mma6e chapter-09 final

Marketing Management:An Asian Perspective, 6th Edition

Instructor Supplements Created by Geoffrey da Silva

3

Creating Brand Equity

9© Pearson Education South Asia Pte Ltd 2013. All rights reserved

Learning Issues for Chapter Nine

1. What is a brand and how does branding work?

2. What is brand equity?

3. How is brand equity built, measured, and managed?

4. What are the important brand architecture decisions in developing a branding strategy?

4 © Pearson Education South Asia Pte Ltd 2013. All rights reserved

The Importance of Building Strong Brands

• One of the most valuable intangible assets of a firm is its brands, and it is incumbent on marketing to properly manage their value.

• Building a strong brand is both an art and a science.

• It requires careful planning, a deep long-term commitment, and creatively designed and executed marketing.

• A strong brand commands intense consumer loyalty—at its heart is a great product or service.


Strategic Brand Management

• Marketers of successful 21st Century brands must excel at the strategic brand management process.

• Strategic brand management combines the design and implementation of marketing activities and programs to build, measure, and manage brands to maximize their value.


The Strategic Brand Management Process

The strategic brand management process involves four main steps:

1. Identifying and establishing brand positioning

2. Planning and implementing brand marketing

3. Measuring and interpreting brand performance

4. Growing and sustaining brand value


What is a Brand Equity?

• Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, enhance, and protect brands.

• The American Marketing Association defines a brand as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.”

• A brand is thus a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need.


Differentiation Created By Brands

• The differences created through branding may be functional, rational, or tangible-related to the product performance of the brand.

• They may also be more symbolic, emotional, or intangible-related to what the brand represents.


The Role of Brands

• Brands identify the source or maker of a product and allow consumers to assign responsibility for its performance to a particular manufacturer or distributor.

• Consumers learn about brands through experiences with the product and its marketing program.


Brands Perform Valuable Functions for the Firm

1. A credible brand signals a certain level of quality so that satisfied buyers can easily choose the product again.

2. Brand loyalty provides predictability and security of demand for the firm and creates barriers to entry for other firms.

3. Branding can be a powerful means to secure a competitive advantage.

4. To firms, brands represent enormously valuable pieces of legal property that can influence consumer behavior, be bought and sold, and provide their owner the security of sustained future revenues.


Challenges of Branding in Asia

Branding has not been a historical imperative for many Asian businesses. Some possible reasons include:a. Asian businesses were more involved in performing the

distribution function for the region’s imports and exports.

b. Ideological reasons led countries such as China and Vietnam to discourage branding in the past.

c. Many companies (e.g., those in Taiwan) have been successful in contract manufacturing under global brand names, even though brand name manufacturers can replace them by shifting to even cheaper sources elsewhere.


Challenges of Branding in Asia

d. Still others benefited as franchisees or as regional joint-venture partners of Western franchises.

e. Previously protected domestic industries and markets also meant there was less need to invest in brand building.


China Airlines—Branding Strategy

A branding makeover for China Airlines included making the airline more international and less-Taiwan or government associated.


Five Challenges for Asian Brands

Kwon Ping Ho, chairman of Banyan Tree Group, outlined five challenges for Asian brands with global ambitions:

1.Asian companies must overcome inherent parochialism.2.Asian brands must adopt a corporate culture that sustains a global perspective.3.Asian brands must face the challenge of maintaining an Asian brand identity as they go global.4.Asian brands must rise above the cheap low-quality image.5.Asian companies must think like a global company despite being small.


Branding Strategy for Banyan Tree

Banyan Tree’s brand cuts across cultural barriers. Its brand is distinctive, focusing on the exotic tropical beach lushness and graciousness of Southeast Asian hospitality; and yet, not culture-specific.


The Scope Of Branding

• How then do you “brand” a product?

• A brand is a perceptual entity that is rooted in reality but reflects the perceptions and idiosyncrasies of consumers.

• Branding is endowing products and services with the power of a brand.



• Branding is all about creating differences between products.

• Marketers need to teach consumers “who” the product is, “what” the product does, and “why” consumers should care.



• Branding involves creating mental structures and helping consumers organize their knowledge about products and services in a way that clarifies their decision-making and provides value to the firm.

• For branding strategies to be successful and brand value to be created, consumers must be convinced there are meaningful differences among brands in the product or service category.

• Marketers can apply branding virtually anywhere a consumer has a choice.

• A brand can be a product, service, store, person, place, an organization, or an idea.


Branding of a ‘Place’

Even countries can be branded. Malaysia is branded as “Truly Asia.”


Brand Equity

• Brand equity is the added value endowed to products and services.

• It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands.


Brand Equity

• Marketers and researchers use various perspectives to study brand equity.

• Customer-based brand equity is thus the differential effect brand knowledge has on consumer response to the marketing of that brand.


Positive and Negative Customer-Based Brand Equity

• A brand has positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified, than when it is not identified.

• A brand has negative customer-based brand equity if consumers react less favorably to marketing activity for the brand under the same circumstances.


Three Ingredients to Customer-Based Brand Equity

1. Brand equity arises from difference in consumer response.

2. Differences in response are a result of consumer’s brand knowledge. Brand knowledge consists of all thoughts, feelings, images, experiences, beliefs, and so on that become associated with the brand.

3. Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand.


Table 9.1: Marketing Advantages of Strong Brands


Challenge for Marketers in Brand Building

• The challenge for marketers is therefore ensuring that customers have the right type of experiences with products and services and their marketing programs to create the desired brand knowledge.

• In an abstract sense, brand equity can be seen as providing marketers with a vital strategic “bridge” from their past to their future.


Customer Experiences with Brands

Customer experiences with Apple’s iPod and Creative Tech’s Zen were so vastly different that iPod has a much larger share despite Creative Tech having the first bite at the MP3 player market.


Challenge for Marketers in Brand Building

• Marketers should also think of the marketing dollars spent on products and services each year as investments in consumer brand knowledge.

• The quality of that investment is the critical factor, not necessarily the quantity (beyond some threshold amount). It’s actually possible to overspend on brand building, if money is not spent wisely.


Brand Knowledge

• Brand knowledge dictates appropriate future directions for the brand. A brand promise is the marketer’s vision of what the brand must be and do for consumers.

• Consumers will decide, based on what they think and feel about the brand, where (and how) they believe the brand should go and grant permission (or not) to any marketing action or program.


Four Types of Brand Assets for Asian Brands (Batey)

1. Golden assets—These refer to natural commodities such as rice, wheat, fruit, tea, fish, cotton, timber, rubber, and minerals, which are abundant in the region and usually exported. Yet, no Asian brand with a global standing exists in this category.

2. Acquired assets—These refer to a branding opportunity on the back of an identity that enjoys strong credibility. Asia’s reputation for quality personal services and hospitality is an area where a global Asian hotel brand can emerge.


Four Types of Brand Assets for Asian Brands (Batey)

3. Potential assets—These refer to the building of a global Asian brand from scratch.

4. Combining acquired assets with potential assets—This hybrid approach may be achievable in the arts and entertainment industry by leveraging Asia’s extraordinary history.


Potentials for Global Brands

Chinese brands such as Tiger Balm, Boh Tea, and Jim Thompson Silk can potentially be global brands.


Marketing MemoA Checklist for Developing Global Asian Brands


Brand Equity Models

1. BRAND ASSET VALUATOR MODEL

2. BRANDZ MODEL

3. BRAND RESONANCE MODEL


Brand Asset Valuator

• Advertising agency Young and Rubicam (Y&R) developed a model of brand equity called brand asset valuator (BAV).

• Based on research with almost 800,000 consumers in 51 countries, BAV provides comparative measures of the brand equity of thousands of brands across hundreds of different categories.

• There are four key components or pillars of brand equity according to BAV (see Figure 9.1).


The Four Elements of the BAV Model

1. Energized differentiation measures the degree to which a brand is seen as different from others.

2. Relevance measures the appropriateness and breadth of a brand’s appeal.

3. Esteem measures perceptions of quality and loyalty, or how well the brand is regarded and respected.

4. Knowledge measures how aware and familiar consumers are with a brand.


Figure 9.1: Brand Asset Valuator Model


Combining the Elements

• Energized Differentiation and Relevance combine to determine Brand Strength.

• Esteem and Knowledge together create Brand Stature.

• Energized Brand Strength and Brand Stature combined form the Power Grid, depicting stages in the cycle of brand development in successive quadrants.

• See Figure 9.2.


Figure 9.2: The Universe of Brand Performance


BRANDZ

• According to this model, brand building involves a sequential series of steps, with each step contingent upon successfully accomplishing the previous step.

• See Figure 9.3: Brand Dynamics Pyramid

• Main levels:– Presence—Do I know about it?–Relevance—Does it offer me something?– Performance—Can it deliver? –Advantage—Does it offer something better than others? –Bonding—Nothing else beats it.


Figure 9.3: Brand Dynamics Pyramid

Research has shown that bonded consumers build stronger relationships with the brand and spend more of their category expenditures on the brand than those at lower levels of the pyramid.


Brand Resonance

The brand resonance model views brand building as an ascending, sequential series of steps, from bottom to top.

1. Ensuring customers identify the brand and associate it with a specific product class or need.

2. Firmly establishing the brand meaning in customers’ minds by strategically linking a host of tangible and intangible brand associations.

3. Eliciting the proper customer responses in terms of brand-related judgment and feelings.

4. Converting customers’ brand response to an intense, active loyalty.


Figure 9.4: Brand Resonance Pyramid


Brand Resonance

The creation of significant brand equity requires reaching the top or pinnacle of the brand pyramid:

a.Brand salience refers to how often and how easily consumers think of the brand.

b.Brand performance is how well the product or service meets customers’ functional needs.

c.Brand imagery describes the extrinsic properties of the product or service.


Brand Resonance

d. Brand judgments focus on customers’ own personal opinions and evaluations.

e. Brand feelings are the customers’ emotional responses and reactions with respect to the brand.

f. Brand resonance refers to the nature of the relationship customers have with the brand and the extent to which they feel they’re “in sync” with.


Building Brand Equity

Marketers build brand equity by creating the right brand knowledge structures with the right consumers. There are three main sets of brand equity drivers:

a. The initial choice for the brand elements or identities making up the brand.

b. The product and service and all accompanying marketing activities and supporting marketing programs.

c. Other associations indirectly transferred to the brand by linking it to some other entity.


Choosing Brand Elements

• Brand elements are trademarkable devices that identify and differentiate the brand.

• Marketers should choose brand elements to build as much brand equity as possible.

• The test is what consumers would think or feel about the product if the brand element were all they knew.


Brand Elements—Nintendo Wii

The Wii name is suggestive of two people playing and its pronunciation implies that the video game console is for everyone.


Brand Element Choice Criteria

• There are six criteria for choosing brand elements.

• The first three—memorable, meaningful, and likable—are “brand building.”

• The latter three—transferable, adaptable, and protectable—are “defensive” and help leverage and preserve brand equity against challenges.


The Six Choice Criteria

1. Memorable—How easily is the brand element recalled? How easily recognized? Is this true at both purchase and consumption. Moreover, the brand name should also look distinctive to be memorable in Asia.

2. Meaningful—To what extent is the brand element credible and suggestive of the corresponding category? Does it suggest something about a product ingredient or the type of person who might use the brand?


Memorable: Qoo has a short and cute name that appeals to Asians.


Meaningful: The Chinese meaning of Nike, Nai Ke, 耐克 , resonates with the fighting spirit in sports.


Biotherm highlights its European origin in its Chinese name ( 碧欧泉 ) to compete more effectively in China.



3. Likeable—How aesthetically appealing do consumers find the brand element? Is it inherently likeable visually, verbally, and in other ways?

4. Transferable—Can the brand element be used to introduce new products in the same or different categories? To what extent does the brand element add to brand equity across geographic boundaries and market segments?



5. Adaptable—How adaptable and updatable is the brand element? As many Asian brands modernize, their elements need to be adaptable and yet retain the traditional values of the brand.

6. Protectable—How legally protectable is the brand element? How competitively protectable? Can it be easily copied? It is important that names that become synonymous with product categories—such as Kleenex, Scotch Tape, and Xerox—retain their trademark rights and not become generic.


Protecting Brand Names

Foreign companies seeking to invest in Asia should thus ensure their brand name and trademark are registered in the Asian country of interest. For example, Starbucks in China ran into intellectual property disputes with a local coffee shop in Shanghai, U-Like Coffee.


Implications for Marketers in Asia

• Given the rapid growth of the global marketplace, Asian companies should choose brand names that work outside the region.

• Just as foreign businesses must be cognizant of Asian aspects of brand naming, Asian companies should select names that are meaningful and pronounceable in other languages as they expand outside the region.

• Otherwise, they will find that they cannot use their names when they go abroad.

• See Marketing Memo: Brand Naming in China.


Marketing Memo: Brand Naming in China


Challenges of Asian Brands

• Asian companies often face the problem that their domestic brand is not well known overseas, or their name may be associated with poor quality or image abroad.

• In addition to building their own names overseas, some Asian businesses overcome this problem by buying established foreign businesses and their brand names.

• Mulberry, Crabtree & Evelyn, and Escada—well-known European brands—are owned by Asian companies.


Mulberry

60

Asian companies overcome low brand name awareness or inferior image by buying established foreign businesses. Mulberry, a famous high-end European brand, is owned by a Singaporean business.

© Pearson Education South Asia Pte Ltd 2013. All rights reserved

Developing Brand Elements

Brand elements can play a number of brand-building roles.

a. If consumers don’t examine much information in making product decisions, brand elements should be easy to recall and inherently descriptive and persuasive.

b. The likability of brand elements may also increase awareness and associations.


Developing Brand Elements

c. Often, the less concrete brand benefits are, the more important that brand elements capture intangible characteristics.

d. Like brand names, slogans are an extremely efficient means to build brand equity.– Think of the inherent brand meaning in slogans such as “A Great

Way to Fly” (Singapore Airlines).

e. They can function as useful “hooks” to help consumers grasp what the brand is and what makes it special.


Hong Kong’s Cathay Pacific has its logo in Chinese calligraphy because it wants to convey the intangible benefits of an Asian service.


Designing Holistic Marketing Activities

• Brands are not built by advertising alone.

• Customers come to know a brand through a range of contacts and touch points:– Personal observations– Personal use– Word of mouth– Interactions with company personnel– Online or telephone experiences– Payment transactions

• A brand contact is any information-bearing experience, whether positive or negative, a customer or prospect has with the brand, its product category, or its market.


Designing Holistic Marketing Activities – Integrated Marketing

• Marketers are creating brand contacts and building brand equity through new avenues such as clubs and consumer communities, trade shows, event marketing, sponsorship, factory visits, public relations and press releases, and social cause marketing.

• Integrated marketing is about mixing and matching these marketing activities to maximize their individual and collective effects.


Designing Holistic Marketing Activities – Integrated Marketing

• Marketers need a variety of different marketing activities that consistently reinforce the brand promise.

• We can evaluate integrated marketing activities in terms of the effectiveness and efficiency with which they affect brand awareness and create, maintain, or strengthen brand associations and image.


Internal Branding

• Marketers must “walk the talk” to deliver the brand promise.

• They must adopt an internal perspective to consider what steps to take to be sure employees and marketing partners appreciate and understand basic branding notions, and how they can help or hurt brand equity.

• Internal branding is activities and processes that help to inform and inspire employees.

• An up-to-date, deep understanding of the brand and its promise by all employees is critical for service companies and retailers.


Brand Bonding

• Brand bonding occurs when customers experience the company as delivering on its brand promise.

• All of the customers’ contacts with company employees and company communications must be positive.

• The brand promise will not be delivered unless everyone in the company lives the brand.

• One of the most potent influences on brand perception is the experience customers have with company personnel. For example, the in-flight service provided by the Singapore Girl is a critical ingredient of Singapore Airlines’ branding success.


Important Principles of Internal Branding

1. Choose the right moment—Turning points are ideal opportunities to capture employees’ attention and imagination. Example: BP – “Beyond Petroleum”.

2. Link internal and external marketing—Internal and external messages must match.

3. Bring the brand alive for employees—A professional branding campaign should be based on marketing research and supervised by the marketing department. Internal communications should be informative and energizing.


Brand Communities

A brand community is a specialized community of consumers and employees whose identification and activities focus around the brand.


Three elements affect brand communities:

1. A “consciousness of kind” or sense of felt connection to the brand, company, product, or other community members

2. Shared rituals, stories, and traditions that help to convey the meaning of the community

3. A shared moral responsibility or duty to both the community as a whole and individual community members


Nike

72

Nike established a brand community with its Nike+ Web site that allows runners to record and track their performances and communicate with others around the world.


Importance of Brand Communities

• A strong brand community results in a more loyal, committed customer base.

• Its activities and advocacy can substitute to some degree for activities the firm would otherwise have to engage in, creating greater marketing effectiveness and efficiency.

• A brand community can also be a constant source of inspiration and feedback for product improvement or innovations.

• See Table 9.2.


Table 9.2: Value Creation Practices (of Brand Communities)


Building Brand Communities—Avoiding the Myths

• Building a positive, productive brand community requires careful thought and implementation.

• There are many myths that need to be avoided.

• See Table 9.3.


Table 9.3: The Myths and Realities of Brand Communities


Leveraging Secondary Associations

• The third and final way to build equity is, in effect, to “borrow it.”

• That is, create brand equity by linking the brand to other information in memory that conveys meaning to consumers.

• These “secondary” brand associations can link the brand to sources.


Secondary Brand Associations

1. The company’s branding strategies2. Countries or other geographical regions—identification of

product origin3. Channels of distribution—channel strategy4. Other brands—ingredient or co-branding5. Characters—licensing6. Spokespeople—endorsements7. Sporting or cultural events—sponsorships8. Other third party sources—awards or reviews


Figure 9.5: Secondary Sources of Brand Knowledge


Measuring Brand Equity

• An indirect approach—assesses potential sources of brand equity by identifying and tracking consumer brand knowledge structures.

• A direct approach—assesses the actual impact of brand knowledge on consumer response to different aspects of the marketing.

• The two general approaches are complementary and marketers can employ both.


Important Factors Marketers Should Know About Brand Equity

• Fully understand the sources of brand equity and how they affect outcomes of interest.

• How these sources and outcomes change over time.


Brand Audit and Brand Tracking

• A brand audit is a consumer-focused series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity.

• Brand-tracking studies collect quantitative data from consumers on a routine basis over time to provide marketers with consistent, baseline information about how their brands and marketing programs are performing on key dimensions.


Brand Audit—KFC in China

• A study comparing the brand image of KFC in China and in the U.S. showed that young Chinese consumers tended to rate KFC more favorably than their American counterparts.

• KFC was rated better on providing a healthy, well-balanced meal; efficient and courteous staff; and more attractive advertising.


Brand Value Chain


Brand Valuation

• Brand equity needs to be distinguished from brand valuation, which involves estimating the total financial value of the brand.

• Table 9.4 displays the world’s most valuable brands in 2010 according to one ranking.

• “Marketing Insight: What is a Brand Worth?” reviews one popular valuation approach.


Table 9.4: The World’s 10 Most Valuable Brands


1. Market segmentation—The first step in the Brand Valuation process is to divide the market(s) in which the brand is sold into mutually exclusive segments of customers that help to determine the variances in the brand’s economic value.

2. Financial analysis—Interbrand assesses purchase price, volume, and frequency to help calculate accurate forecasts of future brand sales and revenues.

3. Role of branding—Interbrand next attributes a proportion of intangible earnings to the brand in each market segment.


4. Brand strength—Interbrand then assesses the brand’s strength profile to determine the likelihood that the brand will realize forecast earnings. This step relies on competitive benchmarking.

5. Brand value calculation—Brand value is the net present value (NPV) of the forecast brand earnings, discounted by the brand discount rate. The NPV calculation comprises both the forecast period and the period beyond, reflecting the ability of brands to continue generating future earnings.


Managing Brand Equity

Because consumer responses to marketing activity depend on what they know and remember about a brand, short-term marketing actions, by changing brand knowledge, necessarily increase or decrease the long-term success of future marketing actions.


Brand Reinforcement

• As the company’s major enduring asset, a brand needs to be carefully managed so that its value does not depreciate.

• Long-lived Asian brands include Mikimoto pearls, Poh Chai pills, and San Miguel beer.

90

San Miguel Corporation, which produces the best-selling beer around the world, was founded in 1890 in the Philippines.


Brand Reinforcement

• As the company’s major enduring asset, a brand needs to be carefully managed so that its value does not depreciate.

• Marketers can reinforce brand equity by consistently conveying the brand’s meaning in terms of:a. What products it represents?b. What products the brand represents?c. What core benefits it supplies?d. What needs it satisfies?e. How the brand makes products superior?f. Which strong, favorable, and unique brand associations should

exist in consumers’ minds?


Brand Reinforcement

• Reinforcing brand equity requires that the brand always be moving forward—in the right direction and with new and compelling offerings and ways to market them.

• An important part of reinforcing brands is providing consistent marketing support.

• Consistency does not mean uniformity and no changes: many tactical changes may be necessary to maintain the strategic thrust and direction of the brand.


Challenges of Managing Brand Equity for Asian Companies

• Many Asian companies have mismanaged their brands for a variety of reasons.

• In the quest for ever-increasing profits, some Asian brands become distracted and lose focus.

• Their owners venture into unrelated activities for short-term gains (e.g., property).

• Underinvestment and neglect have also caused many erstwhile popular Asian brands in such product categories as athletic shoes, patent medicines, underwear, and cosmetics to fade into oblivion.


Brand Reinforcement

Marketers must recognize the trade-offs between activities that fortify the brand and reinforce its meaning, such as a well-received product improvement or a creatively designed ad campaign, and those that leverage or borrow from existing brand equity to reap some financial benefit, such as a short-term promotional discount.


Brand Revitalization

• Changes in consumer tastes and preferences, the emergence of new competitors or new technology, or any new development in the marketing environment could potentially affect the fortunes of a brand.

• In virtually every product category, there are examples of once prominent and admired brands that have fallen on hard times or, in some cases, disappeared.



• Nevertheless, a number of these brands have managed to make impressive comebacks in recent years, as marketers have breathed new life into their customer franchises.

• Asian brands such as Tiger Balm have seen their brand fortunes successfully turned around to varying degrees.



• Often, the first thing to do in revitalizing a brand is to understand what the sources of brand equity were to begin with.

• Are positive associations losing their strength or uniqueness? Have negative associations become linked to the brand?

• Then decide whether to retain the same positioning or create a new one, and if so, which new one.


Brand Revitalization—Eu Yan Sang

The Bak Foong pill still remains a major stalwart as part of Eu Yan Sang’s product line, especially after having undergone a packaging revamp to appeal to a more modern audience.



• Sometimes the actual marketing program is the source of the problem, because it fails to deliver on the brand promise. Then a “back to basics” strategy may make sense.

• In other cases, however, the old positioning is just no longer viable and a reinvention strategy is necessary.

• There is obviously a continuum of revitalization strategies, with pure “back to basics” at one end, pure “reinvention” at the other, and many combinations in between.



• The challenge is often to change enough to attract some new customers but not enough to alienate old customers.

• Brand revitalization of almost any kind starts with the product.


Brand Revitalization – Crabtree & Evelyn

A rebranding exercise of Malaysian-owned Crabtree & Evelyn saw its packaging and store concept changed, winning new customers and improving sales.


Devising a Branding Strategy

• A firm’s branding strategy reflects the number and nature of both common and distinctive brand elements.

• Deciding how to brand new products is especially critical.


Branding Strategy Options

A firm has three main choices:

1. It can develop new brand elements for the new product.

2. It can apply some of its existing brand elements.

3. It can use a combination of new and existing brand elements.


Branding Strategy

• When a firm uses an established brand to introduce a new product, it is called a brand extension.

• When marketers combine a new brand with an existing brand, the brand extension can also be called a sub-brand.

• If the parent brand is already associated with multiple products through brand extensions, it can be called a master brand or family brand.


Brand Extensions

Brand extensions fall into two general categories:

1. In a line extension, the parent brand covers a new product within a product category it currently serves.

2. In a category extension, marketers use the parent brand to enter a different product category.


Examples of Brand Line Extensions in China

Many companies entering China have adapted to local tastes by introducing new flavors and new ingredients.

i. Unilever in China has introduced jasmine iced tea; Colgate-Palmolive came up with jasmine soap.

ii. Procter & Gamble even has jasmine-scented Crest toothpaste.

iii. McDonald’s line of fast-food items includes red bean sundaes.

iv. Pepsi’s Frito-Lay bags Peking duck-flavored potato chips.


Brand Line Extension – Frito-Lay

Frito-Lay extends its potato chip line by introducing flavors that adapt to Asian tastes. Flavors include Peking duck, kimchi, and chili crab.


Extending the Brand Category

• A brand line consists of all products—original as well as line and category extensions sold under a particular brand.

• A brand mix (or brand assortment) is the set of all brand lines that a particular seller makes.

• Many companies are now introducing branded variants that are specific brand lines supplied to specific retailers or distribution channels.

• A licensed product is one whose brand name has been licensed to other manufacturers that actually make the product.


Licensing—Hello Kitty

Hello Kitty has been licensed to many products including credit cards, toasters, purses, confectionery, and UNO card games.


Branding Decisions

• The first branding strategy is whether to develop a brand name for a product.

• Today, branding is such as strong force that hardly anything goes unbranded.

• A commodity is a product presumably so basic that it cannot be physically differentiated in the minds of consumers.

• Assuming a firm decides to brand its products or services, it must choose which brand names to use.


Three Alternative Branding Strategies

Three general strategies are popular:

1. Individual or separate family brand names.

2. Corporate or company brand name.

3. Sub-brand name.


Individual or Separate Family Brand Names

• This policy is followed by Procter & Gamble (Head & Shoulders, Pantene, Rejoice).

• A major advantage of an individual-names strategy is that the company does not tie its reputation to the products.

• If the product fails or appears to have low quality, the company’s name or image is not hurt.

• Companies often use different brand names for different quality lines within the same product class: i. Singapore Airlines named its regional air carrier SilkAir in part to protect

the equity of the Singapore Airlines brand.ii. When Toyota introduced high-end luxury cars, it used Lexus.


Branding by Toyota

Except for its Lexus range, Toyota uses an umbrella corporate name accompanied by a subbrand (Toyota Camry, Toyota Vios, Toyota Altis) to individualize each model.


Corporate Umbrella or Company Brand Name

• This policy is followed by Hitachi. A blanket family name also has advantages.

• Development cost is less because there is no need for “name” research or heavy advertising expenditures to create brand-name recognition.

• Further, sales of the new product are likely to be strong if the manufacturer’s name is good.

• Moreover, the tendency that Asians like to know who they buy from supports this approach (as well as the use of corporate names with individual product names).

• Hence, family and corporate brands are more evident in Asia than in the West.


Corporate Name with Individual Product Names

• This subbranding or hybrid branding policy is followed by Sony (Sony Bravia, Sony Walkman, Sony Vaio, Sony PlayStation), Honda, and Hewlett-Packard.

• The company name legitimizes, and the individual name individualizes, the new product.


House of Brands versus A Branded House

• The use of individual or separate family brand names has been referred to as a “house of brands” strategy, whereas the use of an umbrella corporate or company brand name has been referred to as a “branded house” strategy.

• These two branding strategies represent two ends of a brand relationship continuum.

• A subbrand strategy falls somewhere between, depending on which component of the subbrand receives more emphasis.


Brand Portfolios

• A brand can only be stretched so far, and all the segments the firm would like to target may not view the same brand equally favorably.

• Marketers often need multiple brands in order to pursue these multiple segments.


Brand Portfolios

• Some reasons to introduce multiple brands in a category include:

i. To increase shelf presence and retailer dependence in the store

ii. To attract consumers seeking variety who may otherwise have switched to another brand

iii. To increase internal competition within the firm

iv. To yield economies of scale in advertising, sales, merchandising, and physical distribution


Brand Portfolios

• The brand portfolio is the set of all brands and brand lines a particular firm offers for sale in a particular category or market segment.

• The hallmark of an optimal brand portfolio is the ability of each brand in it to maximize equity in combination with all the other brands in it.

• In general, the basic principle in designing a brand portfolio is to maximize market coverage, so that no potential customers are being ignored.


Brand Portfolios

• Minimize brand overlap so brands are not competing for customer approval.

• Each brand should be clearly differentiated and appealing to a sizable enough marketing segment to justify its marketing and production costs.


Brand Portfolio

• Marketers carefully monitor brand portfolios over time to identify weak brands and kill unprofitable ones.

• Brand lines with poorly differentiated brands are likely to be characterized by much cannibalization and require pruning.

• Brands can also play a number of specific roles as part of a portfolio.


Roles of Brands in a Brand Portfolio

1. Flankers: Flanker or “fighter” brands are positioned with respect to competitors’ brands so that more important (and more profitable) flagship brands can retain their desired positioning.

2. Cash Cows: Some brands may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support.


Roles of Brands in a Brand Portfolio

3. Low-End Entry-Level: The role of a relatively low-priced brand in the portfolio often may be to attract customers to the brand franchise.

4. High-End Prestige: The role of a relatively high-priced brand often is to add prestige and credibility to the entire portfolio.


Brand Extensions

• Many firms have decided to leverage that asset by introducing a host of new products under some of its strongest brand names.

• Most new products are in fact line extensions—typically 80 to 90 percent in any one year.

• Moreover, many of the most successful new products, as rated by various sources, are extensions (e.g., Microsoft Xbox video game system and Apple iPad tablet).

• Brand extensions have two main advantages:i. Facilitate new product acceptanceii. Provide positive feedback to the parent brand and company


Improved Odds of New-Product Success

Brand extensions improve the odds of new product success in a number of ways:

• Consumers can make inferences and form expectations as to the likely composition and performance of a new product based on what they already know about the parent brand itself.

• Extensions reduce risk.

• Extensions can result in reduced costs of the introductory launch campaign.

• They can avoid the difficulty of coming up with a new name.

• Extensions allow for packaging and labeling efficiencies.


Improved Odds of New-Product Success

• Brand extensions can help clarify the meaning of a brand and its core brand values or improve consumer perceptions of the credibility of the company behind the extension.

• Line extensions can renew interest and liking for the brand and benefit the parent brand by expanding market coverage.

• One benefit of a successful extension is that it may also serve as the basis for subsequent extensions.


Example of Brand Extension

In an alliance with Essilor, Nikon has extended its expertise in camera lenses to eyewear lenses. It hopes consumers will infer that its eyewear lenses are as reliable as its camera lenses.


Disadvantage of Brand Extensions

• Line extensions may cause the brand name to be less strongly identified with any one product.

• Ries and Trout call this the “line-extension trap.”

• Brand dilution occurs when consumers no longer associate a brand with a specific or highly similar set of products and start thinking less of the brand.



• If a firm launches extensions consumers deem inappropriate, they may question the integrity of the brand.

• Different varieties of line extensions may confuse and perhaps even frustrate consumers.

• Retailers may reject many new products and brands because they don’t have the shelf or display space for them.



• The worst possible scenario is for an extension not only to fail, but to harm the parent brand in the process.

• Even if sales of a brand extension are high and meet targets, it is possible that this revenue will have resulted from consumers switching to the extension from existing product offerings of the parent brand—called pre-emptive cannibalizing.



• Intra-brand shifts in sales may not necessarily be so undesirable, as they can be thought of as a form of pre-emptive cannibalization.

• One easily overlooked disadvantage of brand extensions is that the firm foregoes the chance to create a new brand with its own unique image and equity.


Success Characteristics

• Marketers must judge each potential brand extension by how effectively it leverages existing brand equity from the parent brand, as well as how effectively, in turn, it contributes to the parent brand’s equity.

• The most important consideration with extensions is that there is “fit” in the minds of the consumer.

• One major mistake in evaluating extension opportunities is failing to take all of consumers’ brand knowledge structures into account.


Key Questions in Evaluating the Success of a Brand Extension

1. Does the parent brand have strong equity?

2. Is there a strong basis of fit?

3. Will the extension have the optimal points-of-parity and points-of-difference?

4. How can marketing programs enhance extension equity?

5. What implications will the extension have for parent brand equity and profitability?

6. How should feedback effects best be managed?


Table 9.5: Brand Extendability Score Card


Table 9.6: Research Insights on Brand Extensions


Customer Equity

• Achieving brand equity should be a top priority for any organization.

• We can relate brand equity to customer equity.

• Brand equity and customer equity both emphasize the importance of customer loyalty.

• The customer equity perspective focuses on bottom-line financial value. Its clear benefit is its quantifiable measures of financial performance.


Customer Equity

• Brand equity emphasizes strategic issues in managing brands and creating and leveraging brand awareness and image with customers. It provides much practical guidance for specific marketing activities.

• Brand equity and customer equity both matter—no brands without customers, and no customers without brands.


Marketing Memo


Sch

em

a f

or

Ch

ap

ter

Nin

e


Thank you

mma6e chapter-09 final

Business

brand building

brand loyalty

credible brand

brand marketing3

brand positioning2

role of brands brands

century brands

marketing management