Competition to Design the Brand Strategy Decision Making Model

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1 Competition to Design the Brand Strategy Decision Making Model Su-Man Wang Dept. Marketing Management, Takming University of Science and Technology 56, Sec. 1, Huanshan Rd., Neihu, Taipei 11451, Taiwan and Ming-Hui Chen Dept. Marketing Management, Takming University of Science and Technology 56, Sec. 1, Huanshan Rd., Neihu, Taipei 11451, Taiwan ABSTRACT In 1980, Porter proposed that "the general competition policy generic strategies" pointed out three different strategies which would give their business a competitive advantage. However, because nowadays the development of branding goods is so important to consumers, companies not only need to analyze the relative competitive advantage, but also need to make decisions on the design of the brand; the most important attribute of this paper is to combine the competitive strategy theory and the branding strategy design theory, which develops a competitive strategy to design a corporate branding decision analysis model. Keywords: competitive strategy, branding strategy, decision-making model. Keywords: Branding Strategy, Competitive Strategy, Corporate Branding, Decision Making. 1. INTRODUCTION The impact of decision-making is very significant to developments of companies. Any company facing complicated and volatile business environments of globalization tends to have successful business due to having the right brand strategy, hence being in good condition to compete. This key factor is essential, if a company is to succeed. The competitive strategy matrix of Michael E. Porter1 in the strategic management field is the most reliable theory in the academic and industry fields. His strategy matrix is mainly based on the dimensions of strategic scope and strategic strength to develop the generic strategies. However, to a company, brands represent very valuable legal assets because the sale of brands can affect consumer behavior, and also guarantee continuous income in the future. The branding strategy of a company reflects the company's sales of different products on the use of the general characteristics and the number and nature of the brand elements. Usually when a company introduces new products, it has three main options, 1. Developing new brand elements for new products, 2. Utilizing some of the already existing brand elements, and 3. Combining new and already existing brand elements. This paper uses the most commonly used cost efficiency and product differentiation of the generic strategies as the two variables in the decision-making about brands. This implies that different companies should coordinate their product cost and the advantage of product differentiation to design adequate brand strategy to maximize their profits.

2 This paper, which is based on the above dimensions of competitive advantage and has gone through literature review, expert interviews, application of modified Delphi method, and competitive strategy, proposes a corporate branding decision analysis model. 2. LITERATURE REVIEW 1) Competitive strategy literature According to the competitive strategy organizations adopt, we will discover how organizations utilize their resources and select their best strategy to strive for the most favorable competitive position in order to improve operation performance. Following are different perspectives from a number of scholars to explain the competitive strategy. Willian 2 proposed strategy for stability, growth, withdrawal, and combination. Miles and Sno 3 proposed four strategic rules according to an organization's business unit strategy and their adaptation to the environment. These rules are defender, prospector, analyzer, and reactor. Herbert & Deresky 4 integrated different scholars' strategies according to the strategies they adopted and proposed for different stages of the product life cycle: Select to build solid foundation strategy during the period of germination and growth stage, and then adopt strategies to expand, and grow; maintain stability of profit base during mature stage ; and adopt harvesting, size, and cost reduction strategy during a recession stage. The competitive strategy proposed by Porter in 1980 mentioned that organizations have three competitive strategies to choose from in order to gain competitive benefits and to perform better than other competitors. The three competitive strategies namely are, low-cost leadership, differentiate products, and focus. This paper is based on the related literature about competitive strategy, the characteristics of brand strategy, the main advantage of Porter s concept about the cost competitive advantage, and differentiation advantage variables as the basis that designs the brand strategy decision-making. 2) Brand Strategy The purpose of the branding strategy is to create a resonance between companies and consumers, and to take advantage of their strengths and their opponent's weaknesses 5. Laforet and Saunders 6 carried out structural analysis of an enterprise brand, and put forward six types of brand strategy: corporate domination strategy, business unit disposal strategy, the double brand strategy, endorsed brand strategy, brand dominant strategy, and the brand name of hidden corporate domination strategy. However, Kotler 7 proposed brand strategy decision-making, which is when the enterprise can use the following brand strategies after the brand is decided: 1. Line extensions: it is under the same brand name, in accordance with different styles, and packaging, to introduce new products. 2. Brand extensions: it is to extend the existing brand name to other types of new products. 3. Multi-brands: it means within the same product category, according to product attributes, consumers' motivation to purchase different brands, to create different product characteristics and preferences. 4. New Brands: it refers to existing brands that were found unsuitable for new products, a new brand should be introduced for the new products. 5. Co-brands: it is also known as dual branding, which is to combine two or more

3 named brands in order to create a synergistic effect. Furthermore, Kotler and Keller 8 promoted branded variants which provides a particular brand line s specific retailers or marketing channels. Another strategy for a licensed product is to authorize the brand name licensed to actual manufacturers of products. Synthesizing all the above scholars' competitive strategies and the definitions of a variety of brand strategies, this study analyzed the product costs of competitors and differentiation degree of production, and drafted brand strategies of competitive advantage, which need to be adjusted and modified at any time under the change of the environment, in order to maintain continuing brand competitiveness. Therefore, this paper combined and applied over a number of brand strategies, and developed a competitive brand strategy design model. 3. METHODOLOGY This paper, which is based on the above dimensions of competitive advantage and has gone through literature review, expert interviews, application of modified Delphi method, and competitive strategy, proposes a corporate branding decision analysis model. 1) Determination of consistency The Standard of Determination of this article follows the idea of Fahety 9 Wedman and Holden & 10, as Table 1. The result of the completion of questionnaires shows the high and moderate level consistency as over 83.3%. Table 1. Criteria of consistency Consistent high Low Moderate High Interquartile Q <= 0.6 <Q <= Q> 1 2) Discrimination of Stability When some of the subjects being discussed do not reach the level of consensus, companies need to use questionnaire of the overall stability as a decision basis of whether or not they should end the investigation. The Discrimination of Stability of this paper adopted the criteria proposed by Murry and Hommons 11 and is based on the number of change of experts opinion, which is less than 20 percent, as the expert group to the opinions of individual items to stabilize the distribution of minimum standards such as Equation (1). (Number of Change / all numbers)* 100%<20%... (1) 3) Fuzzy Delphi Method By the application of Fuzzy theory, we can resolve the ambiguity of experts' consensus, as well as providing experts more flexibility of assessment scale, so that the results of Fuzzy Delphi method is more rigorous and reasonable. At the same time, we can reduce the back and forth number of questionnaires to improve the quality and efficiency of computing steps of Fuzzy Delphi method questionnaire. Due to the considerable length of this article, I will not discuss it here. The selection of number of experts in this study was based on the proposal of Adler and Ziglio 12, which suggested to follow the principle of homogeneous exports when conducting a questionnaire. 4. ANALYSIS of BRAND AND DESIGH STRATEGY Specific decision-making analysis of brand strategy design of competitive strategy uses quantitative-oriented analysis. The operation method is commonly used by social science research such as Decile 5 Likert Scale. According

4 product differentiation to the statistic outcome of returned questionnaire, this paper used the interquartile range test groups to examine the variation of brand strategy from experts opinion to find a consensus of experts of all levels. Besides, this paper also analyzed Fuzzy Delphi Conversion of triangular Fuzzy numbers, and built a competitive brand strategy design model. This study involved a group twelve experts and utilized the decide five Likert-type scale as the attainment of individual experts to collect the extent of agreement on various items of indicators. Table 2 shows the consensus of consistent statistical analysis in Table 2. Table 2 Discriminate of Consensus of Brand Strategy Level of Items of Brand Percentage High % Moderate % Low consistency 0 0 Total 6 100% Through the above analysis of interquartile range, stability and consistency checking and testing by the above analysis, the strategies excerpted and constituted the final strategic direction. Further more, the analysis of Fuzzy Delphi conversion of triangular Fuzzy numbers, contributed to build the competitive strategy design model as in Figure Competition to desigh the brand strategy decision making Model B,C cost advantages D A E,F A Brand extensions B Multibrands C New brands D Cobrands E Branded variants F Licensed product Fig. 1 Competition to design the brand strategy decision marking model The results indicate that companies with highproduct differentiation and low-cost advantages should adopt multi-brand or new brand strategy; the companies with low-product differentiation and high-cost competitive advantage should adopt brand variation promotion strategies or product authorization strategy; the companies with relatively moderate cost advantage and product differentiation will benefit more to adopt dual brand strategy. 5. CONCLUSIONS A business brand name will possibly attract more customers who are loyal to a brand. It is also helpful to segment the market and help enterprises to establish their corporate image. However, the brand of products also increases a company's costs and expenses. Companies must review their costs and product differentiation of themselves and their competitors to make right decision of a business brand. Competitive strategy brand design model is

5 an external advantage comparison-analyzing tool for companies with competitive product cost and differentiation advantage. This model will help companies a tool to examine the brand design strategy in corporate brand strategy at all time. Health. London, Jessica Kingsley Pub., REFERENCES [1] M. E. Porter, Competitive strategy: Techniques for Analyzing and competitors, New York: Free Press, [2] G, Willian, Business Policy: Strategy Formation & Management Action, 2 nd ed., New York: McGraw-Hill, [3] R. E. Miles, and C. C. Snow, Organizational Strategy, Structure a Process, McGraw-Hills Press, [4] T. T. Herbert, and H. Deresky, Generic Strategy Content, Strategic Management Journal, Vol. 8, pp , [5] D.A. Aaker, Building Strong Brands, MA: New York Free Press, [6] S. Laforet & J. Saunders, Managing brand portfolios: why leaders do what they do, Journal of Advertising Research, Vol.39, No. 1, pp.51-66, [7] P. Kotler, Marketing management, Prentice Hall International, Inc, [8] P. Kotler, and K. L. Keller, Marketing Management, 12 th Ed., New York: Prentice Hall, [9] V. Fahety, Continuing Social Work Education: results of a Delphi Survey. Journal of Education for Social Work, Vol. 15, No.1, pp.12-19, [10] M. C. Holden, & J. F. Wedman, Future issues of computer-mediated communication: The results of a Delphi study, Educational technology research and development, Vol. 4, No.1, pp.5-24, [11] J. W. Murry & J. O. Hommons, Delphi: A versatile methodology for conducting qualitative research, The Review of Higher Education, Vol. 18, No. 4, pp , [12] M. Adler, and E. Ziglio, Gazing into the Oracle: The Delphi Method and Its Application to Social Policy and Public