CHAPTER 1: BRANDS & BRAND MANAGEMENT

Kevin Lane Keller Tuck School of Business Dartmouth College

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Brand History
The word brand is derived from the old norse word brandr which means: to burn as brand were and still are the means by which owner of livestock mark their animals to identifyy them
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Source: http://www.texaslonghorn.net/longhorn_info/management_tips/I mages/Branding-CU-1009-033.jpg

Brand an Introduction

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What is a brand?

For the American Marketing Association (AMA), a brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition. These different components of a brand that identify and differentiate it are brand elements.

brand with a small b

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What is a brand?

Brand with a capital B:

Many practicing managers refer to a brand as more than that as something that has actually created a certain amount of awareness, reputation, prominence, and so on in the marketplace.

We can make a distinction between the AMA definition of a brand with a small b and the industrys concept of a Brand with a capital b.
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Brands vs. Products

A product is anything we can offer to a market for attention, acquisition, use, or consumption that might satisfy a need or want. A product may be a physical good, a service, a retail outlet, a person, an organization, a place, or even an idea.

http://t3.gstatic.com/images?q=tbn:ANd9GcTFXLwHBmhehZDojyOlXfoCYQt026ssb2QaQvevhqmOlIiD_7fgubpsnOeshg

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Five Levels of Meaning for a Product

(e.g. Air Conditioner)

The core benefit level is the fundamental need or want that consumers satisfy by consuming the product or service. (Cooling and comfort) The generic product level is a basic version of the product containing only those attributes or characteristics absolutely necessary for its functioning but with no distinguishing features. This is basically a stripped-down, no-frills version of the product that adequately performs the product function. (sufficient cooling capacity/BTU/hr) The expected product level is a set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. (based on consumer report: having 2 cooling speed, power cord 60 inches, R-22 HCFC refrigerant etc) The augmented product level includes additional product attributes, benefits, or related services that distinguish the product from competitors. (additional feature e.g. Electric touch-pad, temperature display, etc) The potential product level includes all the augmentations and transformations that a product might ultimately undergo in the future. (extended infinite life batteries, mosquito repealant, auto on of heat detector etc)

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A brand is therefore more than a product, as it can have dimensions that differentiate it in some way from other products designed to satisfy the same need.

Source: Personal Documentation

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Some brands create competitive advantages with product performance; other brands create competitive advantages through non-product-related means.
Performance

non product related

http://t2.gstatic.com/images?q=tbn:ANd9GcSF1q6TqD9uZAM81R9Cw7NoUHNauKMmNuKeLSWnbAhyzNXEqhjFw3_xzRR4Q

http://mlb.mlb.com/mlb/images/sweepstakes/y2008/gillette/gillette_ad.jpg

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Why do brands matter?

What functions do brands perform that make them so valuable to marketers?

The Famous Pepsi blind test: New Coke Disaster .........

Source: http://www.brandchannel.com/home/image.axd?picture=2012%2F5%2Fpepsicoke.jpg
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Pepsi ad 1

Video courtessy of Youtube

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Pepsi ad 2

Video courtessy of Youtube

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New coke Campaign

Video courtessy of Youtube

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Pepsi Reply

Video courtessy of Youtube

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Importance of Brands to Consumers

(Individual/Business)

Identification of the source of the product/maker Assignment of responsibility to product maker Risk reducer Search cost reducer (due to their past experiences, the simplification for their product decision) Promise, bond, or pact with product maker (trust and loyal to the brand as long as they are satisfied/able to fulfil their functional utility) Symbolic device(allowing customer to project their self image) Given to the difficulty of assesing and intepreting product attributes and benefits of experience and credence product, Brand become important as a signal of quality :

Search goods (e.g. groceries: consumer able to evaluate the product attributes such as sturdiness, size, color etc. by visual inspection) Experience goods (e.g. automobil tires: should experience it first/actual product trial to judge durability etc) Credence goods (e.g. Insurance coverage: consumer might rarely learn product attributes) 1.15

Reducing the Risks in Product Decisions for customers

Consumers may perceive many different types of risks in buying and consuming a product: Functional riskThe product does not perform up to expectations. Physical riskThe product poses a threat to the physical well-being or health of the user or others. Financial riskThe product is not worth the price paid. Social riskThe product results in embarrassment from others. Psychological riskThe product affects the mental wellbeing of the user. Time riskThe failure of the product results in an opportunity cost of finding another satisfactory product.
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Picture source: http://t3.gstatic.com/images?q=tbn:ANd9GcTdVzogoarhQdxjy4b-os9V5VjgVC3SZAWBvSwafZ5v0nZ9hx-B

Importance of Brands to Firms

Identification to simplify handling or tracing, and operationally help to organize inventory and accounting records Legally protecting unique features to ensure that the firm can safely invest in the brand and reap the benefits of a valuable asset (can be protected through registered trademark, manufacturing through patent, packaging through copyright and design: Apple vs. Samsung) Signal of quality level Endowing products with unique associations capable of influencing consumer behavior, Source of competitive advantage Source of financial returns by providing the security of sustained future revenues (a belief that strong brands result in better earnings and profit performance that in turn will create greater value for shareholders)
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Can everything be branded?

Ultimately a brand is something that resides in the minds of consumers. The key to branding is that consumers perceive differences among brands in a product category. Even commodities can be branded:

Coffee (Maxwell House), bath soap (Ivory), flour (Gold Medal), beer (Budweiser), salt (Morton), oatmeal (Quaker), pickles (Vlasic), bananas (Chiquita), chickens (Perdue), pineapples (Dole), and even water (Perrier)

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An Example of Branding a Commodity

De Beers Group added the phrase A Diamond Is Forever

Source: http://www.gemnation.com/images/debeers/3_stone _ring_she_already_kn.jpg

Source: http://youthvoices.net/discussion/diamo nd-engagement-rings

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What is branded?
Physical goods (Coca Cola, Mercedes benz, ribena, etc) Services (McD, Hilton, TM, AisAsia, etc) Retailers and distributors (Carrefour, Giant, 7 Eleven, Lotte, etc) Online products and services (Amazon.com, Google, etc) People and/ organizations (Nonprofit Organization, Donald Trump, etc) Sports, arts, and entertainment (Harry Potter, Broadway, MU, etc) Geographic locations (Las vegas, Genting, Bali, etc) Ideas and causes (Save Orangutan,, AIDS ribbon, etc)

Source: various resources fom Google Images

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Source of Brands Strength

The real causes of enduring market leadership are vision and will. Enduring market leaders have a revolutionary and inspiring vision of the mass market, and they exhibit an indomitable will to realize that vision. They persist under adversity, innovate relentlessly, commit financial resources, and leverage assets to realize their vision.
Gerald J. Tellis and Peter N. Golder, First to Market, First to Fail? Real Causes of Enduring Market Leadership, MIT Sloan Management Review, 1 January 1996
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Importance of Brand Management

The bottom line is that any brand - no matter how strong at one point in time - is vulnerable, and susceptible to poor brand management.

Source: http://celebritynewsandstyle.com/wp-content/uploads/2012/07/kristen-rupert.jpg

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What are the strongest brands?

Top Ten Global Brands

Brand
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2006 ($Billion)
67.00 56.93 56.20 48.91 32.32 30.13 27.94 27.85 27.50 21.80

2005 ($ Billion)
67.53 59.94 53.38 47.00 35.59 26.45 24.84 26.44 26.01 20.00
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2.
3. 4.

5.
6. 7.

8.
9. 10.

Coca-Cola Microsoft IBM GE Intel Nokia Toyota Disney McDonalds Mercedes-Benz

Source: http://socialcommercetoday.com/wp-content/uploads/2011/10/BGB2011-Poster-Interbrand-1.png

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Branding Challenges and Opportunities

Savvy customers (well informed, social media, info/opinion web etc. - e.g. Traveladvisor, FB, twitter, blogs etc) Brand proliferation (the rise of brand and line extension, getting crowded hard to decide) Media fragmentation (more and more specific media) Increased competition (Globalization, low-priced competitor, brand extension, deregulation) Increased costs (higher cost of developing a product or supporting the existing one) Greater accountability (short term profit target/benefit but long term cost/consequences e.g. Cutting advertisining cost)
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The Brand Equity Concept

No common viewpoint on how it should be conceptualized and measured It stresses the importance of brand role in marketing strategies. Brand equity is defined in terms of the marketing effects uniquely attributable to the brand.

Brand equity relates to the fact that different outcomes result in the marketing of a product or service because of its brand name, as compared to if the same product or service did not have that name.

Fundamentally, branding is all about endowing products and services with the power of Brand Equity
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Strategic Brand Management

It involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity.

The Strategic Brand Management Process is defined as involving four main steps:
1. Identifying and establishing brand positioning and values 2. Planning and implementing brand marketing programs 3. Measuring and interpreting brand performance 4. Growing and sustaining brand equity
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Strategic Brand Management Process

(to pull all various concept together)
Steps
Identify and establish brand positioning and values

Key Concepts
Mental maps Competitive frame of reference Points-of-parity and points-of-difference Core brand values Brand mantra (core brand promise)

Plan and implement brand marketing programs

Mixing and matching of brand elements Integrating brand marketing activities Leveraging of secondary associations
Brand value chain Brand audits Brand tracking Brand equity management system

Measure and interpret brand performance

Grow and sustain brand equity

Brand-product matrix Brand portfolios and hierarchies Brand expansion strategies Brand reinforcement and revitalization

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Example: association tree/ mental map

http://thisisnotawebblog.files.wordpress.com/2011/11/werkgroep-01-mindmap2.png

Li Ning Company Limited is one of the leading sports brand companies in China, mainly providing sporting goods including footwear, apparel, equipment and accessories for professional and leisure purposes primarily under the LINING brand. Headquartered in Beijing, the Group has brand marketing, research and development, design, manufacturing, distribution and retail capabilities. It has established an extensive supply chain management system and a retail distribution network in China, predominantly through outsourced manufacturing operations and franchised distribution (www.lining.com)
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