Chapter 9 STRATEGIC BRAND MANAGEMENT Challenges in Building Strong Brands Strategic Brand Analysis Brand Identity ty Strategies es Managing Products/Brands Managing the Brand Portfolio 1 CHALLENGES IN BUILDING STRONG BRANDS A product is anything that is potentially valued by a target market for the benefits or satisfaction it provides, including objects, services, organizations, places, people, and ideas 2 1
DEFINITION A brand is a name, term, sign, symbol, or design, or combination of them, intended to identify the goods or services of one seller or group of sellers, and to differentiate t them from those of competitors. American Marketing Association Goods Versus Services Services are intangible consumed at the time they are produced, d often linked to the people who produce the services.* * Leonard Berry, Services are Different, Business, May-Jun 1980, 24-30. 3 Strategic Role of Brands A strategic brand perspective requires managers to be clear about what role brands play for the company in creating customer value and share-holder value. FOR BUYERS, BRANDS CAN: reduce customer search costs by identifying products quickly and accurately, reduce the buyer s perceived risk by providing an assurance of quality and consistency (which may then be transferred to new products), reduce the social and psychological risks associated with owning and using the wrong product by providing psychological rewards for purchasing brands that symbolize status and prestige. 4 2
STRATEGIC ROLE OF BRANDS FOR SELLERS, BRANDS CAN FACILITATE: repeat purchases that enhance the company s financial performance because the brand enables the customer to identify and re-identify the product compared to alternatives, the introduction ti of new products, because the customer is familiar with the brand from previous buying experience, promotional effectiveness by providing a point of focus, premium pricing by creating a basic level of differentiation compared to competitors, market segmentation by communicating a coherent message to the target audience, telling them for whom the brand is intended and for whom it is not, brand loyalty, of particular importance in product categories where loyal buying is an important feature of buying behavior. Source: Marketing Science Institute Report No. 97422, 1997 5 Brand Management Challenges* Internal and external forces create hurdles for product brand managers in their brand building initiatives: Intense Price and Other Competitive Pressures Fragmentation of Markets and Media Complex Brand Strategies and Relationships Bias Against Innovation Pressure to Invest Elsewhere Short-Term Pressures *David A. Aaker, Building Strong Brands, 1996, 26-35. 6 3
Brand Management Responsibility Product/Brand Management Planning, managing, and coordinating the strategy for a specificproduct p or brand Product Group/Marketing Management Product director, group manager, or marketing manager Product Portfolio Management Chief executive at SBU Team of top executives Market-Driven Management Integrate sales, marketing, and other business functions into cross-functional teams 7 Marketing s Role in Product Strategy 1. Market sensing 2. Identifying the characteristics and performance features of products 3. Guiding target market and programpositioning strategies Strategic brand management decisions are relevant to all businesses, including suppliers, producers, wholesalers, distributors, and retailers. 8 4
Strategic Brand Management Brand Identity Strategy Managing Brand Strategy over time Brand Equity measurement and management Strategic Brand Analysis Managing the Brand Portfolio Leveraging the Brand 9 Strategic Brand Analysis Analyses Product Product Line Portfolio of Product Lines Market and Customer Competition Brand(s) 10 5
Tracking Brand Performance Set Performance Objectives Select Method(s) for Product Evaluation Identify Problem Products Decide How to Resolve /Eliminate the Problems 11 Financial analysis Research studies Methods for analyzing product portfolio performance Product life cycle analysis Analyzing Product Portfolio Performance Standardized information services Product performance analysis Brand Positioning maps 12 6
Product Life Cycle Analysis Relevant issues in PLC analysis include: Determining the length and rate of change of the PLC Identifying the current PLC stage and selecting the product strategy that corresponds to that stage Anticipating threats and finding opportunities for altering and extending the PLC 13 PLC: introduction, growth, maturity, decline Product Performance Analysis Management s performance criteria Strengths and weaknesses relative to portfolio Brand Positioning Analysis Perceptual maps for brand comparison Buyer preferences Other Product Analysis Methods Information Services Research studies Financial analysis 14 7
Brand Equity Effective strategic brand management requires that we understand brand equity and evaluate its impact when making brand management decisions: Brand equity is a set of brand assets and liability linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm s customers.* Measuring Brand Equity. Several measures are needed to capture all relevant aspects of brand equity.** loyalty (price premium, satisfaction/loyalty), perceived quality/leadership measures (perceived quality, leadership/popularity), associations/differentiation (perceived value, brand personality, organizational associations), awareness (brand awareness), and market behavior (market share, price and distribution indices). These components provide the basis for developing operational measures of brand equity. * David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15. **Ibid, 102-120. 15 BRAND IDENTITY STRATEGIES Brand identity is a unique set of brand associations that the brand strategist aspires to create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members.* Brand Focus/Identity Perspectives Product Line Branding (specific or line of products) Corporate Branding (company name) Combination Branding Private Branding (Symbol) * David A. Aaker, Building Strong Brands, 1996, 68. 16 8
MANAGING PRODUCTS/BRANDS Building g the Product/Brand Over Time Product Line Strategies Product/Brand Portfolio Strategies 17 Strategies for Improving Product Performance Cost reduction Product improvement Alter marketing strategy Add new product(s) Product line Strategy Eliminate specific product(s) Product mix strategy Delete product line(s) Change product line priorities 18 Add new product line(s) 9
MANAGING THE BRAND PORTFOLIO Objectives: Leverage commonalities to generate synergy Reduce damage to brand identity Obtain clarity of product offering Enablechange and adaptation ti Guide resource allocations among brands Source: Aaker, Building Strong Brands, 1996. 19 Strategies for Brand Strength Adding a New Line Through internal development or by purchase or an entire company or a line of products Brand-Building Strategies Developing the brand identification strategy Coordinate identity across the organization Brand Revitalization Find new uses for mature brands Add products related to heritage Strategic Brand Vulnerabilities Strategic Brand Vulnerabilities Brand equity can be negative Retailer private brands compete with manufacturer brands Major shifts in consumer tastes Competitive actions Unexpected events 20 10
Product Mix Modifications Motivation for changing the product mix: Increase the growth rate of the business Offer a more complete range ofproducts to wholesalers and retailers Gain marketing strength and economies in distribution, advertising, and personal selling Leverage an existing brand position Avoid dependence on one product line or category 21 Brand Leveraging Strategy LINE EXTENSION BRAND EXTENSION Minor variants of a single product are marketed under the same brand name (i.e. new flavors, forms, colors) Extensions of the brand name to other product categories (i.e. Nike apparel) --Similar --Dissimilar 22 11
Brand Leveraging Strategy Leveraging Alternatives LINE EXTENSIONS BRAND EXTENSIONS Horizontal Extension Vertical Extension Another Product Class Up from Down from Core Core Brand Brand Range Brand Co- Branding 23 BRAND LEVERAGING STRATEGY BRAND LEVERAGING EVALUATION CRITERIA Brand Relevance/Differentiation Capabilities/Perceived Value Match Market/Segment Opportunity Cannibalization Risks Potential for Core Brand Damage Clarity of Product Offerings Estimated Financial Performance Brand Equity Impact 24 12
BRAND LEVERAGING STRATEGY GLOBAL BRANDS International markets: strategic branding challenges Global brands supported by increasingly cosmopolitan consumers in many countries Don t build global brands but strive for global brand leadership Challenge for MNCs: managing brand systems containing global, regional, and local brands 25 BRAND LEVERAGING STRATEGY INTERNET BRANDS Interactivity enhances brand relationships and corporate reputation Guidelines for a website used to reinforce an existing brand Create a positive experience (ease of use, value, interactive, personalized, timely) Reflect and support the brand Synergy with other communication programs Provide home for loyalists Differentiate with strong sub-branded content Source: Aaker and Joachimsthaler, Brand Leadership, 2000, 242. 26 13
SEVEN DEADLY SINS OF BRAND MANAGEMENT* Failure to fully understand the meaning of the brand. Failure Fil to live up to the brand promise. Failure to adequately support the brand. Failure to be patient with the brand. Failure to adequately control the brand. Failure to properly balance consistency and change with the brand. Failure to understand the complexity of brand equity measurement and management. *Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736. 27 HOW MANY BRANDS? 1. Is it different enough to merit a new name? 2. Will the brand identity add value? 3. Are there risks in using an existing brand name? 4. Is the new brand a viable business venture? Review Question What is a brand? Discuss the strategic role of brands for both buyers and sellers. 28 14