, pricing strategies and other marketing activities can all enhance or detract from brand equity. The customer-based equity model provides some useful guidance to interpret these effects. One implication of the conceptualization of customer-brand equity is that the manner in which brand associations are formed does not matter — only the resulting awareness and strength, favorability and uniqueness of brand associations. Perceived quality It is customers’ perception of the overall quality or superiority of a product or service compared to alternatives and with respect to its intended purpose. How consumers form their opinions about quality? Primary ingredients and supplementary features; product reliability, durability and serviceability; style and design. Consumers beliefs about these characteristics often define quality and influence attitudes and behavior toward a brand. Product quality depends not only on functional product performance but on broader performance considerations as well, like speed, accuracy, care of product delivery and installation... Brand attitudes may also depend on more abstract product imagery, such as the symbolism or personality reflected in the brand. After-marketing To achieve the desired brand image, product strategies should focus on both purchase and consumption. Unfortunately too little marketing attention is devoted to finding new ways for consumers to truly appreciate the advantages and capabilities of products. One notable trend in marketing is the growing role of after-marketing: marketing activities that occur after customer purchase. Innovative design, thorough testing, quality production and effective communication — through mass customization or any other means — are without question the most important considerations in enhancing product consumption experience that build brand equity. In many cases however they may only be necessary and not sufficient conditions for brand success. User manuals To enhance consumers’ consumption experiences, marketers must develop user manuals or help features that clearly and comprehensively describe both what the product or service can do for consumers and how they can realize these benefits (with globalization is more important, because of translation needed). User manuals increasingly may need to appear in online and multimedia formats to most effectively demonstrate product functions and benefits. Customer service programs Creating stronger ties with consumers can be as simple as creating a well-designed customer service department. 2/3 of customer switched companies in the past year due to poor customer service. After-marketing can include the sale of complementary products that help make up a system or in any other way enhance the value of the core product. After-marketing can be an important determinant of profitability. Loyalty programs Loyalty of frequency programs have become one popular means by which marketers can create stronger ties to customers. Purpose: identifying, maintaining, increasing the yield from a firm’s best customers through long-term, interactive, value-added relationship. The value created by the loyalty program creates switching costs for consumers, reducing price competition among brands. Tips for building effective loyalty programs: a. Know your audience (target customers can be changed by the program) b. Change is good (update the program to attract new customers) 10 c. Listen to your best customers (suggestions and complaints from top customers deserve careful consideration) d. Engage people (make customer want to join the program) Summary: The product is at the heart of brand equity. Marketers must design, manufacture, market, sell, deliver, and service products in a way that creates a positive brand image with strong, favorable, and unique brand associations; elicits favorable judgments and feelings about the brand; and fosters greater degrees of brand resonance. Product strategy entails choosing both tangible and intangible benefits the product will embody and marketing activities that consumers desire and the marketing program can deliver. A range of possible associations can become linked to the brand some functional and performance-related, and some abstract and imagery-related. Perceived quality and perceived value are particularly important brand associations that often drive consumer decisions. Because of the importance of loyal customers, relationship marketing has become a branding priority. Consequently, consumers’ actual product experiences and aftermarketing activities have taken on increased importance in building customer-based brand equity. Those marketers who will be most successful at building CBBE will take the necessary steps to make sure they fully understand their customers and how they can deliver superior value before, during, and after purchase. Pi g strategy Price isthe one revenue-generating element of the traditional marketing mix, and price premiums are among the most important benefits of building a strong brand. Consumer price perceptions Pricing strategy can dictate how consumers categorize the price of the brand and how firm or how flexibly they think the price is, based on how deeply or how frequently it is discounted. Consumers often rank brands according to price tiers in a category. There is also a relationship between price and quality; within any price tier there is a range of acceptable prices, called price bands, that indicate the flexibility and breadth marketers can adopt in pricing their brands within a tier. Some companies sell multiple brands to better compete in multiple categories. Consumers may have price perceptions that have more inherent product meaning. In many categories they may infer the quality of a product on the basis of its price and use perceived quality and price to arrive at an assessment of perceived value. Costs here are not restricted to the actual monetary price, but may reflect opportunity costs of time, energy and any psychological involvement in the decision that consumers might have. Consumer association of perceived value are often an important factor in purchase decisions. Value-based pricing strategies: strategy to attempt to sell the right product at the right price, to better meet consumer wishes, marketers need to understand all price perceptions that consumers have for a brand, to uncover quality and value interferences and to discover any price premiums that exist. 11 Setting prices to build brand equity Choosing a price strategy to build brand equity means determining: a method for setting current prices and a policy for choosing the depth and duration of promotions and discounts. There are many different approaches to setting prices. Factors related to the costs of making and selling products and the relative prices of competitive products are important determinants in pricing strategy. Firms are placing greater important on consumer perceptions and preferences. Many firms are employing a value-pricing approach to setting prices and an everyday low pricing (EDLP) approach to determining their discount pricing policy over time. Value pricing Objective of value pricing: uncover the right blend of product quality, product costs, product prices that fully satisfies the needs and wants of consumers and the profit targets of the firm. Strong brand can command price premiums. Strong brands cannot command an excessive price premium. An effective value-pricing strategy should strike the proper balance among three key components: a. Product design and delivery b. Product costs c. Product prices Product design and delivery Consumers are willing to pay premiums when they perceive added value in product and services. The advantages of creating strong brand differentiation have led to price premiums when brands are sold online just as much as when sold offline. Product costs Lower costs as much as possible. Meeting cost targets invariably requires finding additional cost saving through productivity gains, outsourcing, material substitution, product reformulations, process changes like automation... cost reduction can't sacrifice quality, effectiveness or efficiency. Product prices Understand exactly how much value consumers perceive in the brand and thus to what extent they will pay a premium over product costs. The most straightforward approach is to directly ask the perception of price and value. Communicating value Combining these three components in the right way to create value is crucial. Marketers may also need to engage in marketing communications to help consumers better recognize the value; in some cases the solution may simply require straightforward communications that expand on the value equation for the brand, such as stressing quality for price. In other cases it may involve framing and convincing consumers to think about their brand and product decisions differently. 12 amounts of money into maintain their facilities and paying sales staffs. To compensate them manufacturers can offer dealers exclusive access to new products, branded variants. Retail segmentation Retailers are customers too. They may need to be divided into segments or even treated individually so they will provide the necessary brand support. Retailers may need different product mixes, special delivery systems, customized promotions or even their own branded version of the products. Branded variants have been defined as branded items in a diverse set of durable and semidurable goods categories that are not directly comparable to other items carrying the same brand name. How create? Change color, design, flavor, options, style, stain, motif, feature, layout. Cooperative advertising With co-op advertising a manufacturer pays for a portion of the advertising that a retailer runs to promote the manufacturer’s product and its availability in the retailer's place of business. To be eligible to receive co-op funds, the retailer usually must follow the manufacturers stipulations as to the nature of brand exposure in the ad. The rationale behind cooperative advertising for manufacturers is that it concentrates some of the communication efforts at a local level where they may have more relevance and selling impact with consumers. but the brand image communicated through co-op is not as tightly controlled as when the manufacturer runs its own ads, and there is a danger that the emphasis in a co-op and may be on the store or on a particular sale it is running rather than on the brand. The challenge in designing effective co-op ads will continue to be striking a balance between pushing the brand and the store at the same time. In that sense cooperative advertising will have to live up to its name, and manufacturers will have to get involved in the design and execution of retailers’ campaigns rather than just handing over money or supplying generic, uninspired ads. Direct channels Company owned stores Company stores provide many benefits: they are means to showcase the brand and all its different product varieties in a manner not easily achieved through normal retail channels; they can provide the added benefit of functioning as a test market to gauge consumer response to alternative product designs, presentations and prices. A disadvantage of company stores is that some companies lack the skills, resources or contacts to operate effectively as a retailer. Another issue is potential conflict with existing retail channels and distributors. These manufacturer-owned stores can also be seen as a means of hedging bets with retailers who continue to push their own labels. Manufacturers n particular have been careful to stress that their stores are not a competitive threat to their retailers but rather a showcase that can help sell merchandise for any retailer carrying their brand. Store within a store Some marketers try to create their own shops within major department stores. Dual benefits of appeasing retailers while at the same time allow the firm to retain control over the design and implementation of the product presentation at the point of purchase. For retailers they help drive 15 foot traffic and acquire new capabilities quickly; for smaller brands they allow a quick distribution growth. The goal is to find “win-win” solutions that benefit channel partners and consumers alike. Other means Sell directly to consumers via phone, mail or electronic means. These vehicles help sell products but also contribute to brand equity by increasing consumer awareness of the range of products associated with a brand and increase consumer understanding of the key benefits of those products. Marketers can execute direct marketing efforts in many ways, such as catalogs, videos, physical sites... Online strategies Integrated channels allow consumers to shop when and how they want. It doesn°t benefit only consumers: for some shops most profitable consumers are the one that shop multiple channels. Multichannel retailers are able to acquire customers at half the cost of internet-only retailers. Summary: Channels are the means by which firms distribute their products to consumers. Channel strategy to build brand equity includes designing and managing direct and indirect channels to build brand awareness and improve the brand image. Direct channels can enhance brand equity by allowing consumers to better understand the depth, breadth, and variety of the products associated with the brand as well as any distinguishing characteristics. Indirect channels can influence brand equity through the actions and support of intermediaries such as retailers, and the transfer of any associations that these intermediaries might have to the brand. Direct and indirect channels offer varying advantages and disadvantages that marketers must thoughtfully combine, both to sell products in the short run, and maintain and enhance brand equity in the long run. As is often the case with branding, the key is to mix and match channel options so that they collectively realize these goals. Thus, it is important to assess each possible channel option in terms of its direct effect on product sales and brand equity, as well as its indirect effect through interactions with other channel options. Marketing activities and programs are the primary means that firms build brand equity. Brand- building product, pricing, channel, and communication strategies must be put into place. In terms of product strategies, both tangible and intangible aspects of the brand will matter. Successful brands often create strong, favorable, and unique brand associations to both functional and symbolic benefits. Although perceived quality is often at the heart of brand equity, there is a wide range of associations that consumers may make to the brand. Marketers are personalizing their consumer interactions through experiential and relationship marketing. Experiential marketing promotes a product by not only communicating a products features and benefits but also connecting it with unique and interesting consumer experiences. Relationship marketing includes marketing activities that deepen and broaden the way consumers think and act toward the brand. Mass customization, one-to-one, and permission marketing are all means of getting consumers more actively engaged with the product or service. Aftermarketing and loyalty programs are also ways to help create holistic, personalized buying experiences. In terms of pricing strategies, marketers should fully understand consumer perceptions of value. Increasingly, firms are adopting value-based pricing strategies to set prices and everyday-low-pricing strategies to guide their 16 discount pricing policy over time. Value-based pricing strategies attempt to properly balance product design and delivery, product costs, and product prices. Everyday-low-pricing strategies establish a stable set of “everyday” prices and introduce price discounts very selectively. In terms of channel strategies, marketers need to appropriately match brand and store images to maximize the leverage of secondary associations, integrate push strategies and shopper marketing activities for retailers with pull strategies for consumers, and consider a range of direct and indirect distribution options. Chapter 6: Integrating Marketing Communications to Build Brand Equity Marketing communication are the means by which firms attempt to inform, persuade and remind consumers about the brand they sell. Designing marketing communication programs is a complex task. The new media environment Marketing communications can contribute to brand equity in a number of different ways: creating awareness of the brand, linking points-of-parity and point-of-difference associations to the brand in consumers’ memory, eliciting positive brand judgements or feelings, facilitating a stronger consumer-brand connection and brand resonance. Media environment has changed dramatically in recent years. Challenges in designing brand-building communications The simplest way to judge any communication option is by its ability to contribute to brand equity. Process by which marketing communication might affect consumers: a person to be persuaded by any form of communication has to follow this six steps: 1. Exposure (see or hear) Attention (notice) Comprehension (understand) Yielding (respond favorably) Intentions (plan to act) Behavior (act) OUAWÒWN Role of Multiple Communications How much and what kinds of marketing communications are necessary? It depends on stage of brand life cycle, objectives, budget, product characteristics, media strategy of competitors, target... different communication options may target different market segments. Four major marketing communication options Advertising and promotion Interactive marketing Events and experiences Mobile marketing pPENP 17 Advertiser can buy space in stadiums and arenas and on garbage cans, bicycle racks, parking meters... - Movies, airlines, lounges and other places: advertiser are placing traditional TV and print ads in unconventional places. Many advertiser believe it is important to create specially designed ads for these out-of-home exposures to better meet consumer expectations. - Product placement: Many major marketers pay fees so their products can make cameo appearances in movies and on TV. Marketers combine product placements with special promotions to publicize a brand’s entertainment tie-ins and create “branded entertainment”. Some firms benefit from product placement at no cost by either supplying their product to the movie company in return for exposure or simply because of the creative demands of the storyline. - Pointof purchase Guidelines: the main advantage is that they can reach very precise and captive audience in a cost- effective and increasingly engaging manner. The message must be simple and direct (15 second sell). Strategically out of home advertising is often more effective at enhancing awareness or reinforcing existing brand associations that at creating new ones. A danger is consumer backlash against over-commercialization. Promotion Advertising and promotion often go hand-in-hand. Sales promotions are short-term incentives to encourage trial or usage of a product or service. Marketers can target sales promotion to either the trade or end consumers. they come in all forms, they are incentive to buy: a. Change the behavior of the trade so that they carry the brand and actively support it b. Change the behavior of consumers so that they buy a brand for the first time, buy more of the brand, or buy the brand earlier or more often Consumer sales promotions permit manufacturers to price discriminate by effectively charging different prices to groups of consumers who vary in their price sensitivity. Carefully designed promotions can build brand equity through information or actual product experience that helps to create strong, favorable and unique associations. From a consumer point of view there are disadvantages such as decreased brand loyalty and increase brand switching, decreased quality perceptions, increased price sensitivity. Sometimes they may merely subsidize buyers who would have bought the brand anyway. Sales promotions also may just subsidize “coupon enthusiast”. Moreover new consumers attracted to the brand may attribute their purchase to the promotion and not to the merits of the brand per se. promotions with consumers have as object new category users, existing category users, and or existing brand users; with the trade it can be distribution, support, inventories or goodwill. Consumer promotions Designed to change the choices, quantity and timing of consumers’ product purchases. Distinguish between customer franchise building promotions (samples, demonstrations, educational material) and non customer franchise building promotions (price-off packs, premiums, sweepstakes, refund offers). Customer franchise building promotions can enhance the attitudes and loyalty of consumers toward a brand (affect brand equity). Marketers increasingly judge sales promotions by 20 their ability to contribute to brand equity as well as generate sales. Promotion strategy must reflect the attitudes and behavior of consumers. Trade promotions They are often financial incentives or discounts given to retailers, distributors and other channel members to stock, display and facilitate the sale of a product through slotting allowance, point of purchase displays, contests and dealer incentives, training programs, trade shows and cooperative advertising. Typically designed either to secure shelf space and distribution for a new brand or to achieve more prominence on the shelf and in the store. Online Marketing Communications Interactive online marketing communications. The main advantages are the low cost and the level of detail and degree of customization it offers. They can accomplish almost any marketing communication objective and are especially valuable in terms of solid relationship building. Three particularly crucial online brand-building tools: websites, online ads and videos, social media. Web sites Even if different market segments may have different levels of knowledge and interest about a brand, a well-designed web site can effectively communicate to consumers regardless of their personal brand or communications history. Many consumers also create websites and pages that review, rates and give feedback on brands. Marketers must carefully monitor these different forums and participate where appropriate. Provide timely and reliable information, update frequently and offer as much customized information as possible. Eye catching pages that can sustain browsers’ interest, latest technology and effectively communicating the brand message. Web site design is crucial. Online Ads and Videos Internet advertising is accountable, because software can track which ads went to which sales; it's nondisruptive, so it doesn't interrupt consumers; it can target consumers so that only the most promising prospects are contacted. Online ads and videos also can extend the creative or legal restrictions of traditional print and broadcast media to persuasively communicate brand positioning and elicit positive judgements and feelings. Disadvantage: ignore banner ads and screen them out with pop-up filters. The advantage of videos is the enormous potential pass-along that exists if an imaginative video strikes a chord with consumers. Video opportunities for brand building can only continue to grow. Email ads in general have increased in popularity. Search advertising: users are presented with sponsored links relevant to their search words alongside unsponsored search results. Social Media Many forms, buy six key options are: message boards and forums; chat rooms; blogs; Facebook; twitter; YouTube. They allow brands to establish a public voice and presence on the web. It complements and reinforce other communication activities, it helps promote innovation and relevance for the brand. They can also create sense of community and foster active engagement. 21 Different social media can accomplish different objectives. Marketers must bear in mind that not everyone actively participates in social media; only some of the consumers want to get involved with only some of the brands and even then only some of the time. Putting it all together Interactive marketing communications work well together. Attention getting online ads and videos can drive consumers to a brand’s website, where they can learn and experience more about the brand. Many experts maintain that a successful digitally based campaign for a brand often skillfully blends three different forms of media: paid media (all the various forms of more traditional advertising media like TV and print), owned media (those media channels the brand controls to some extent like website, emails, social media) and earned media (when consumers themselves communicate about the brand via social media, word-of-mouth...). The interplay between the three forms of media is crucial. Events and experiences Brand building in the virtual world must be complemented with brand building in the real or physical world. They range from an extravagant multimillion dollar sponsorship of a major international event to a simple local in store product demonstration or sampling program. Experiences can take all forms. Event marketing can be defined as public sponsorship of events or activities related to sports, art, entertainment or social causes. The bast majority of event expenditures occur in the word of sports, then tours and attraction, causes, arts, festivals, fairs and annual events, associations and membership organizations. Rationale Marketers report a number of reasons why they sponsor events: a. Identify with a particular target market or lifestyle Increase awareness of the company or product name Create or reinforce consumer perceptions of key brand image associations Enhance corporate image dimensions Create experiences and evoke feelings Express commitment to the community or on social issues Entertain key clients or reward key employees Permit merchandising or promotional opportunities Drawbacks: the success of an event can be unpredictable and out of the sponsors’ control; there can be much clutter in sponsorship; some consumers may still resent the commercialization of events through sponsorship. Guidelines: choosing the appropriate events, designing the optimal sponsorship program, measuring the effects of sponsorship on brand equity. Choosing sponsorship opportunities: the event must meet the marketing objective and communication strategy defined by the brand. The audience delivered by the event must match the target market of the brand. The event must have sufficient awareness. Of a particular concern is whether consumers make favorable attributions to the sponsor for its participation. Some sponsors create their own event. More and more firms are also using their names to sponsor the arenas, stadiums and other venues that actually hold the events. 7a Po ooo 22 Conformability It refers to the extent that a marketing communication option is robust and effective for different groups of consumers. two types of conformability: communication and consumer. The ability of a marketing communication to work at two levels (consumers that have already been exposed to other marketing communications for that brand and the ones that haven't) is critically important. A marketing communication option is conformable when it achieves its desired effect regardless of consumers’ past communication history. We can judge a communication option in terms of broader consumer conformability that is how well does it inform or persuade consumers who vary in dimensions other than communication history. Two possible means of achieving this dual communication ability: a. multiple information provision strategy: provide different info within a communication option to appeal to the different types of consumers. b. broad information provision strategy: provide info that is rich or ambiguous enough to work regardless of prior consumer knowledge. Cost Evaluations of marketing communications on all of the preceding criteria must be weighted against their cost to arrive at the most effective and efficient communication program. Using IMC Choice Criteria The IMC choice criteria con provide some guidance for designing IMC programs. Two key steps are evaluating communication options and establishing priorities and trade offs. Evaluating Communication Options We can judge marketing communications options or communication types according to the response and communication effects they can create, as well as how they rate on the IMC choice criteria. Different communication types and options have different strengths and weaknesses and raise different issues. Several points about the IMC choice criteria are worth noting: each communication types, if properly designed, can play a critical and unique role in achieving those communication objectives. AII marketing communications appear expensive, although some differences in cost per thousands can prevail. Establishing Priorities and trade-offs The IMC program a marketer adopts will depend in part on how he/she ranks the choice criteria. The marketers must also make tradeoffs. Three possible tradeoffs with the IMC choice criteria that result from overlaps in coverage: - commonality and complementarity will often be inversely related (the more various marketing communication options emphasize the same brand attribute or benefit, all else being equal, the less they can effectively emphasize other attributes and benefits); - conformability and complementarity will also often be inversely related (the more a communication program accounts for differences in consumers across communication option, the less necessary it isthat any one communication be designed to appeal to many different groups); - commonality and conformability do not share an obvious relationship 25 Summary: Brand equity is fundamentally determined by the brand knowledge created in consumers’ minds by the sup- porting marketing program. Four main types of communications were identified as being critical: (1) advertising and promotion, (2) interactive marketing, (3) events and experiences, and (4) mobile marketing. A number of specific communication options—broadcast, print, direct response, and place advertising media; consumer and trade promotions; Web sites, online ads and videos, and social media online marketing; and events and experiences—were reviewed in terms of basic characteristics as well as success factors for effectiveness. Brand amplifiers that enhance these effects in the form of publicity and public relations, word-of-mouth, and buzz marketing were also discussed. From the perspective of customer-based brand equity, all possible communication options should be evaluated in terms of their ability to affect brand equity. In particular, the CBBE concept provides a common denominator by which the effects of different communication options can be evaluated: Each communication option can be judged in terms of the effectiveness and efficiency by which it affects brand awareness and by which it creates, maintains, or strengthens favorable and unique brand associations. Different communication options have different strengths and can accomplish different objectives. Thus, it is important to employ a mix of different communication options, each playing a specific role in building or maintaining brand equity. The second important insight that emerges from the conceptual framework is that the marketing communication program should be put together in a way such that the whole is greater than the sum of the parts. In other words, as much as possible, there should be a match among certain communication options so that the effects of any one communication option are enhanced by the presence of another option. Marketers need to evaluate marketing communication options strategically to determine how they can contribute to brand equity. To do so, marketers need some theoretical and managerial guidelines by which they can deter- mine the effectiveness and efficiency of various communication options both singularly and in combination with other communication options. Chapter 9: Measuring Sources of Brand Equity: Capturing customer mind-set Understanding the current and desired brand knowledge structures of consumers is vital to effectively building and managing brand equity. Measuring sources of brand equity requires that the brand manager fully understand how customer shop for and use products and service and what customers know, think and feel about and act toward various brands. Qu e research techniques Qualitative research technique often identify possible brand associations and sources of brand equity. These are relatively unstructured measurement approaches that permit a range of both questions and answers and so can often be a useful first step in exploring consumer brand and product perceptions. Free association Subjects are asked what comes to mind when they think of the brand, without any more specific probe or cue than perhaps the associated product category. Marketers use it mainly to identify the range of possible brand associations in consumers’ mind, but free association may also provide 26 some rough indication of the relative strength, favorability and uniqueness of brand associations. Some questions may be: what do you like best/least about the brand? What isthe positive/negative aspect? Then you can go on with other questions about who, what, when where, why and how questions. Guidelines: two main issues to consider are what types of probes to give to subjects and how to code and interpret the resulting data; move from general consideration to more specific considerations. Projective techniques diagnostic tools to uncover the true opinions and feelings of consumers when they are unwilling or otherwise unable to express themselves on these matters. Marketers present consumers with an incomplete stimulus and ask them to complete it, or they give consumers an ambiguous stimulus and ask them to make sense of it. In the process consumers will reveal some of their true beliefs and feelings. Completion and interpretation tasks Classic projective technique use incomplete or ambiguous stimuli to elicit consumer thoughts and feelings; one approach is “bubble exercises”: empty bubbles are placed in scenes to represent the thoughts of participants; consumers have to fill in the bubble by indicating what they believe is happening or being said in the scene. Comparison tasks The consumers have to convey their impressions by comparing brands to people, countries, animals, activities, fabrics, occupation, car, magazines, vegetables, nationalities or even other brands. Then there are follow up question about why subjects made the comparison they did. Archetypes Fundamental psychological association, shared by members of the culture, with a given cultural object. Different cultures have dramatically different archetypes for the same objects. Relaxational exercises and visualization with consumers find the imprinting moments appropriate to the product researched. Zaltman metaphor itation technique ZMET is based on a belief that consumers often have subconscious motives for their purchasing behavior. It is a technique for eliciting interconnected constructs that influence thought and behavior. Based on the idea that most social communication is nonverbal and two-thirds of all stimuli received by the brain are visual. Using ZMET you tease out consumers’ hidden thoughts and feelings about a particular topic, which often can be expressed best using metaphors. The interview consists of a series of steps: 1. storytelling: exploring individual visual metaphors 2. expandthe frame: expanding the metaphoric meaning of images 3. sensory metaphor: eliciting metaphors about the research topic from each sensory modality 27 Strategic Implications The advantage of aided recall measures is that they yield insight into how brand knowledge is organized in memory and what kind of cues or reminders may be necessary for consumers to be able to retrieve the brand from memory. Understanding recall when we use different levels of product category specificity as cues is important, because it has implications for how consumers from consideration sets and make product decisions. The category structure that exists in consumers’ minds can have profound implications for consumer choice and marketing strategy. The insights gleaned from measuring brand recall are also valuable for developing brand identity and integrated marketing communication programs. Bran age Useful for marketers to make a distinction between lower-level considerations, related to consumer perceptions of specific performance and imagery attributes and benefits, and higher- level considerations related to overall judgements, feelings, relationship. Connection between the two levels: consumers’ overall responses and relationship with a brand depend on perception of specific attributes and benefits of that brand. Issues in measuring lower level brand performance and imagery associations: beliefs are descriptive thoughts that a person holds about something. Brand association beliefs are those specific attributes and benefits linked to the brand and its competitors. Assess belief associations on the basis of one or more of the three key dimensions — strength, favorability, uniqueness — making up the sources of brand equity. 1. Whatare the strongest associations you have to the brand? (strength) 2. Whatis good about the brand? (favorability) 3. What is unique about the brand? (uniqueness) To gain more specific insights we can rate these belief association according to strength, favorability and uniqueness. Other approaches A more complicated quantitative technique to assess overall brand uniqueness is multidimensional scaling (MDS), or perceptual maps. MDS is a procedure for determining the perceived relative images of a set of objects, such as products or brands. It transforms consumer judgements of similarity or preference into distances represented in perceptual space. Brand responses The purpose of measuring more general, higher level considerations is to find out how consumers combine all the more specific, lower level considerations about the brand in their minds to form different types of brand responses and evaluations. Purchase intentions Set of measures closely related to brand attitudes and consideration looks at purchase intentions and focus on the likelihood of buying the brand or of switching to another brand. Purchase intentions are most likely to be predictive of actual purchase when there is correspondence between the two in the following dimensions: a. Action (buying for own use or to give as a gift) 30 b. Target (specific type of product and brand) c. Context (in what type of store based on what prices and other conditions) d. Time (within a week, month or year) When asking consumers to forecast their likely purchase of a product or a brand, we want to specify exactly the circumstances, the purpose of the purchase, the location, time and so forth. Consumers could indicate their purchase intention on an 11-poin probability scale that ranges fromoto 10. Likelihood to recommend Important question: how likely is it that you would recommend this product or service to a friend or colleague? In a survey customers are asked to rate their likelihood to recommend on a 0-10 point scale; marketers then subtract detractors (0-6) from promoters (9-10) to arrive at the Net Promoter Score (NPS). Customers who rate the brand 7-8 are deemed passively satisfied and are not included. Several companies have seen benefits from adopting NPS as a means of tracking brand health. Brand relationships Additional consideration with respect to: behavioral loyalty, attitudinal attachment, sense of community and active engagement. Behavioral loyalty To capture reported brand usage and behavioral loyalty we could ask consumers several questions directly. Marketers can make their measures open ended, force consumers to choose on of two brands or offer multiple choice or rating scales. Attitudinal attachment Several different approaches have been suggested to measure the second component of brand resonance — brand attachment. One study proposed a brand love scale that consists of 10 items: wonderful brand; makes me feel good; totally awesome; neutral feeling about this brand; makes me happy; | love it; no particular feelings about this brand; pure delight; passionate about it; very attached to it. Others study found 11 dimensions that characterized brand love: 1. Passion (for the brand) Duration of the relationship Self congruity Dreams (the brand favors consumer dreams) Memories (evoked by the brand) Pleasure Attraction Uniqueness . Beauty 10. Trust 11. Declaration of affect ORPNDUAWN 31 One promising approach defines brand attachment in terms of two underlying construct where each of those two dimensions have two subdimensions, suggesting the following sets of measures: 1. Brand self connection a. connected “to what extent do you feel that you are personally connected to the brand” b. part of who you are “to what extent the brand is part of you” 2. Brand prominence - automatic “to what extent are your thoughts and feelings toward the brand often automatic, coming to mind seemingly on their own” - naturally “to what extent do your toughs and feelings toward the brand come to you naturally and instantly” Sense of community Sense of community and active engagement could call for more varied measures because of their diverse set of issues. Social currency is the extent to which people share the brand or information about the brand as part of their everyday social lives at work or at home. Active engagement Active engagement for a brand is defined as the extent to which consumers are willing to invest their own personal resources (time, energy, money...) on the brand beyond those resources expended during purchase or consumption of the brand. In depth measures could explore word of mouth behavior, online behavior... Fournier’s brand relationship research Brands can and do serve as viable relationship partners so: reconceptualization of the notion of brand personality within this framework. Brand personality describes the relationship role enacted by the brand in its partnership capacity. Fournier identifies a typology of 15 different relationship types characterizing consumers’ engagement with brands. This relationship role view of a brand personality provides more actionable guidance to managers who wish to create and manage their brand personalities in line with marketing actions than does the trait-based view, which identifies general personality tendencies that might or might not be connected to marketing strategies and goals. Reframe the conceptualization and measurement of brand strength strictly in relationship terms: definition of a brand’s strength in terms of the strength, depth and durability of the consumer-brand relational bond using the concept of brand relationship quality (BRQ). B RQ includes six main dimensions of relationship strength: 1. Interdependence: degree to which the brand is ingrained in the consumer's daily course of living — behaviorally and cognitively; it can become dependency and addiction); 2. self-concept connection (degree to which the brand delivers on important identify concerns, tasks, themes, thereby expressing a significant part of the self-concept, both past and present); 3. commitment (dedication to continued brand association and betterment of the relationship, despite circumstances foreseen and unforeseen); 4. love/passion (affinity toward and adoration of the brand, particularly with respect to other available alternatives); 5. intimacy (deep familiarly with and understanding of both the essence of the brand as a partner in the relationship and the nature of the consumer-brand relationship itself); 32 Applications The classic example is “blind testing” research studies: different consumers examine or use a product with or without brand identification (example of Coca Cola vs others). One natural application of this approach is product purchase or consumption research for new or existing products, as long as the brand identification can be hidden in some way for the “unbranded” control group. It is also useful to determine brand equity benefits related to price margins and premiums. It isolates the value of a brand in a very real sense. Particularly applicable when the marketing activity under consideration represents a change from past marketing of the brand or proposed brand extension. Critique If the marketing activity under consideration is already strongly identified with the brand it may be difficult to attribute some aspect of the marketing program to a fictitiously name or unnamed version of the product or service in a believable fashion. Realism we can achieve in the experiment is crucial. We usually have to sacrifice some realism in order to gain sufficient control to isolate the effects of brand knowledge. When it's too difficult for consumers to examine or experience some element of the marketing program without being aware of the brand, we can use detailed concept statements of that element instead; for example we can ask consumers to judge a proposed new product when it is either introduced by the firm as a brand extension or introduced by an unnamed firm in that product market. Simulations and concept statements may highlight the particular product characteristics enough to make them more salient than they would otherwise be, distorting the results. Marketing based comparative approaches Hold the brand fixed and examine consumer response based on changes in the marketing program. Applications Assessing consumer response to different advertising strategies, executions of media plans through multiple test markets. By controlling the other factors we can isolate the effects of the brand and product. Marketers can also explore potential brand extensions by collecting consumer evaluations of a range of concept statements describing brand extension candidates. Main advantage is ease of implementation. Critique Main drawback is that it may be difficult to discern whether consumer responses to changes in the marketing stimuli are being caused by brand knowledge or by more generic product knowledge. It may be that for any brand in the product category consumers would be willing to pay certain prices, accept a particular brand extension and so forth. 35 Conjoint analysis Survey-based multivariate technique that enables marketers to profile the consumer decision process with respect to products and brands. By asking consumers to express preferences or choose among a number of carefully designed product profiles, researchers can determine the trade offs consumers are making between various brand attributes, and thus the importance they are attaching to them. Each profile consumers see is made up of a set of attribute levels chosen on the basis of experimental design principles to satisfy certain mathematical properties. Part worth: value consumers attach to each attribute level, as statistically derived by the conjoint formula. One attribute is the brand name. the part worth for the brand name attribute reflects its value. Applications Number of possible applications. In the past used a brand/price trade off methodology as a means of assessing advertising effectiveness and brand value. It is a simplified version of conjoint measurement with just two variables. Can applied in very different ways selecting different variables. The main advantage is that it allows us to study different brands and different aspects of the product or marketing program simultaneously. Critique One of the disadvantages is that marketing profiles may violate consumers’ expectations based on what they already know about brands. We must take care that consumers do not evaluate unrealistic product profiles or scenarios. It can also be difficult to specify and interpret brand attribute levels. Holistic methods It place an overall value on the brand in either abstract utility terms or concrete financial terms. It attempt to net out various considerations to determine the unique contribution of the brand. The residual approach examines the value of the brand by subtracting consumers’ preferences for the brand from their overall brand preferences. The valuation approach places a financial value on brand equity for accounting purposes, mergers and acquisitions or other such reasons. Residual approaches View that brand equity is what remains of consumer preferences and choices after we subtract physical product effects. We can infer the relative valuation of brands by observing consumer preferences and choices if we take into account as many sources of measured attribute values as possible. Brand equity is defined as the incremental preference over and above what would result without brand identification; so we can calculate brand equity by subtracting preferences for objective characteristics of the physical product from overall preference. Scanner panel Some researcher have focused on the analysis of brand value based on data sets from supermarket scanners of consumer purchases. Kamakura and Russel proposed a measure that employs consumer purchase histories from supermarket scanner data to estimate brand equity 36 though a residual approach. Their model explains the choices observed from a panel of consumers as a function of the store environment, the physical characteristics of available brands anda residual term dubbed brand equity. By controlling for other aspects of the marketing mix they estimate that aspect of brand preference that is unique to a brand and not currently duplicated by competitors. Recently a variation proposed by Ailawadi, Lehmann and Neslin employees actual retail sales data to calculate a revenue premium as an estimate of brand equity, by calculating the difference in revenues between a brand and a generic or private label in the same category. Sriram, Balachandar and Kalwani use store-level scanner data to track brand equity and key drivers of brand equity over time. Choice experiments Swait, Erdem and colleagues proposed a related approach to measuring brand equity with choice experiments that account for brand names, product attributes, brand image and differences in consumer sociodemographic characteristics and brand usage. Equalization price: price that equates the utility of a brand to the utilities that could be attributed to a brand in the category where no brand differentiation occurred. Equalization price can be considered a proxy for brand equity. Multi-attribute attitude models Srinivasan, Park and Chang have proposed a comprehensive residual methodology to measure brand equity based on the multi attribute attitude model. Their approach reveals the relative sizes of different bases of brand equity by dividing brand equity into three components: brand awareness, attribute perception biases and non attribute preference. - The attribute-perception biased component of brand equity is the difference between subjectively perceived attribute values and objectively measured attribute values. Objectively measured attribute values come from independent testing services such as consumer reports or acknowledged experts in the field. - Nonattribute preference component of brand equity is the difference between subjectively perceived attribute values and overall preference. It reflects the consumer’s overall appraisal of a brand that goes beyond the utility of individual product attributes. Model for decomposing attribute ratings of a brand into two components: 1. Brand-specific associations, meaning features, attributes or benefits that consumers link to a brand; 2. General brand impressions based on a more holistic view of a brand. Critique Residual approaches provide a useful benchmark for interpreting brand equity. The disadvantage of residual approaches is that they are most appropriate for brands with a lot of product-related attribute associations, because these measures are unable to distinguish between different types of non product related attribute associations. The residual approach's diagnostic value for strategic decision making in other cases is limited. Residual approaches take a fairly static view of brand equity by focusing on consumer preferences. This contrasts with the process view advocated by the customer-based brand equity framework. Issue of separability in brand valuation: separating the value of the brand name and trademark from the many other elements of the augmented product. 37 Brand strength It measures the ability of the brand to secure the delivery of expected future earnings. It is reported on a scale of 0-100 based on an evaluation across 10 dimensions of brand activation. Performance in these dimension is generally judged relative to other brands in the industry; the brand strength inversely determines a discount rate, through a proprietary algorithm. That rate is used to discount branded earnings back to a present value, based on the likelihood that the brand will be able to withstand challenges and deliver the expected earnings. Summary: Brand valuation and the “brands on the balance sheet” debate are controversial subjects. There is no one universally agreed-upon approach. In fact, many marketing experts feel it is impossible to reduce the richness of a brand to a single, meaningful number, and that any formula that tries to do so is an abstraction and arbitrary. The primary disadvantage of valuation approaches is that they necessarily have to make a host of potentially oversimplified assumptions to arrive at one measure of brand equity. Wharton's Peter Fader points out a number of limitations of valuation approaches: they require much judgmental data and thus contain much subjectivity; intangible assets are not always synonymous with brand equity; the methods sometimes defy common sense and lack “face validity”; the financial measures generally ignore or downplay current investments in future equity like advertising or R&D; and the strength of the brand measures may be confounded with the strength of the company. At the heart of much of the criticism is the issue of separability we identified earlier. An Economist editorial put it this way: “Brands can be awkward to separate as assets. With Cadbury's Dairy Milk, how much value comes from the name Cadbury? How much from Dairy Milk? How much merely from the product's (replicable) contents or design?” To draw a sports analogy, extracting brand value may be as difficult as determining the value of the coach to a team’s performance. And the way a brand is managed can have a large effect, positive or negative, on its value. This chapter considered the two main ways to measure the benefits or outcomes of brand equity: comparative methods (a means to better assess the effects of consumer perceptions and preferences on aspects of the marketing program) and holistic methods (attempts to come up with an estimate of the overall value of the brand). Understanding the particular range of benefits for a brand on the basis of comparative methods may be useful as an input in estimating the overall value of a brand by holistic methods. Combining these outcome measures with the measures of sources of brand equity from Chapter 9 as part of the brand value chain can provide insight into the effectiveness of marketing actions. Nevertheless, assessing the ROI of marketing activities remains a challenge. Here are four general guidelines for creating and measuring ROI from brand marketing activities: 1. Spend wisely—focus and be creative. To be able to measure ROI, we need to be earning a return to begin with! Investing in distinctive and well-designed marketing activities in- creases the chance for a more positive and discernible ROI. 2. Look for benchmarks——examine competitive spending levels and historical company norms. It is important to get the lay of the land in a market or category in order to under- stand what we may expect. 3. Be strategic-apply brand equity models. Use models such as the brand resonance model and the brand value chain to provide discipline and a structured approach to planning, implementing, and interpreting marketing activity. 4. Be observant—track both formally and informally. Qualitative and quantitative insights can 40 help us understand brand performance. Perhaps the dominant theme of this chapter and the preceding chapter on measuring sources of brand equity is the importance of using multiple measures and research methods to capture the richness and complexity of brand equity. No matter how carefully we apply them, single measures of brand equity provide at best a one- or two-dimensional view of a brand and risk missing important dimensions of brand equity. No single number or measure fully captures brand equity. Rather, we should think of brand equity as a multidimensional concept that depends on what knowledge structures are present in the minds of consumers, and what actions a firm takes to capitalize on the potential that these knowledge structures offer. There are many different sources of, and outcomes from, brand equity, depending on the marketers' skill and ingenuity. Firms may be more or less able to maximize the potential value of a brand according to the type and nature of their marketing activities. The actual value of a brand depends on its fit with buyer’s corporate structure and other assets. If the acquiring company has manufacturing or distribution capabilities that are synergistic with the brand, then it might be worth paying a lot of money for it. The customer-based brand equity framework emphasizes employing a range of research measures and methods to fully capture the multiple potential sources and outcomes of brand equity. Chapter 11: Designing and implementing brand architecture strategies Broader perspective: how to sustain, nurture and grow brand equity under various situations and circumstances. Many firms employ complex brand architecture strategies. But which are the guidelines? Developing a brand architecture strategy It helps marketers determine which products and service to introduce and which brand names, logos, symbols and so forth to apply to new and existing products. It defines both the brands” breadth or boundaries and its depth or complexity. The role of brand architecture is twofold: A. Clarify brand awareness: improve consumer understanding and communicate similarity and differences between individual products and services. B. Improve brand image: maximize transfer of equity between the brand and individual products and services to improve trial and repeat purchase. Developing a brand architecture strategy requires three key step. Step 1: defining brand potential The first step is to define the brand potential by considering three important characteristics: brand vision, brand boundaries and brand positioning. Articulating the brand vision Brand vision is management’s view of the brand’s long term potential. It is influenced by how well the firms Is able to recognize the current and possible future brand equity. Many brands have latent brand equity that is never realized because the firm is unable or unwilling to consider all that the brand could and should become. On the other hand many brands have transcended their initial market boundaries to become much more. Waste Management is in the process of transforming itself from a trash company to a one-stop, green, environmental service shop that does a lot more than just collect and dispose of garbage. Without a clear understanding of its 41 current equity it is difficult to understand what the brand could be built on. A good brand vision has a foot in both the present and the future. Brand vision relates to the higher order purpose of the brand, based on keen understanding of consumer aspirations and brand truths. It transcends the brand’s physical product category descriptions and boundaries. Defining the brand boundaries Defining brand boundaries means identifying the products or services the brand should offer, the benefits it should supply and the needs it should satisfy. “Spandex Rule”: just because you can... doesn't mean you should. Marketers must evaluate extending their brand carefully and launch new products selectively. A broad brand is one with an abstract positioning that is able to support a higher order promise relevant in multiple product settings. It often has a transferable point of difference, thanks to a widely relevant benefit supported by multiple reason to believe or supporting attributes. Nevertheless all brands have boundaries. To improve market coverage companies target different segments with multiple brands in a portfolio; they have to be carefully to not over brand or attempt to support too many brands. Crafting the brand positioning Brand positioning puts some specificity into a brand vision. Four key ingredients: 1. Competitive frame of reference 2. Points of difference 3. Points of parity 4. Brand mantra (particularly useful in establishing product boundaries or brand “guardrails”). it should offer rational and emotional benefits and be sufficiently robust to permit growth, relevant enough to drive consumer and retailer interest and differentiated enough to sustain longevity. Step 2: identifying brand extension opportunities Identify new products and services to achieve that potential though a well designed and implemented brand extension strategy. A brand extension is a new product introduced under an existing categories, and category extensions, new product introductions outside extension strategy. Important to carefully plan the optimal sequence of brand extensions to achieve brand potential; the key is to understand equity implications of each extension in terms of points of parity and points of difference. By adhering to the brand promise and growing the brand carefully through little steps, marketers can ensure that brands cover a lot of ground. Launching a brand extension is harder than it might seems. Step 3: branding new products and services Final step is to decide on specific brand elements to use for any particular new product or service associated with the brand. New products and services must be branded in a way to maximize the brand's overall clarity and understanding to consumers and customers. One way we can distinguish brand architecture strategies is by looking at whether a firms is employing an umbrella corporate or family brand for all its products, known as a “branded house” or a collection of individual brands all with different names, known as “house of brands”. Most firms adopt a strategy somewhere between these two end points, often employing various types of sub-brands. 42 Level of a brand hierarchy Different levels of the hierarchy have different issues. Corporate or company brand level The highest level of the hierarchy technically always consists of one brand — the corporate or company brand. We refer to corporate and company brands interchangeably, recognizing that consumers may not necessarily draw a distinction between the two or know that corporations may subsume multiple companies. For legal reason the company or corporate brand is always present on the product or package, although the name of a company subsidiary may appear instead of the corporate name. we can think of a corporate image as the consumer associations to the company or corporation making the product or providing the service. Family brand level A family brand, also called range brand or umbrella brand, is used in more than one product category but is not necessarily the name of the company or corporation. Because a family brand may be distinct from the corporate or company brand, company level associations may be less salient. Most firm typically support only a handful of family brands. If the corporate brand is applied to a range of products, then it functions as a family brand too and the two levels collapse to one for those products. Why apply family brands instead of corporate brands? As product become more dissimilar, it may be harder for the corporate brand to retain any product meaning or to effectively link the disparate product. Distinct family brands can evoke a specific set of associations across a group of related product. Family brands can be an efficient means to link common associations to multiple but distinct product. The cost of introducing a related new product can be lower and the likelihood of acceptance higher when marketers can apply an existing family brand to a new product. If the product linked to the family brand and their supporting marketing programs are not carefully considered and designed, the associations to the family brand may become weaker and less favorable. Moreover the failure of one product may hurt other products sold under the same brand. Individual brand level Individual brands are restricted to essentially one product category, although multiple product types may differ on the basis of model, package size, flavor... Each brand has a dominant position in its respective product category within the broader product class. Advantage of creating individual brands: we can customize the brand and all its supporting marketing activity to meet the needs of a specific customer group. The name, logo and other brand elements, as well as product design, marketing communication programs etch can all focus on a certain target market. If the brand runs into difficult or fails the risk to other brands and the company itself is minimal. The disadvantages are the difficulty, complexity and expense of developing separate marketing programs to build sufficient levels of brand equity. Modifier level Regardless of whether marketers choose corporate, family or individual, they must often further distinguish brands according to the different types of items or models. A modifier is a mean to 45 designate a specific item or model type or a particular version or configuration of the product. Adding a modifier often can signal refinements or differences between brand related to factors such as quality levels, attributes, function... one function of modifiers is to show how one brand variation relates to others in the same brand family. Modifiers help make products more understandable and relevant to consumers or even to the trade. They can even become strong trademarks if they are able to develop a unique association with the parent brand. Product descriptor It's not considered a brand element per se, but for the branded product may be an important ingredient of branding strategy. The product descriptor helps consumers understand what the product is and does and also helps define the relevant competition in consumers’ minds. In the case of a truly new product, introducing it with a familiar product name may facilitate basic familiarly and comprehension, but perhaps at the expense of a richer understanding of how the new product is different from closely related products that already exist. Designing a brand hierarchy Brand elements at each level of the hierarchy may contribute to brand equity through their ability to create awareness as well as foster strong, favorable, and unique brand associations and positive responses. The challenge in setting up a brand hierarchy is to decide: 1. The specific product to be introduced for any one brand 2. The number of levels of the hierarchy to use 3. The desired brand awareness and image at each level 4. The combinations of brand elements from different levels of the hierarchy, if any, to use for any one particular product 5. The best way to link any one brand element, if at all, to multiple products. Specific products to introduce Three principles: a. principle of growth maintains that investments in market penetration or expansion versus product development for a brand should be made according to ROI opportunities (firms must make cost-benefit calculations for investing resource sin selling more of a brand’s existing product to new customers versus launching new products for the brand); b. Principle of survival states that brand extensions must achieve brand equity in their categories (me too extensions must be avoided); c. Principle of synergy states that brand extensions should also enhance the equity of the parent brand. Number of levels of the brand hierarchy Decide which level or levels of the branding hierarchy to use. Most firms choose to use more than one levels for two main reason: each successive branding level allows the firm to communicate additional, specific info about its products and developing brands at lower levels of the hierarchy allows the firm flexibility in communicating the uniqueness of its products; at the same time developing brands at higher levels of the hierarchy is obviously an economical means of communicating common or shared info and providing synergy across the company's operations. 46 The practice of combining an existing brand with a new brand is called sub-branding, because the subordinate brand is a means of modifying the superordinate brand. A sub-brand, or hybrid branding, strategy can also allow for the creation of specific brand beliefs. Marketers can employ a host of brand elements as part of a sub-brand, including name, product form, shape, graphics... by skillfully combining new and existing brand elements, they can effectively signal the intended similarity or fit of a new extension with its parent brand. Principle of simplicity: need to provide the right amount of branding info to consumers, no more and no less. The desired number of levels of the brand hierarchy depends on the complexity of the product line or product mix, and thus on the combination of shared and separate brand associations the company would like to link to any one product. It's difficult to brand a product with more than three levels of brand names without overwhelming or confusing consumers; a better approach might be to introduce multiple brands at the same level (multiple family brands) and expand the depth of the branding strategy. Desired awareness and image at each hierarchy level Marketers us some types of sub-branding strategy for two or more brand levels, two general principles should guide them at each level of the brand knowledge creation process. The principle of relevance is based on the advantages of efficiency and economy; marketers should create associations that are relevant to as many brands nested at the level below as possible, especially at the corporate or family brand. The more abstract the associations are likely to be extremely advantageous because they can cut across many product categories. For brand with strong product category and attribute association it can be difficult to create a brand image robust enough to extend into new categories. The principle of differentiation is based on disadvantages of redundancy; marketers should distinguish brands at the same level as much as possible. If they cannot easily distinguish two brands, it may be difficult for retailers or other channel members to justify supporting both and for consumers to choose. The principle also implies that not all products should receive the same emphasis at any level of hierarchy. A flagship product is one that best represents or embodies the brand to consumer. It is often the first product b which the brand gained fame. Flagship products play a key role in the brand portfolio in that marketing them can have short term benefits as well as long term benefits. Combining brand elements from different levels If we combine multiple brand elements from different levels of the brand hierarchy we must decide how much emphasis to give each. Principle of prominence: prominence of a brand elements is its relative visibility compared with other brand elements. It depends on several factors (order, size, appearance, semantic associations). A name is generally more prominent when it appears first, larger and more distinctive. The principle states that the relative prominence of the brand elements determines which become the primary one and which the secondary one. Primary brand elements should convey the main product positioning and points of difference. Secondary brand elements convey a more restricted set of supporting associations such as points of parity or perhaps an additional point of difference. A secondary brand element may also facilitate awareness. Ifthe corporate or family brand is made more prominent then its associations are more likely to dominate; if the 47 Summary: Many intangible brand associations can transcend the physical characteristics of products, providing valuable sources of brand equity and serving as critical points-of-parity or points-of- difference. Companies have a number of means—indirect or direct—of creating these associations. But they must “talk the talk” and “walk the walk” by communicating to consumers and backing up claims with concrete programs consumers can easily understand or even experience. Managing the corporate brand A number of specific issues arise in managing corporate brand (for example corporate social responsibility, corporate image campaigns and corporate name changes). Corporate social responsibility Some marketing experts believe consumers are increasingly using their perceptions of a firm’s role in society in their purchase decisions. A company that fails to look after its reputation will endure financial difficulties. The CEO’s reputation is important in influencing ratings. Some firms are putting corporate social responsibility at the very core of their existence. Corporate image campaigns They are designed to create association the corporate brand as a whole; consequently they tend to ignore or downplay individual products or sub-brands. Some of the biggest spenders on these kinds of campaigns are well known firms that use their company or corporate name prominently in their branding strategies. They have been criticized, but they provide invaluable marketing and financial benefits by allowing the firm to express itself and embellish the meaning of its corporate brand and associations for its individual products. To maximize the probability of success marketers must clearly define the objectives of a corporate image campaign and carefully measure results against them. A number of different objectives are possible in a corporate brand campaign: - Build awareness of the company and the nature of its business - Create favorable attitudes and perceptions of company credibility - Link beliefs that can be leveraged by product specific marketing - Makea favorable impression on the financial community - Motivate present employees and attract better recruits - Influence public opinion on issues The first three are critical in terms of building customer-based brand equity. like product advertising, corporate image campaigns are becoming more creative and often include digital strategies as an integral components. A brand line campaigns promote a range of products associated with a brand line. A brand line ads or promotions can be particularly useful in building brand awareness, clarifying brand meaning, suggesting additional usage applications. Corporate name changes Corporate names may have to change for many reasons, but they should be the right reasons pursued in the right way. 50 Rationale A merger or acquisition is often the impetus to reevaluate naming strategies and weigh the existing and potential equity of each brand in its context. - A new corporate name arising from a merger or acquisition may be based on some combination of two existing names, if they are strong; - Ifthere is an imbalance in brand equity, the firm typically chooses the name with more inherent brand equity and relegates the other to a sub-brand role or eliminates it altogether; - Finally if neither name has the desired brand equity, a completely new name can signal new capabilities. Corporate name also change because of divestitures, leveraged buyouts, sale of assets. It can also change to correct public misperceptions about the nature of the company's business. Significant shifts in corporate strategy may necessitate name changes. The desire to create distance from scandal. Guidelines Cautious approach; name changes are complicated, time consuming and expensive. Firms should evaluate candidate names in terms of memorability, meaningfulness, likability, protectability, adaptability and transferability. If the consumer market is the primary objective, the name may reflect or be suggestive of certain product characteristics, benefits or values. Once the firm has chosen the name, the substantial task of introducing it to employees, customer, suppliers and the public begins. initial reaction to rebranding is almost always negative simply because people resist change. Sometimes an especially harsh reception will cause a firm to abandon a new name. Brand architecture guidelines Brand architecture is a classic example of the art and science nature of marketing. It's important to establish rules and conventions and be disciplined and consistent. Also important to be flexible and creative. Rarely solutions to a brand architecture challenge, no uniform agreement exists on the one type of branding strategy that all firms should adopt for all products. Brand hierarchy may not be symmetric. Five guidelines in devising and implementing the optimal brand architecture strategy: 1. Adopta strong customer focus 2. Create broad, robust brand platforms (strong umbrella brands are highly desirable) 3. Avoid overbranding and having too many brands 4. Selectively employ sub-brands (they can communicate relatedness and distinctiveness and are means of complementing and strengthening brands) 5. Selectively extend brands. Summary: A key aspect of managing brand equity is adopting the proper branding strategy. Brand names of products typically consist of a combination of different names and other brand elements. A brand architecture strategy for a firm identifies which brand elements a firm chooses to apply across the various products or services it sells. Several tools aid in developing a brand architecture strategy. 51 Combining the brand-product matrix, the brand portfolio, and the brand hierarchy with customer, company, and competitive considerations can help a marketing manager formulate the optimal brand architecture strategy. The brand-product matrix is a graphical representation of all the firm’s brands and products, with brands as rows and the corresponding products as columns. The rows represent brand- product relationships and capture the firm’s brand extension strategy. Marketers should judge potential extensions by how effectively they leverage existing brand equity to a new product, as well as how effectively the extension, in turn, contributes to the equity of the existing parent brand. The columns of the matrix represent product-brand relationships and capture the brand portfolio strategy in terms of the number and nature of brands to be marketed in each category. We characterize a brand architecture strategy according to its breadth in terms of brand- product relationships and brand extension strategy, and its depth in terms of product-brand relationships and the brand portfolio or mix. Breadth describes the product mix and which products the firm should manufacture or sell. Depth deals with the brand portfolio and the set of all brands and brand lines that a particular seller offers. A firm may offer multiple brands in a category to attract different—and potentially mutually exclusive—market segments. Brands also can take on very specialized roles in the portfolio: as flanker brands to protect more valuable brands, as low-end entry-level brands to expand the customer franchise, as high-end prestige brands to enhance the worth of the entire brand line, or as cash cows to milk all potentially realizable profits. Companies must be careful to understand exactly what each brand should do for the firm and, more important, what they want it to do for the customer. A brand hierarchy reveals an explicit ordering of all brand names by displaying the number and nature of common and distinctive brand name elements across the firm’s products. By capturing the potential branding relationships among the different products sold by the firm, a brand hierarchy graphically portrays a firm’s branding strategy. One simple representation of possible brand elements and thus of potential levels of a brand hierarchy is (from top to bottom): corporate (or company) brand, family brand, individual brand, and modifier. In designing a brand hierarchy, marketers should define the number of different levels of brands (generally two or three) and the relative emphasis that brands at different levels will receive when combined to brand any one product. One common strategy to brand a new product is to create a sub-brand, combining an existing company or family brand with a new individual brand. When marketers use multiple brand names, as with a sub-brand, the relative visibility of each brand element determines its prominence. Brand visibility and prominence will depend on factors such as the order, size, color, and other aspects of the brand’s physical appearance. To provide structure and content to the brand hierarchy, marketers must make clear to consumers the specific means by which a brand applies across different products and, if different brands are used for different products, the relationships among them. In designing the supporting marketing program in the context of a brand hierarchy, marketers must define the desired awareness and image at each level of the brand hierarchy for each product. In a sub-branding situation, the desired awareness of a brand at any level will dictate the relative prominence of the brand and the extent to which associations linked to the brand will transfer to the product. In terms of building brand equity, we should link associations at any one level based on principles of relevance and differentiation. In general, we want to create associations relevant to as many brands nested at the level below as possible and to distinguish any brands at the same level. Corporate or family brands can establish a number of valuable associations to differentiate the brand, such as common product attributes, benefits, or attitudes; people and relationships; programs and values; and corporate credibility. A corporate image will depend on a number of factors, such as the products a company makes, the actions it takes, and the manner in which it communicates to 52 Provide feedback benefits to the parent brand Besides facilitating acceptance of new products, brand extensions can also provide positive feedback to the parent brand in a number of ways. Clarify brand meaning Extensions can help clarify the meaning of a brand to consumers and define the kinds of markets in which it competes, an important first step in the brand architecture process. Broader brand meaning often is necessary so that firms avoid “marketing myopia” and do not mistakenly draw narrow boundaries around their brand, either missing market opportunities or becoming vulnerable to well planned competitive strategies. Thinking more broadly about product meaning can easily inspire different marketing programs and new product opportunities. In some cases it is advantageous to establish a portfolio of related products that completely satisfy consumer needs in a certain area. Enhance the parent brand image According to the customer based brand equity model, one desirable outcome of a successful brand extension is that it may enhance the parent brand image by strengthening an existing brand association, improving the favorability of an existing bran association, adding a new brand association or a combination of these. One common way a brand extension affects the parent brand image is by helping clarify its core brand values (those attributes and benefits that come to characterize allthe products in the brand line and, as a result are those with which consumers often have the strongest associations) and associations. Another type of association that it may is consumer perceptions of the company's credibility. Choosing to launch a new product or service with a completely new brand name means forgoing these feedback benefits. Bring new customers into the brand franchise and increase market coverage Line extensions can benefit the parent brand by expanding market coverage, such as by offering a product benefit whose absence may have prevented consumer from trying the brand. Creating “news” and bringing attention to the parent brand may benefit the family brand as a whole. Revitalize the brand Sometimes brand extensions can be a mean to renew interest in and liking for the brand. Permit subsequent extensions A successful extension, especially a category extension, may serve as the basis for subsequent extensions. Disadvantages of brand extensions Despite potential advantages, brand extensions have a number of disadvantages. 55 Can confuse or frustrate consumers Different varieties of line extensions may confuse/frustrate consumers about which version of the product is the right one for then. In some situations, greater product variety may induce shoppers to buy less. Many retailers do not have enough shelf or display space to stock the large number of new products and brands continually being introduced even if they wanted to. So some consumers may be disappointed when they're unable to find an advertised brand extension because a retailer is unable or unwilling to stock it. If a firm launches extensions that consumers deem inappropriate they may question the integrity and competence of the brand. Can encounter ret: r resistance It has become virtually impossible for a grocery store or supermarket to offer allthe different varieties available across all the different brands in any one product category. Moreover retailers often feel that many line extensions are merely “me too” products that duplicate existing brands in a product category and should not be stocked even if there is space. Can fail and hurt parent brand image The worst possible scenario: not only to fail, but to harm the parent brand image in the process. Can succeed but cannibalize sales of parent brand Success may result merely from consumers switching from existing offerings of the parent brand. Line extensions designed to establish points of parity with current offerings in the parent brand category particularly may result in cannibalization. Sometimes such intra brand shifts in sales are not undesirable, we can think of them as a form of “preemptive cannibalization”: without the introduction of the line extension, consumers might have switched to a competing brand instead. Can succeed but diminish identification with any one category One risk of linking multiple products to a single brand is that the brand may not be strongly identified with any one product. Brand extension may obscure the brand’s identification with its original categories, reducing brand awareness. Can succeed but hurt the image of the parent brand If customers see the brand extension's attribute or benefit associations as inconsistent or even conflicting with the corresponding associations for the parent brand, they may change their perceptions of the parent brand as a result. Can dilute brand meaning Lack of identification with any one category and a weakened image may be especially evident with high quality or prestige brands. From protect their brand from dilution, many up and coming fashion companies and designers seeking to establish their brand though a family or brand extensions are now forging exclusive licensing partnership with a single retailer. These exclusive licenses enable the licensor to better control the inventory, avoid discounts and protect brand. 56 Can cause the company to forgo the change to develop a new brand By introducing a new product as a brand extension, the company forgoes the change to create a new brand. Introducing a new product as a brand extension can have significant and potentially hidden costs in terms of the lost opportunities of creating a new brand franchise. The extensions’ brand positioning may be less flexible, given that it has to live up to the parent brand’s promise and image. The positioning of a new brand, in contrast, could be introduced and updated in the most competitively advantageous way possible. Understanding how consumers evaluate brand extensions What determines whether a brand extension is able to capitalize on potential advantages and avoid, or at least minimize, potential disadvantages? Even leading marketing companies have sometimes failed despite their best intentions when launching a brand extension. Managerial assumptions Baseline case in which consumers are evaluating the brand extension based only on what they already know about the parent brand and the extension category, and before any advertising, promotion, or detailed product information is available. Consumers use their existing brand knowledge, as well as what they know about the extension category, to try to infer what the extension product might be like. For these inferences to result in favorable evaluations of an extension, four basic conditions must generally hold true: 1. Consumers have some awareness of and positive associations about the parent brand in memory; (unless positive associations about the parent brand, consumers are unlikely to form favorable expectations of an extension); 2. Atleast some of these positive associations will be evoked by the brand extension; (in general consumers are likely to infer associations similar in strength, favorability and uniqueness to the parent brand when they see the brand extension as similar or close in fit to the parent); 3. Negative associations are not transferred from the parent brand; (any negative associations that do exist for the parent brand will be left behind and not play a prominent role in consumers’ evaluation of the extension); 4. Negative associations are not created by the brand extension (any parent brand attributes or benefits that consumers view positively — or neutrally — must not be seen as negative for the extension). If any assumption does not hold true, problems can follow. Brand extensions and brand equity An extensions’ ultimate success will depends on its ability to both achieve some of its own brand equity inthe new category and contribute to the equity of the parent brand. Creating extension equity For the brand extension to create equity, it must have a sufficiently high level of awareness and achieve necessary and desired points of parity and points of difference. Brand awareness will depend primarily on the marketing program and resources devoted to spreading the word about 57 Choosing brand elements Brand extensions retain one or more elements from an existing brand. They do not have to leverage only the brand name but can use other brand elements too. Sometimes packaging is such a critical component of brand equity that it is hard to imagine an extension without it; dilemma: without the package will be not distinguished. A brand extension can retain or modify one or more brand elements from the parent brand as well as adopt its own brand elements. Designing optimal marketing program Marketing program for a brand extension must consider the same guidelines in building brand equity. Consumer perceptions of value must guide pricing decisions, distribution strategies must blend push and pull considerations and the firm must integrate marketing communications by mixing and matching communication options. Leveraging secondary brand associations Brand extensions will often leverage the same secondary associations as the parent brand, although competing in the extension category may require some additional fortification like liking the other entities. A brand extension differs in that there is always some leveraging of another brand or company. Evaluate extension success and effects on parent brand equity Final step in evaluating brand extension opportunities is to assess the extent to which an extension is able to achieve its own equity as well as contribute to the equity of the parent brand. To help measure its success we can use brand tracking based on the customer based brand equity model or other key measures of consumer response, centered on both the extension and the parent brand as a whole. Extension guidelines based on academic research Some specific guidance about brand extensions: 1. Successful brand extensions occur when the parent brand has favorable associations and consumers perceive a fit between the parent brand and the extension product; 2. There are many bases of fits: product related attributes and benefits as well as non product related attributes and benefits related to common usage situations or user types; 3. Depending on consumer knowledge of the product categories, perceptions of fit may be based on technical or manufacturing commonalities or more surface considerations such as necessary or situational complementarity; 4. High quality brands stretch farther than average quality brands, although both types of brands have boundaries; 5. A brand thatis seen as prototypical of a product category can be difficult to extend outside the category; 6. Concrete attribute associations tend to be more difficult to extend than abstract benefit associations; 7. Consumers may transfer associations that are positive in the original product class but become negative in the extension context; 60 8. Consumers may infer negative associations about an extension, perhaps even based on other inferred positive associations; 9. Itcanbe difficult to extend into a product class that is seen as easy to make; 10. A successful extension can not only contribute to the parent brand image but also enable a brand to be extended even farther; 11. An unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two; 12. An unsuccessful extension does not prevent a firm from backtracking and introducing a more similar extension; 13. Vertical extensions can be difficult and often require sub branding strategies; 14. The most effective advertising strategy for an extension is one that emphasizes information about the extension (rather than reminders about the parent brand); 15. Individual differences can affect how consumers make an extension decision, and will moderate extension effects; 16. Cultural differences across markets can influence extension success. Summary: Brand extensions occur when a firm uses an established brand name to introduce a new product. We can distinguish them by whether the new product is being introduced in a product category currently served by the parent brand (a line extension) or in a completely different product category (a category extension). Brand extensions can come in all forms. They offer many potential benefits but also can pose many problems. The basic assumptions behind brand extensions are that consumers have some awareness of and positive associations about the parent brand in memory, and that the brand extension will evoke at least some of these. Moreover, marketers assume that negative associations will not be transferred from the parent brand or created by the brand extension. The extension's ability to establish its own equity will depend on the salience of consumers’ associations with the parent brand in the extension context and the favorability and uniqueness of any associations they infer. The extension's ability to contribute to parent brand equity will depend on how compelling is the evidence about the corresponding attribute or benefit association in the extension context, how relevant or diagnostic the extension evidence is about the attribute or benefit for the parent brand, and how strong consumers’ existing attribute or benefit associations are for the parent brand. To evaluate brand extension opportunities, marketers need to carefully consider brand extension strategies by applying managerial judgment and consumer research to the following steps: Define actual and desired consumer knowledge about the brand, identify possible extension candidates, evaluate the potential of extension candidates, design marketing programs to launch extensions, and evaluate extension success and effects on parent brand equity. Finally, a number of important research findings deal with factors affecting the acceptance of a brand extension, as well as the nature of feedback to the parent brand. Chapter 14: Managing Brands over geographic boundaries and market segments Regional Market Segments Regionalization seems to run counter to globalization. A regionalization strategy can make a brand more relevant and appealing to any one individual. Regionalization can have downsides: marketing efficiency may suffer and costs may rise with regional marketing; moreover regional campaigns 61 may force local producer to become more competitive or blur a brand’s national identity. The upside, is that marketing can have a stronger impact. Other demographic and cultural segments Any market segment may be a candidate for a specialized marketing and branding program. Demographic dimensions as well as psychographic considerations often are related to more fundamental differences in shopping behaviors or attitudes about brand. These differences can often serve as the rationale for a separate branding and marketing program. Because of increased consumer mobility, better communication and expanding transnational entertainment options, lifestyles are fast becoming more similar across countries than they are within countries across sociodemographic segments. One result is that brands able to tap into the global sensibilities of the youth market may be better prepared to adopt a standardized branding program and marketing strategy. Marketers are also considering how various ethnic, racial or cultural groups may require different marketing programs. Marketing critics say that some consumers may not like being targeted on the basis of their being different, since that only reinforces their image as outsiders or a minority. Moreover consumers not in the targeted segment may feel alienated or distanced from the company and brand as a result. Rational for going international A number of well known global brands have derived much of thei sales and profits from non domestic markets for decades; their success are among the forces that have encouraged many firms to market their brands internationally, including: - Perceptionof slow growth and increased competition in domestic markets - Beliefin enhanced overseas growth and profit opportunities - Desire to reduce costs from economies of scale - Needto diversify risk - Recognition of global mobility of customers In more product categories the ability to establish a global profile is becoming a prerequisite for success: luxury goods, where the addressable market is relatively small percentage of the global market, a global profile is necessary to grow profitably. Ideally the marketing program for a global brand consists of one product formulation, one package design, one advertising program, one pricing schedule, one distribution plan, and so on that would prove the most effective and efficient option for every country in which the brand was sold. Unfortunately such a uniformly optimal strategy is rarely possible. Advantages of global marketing programs A number of potential advantages attach to a global marketing program; in general, the less it varies from country to country, the more these advantages will be realized. Economies of scale in production and distribution From a supply side or cost perspective, the primary advantages of a global marketing program are the manufacturing efficiencies and lower costs that derive from higher volumes in production and distribution. The more that strong experience curve effects exist, the more economies of scale in production and distribution from a standardized global marketing program will prevail. 62 on very different meanings in different countries. Understanding how consumers actually form their impressions of country of origin and update their brand knowledge can be challenging. Global brand equity To build brand resonance marketers must: 1. Establish breadth and depth of brand awareness 2. Create points of parity and points of difference 3. Elicit positive, accessible brand responses 4. Forge intense, active brand relationships. Achieving these four steps requires establishing six core brand building blocks: brand salience, brand performance, brand imagery, brand judgements, brand feelings, brand resonance. In each and every market in which marketers sell the brand, they must consider how to achieve these steps and create these building blocks. Creating brand salience Often product introductions in the domestic market are sequential, stretched out over a longer period of time than the nearly simultaneous introduction that occur overseas. Different orders of introduction can profoundly affect consumer perceptions about what products the brand offers, the benefits supplied and the needs satisfied. Need to examine the breadth and depth of recall to ensure that the proper brand salience and meaning exist. Crafting brand image If the product doesn't vary appreciably across markets, basic brand performance associations may not need to be that different. Brand imagery associations may be quite different and one challenge in global marketing is to meaningfully refine the brand image across diverse markets. Eliciting brand responses Brand judgements must be positive in new markets, consumers must find the brand to be of good quality, credible, worthy of consideration and superior. Crafting the right brand image will help accomplish these outcomes. One of the challenges in global marketing is creating the proper balance and type of emotional responses and brand feelings. Blending inner (enduring and private) and outer (immediate experiential) emotions can be difficult, given cultural differences across markets. Cultivating resonance Achieving brand resonance in new markets means that consumers must have sufficient opportunities and incentives to buy and use the product, interact with other consumers and the company itself and actively learn and experience the brand and its marketing. Interactive, online marketing can be advantageous here, as long as it can be accessible and relevant anywhere in the world. Digital efforts can’t completely replace grassroots marketing efforts that help connect the consumer with the brand. 65 Global brand positioning Recall that brand positioning means creating mental maps, define core brand associations, identifying points of parity and points of difference, and crafting a brand mantra. In developing a global brand positioning we need to answer three key set of questions: 1. Howvalid isthe mental map in the new market? How appropriate is the positioning? What is the existing level of awareness? How valuable are the core brand associations, points of parity and points of difference? 2. What changes should we make to the positioning? Do we need to create any new associations? Should we not recreate any existing associations? Should we modify any existing associations? 3. How should we create this new mental map? Can we still use the same marketing activities? What changes should we make? What new marketing activities are necessary? Because the brand is often at an earlier stage of development when going abroad, we often must first establish awareness and key points-of-parity. Then we can consider additional competitive considerations. In effect, we need to define a hierarchy of brand associations in the global context that defines which associations we want consumers in all countries to hold, and which we want consumers only in certain countries to have. We have to determine how to create these associations in different markets to account for different consumer perceptions, tastes, and environments. Thus, we must be attuned to similarities and differences across markets. Although firms are increasingly adopting an international marketing perspective to capitalize on market opportunities, a number of possible pitfall exist. Standardization versus customization Fundamental issue: extent to which the marketing program should be standardized across countries. Standardization and customization Marketers are blending global objectives with local or regional concerns. From these perspectives, transferring products across borders may mean consistent positioning for the brand, but no necessarily the same brand name and marketing program in each market. Similarly, packaging may have the same overall look but be tailored as required to fit the local populace and market needs. Centralized marketing strategies that preserve local customs and traditions can be a boon for products sold in more than one country — even in diverse cultures. Top brands adapt their marketing programs in different parts of the world. Product strategy One reason so many companies ran into trouble initially going overseas is that they unknowingly overlooked differences in consumer behavior. Marketers may need to conduct research into local markets. Product differences are not justified for certain countries in some cases. From a corporate perspective, one solution to the trade off between global and local brands is to sell both types of brands as part ofthe brand portfolio in a category. Even companies that have succeeded with global brands maintain that standardized international marketing programs work with only some products, in some places and at some times, and will never totally replace brands and ads with local appeal. 66 Communication strategy Advertising is one area in which many firms face challenges internationally. Creative strategies in advertising may have to differ to some degree. Different countries can be more or less receptive to different creative styles. Each country has its own unique media challenge and opportunities. Distribution strategy Channels present challenges to many firms because there are few global retailers, especially supermarkets and grocery stores, although some progress has been made. As in domestic markets, firms will often want to blend push and pull strategies internationally to build brand equity. Sometimes companies mistakenly adapt strategies that were critical factors to success, only to discover that they erode the brand’s competitive advantage. Pricing strategy Value pricing principle still general applies. Marketers need to understand in each country what consumer perceptions of the value of the brand are, their willingness to pay and their elasticities with respect to price changes. Sometimes differences in these considerations permit differences in pricing strategies. Differences in distribution structures, competitive positions, and tax and exchange rates also may justify price differences. Setting drastically different prices across countries can be difficult: pressures for international price alignment have arisen. Hermann Simon recommends creating an international “price corridor” that takes into account both the inherent differences between countries and alignment pressures. The corridor is calculated by company headquarters and its country subsidiaries by considering market data for the individual countries, price elasticities In the countries and arbitrage costs between them, and data on competition and distribution. No country is then allowed to set its price outside the corridor. Another possible strategy is to introduce different brands in high price, high income countries and in low price, low income countries, depending on the relative cost trade offs of standardization versus customization. Developing versus developed markets Some of the most important developing markets are captured by the acronym BRICS (Brazil, Russia, India, China; South Africa). They are developing in that they do not yet have the infrastructure, institutions and other features that characterize more fully developed economies in North America and Western Europe. Yet they are among the largest and fastest growing and have received much attention from companies all over the world. Three As model for emerging markets strategies: 1. Applicability: product must suit local culture; 2. Availability: product must be sold in channels that are relevant to the local population; 3. Affordability: product can’t be priced out ofthe target market's range. Different income segments exist in developing markets. Many marketers have successfully tapped into the high end of the income spectrum with luxury goods or by focusing on the growing middle class, opportunities also abound at the broader base of the income pyramid. One useful distinction has been made between: low income, subsistence and extreme poverty. 67 points-of-difference for competitors: they are designed to provide “no reason why not” to choose the brand. Guidelines for creating desired brand knowledge structures: Depth of brand awareness: Determined by the ease of brand recognition and recall. Breadth of brand awareness: Determined by the number of purchase and consumption situations for which the brand comes to mind. Strong brand associations: Created by marketing programs that convey relevant information to consumers in a consistent fashion at any one point in time, as well as over time. Favorable brand associations: Created when marketing programs effectively deliver product-related and non-product-related benefits that are desired by consumers. Unique brand associations: Strong and favorable, create points of difference that distinguish the brand from other brands. Brand associations that are not unique, however, can create valuable points-of-parity to establish necessary category associations or to neutralize competitive points-of-difference. Outcomes of brand equity Assuming we can create a positive brand image, with marketing programs that register the brand in memory and link it to strong, favorable and unique associations, we can realize a number of benefits for the brand, as: Improved perceptions of product performance Greater customer loyalty Less vulnerability to competitive marketing actions Less vulnerability to marketing crises Higher margins More inelastic consumer response to price increases More elastic consumer response to price decreases Greater trade cooperation and support Increased marketing communication effectiveness Possible licensing opportunities Additional brand extension opportunities Tactical guidelines How to build, measure and manage brand equity. Building brand equity You can do it in three major ways: 1. Initial choice of the brand elements making up the brand 2. Marketing activities and the design of the marketing program 3. Leverage of secondary associations that link the brand to other entities like a company, geographic region, other brand, person or event. 70 Guidelines: - Mix and match brand elements—brand names, logos, symbols, characters, slogans, jingles, and packages—by choosing different brand elements to achieve different objectives and by designing brand elements to be as mutually reinforcing as possible. - Ensurea high level of perceived quality and create a rich brand image by linking tangible and intangible product-related and non-product-related associations to the brand. - Adopt value-based pricing strategies to set prices and guide discount pricing policies over time that reflect consumers’ perceptions of value and willingness to pay a premium. - Considera range of direct and indirect distribution options and blend brand-building push strategies for retailers and other channel members with brand-building pull strategies for consumers. - Mix marketing communication options by choosing a broad set of communication options based on their differential ability to affect brand awareness and create, maintain, or strengthen favorable and unique brand associations. Match marketing communication options by ensuring consistency and directly reinforcing some communication options with other communication options. - Leverage secondary associations to compensate for otherwise missing dimensions of the marketing program by linking the brand to other entities such as companies, channels of distribution, other brands, characters, spokespeople or other endorsers, or events that reinforce and augment the brand image. Themes Importance of complementarity and consistency: ensuring complementarity means choosing different brand elements and supporting marketing activities so that the potential contribution to brand equity of one compensates for the shortcoming of the others. A high degree of consistency across these elements helps create the highest level of awareness and the strongest and most favorable associations possible. Consistency ensures that diverse brand and marketing mix elements share a common core meaning, perhaps by conveying the same information, such as a benefit association that is reinforced by a highly integrated, well branded marketing communications programs. Measuring brand equity We can gauge brand equity indirectly by measuring its potential sources and directly by measuring its possible outcomes. This means measuring aspects of brand awareness and brand image leading to the differential customer response that creates brand equity: breadth and depth of brand awareness, strength, favorability and uniqueness of brand associations. Marketers need to properly design and implement a brand equity measurement systems: 1. Conduct brand audits 2. Design brand tracking studies 3. Establish a brand equity management system. Guidelines: - Formalize the firm’s view of brand equity into a document, the brand equity charter, that provides relevant branding guidelines to marketing managers. 71 -_ Conduct brand inventories to profile how all of the products sold by a company are branded and marketed and conduct brand exploratories to understand what consumers think and feel about a brand as part of periodic brand audits to assess the health of brands, understand their sources of brand equity, and suggest ways to improve and leverage that equity. - Conduct consumer tracking studies on a routine basis to provide current information as to how brands are performing with respect to the key sources and outcomes of brand equity as identified by the brand audit. - Assemble results of tracking survey and other relevant outcome measures into a brand equity report to be distributed on a regular basis to provide descriptive information as to what is happening with a brand as well as diagnostic information as to why it is happening. - Establish a person or department to oversee the implementation of the brand equity charter and brand equity reports to make sure that, as much as possible, product and marketing actions across divisions and geographic boundaries are done in a way that reflects the spirit of the charter and the substance of the report so as to maximize the long- term equity of the brand. Themes The dominant theme in measuring brand equity is the need to employ a full complement of research techniques and processes that capture as much as possible the richness and complexity of brand equity. We need multiple techniques and measures to tap into allthe various sources and outcomes of brand equity, to help interpret brand equity research and to ensure that we get actionable information at the right time. Managing brand equity Managing brand equity requires taking a broad, long term perspective of brands, especially when firms are selling multiple products and brands in multiple markets. Brand hierarchies must define common and distinct brand elements among various nested products. New product and brand extension strategies must ensure that we have optimal brand and product portfolios. We need to manage these brands and products effectively over geographic boundaries and target market segments by creating brand awareness and a positive brand image in each market in which the brand is sold. Managing brands over time requires reinforcing the brand meaning and adjusting the branding program as needed. 1. Define Brand Hierarchy A. Principle of Simplicity: Employ as few levels as possible. B. Principle of Clarity: Logic and relationship of all brand elements employed must be obvious and transparent. C. Principle of Relevance: Create abstract associations relevant to as many products as possible. D. Principle of Differentiation: Differentiate individual products and brands. E. Principle of Growth: Investments in market penetration or expansion vs. product development should be made according to ROI opportunities. F. Principle of Survival: Brand extensions must achieve brand equity in their categories. G. Principle of Synergy: Brand extensions should enhance the equity of the parent brand. 72