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Introduction More and more brands are becoming increasingly value centered. More customers are turning from prestige and luxury to lower- cost brands that deliver acceptable quality features. Firms are offering lower versions of their traditional brand. Bata Shoe Company for a long time has focused on pure leather shoes with limited variety. Recently we have observed line extension of ladies and kids footwear to offer variety in designs and colours. This strategic move has attracted non traditional customers. Blue Band has brought down the prices to compete effectively. As a brand/marketing student and practitioner the key questions to address are: What are the drivers of this consumer trend towards value? As a marketer; how a can a firm adopt a branding strategy that will accommodate downscale version without weakening the brand? 1.1.2 Driving forces towards value centered approach in branding a) Overcapacity created by stiff competition in fairly static market Competition is the core driver in the Kenyan Market. Competition may result from the following: Brand extension from other products classes eg Gental Detergent is an extension from cooking fats/oils product class New entrants (from other markets/countries) eg sanitary towels, pampers, Hair products New or revitalized brands /store brands that are competitive in quality New entrants often introduce parity products without innovative distinctive value propositions. Therefore new entrants and the struggling 3rd and 4th place brands are forced to emphasize price promotions and sales events instead of a product/benefits. As a result the market experiences the following: Differentiation between the brands becomes minimal Brand loyalty erodes Customers focus on price and features Fewer and fewer customers are willing to pay the historic price Market share start falling (sometimes drastically) for those who maintain their levels (b) Retail environment created by channels that typically have a lower cost structure engage in aggressive price competition and freely use private label goods (c) This includes use of price clubs and direct marketing Example: Dell and Gateway became two of the top five players in the computer market by selling directly through ads placed in computer magazine and catalogs. Customers were supported over the phone by 3rd party such organizations their prices were less than IBM and Compaq and forced the leading firms to change strategies and forever altered the face of computer marketing. b) Technological Changes New technology can introduce a new market or a product eg disposals ie razors, single use cameras. It can also influence cost structure ie brands that are simpler and cheaper creating new prices points. Eg cursinart (food processor was not able to keep up with the technological changes. Black and Decker took over.

Technology force represents a major paradigm shift. The old assumptions do not hold any longer. Leading brands must find a way of participating in the new market or accept the declining market share. The challenge the transition without damaging the brands accumulated brand equity Moving down is easy protecting the brand is hard According the Mountain bikers going down is much easier than going up but it is a challenge to recapture the vertical. Similarly brands move down easily but they experience problems and challenges created by getting to the bottom. The greatest challenge is to avoid harming the brand, particularly in terms of its perceived quality associations. Moving down affects perceptions of the brands more than any other brand management option. According to psychologists, people are influenced much more by unfavorable information than by favorable information. Initial negative information about a person (eg political arenas is very resistant to subsequent positive information while as an initial good impression is quite likely to be altered by subsequent negative interactions negative versus positive word of mouth. Downward movement need not be fatal to the brand. Downward entry is not always too risky. There are strategies that a marketer can adopt to reduce the risk of hurting the brand. How do you reduce the risk? a) Distinguishing the new product from parent brand The new product can be distinguished through the use of sub brands and other devices. Studies have shown that consumers are able to compartmentalize perceptions. Sonny has successfully operated at the high and with some products such as TV and walkman and at lower price products with others. Key to reducing the brand risk is to distinguish the new context from the original category. Customers can separate the brand identity into two product classes but may need help to do so If the extension is far/unrelated the risk is reduced but there is a risk that the brand may not contribute anything positive in the new context. A brand can take some risks. A strong brand is resilient and can stand some extension difficulties especially if some degree of separation exists. What is the best amount of separation? What will protect the brand but still work? The risk of a stand- alones brand Although it results in ultimate separation and protection of the core brand, it does not guarantee success eg IBM and Ambra (compete with mail order firms in Europe & America after 2 years). Creating a new brand at any level with credibility is most difficult. b) Dropping the price and maintaining quality perceptions This is the most direct approach. Eg Blue Band, Marboro, Pampers have value priced their products to make it competitive. Although consumers have begun to question higher prices brands the reality is that price point is still a positioning cue. A sharp price reduction can indicated to customers that the brand is of average quality and it is no different. If the price has lost all its credibility in terms of offering a different or better product dropping the price is a risk free strategy. But many brands still retain a very worthwhile market segment at the premium end of the market. They also offer premium quality or features that prevent them from obtaining cost

partly with their new competitors. Such brands should retain some quality differentiation when they move down. The challenge is to start competing at a new price point without repositioning the brand as a lower quality price brand. The key to adjusting price while retaining a quality position is to convince retailers and customers that the change does not reflect a different quality level. How have some brands done it? Blue band- Anniversary celebrations Proctor & Gamble everyday low price program as a new way of doing business consumer and trade promotions had led to channel inefficiencies for the retainer as well as to confusion and bother to the customers. Bata- variety to suit lifestyle Case of Marlboro Had abrupt price drop in its flagship brand. The strategy was perceived by some retailers and customers as panic reaction and cast a cloud over the brand equity. Dramatic price reduction was not supported by a logical strategic reasoning offered by P&G. Consumers and retailers used their own logic to explain the drop. Marlboro is so established and strong that is difficult to damage. The fact that the price cut did reverse the fall in market share is an indicator the brand is strong but had become overpriced. Use of Sub Brands Sub brands permit entry in an emerging low and without threatening the parent brands equity in the higher ranges of the market. Examples of such sub brands include Compaq Compaq pro line computers, Dell- Dell Dimension line and IBM- IBM value point line. Reduces the risk by distinguishing downscale brand from parent brand Challenges of using sub brands Possibility of cannibalization (buyers shift to the cheaper version). However, what seems like cannibalization may be actually strategic brand protection. Those who move from premium brand may have been attracted to the value brands of another player in the market. Extending the brand down will taint the brand name and hence image dilution Is the use of sub brand always successful? While some brands have succeeded to move down through sub brands others have failed. Gap stores (successful retailer of distinctive casual clothing) backed away from sub brands because of cannibalization and image dilution issues. It had faced competitors who were targeting value-conscious customers by offering gap like fashions at prices that were 20-30% lower. Gap Stores established the sub brand Gap warehouse and sold at competitive prices. But clothes were too similar. It cannibalized the parent brand. A year later they changed to Old Navy Clothing Company. Gap relegated to a much less prominent endorser role at the outset and scheduled to disappear entirely over time. The risk to the brand is lower when the extension is qualitatively different from the parent. Example is Gillette and its economy version of disposable razor market line; Gillette Good News Line. Gillette has a positioning of quality innovative razors for men. The personality is masculine/macho Gillette persona. It was contrasted with the sub brands younger, lighter personality. This helped to distinguish the sub brand. In addition, the fact that Gillette Good News disposable was a premium entry

into the disposable category also helped to reduce the potential damage to the perceived quality of the brand. Descriptive sub brands for value positioning The name and logo of sub brand can assist in signaling a lower level product eg by using the word value IMB Value Point suggests that it is a low end addition to the IBM line. A brand may also use a series of numbers to denote clearly where in the quality/value spectrum the products fit eg 100 series may be qualitatively larger and superior to the 90 series. But thus must be used with caution to avoid confusion. Creating a different personality Sub brand personality can be used to differentiate the new lower priced entry . A Strong and different personality from original brand can reduce risks of cannibalization and image tarnishing of the parent brand. Family relationships offer a clear and rich opportunity for creating distinct but related sub brand personalities. The sub brand could be a child (son) daughter of the original brand (father/mother), one who cannot afford or appreciate the better version. Personality of a child offers a distinction point from the parent brand a way to connect with a target market while still providing a coherent link to the brands heritage. Distinguishing the sub brand product If the product is clearly different in terms of physical appearance (colours, designs, packaging materials etc) ,applications and uses the risk to the core brand is reduced eg Gillette Good News line. When the features are not visible, its important to create different personality and to manage the symbols associated with the new brand eg different logo and colour to provide necessary separation. The sub brand can also be distinguished by targeting at different markets such as rural and urban, different regions. This will reduce the risk of image tarnishing. Consumers of the parent brand are not likely to be exposed to the new offering. Separation of the market may also apply to the distribution outlets and the sales team. Will the Identity Stretch? Of key concern in moving the brand downwards is whether the brand identify can span the vertical line definition or it will be compromised by new entries at the low end. BMW;s 300, 500, 7000 reflect different sizes and price points but have the same identity . The ultimate driving machines A car that is responsive and fun to drive works at all price points Mercedes is based on partly prestige and exclusivity Mercedes 190 presented problem because 30,000 of its potential inconsistency with the Mercedes identity of status cars for the affluent. When Mercedes redefined identity to focus on quality rather than status the 190 sub brand fit in better and provided a way to extend the Mercedes to franchise to a younger group of buyers. Brook side introduced a completely new brand; Ilara to capture the value milk market with pouch packaging instead of the traditional tetra classic pack. 2. MOVING A BRAND UP A brand may be a leader in volume and market share. It enjoys economies of scale and preference at the retail outlet. However, the price has been squeezed by retailers and consumers especially by price brands. In such cases an attractive growth segment often emerges at the very high end of the market.

Moving the brand up may offer higher margins, provide interest, potential for growth and expansion. Further, it can offer newsworthy development to a somewhat tired category. The challenge to a marketer is: How can brands move up to take advantage of this growth and vitality? A brand may move up by establishing a new brand or through sub brands. Use of a new brand When the existing brand is too tired it may not offer any advantages. The only feasible alternative is to develop a new stand alone brand The option of successfully introducing a new brands is often either too costly or simply not feasible especially when the task is to become the 3 rd and 4th brand in bound and on the shelf. Alternative is to use a sub brand The role of a sub brand Advantages of using a sub-brand Less expensive to create brand visibility and associations for a new brand name The applicable assets of the brand can help provide a value proposition Sub brands can provide a perceived quality lift to the core brand names eg Holiday Inn Coors. Risks of using a sub brand The risks are less compared to moving down. (a) The possibility that the premium version can by comparison make the core brand look more ordinary than it was previously perceived to be e.g. Prestige Centers. (b) Core brand will hinder the premium brand from achieving its full prestige. (c) Premium brands become an object of ridicule. The key to reducing this risk is to make the sub brand distinct from the rest of the offerings under the brand umbrella. Separating the Sub Brand A brand may lack credibility at the higher end. Marketers can apply the following strategies to make a believable claim Have a silver bullet within the higher end line that demonstrates the sub brands ability to deliver Clearly separate the sub brand from that of the core brand eg Black & Deckers quantum line of the equipment used newsletter, telephone advice program and silver colour not green. Employ a descriptor eg Kodak Gold, Kodak Royal gold, special edition, professional, gold platinum. However, a descriptor can hinder the sub brand from developing an independent identity Will the Identity Stretch? Brands whose identities are inconsistent with an upscale entry will find an upward movement more difficult. Such brand may be forced to establish new brand names. An upscale entry as a vehicle for downstream enhancement The motivation is to affect the original brand identity positively .This is referred to the downstream enhancement. In such cases profitability of the new brand may be of secondary importance, or ven non5

existent. e.g Gallo is a dominant name in wine business. It was faced with huge competition. Competitors positioned themselves above Gallo in quality. To protect itself Gallo needed to move up a small notch which was achieved through downstream enhancement.