CRAVENS PIERCY

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McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

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Chapter Nine Strategic Brand Management

McGraw-Hill/Irwin

2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

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STRATEGIC BRAND MANAGEMENT

Challenges in Building

Strong Brands
Strategic Brand Analysis

Brand Identity Strategies

Managing

Products/Brands
Managing the Brand

Portfolio

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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

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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 them from those of competitors.
American Marketing Association

Goods Versus Services Services are intangible

consumed at the time they are produced, often linked to the people who produce the services.*
* Leonard Berry, Services are Different, Business, May-Jun 1980, 24-30.

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 shareholder value.
FOR BUYERS, BRANDS CAN:
reduce customer search costs by identifying products quickly and accurately,

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reduce the buyers 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.

FOR SELLERS, BRANDS CAN FACILITATE:

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repeat purchases that enhance the companys financial performance because the brand enables the customer to identify and re-identify the product compared to alternatives, the introduction 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

Brand Management Challenges*

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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.

Responsibility for Managing Products

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Product/Brand Management
Planning, managing, and coordinating the strategy for a specific product or brand

Product Group/Marketing Management

Product director, group manager, or marketing manager

Product Portfolio Management

Chief executive at SBU Team of top executives

Marketings Role in Product Strategy

1. Market sensing 2. Identifying the characteristics and performance features of products

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3. Guiding target market and program-positioning strategies

Strategic brand management decisions are relevant to all businesses, including suppliers, producers, wholesalers, distributors, and retailers.

Strategic Brand Management

Brand Identity

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Identity Implementation

Brand Equity

Brand Strategy Over Time Strategic Brand Analysis

Managing the Brand Portfolio

Leveraging the Brand

Strategic Brand Analysis

Analyses Product Product Line

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Portfolio of Product Lines

Market and Customer Competition

Brand(s)

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Tracking Product Performance

Set Performance Objectives

Select Method(s) for Product Evaluation

Identify Problem Products

Decide How to Eliminate the Problems

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Product life cycle analysis

Financial analysis

Product grid analysis

Analyzing Brand Performance

Research studies Brand Positioning maps

Standardized information services

Product Life Cycle Analysis

Relevant issues in PLC analysis include:

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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

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Product Grid Analysis Managements 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

Brand Equity

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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 firms 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.

BRAND IDENTITY STRATEGIES

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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.* Four Brand Identity Perspectives Product

Organization
Person Symbol
* David A. Aaker, Building Strong Brands, 1996, 68.

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Specific Product

Private Branding

Line of Products

Basis of Identification Combination Basis Company Name

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MANAGING PRODUCTS/BRANDS
Building the Product/Brand Over Time Product Line Strategies Product/Brand Portfolio Strategies

Strategies for Improving Product Performance

Cost reduction Add new product(s) Product Alter improvement marketing strategy Product line Strategy

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Eliminate specific product(s)

Product mix strategy

Delete product line(s)

Change product line priorities

Add new product line(s)

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Strategies for Brand Strength

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

Brand equity can be negative Retailer private brands compete with manufacturer brands Major shifts in consumer tastes Competitive actions Unexpected events

Product Mix Modifications

Motivation for changing the product mix: Increase the growth rate of the business Offer a more complete range of products 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

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Brand Leveraging Strategy

LINE EXTENSION

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Minor variants of a single product are marketed under the same brand name

BRAND EXTENSION

Extensions of the brand name to other product categories

--Similar
--Dissimilar

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Leveraging Alternatives

LINE EXTENSIONS

BRAND EXTENSIONS

Horizontal Extension

Vertical Another Extension Product Class Down from Core Brand

CoRange Brand Branding

Up from Core Brand

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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

SEVEN DEADLY SINS OF BRAND MANAGEMENT*

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Failure to fully understand the meaning of the brand. Failure 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.

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MANAGING THE BRAND PORTFOLIO

Objectives:

Leverage commonalities to generate synergy

Reduce damage to brand identity

Obtain clarity of product offering

Enable change and adaptation Guide resource allocations among

brands

Source: Aaker, Building Strong Brands, 1996.

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GLOBAL BRANDS
International

markets: strategic branding challenges Global brands supported by increasingly cosmopolitan consumers in many countries Dont build global brands but strive for global brand leadership Challenge for MNCs: managing brand systems containing global, regional, and local brands

Internet Brands
Interactivity

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enhances brand relationships and corporate reputation 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

Guidelines

Provide home for loyalists

Differentiate with strong subbranded content

Source: Aaker and Joachimsthaler, Brand Leadership, 2000, 242.

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HOW MANY BRANDS?

1. 2.

Is it different enough to merit a new name? Will the brand identity add value?

3.

Are there risks in using an existing brand name?

Is the new brand a viable business venture?

4.