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Executive Summary
"Brand value is very much like an onion. It has layers and a core. The core is the user who will
stick with you until the very end."
Edwin Artzt
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measurable benefits delivered by a particular product or service. These intrinsic
values may include things such as the image imparted to the purchaser,
advertising quality, advertising quantity, and trust, long-term reputation for
reliability, customer support, social responsibility, and so forth
The challenge to both marketers and marketing researchers is determining
how we measure and manage the intrinsic value of a brand (its equity) and how
do we tie that value and our attempts to improve value to customer loyalty.
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Crisis in Marketing
Traditional methods for brand building and marketing have lost their
effectiveness.
According to a study published by Krober-Riel, as much as 90% of the
information provided to the consumer is ignored. An average person is
exposed in a normal day to an estimated 3,000 commercial messages. This
information overload is compounded by an unalterable shift in consumers media
consumption and leisure patterns. Consumers today are more easily distracted
and spend more time engaged with personal media, such as iPods, video
game consoles, and Internet browsers, than they do with traditional sources
such as TV, Radio, and Films. Due to the inherent interactivity and
customizability of these new media platforms, the ground rules and expectations
for how consumers will interact with brands are changing. Consumers now
expect marketing messages to be more relevant to their interests and needs,
less obtrusive and invasive, and inherently valuable themselves.
Meeting these consumer expectations is harder than it may sound. The problem
is that traditional marketing methods are deeply rooted in a much simpler
world where three television networks are all that separated marketers from their
potential consumers.
With extremely broad appeal and consumers undivided attention, television
(and radio before it), provided marketers with a medium in which they could
carefully and directly communicate the existence and benefits of their products.
This uniqueness and the longevity of the dominance of these media platforms
means the basic underpinnings of consumer marketing have remained relatively
unchanged for nearly 100 years. This deep-seeded bias towards a one-tomany broadcast approach to marketing, where a message developed for a
mass audience is prominently displayed in places where the right people will
come across it, is visible in all forms of marketing today. Even progressive
marketing strategies that incorporate new media platforms like webisodes,
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banner ads, and pod casts are still defined by this flawed broadcast marketing
mentality.
Because these practices inherently do not meet consumers need for relevance,
subtlety, and value, they are being tuned out by the consumers today. The
response from marketers has been to create broader, louder, and marketing with
messages that are more superficial in an attempt to rise above the clutter. The
only way out of this predicament is for a shift in the marketing area that breaks
the hold of a one-to-many broadcast marketing mentality and moves towards a
more innovative approach of engaging consumers. With many traditional
marketing techniques exhausted, the time has come for marketers and their
agencies to look to fields outside of the traditional marketing disciplines in order
to identify business practices that will engage the consumer, enhance the brand,
and encourage a purchase.
What is Value?
"Any damn fool can put on a deal, but it takes genius, faith and perseverance to create a brand." David Ogilvy
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Value = Benefits / Price
or alternatively:
Value = Quality received / Expectations
What is Brand?
A brand includes a name, logo, slogan, and/or design scheme associated with
a product or service. Brand recognition and other reactions are created by the
use of the product or service and through the influence of advertising, design,
and media commentary. A brand is a symbolic embodiment of all the information
connected to the product and serves to create associations and expectations
around it. A brand often includes a logo, fonts, color schemes, symbols, and
sound, which may be developed to represent implicit values, ideas, and even
personality.
Branding Concepts
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Marketers engaged in branding seek to develop or align the expectations behind
the brand experience, creating the impression that a brand associated with a
product or service has certain qualities or characteristics that make it special or
unique. A brand image may be developed by attributing a "personality" to or
associating an "image" with a product or service, whereby the personality or
image is "branded" into the consciousness of consumers. A brand is therefore
one of the most valuable elements in an advertising theme. The art of creating
and maintaining a brand is called brand management.
Brand Equity measures the Total Value of the brand to the brand owner, and
reflects the extent of brand franchise.
For a firm to deliver value to its customers, they must consider what is known as
the "Total Market Offering." This includes the reputation of the organization,
staff representation, product benefits, and technological characteristics as
compared to competitors' market offerings and prices. Value can thus be defined
as the relationship of a firm's market offerings to those of its competitors
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washing machine that leaks, or the training shoe that often falls apart when wet
will never develop brand equity.
Positioning
Positioning is the position a brand occupies in a market in the minds of
consumers. Strong brands have a clear, often unique position in the target
market.
Positioning can be achieved through several means, including brand name,
image, service standards, product guarantees, packaging and the way in which it
is delivered. In fact, successful positioning usually requires a combination of
these things.
Communications
Communications play a key role in building a successful brand. All elements of
the promotional mix need to be used to develop and sustain customer
perceptions. Initially, the challenge is to build awareness, then to develop the
brand personality and reinforce the perception.
First-mover advantage
In terms of brand development, by First-Mover advantage means that it is
possible for the first successful brand in a market to create a clear positioning
in the minds of target customers before the competition enters the market. There
is plenty of evidence to support this.
Leading consumer product brands like Pepsi and Hindustan Unilever Ltd. that,
in many ways, defined the markets they operate in and continue to lead.
However, being first into a market does not necessarily guarantee long-term
success. Competitors drawn to the high growth and profit potential
demonstrated by the market-mover will enter the market and copy the best
elements of the leaders brand
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Long-term perspective
There should be a need to invest in the brand over the long-term. Building
customer awareness, communicating the brands message and creating
customer loyalty takes time. This means that management must invest in a
brand, perhaps at the expense of short-term profitability.
Internal marketing
Finally, a firm must market itself internally as well as externally. The whole
business should understand the brand values and positioning. This is important
in service businesses where a critical part of the brand value is the type and
quality of service that a customer receives.
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benefits and the perceived intrinsic benefits delivered by products in their
consideration set, against price, to arrive at their value hierarchy, and ultimately
their purchase decision.
Brands that have high-perceived value are always included in a purchaser's
consideration set. If a brand's combined tangible and intrinsic equities are
consistently higher than any other brand in the category, that brand will have
the highest customer loyalty in terms of purchase, repurchase, and
recommendation. Competing brands can only improve their loyalty against the
brand equity leader by lowering price in the short term, improving their product's
tangible features in the mid term, or improving their brand's intrinsic benefits, or
equity, in the long term
What are the intangible product attributes and image features that lead to
consumer willingness to pay a premium price?
Who are the customers that are willing to pay that premium for my brand?
Who are the customers that are willing to pay that premium for the
competitive brand?
With regard to these attributes and features, how does my brand compare
to the competition?
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Does the equity of my brand carry over to other products and services? If
yes, what are these products and services to which equity of my brand
extends?
of
value,
and
thus,
there
is
little
loyalty.
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Net
Income
to
Operating
Income
and
Equity
to
Value
The profits margins for firms can be stated in terms of net income or in terms
of operating income (EBIT). If pre-tax operating margins are used, the
appropriate value estimate is that of the firm. In particular, if one makes the
assumption that
Free Cash Flow to the Firm = EBIT (1 - tax rate): Net Capital exp. and working
capital needs are zero.
Then the Value of the Firm can be written as a function of the after-tax operating
margin= (EBIT (1-t)/Sales
Where,
g = Growth rate in after-tax operating income for the first n years
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gn = Growth rate in after-tax operating income after n years forever (Stable
growth
rate)
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potential
According
to
the
Central
Statistical
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1. Low prices The cost of the inputs, i.e. both materials and labor make
it possible for unbranded goods to be sold at much cheaper rates than
their branded counterparts do.
2. Local aspect Many unbranded goods are manufactured by regional
players and hence the products are tuned to the local preferences of
the region.
3. Derived benefits The rural consumer used to be more priceconscious than value-conscious. The mindset for securing quality for an
extra additional price, i.e. value consciousness has now seeped in. e.g.
MARICO claims that its brands of low cholesterol oils have penetrated
rural areas largely.
4. Rural income levels The incomes in rural areas are not as much as
compared to urban areas. Hence, many items fall out of the purchasing
capacity of the rural consumers
5. Rural income generation Even if rural consumers do have the
aggregate monthly income to purchase branded products, they do not to
have enough money at one point of time to purchase the item. This is
why in areas where branded products are available, they are often sold in
loose quantities since they fall into the purchasable range.
6. Counterfeits Even though these counterfeit products would be
branded, if a consumer is not satisfied with the value that he is getting
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out of the product, his buy in into the branded products will take a
downturn.
7. Mindset for quality As soon as the rural consumer is convinced that
branded goods are expensive because of their quality, which is
beneficial to him, he will switch over thereby becoming a part of the
branded goods purchaser category. It is important to realize that all
brands need to reinforce a quality mindset into the rural consumer in a
concerted manner.
Action orientations
Dividing the product categories based on the action orientation that branded
product categories should follow to generate greater returns from the rural
market. These action orientations are aimed at targeting the different sections of
the consumer pyramid and will eventually lead brands to the bottom of the
pyramid:
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Conclusion
How much one can expect to pay for the creation of a brand?
The answer is that the fee does not have to be astronomical, but it can be
depending on whom one decides to do business.
Creating a brand is often a classic case of getting what one pays for. A
person may create a name and commensurate logo (without applications like
letterhead, signage and packaging) for $500 or pay for an international identity
and branding company $100,000. In theory, that $100,000 should give higher
quality images and plenty of targeted branding theory, but that is not always
the case.
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A small business probably will never have a globally recognized "power
brand" simply because it may not have (and for that matter don't need) the
marketing resources that would fuel that level of awareness.
But it can be the most powerful brand in its target market. All it takes is
References:
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Websites:
http://pages.stern.nyu.edu
http://www.allaboutbranding.com
http://www.allbusiness.com
http://en.wikipedia.org
http://www.fastcompany.com
Papers: