CH-9-10 Creating Brand Equity – Marketing Management: A South Asian Perspective : Chapter Notes

This Document Contains Chapters 9 to 10 Chapter 9 Creating Brand Equity LEARNING OBJECTIVES In this chapter, we will address the following questions: What is a brand and how does branding work? What is brand equity? How is brand equity built, measured, and managed? What are the important brand architecture decisions in developing a branding strategy? SUMMARY A brand is a name, term, sign, symbol, design, or some combination of these elements, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. The different components of a brand— brand names, logos, symbols, package designs, and so on—are brand elements. Brands are valuable intangible assets that offer a number of benefits to customers and firms and need to be managed carefully. The key to branding is that consumers perceive differences among brands in a product category. Brand equity should be defined in terms of marketing effects uniquely attributable to a brand. That is, different outcomes result in the marketing of a product or service because of its brand, compared to the results if that same product or service was not identified by that brand. Building brand equity depends on three main factors: (1) The initial choices for the brand elements or identities making up the brand; (2) the way the brand is integrated into the supporting marketing program; and (3) the associations indirectly transferred to the brand by links to some other entity (the company, country of origin, channel of distribution, or another brand). Brand audits measure “where the brand has been,” and tracking studies measure “where the brand is now” and whether marketing programs are having the intended effects. A branding strategy identifies which brand elements a firm chooses to apply across the various products it sells. In a brand extension, a firm uses an established brand name to introduce a new product. Potential extensions must be judged by how effectively they leverage existing brand equity to a new product, as well as how effectively they contribute to the equity of the parent brand in turn. Brands may expand coverage, provide protection, extend an image, or fulfill a variety of other roles for the firm. Each brand-name product must have a well-defined positioning to maximize coverage, minimize overlap, and thus optimize the portfolio. Customer equity is a complementary concept to brand equity that reflects the sum of lifetime values of all customers for a brand. OPENING THOUGHT This chapter will present some challenges to students new to marketing. The concept of a “brand” is discussed in depth in the chapter and because that concept is much more than a product, some students will have difficulty in understanding the total concept of a “brand.” The instructor is urged to use a number of concrete examples gleaned from the student’s personal experiences of what a “brand” is. The instructor is urged to spend a considerable amount of time trying to differentiate between the symbol or package, and the total “brand.” The instructor is cautioned to ensure that the concept of a “brand” has been satisfactorily understood by the students before proceeding further with the chapter material. The second challenge presented in the chapter is the fact that “brands” represent financial assets to a company and that they are valuable intangible assets that need to be managed and represents perceived differences in product performances. The instructor can use and is encouraged to use numerous examples of competing products in a category to demonstrate to the students the differences and the perceptual differences among and between like products. An in-class exercise could include asking students to mention products or services that they are loyal to and the instructor could elicit their reasons for this loyalty, compare and contrast these opinions to other students in the class to demonstrate brand loyalty and brand switching. This chapter also contains a number of definitions that the instructor is urged to define and differentiate clearly so that the students understand. TEACHING STRATEGY AND CLASS ORGANIZATION PROJECTS At this point in the semester, students are to have their “branding” strategy developed for their project. Questions to be completed include the brand name, its equity position, and the decisions in developing the brand strategy. In small groups (five students suggested as the maximum), have them list their favorite branded product or service (Google, Nike, or others). Based upon the information contained in this chapter, the students are to collect information, via oncampus research, on the brand’s brand equity based upon the Brand Asset Valuator, developed by Young and Rubicam. Marketing Plan Decisions about branding are critical for any marketing plan. During the planning process, marketers must consider issues related to brand strategies and brand equity. Each student group’s product or service begins with zero brand equity. A brand is a complex symbol that can convey up to six levels of meaning: attributes, benefits, values, culture, personality, and user. Get students to explain their brands’ attributes, meaning and benefits. Ask them to determine the strategies and action programs for building brand equity. Each group should summarize their ideas in a written marketing plan or type them into the Marketing Mix section of Marketing Plan Pro. They should also indicate in the Marketing Research section what studies support their decisions about managing the brand equity. ASSIGNMENTS Individually, have the students visit Brand channel (www.brandchannel.com) and (a) choose a brand listed there and summarize the views regarding the brand as expressed by brandchannel.com; or (b) choose the “papers” icon and read and summarize one of the papers listed. Either in small groups or indivually, ask the students to conduct a small research project with students on campus regarding the student’s brand knowledge of a particular brand (again, the students can select their “brand” for this exercise). In their research, the students are to delineate the brands: unique brand association, the thoughts, feelings, images, experiences, and beliefs elicited by the brand. This exercise builds on the concepts of marketing research covered in Chapter 4 of this text. Important information for the students to postulate is why in their research some of the respondents held such beliefs about the brand and why others did not. Table 9.4 displays the world’s most valuable brands for 2010. Students are to take these brands and in a research project, find financial, stock, and other information about these companies. Does the financial valuation metrics account for all of the “brand valuation?” On the other hand, does the presence of a strong brand provide incremental “value” to the company beyond tangible assets of the firm? Why or why not? In Andy Sernovitz’s book, Word of Mouth Marketing: How Smart Companies Get People Talking, Greenleaf Book Group Press, 2012, he lists Five Ts: Talkers, Topics, Tools, Taking Part and Tracking in word of mouth marketing. After reading Mr Sernovitz’s book, comment on whether or not you believe that “word of mouth marketing” will work for all products and services in the future. END-OF-CHAPTER SUPPORT MARKETING DEBATE—Are Line Extensions Good or Bad? Some critics vigorously denounce the practice of brand extensions, as they feel that too often companies lose focus and consumers become confused. Other experts maintain that brand extensions are a critical growth strategy and source of revenue for the firm. Take a position: Brand extensions can endanger brands versus Brand extensions are an important brand growth strategy. Pro: In today’s crowded world of products and services, the choices available to consumers can sometimes be overwhelming. Marketers with strong brand identities and positions can help consumers narrow their choices by the use of brand extensions. Brand extensions help marketers quickly gain retailer acceptance of their new products and provide the consumer with the “confidence and familiarity” of the parent brand. From the production, distribution, manufacturing, and marketing communications side of the equations, brand extensions allow the marketer to maximize economies of scale in these areas. Additionally, brand extensions can benefit the parent brand by catering to new markets, new users, or previous users that had “dropped” using the product for various reasons—creating incremental sales to the parent brand. Finally, the cost of developing a new brand from scratch, in terms of dollars and time, has become so high that it is virtually impossible for many firms to consider such an option. Con: The proliferation of brand extensions can cause the parent brand to lose its identity and individuality with the consumer thus eroding brand equity for the parent brand over the long haul. When brand extensions fail, the failures of the extensions could impact the parent brand simply by association. Cannibalization of the parent brand for the extension if not pre-emptive could erode profits as consumers switch to a less profitable line extension. Finally, a marketer loses the opportunity to build a new brand with a new image and equity by the use of brand extensions. The time and money needed to develop a new brand, if done correctly, can pay off in the end for both the consumer and the firm. MARKETING DISCUSSION How can you relate the different models of brand equity presented in the chapter? How are they similar? How are they different? Can you construct a brand equity model that incorporates the best aspects of each model? Suggested Response: Brand equity depends on three main factors: the initial choice for the brand elements or identities making up the brand, the way the brand is integrated into the supporting marketing programs; the associations indirectly transferred to the brand by linking the brand to some other entity. Brand equity needs to be measured and managed well. Branding strategy identifies which brand elements a firm chooses to apply across the various products it sells. Brands play a number of roles within a brand portfolio: expand coverage, provide protection, extend an image, or fulfill a variety of other roles as dictated by the firm’s strategy. Their similarity rests in their execution and the overall strategic direction of the firm. Their differences lie in the “role” designated for each brand. As long as the firm identifies and maintains a consistent “role” for each of its brands, the brand portfolio will and can maximize coverage and minimize brand interactions and overlaps. If the firm does not maintain a consistent “role” for each brand it runs the risk of destroying brand integrity. A brand equity model that incorporates the best aspects of each model becomes the challenge and the “art” of marketing. In such a model, each brand contains its own identity, has an integrated marketing program designed around such identity, and has the associations consistent with its identity. Additionally, the brand has a strategy that defines its positioning within the market and the firm, has a strategy that has defined its “role” within the corporate structure with a well-defined positioning statement, and maximizes coverage with minimal brand interference and cannibalization of other corporate brands. Different models of brand equity, such as Aaker's Brand Equity Model and Keller's Brand Resonance Model, are similar in emphasizing brand awareness, perceived quality, and brand loyalty. They differ in focus; Aaker highlights brand assets and liabilities, while Keller emphasizes customer-brand relationships. A comprehensive model could integrate brand awareness, perceived value, brand associations, and emotional connection, combining elements from both models to offer a holistic view of brand equity. Marketing Lesson: PROCTER & GAMBLE P&G’s impressive portfolio includes some of the strongest brand names in the world. What are some of the challenges and risks associated with being the market leader in so many categories? Suggested Answer: Student answers will vary, but good students will note that as a brand leader in 15 categories, P&G continuously fights off challenges from smaller niche firms, based on its own internal branding metrics. Additionally, P&G must study its consumers, use long-term perspectives, employ product innovation and quality strategies to remain ahead of their competitors. Being a market leader for P&G involves risks such as heightened competition, maintaining innovation, and managing brand reputation across diverse global markets while adapting to rapidly changing consumer preferences. With social media becoming increasingly important and fewer people watching traditional commercials on television, what does P&G need to do to maintain its strong brand images? Suggested Answer: Student answers will vary, but good students will note that P&G is at the forefront in the use of social media in researching their target market (3 million via email and phone center/year) to find out how effective social media is in producing a “purchase.” P&G should invest more in targeted digital marketing campaigns on social media platforms, engage with consumers authentically, and leverage data analytics to personalize content and enhance brand relevance in the digital age. What risks do you feel P&G will face going forward? Suggested Answer: Student answers will vary and good students will note or cite Michael Porter’s Five Forces model to fully answer this question as the risks are numerous and many are unknown at this point. Going forward, P&G may face risks related to economic downturns affecting consumer spending, increased regulatory scrutiny on product safety and environmental impact, and intensifying competition in emerging markets and digital channels. Marketing Lesson: MCDONALD’S What are McDonald’s core brand values? Have these changed over the years? Suggested Answer: McDonald’s core brand values are quality, service, cleanliness, and value. Yes, McDonald’s for a time got away from its core brand values and started the “plan to win” helping it to re-focus on a better, higher-quality consumer experience. McDonald's core brand values include quality, consistency, affordability, and convenience. While these values have remained consistent, there has been a shift towards emphasizing sustainability and healthier menu options in recent years. McDonald’s did very well during the recession in the late 2000s. With the economy turning around for the better, should McDonald’s change its strategy? Why or why not? Suggested Answer: Student answers will vary but good students will note that from “2003 to 2006, its stock price increased 170%. Sales continued to increase through the late 2000s and topped $23.5 billion in 2008, making McDonald’s one of only two companies in the Dow Jones industrial average whose share price rose in 2008.” McDonald's should consider adjusting its strategy to capitalize on increased consumer spending by enhancing menu innovation, focusing on premium offerings, and investing in customer experience to maintain competitive edge and sustain growth amidst economic recovery. What risks do you feel McDonald’s will face going forward? Suggested Answer: Student answers will vary and good students will cite Michael Porter’s Five Forces model in fully answering this question. McDonald's faces risks such as changing consumer preferences towards healthier options, regulatory challenges in different markets, and competition from fast-casual dining options and delivery services impacting traditional sales channels. DETAILED CHAPTER OUTLINE 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. 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 involves four main steps: Identifying and establishing brand positioning Planning and implementing brand marketing Measuring and interpreting brand performance Growing and sustaining brand value deals with brand positioning WHAT INFLUENCES CONSUMER BEHAVIOR? 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. These differences 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 past experiences with the product and its marketing program. Brands perform valuable functions for the firm. A credible brand signals a certain level of quality so that satisfied buyers can easily choose the product again. Brand loyalty provides predictability and security of demand for the firm and creates barriers to entry for other firms. Branding can be a powerful means to secure a competitive advantage. 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. Kwon Ping Ho, chairman of Banyan Tree Group, outlined five challenges for Asian brands with global ambitions: Asian companies must overcome inherent parochialism. Asian brands must adopt a corporate culture that sustains a global perspective. Asian brands must face the challenge of maintaining an Asian brand identity as they go global. Asian brands must rise above the cheap low-quality image. Asian companies must think like a global company despite being small. 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. DEFINING BRAND EQUITY Brand equity is the added value endowed to products and services. A) 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. B) 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. 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. F) There are three key ingredients of customer-based brand equity. Brand equity arises from difference in consumer response. Differences in response are a result of consumer’s brand knowledge, the thoughts, feelings, images, experiences, and beliefs associated with the brand. Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand. See Table 9.1 Marketing Advantages of Strong Brands. 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 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. Ian Batey argues that Asia should aim to have at least 20 brands among the world’s 50 most valuable names by 2020. He identified four types of East Asian assets that may serve as springboards to this end: 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. Acquired assets —These refer to a branding opportunity on the back of an identity that enjoys strong credibility. Potential assets—These refer to the building of a global Asian brand from scratch. Combining acquired assets with potential assets—This hybrid approach may be achievable in the arts and entertainment industry by leveraging Asia’s extraordinary history. Marketing Memo: A Checklist for Developing Global Asian Brands Eight questions Asian companies should ask themselves. BRAND EQUITY MODELS Although there is agreement about basic principles, a number of models of brand equity offer some different perspectives. Here we briefly highlight the more established ones. A) Brand Asset Valuator Advertising agency Young and Rubicam (Y&R) developed a model of brand equity called brand asset valuator (BAV). There are four key components (See Figure 9.1): Energized Differentiation Relevance Esteem Knowledge 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 The Universe of Brand Performance. Brandz Marketing research consultants Brown and WPP have developed the BRANDZ model of brand strength, at the heart of which is the BrandDynamics pyramid. According to this model, (see Figure 9.3), brand building follows a series of steps. 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. 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. Ensuring customers identify the brand and associate it with a specific product class or customer need. Firmly establishing the brand meaning in consumers’ minds by strategically linking a host of tangible and intangible brand associations. Eliciting the proper customer responses in terms of brand-related judgment and feelings. Converting customers’ response to an intense, active brand loyalty. According to this model, enacting the four steps involves establishing six “brand building blocks” with customers. These brand building blocks can be assembled in terms of a brand pyramid, as illustrated in Figure 9.4. The creation of significant brand equity requires reaching the top or pinnacle of the brand pyramid: Brand salience relates to how often and easily the brand is evoked under various purchase or consumption situations. Brand performance relates to how the product or service meets customers’ functional needs. Brand imagery deals with the extrinsic properties of the product or service, including how the brand attempts to meet customers’ psychological or social needs. Brand judgments focus on customers’ own personal opinions and evaluations. Brand feelings are customers’ emotional responses and reactions toward the brand. Brand resonance refers to the nature of the relationship that customers have with the brand and the extent to which customers feel that they are “in sync” with the brand. 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: The initial choices for the brand elements or identities making up the brand. The product and service and all accompanying marketing activities and supporting marketing programs. 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. A) Brand elements can be chosen to build as much brand equity as possible. B) The test is what consumers would think or feel about the product if the brand element were all they knew. Brand Element Choice Criteria There are six criteria for choosing brand elements. The first three—memorable, meaningful, and likable—are “brand building.” A) The latter three—transferable, adaptable, and protectable—are “defensive” and help leverage and preserve brand equity against challenges. Memorable Meaningful Likable Transferable Adaptable Protectible Marketing Memo: Brand Naming In China Brand names in China come in all forms. Some are written in Chinese; others in a foreign language such as English, Japanese or French; and yet others, new words and meanings (p. 313). Developing Brand Elements Brand elements can play a number of brand-building roles. If consumers don’t examine much information in making product decisions, brand elements should be easy to recall and inherently descriptive and persuasive. The likability of brand elements may also increase awareness and associations. Often, the less concrete brand benefits are, the more important that brand elements capture intangible characteristics. Like brand names, slogans are an extremely efficient means to build brand equity. They can function as useful “hooks” to help consumers grasp what the brand is and what makes it special. 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. 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. Marketers need a variety of different marketing activities that consistently reinforce the brand promise. Internal Branding Marketers must now “walk the talk” to deliver the brand promise. They must adopt an internal perspective 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. Brand bonding occurs when customers experience the company as delivering on its brand promise. The brand promise will not be delivered unless everyone in the company lives the brand. Some important principles for internal branding are: Choose the right moment Link internal and external marketing Bring the brand alive for employees BRAND COMMUNITIES Thanks to the Internet, companies are interested in collaborating with consumers to create value through communities built around brands. A brand community is a specialized community of consumers and employees whose identification and activities focus around the brand. Three characteristics identify brand communities: A “consciousness of kind” or sense of felt connection to the brand, company, product, or other community members; Shared rituals, stories, and traditions that help to convey the meaning of the community; and A shared moral responsibility or duty to both the community as a whole and individual community members. Brand communities come in many different forms 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 improvements or innovations. Table 9.2 shows the activities that brand communities engage in that create value for the brand. Branding experts Susan Fournier and Lara Lee identified seven common myths about brand communities and suggest the reality in each case (see Table 9.3). LEVERAGING SECONDARY ASSOCIATION The third and final way to build equity is, in effect, to “borrow it.” That is, brand associations may themselves be linked to other entities that have their own associations, creating “secondary” brand associations. In other words, brand equity may be created by linking the brand to other information in memory that conveys meaning to consumers (see Figure 9.5). MEASURING BRAND EQUITY How do we measure 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. There are 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. 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. Marketers should distinguish brand equity from brand valuation, which is the job of estimating the total financial value of the brand. Marketing Insight: The Brand Value Chain The brand value chain is a structured approach to assessing the sources and outcomes of brand equity and the manner in which marketing activities create brand value. The brand value chain is a structured approach to assessing the sources and outcomes of brand equity and the manner in which marketing activities create brand value (See Figure 9.6). See Table 9.4 The World’s 10 Most Valuable Brands Marketing Insight: What is a brand worth? Top brand valuation firm Interbrand has developed a model to formally estimate the dollar value of a brand. Interbrand defines Brand Value as the net present value of the earnings a brand is expected to generate in the future and believes both marketing and financial analyses are equally important in determining the value of a brand. 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. A) Marketers can reinforce brand equity by consistently conveying the brand’s meaning in terms of: what products the brand represents, what core benefits it supplies, and what needs it satisfies; as well as how the brand makes those products superior, and which strong, favorable, and unique brand associations should exist in the minds of consumers. Reinforcing brand equity requires innovation and relevance throughout the marketing program. An important consideration in reinforcing brands is providing consistent marketing support. 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. Often, the first place to look in turning around the fortunes of a brand is to understand what its sources of brand equity were. Are positive associations losing their strength or uniqueness? Have negative associations become linked to the brand? Decisions must then be made on whether to retain the same positioning or to create a new positioning and, if so, which positioning to adopt. DEVISING A BRANDING STRATEGY A firm’s branding strategy reflects the number and nature of both common and distinctive brand elements applied. Deciding how to brand new products is especially critical. A firm has three main choices: It can develop new brand elements for the new product. It can apply some of its existing brand elements. It can use a combination of new and existing brand elements. 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. D) Brand extensions fall into two general categories: In a line extension, the parent brand covers a new product within a product category it currently serves. In a category extension, marketers use the parent brand to enter a different product 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. BRANDING DECISIONS Corporations have to make decisions whether to have individual or separate brand names for each product category or to use an umbrella corporate name. Sometimes, decisions whether to include sub-brand names need to be made. Alternative Branding Strategies Today, branding is such a strong force that hardly anything goes unbranded. Assuming a firm decides to brand its products or services, it must then choose which brand names to use. Four general strategies are often used: Individual or separate family brand names Corporate umbrella or company brand name Corporate name combined with individual product names 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. Some reasons to introduce multiple brands in a category include: Increasing shelf presence and retailer dependence in the store. Attracting consumers seeking variety who may otherwise have switched to another brand. Increasing internal competition within the firm. Yielding economies of scale in advertising, sales, merchandising, and physical distribution. 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. 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. 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. 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. Cash Cows Some brands may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support. 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. 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. Advantages of brand extensions Brand extensions have two main advantages: Facilitate new product acceptance 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. Positive Feedback Effects Besides facilitating the acceptance of new products, brand extensions can also provide feedback benefits. 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. Disadvantages 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 have to 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 preemptive 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 A potential new product extension for a brand must be judged by how effectively it leverages existing brand equity from the parent brand to the new product, as well as how effectively the extension, in turn, contributes to the equity of the parent brand. Marketers should ask a number of questions in judging the potential success of an extension. Does the parent brand have strong equity? Is there a strong basis of fit? Will the extension have the optimal points-of-parity and points-of-difference? How can marketing programs enhance extension equity? What implications will the extension have for parent brand equity and profitability? How should feedback effects best be managed? Table 9.5 offers a sample scorecard with specific weights and dimensions that users can adjust for each application. Table 9.6 lists a number of academic research findings on brand extensions. One major mistake in evaluating extension opportunities is failing to take all of consumers’ brand knowledge structures into account, and focusing on one or two brand associations as a potential basis of fit. CUSTOMER EQUITY Achieving brand equity should be a top priority for any organization. “Marketing Memo: Twenty-First-Century Branding” offers some contemporary perspectives on enduring brand leadership. 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. 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. Chapter 10 Crafting the Brand Positioning LEARNING OBJECTIVES In this chapter we will address the following questions: How can a firm develop and establish an effective positioning in the market? How do marketers identify and analyze competition? How are brands successfully differentiated? What are the differences in positioning and branding with a small business? SUMMARY To develop an effective positioning, a company must study competitors as well as actual and potential customers. Marketers need to identify competitors’ strategies, objectives, strengths, and weaknesses. Developing a positioning requires the determination of a frame of reference—by identifying the target market and the resulting nature of the competition—and the optimal points-of-parity and points-of-difference brand associations. A company’s closest competitors are those seeking to satisfy the same customers and needs and making similar offers. A company should also pay attention to latent competitors, who may offer new or other ways to satisfy the same needs. A company should identify competitors by using both industry- and market-based analyses. Points-of-difference are those associations unique to the brand that are also strongly held and favorably evaluated by consumers. Points-of-parity are those associations not necessarily unique to the brand but perhaps shared with other brands. Category pointof-parity associations are associations consumers view as being necessary to a legitimate and credible product offering within a certain category. Competitive pointof-parity associations are those associations designed to negate competitors’ points-ofdifference or overcome perceived weaknesses or vulnerabilities of the brand. The key to competitive advantage is relevant brand differentiation—consumers must find something unique and meaningful about a market offering. These differences may be based directly on the product or service itself or on other considerations related to factors such as employees, channels, image, or services. Emotional branding is becoming an important way to connect with customers and create differentiation from competitors. Although small businesses should adhere to many of the branding and positioning principles larger companies use, they must place extra emphasis on their brand elements and secondary associations and must be more focused and create a buzz for their brand. OPENING THOUGHT A barrier to effective learning that can be experienced by students in this chapter comes from the concept of “positioning.” Students will be familiar with different products or services, but having them realize what the products and services “positions are” within their frame of references is challenging to verbalize. The instructor is encouraged to use a number of examples of products or services familiar to the students to get this concept fully across. Secondly, the understanding of the terms point-of-differences (PODs) and points-of-parity (POPs) can easily be confused. The instructor is encouraged to use a number of similar products (computers, cell phones, pens, PDAs for example) and ask students to differentiate these products in terms of the product’s POPs and PODs; and why these concepts are so important to the marketing of products. A key example of a new product with a pronounced POD is Apple’s iPhone. The third challenge presented in this chapter is an understanding that products and markets have a life cycle and undergo changes throughout that process. Again, the use of product or service examples familiar to the students is encouraged to communicate the different stages of a product’s life cycle. TEACHING STRATEGY AND CLASS ORGANIZATION PROJECTS At this point in the semester, student projects should be completed to include their fictional product or service’s brand positioning. In relationship to the material contained in the chapter, students should have delineated and designed a differentiated brand positioning for their project. Relevant to the opening vignette of the chapter concerning Pantene shampoo’s positioning and differentiation, students are to devise a positioning and differentiation strategy for their own product or service. Marketing Plan: The third part of STP is to select and communicate an effective positioning to differentiate product or service offerings from competitors’ offerings. The marketer must also plan for appropriate marketing strategies for each stage of the product life cycle. As students continue work to develop their marketing plan, get them to consider these questions about positioning and life-cycle strategies: Which of the differentiation variables related to product, services, personnel, channels, and image are best suited for their situation, strategy, and marketing objectives? Why? What is your positioning statement? Knowing the nature of their product or service, what are the implications for the marketing mix, product management strategy, service strategy, and R&D strategy? They should record answers in a written marketing plan or type them in the Positioning section of Marketing Plan Pro. They should also indicate in the Marketing Research section what studies support their decisions about managing positioning. ASSIGNMENTS The Web site www.allaboutbranding.com lists a number of articles and books about branding products today. Assign students the objective of reading four articles from the Web site and commenting in class about the information contained in the articles and what new information about branding they learned. Most campus communities have their own radio and/or television broadcasting stations. If one is present on your campus, students are to define the college or university’s station(s) in terms of positioning and differentiation strategy. What stage in the product’s life cycle are the station(s)? What can be done to reposition the station(s) to attract more viewership? What is the competitive advantage present in their operations? Determining the proper competitive frame of reference requires understanding consumer behavior and the consideration sets consumers use in making brand choices. For a set of three products or services (selected by the students) students should research these companies and provide the companies (and its products) value proposition in a matrix similar to Table 10.1. Points-of-differences and points-of-parity are two important concepts of brand development and are driven by two differing strategies—inclusion and differentiation. Students should devise a list of at least five other products/services that they believe demonstrate points-of-differences and points-of-parity in their brand positioning. Student must include their reasoning behind the inclusion of these products/services into a category. Good students will present “proof” of their correct selection by including advertising copy supporting the product or services POD or POP. Styles, fashions, and fads fall into special categories when talking about product life cycles. Some may have a product life cycle measured in weeks, others in months, and yet others in years. Ask the students to list the current fads, fashions, and styles prevalent around campus today. Do any of these fashions, styles, or fads meet or satisfy a strong need? If so, can they predict the length of the life cycle of the ones that satisfy a strong need? Which of the fashions, styles, or fads do the students predict will have longevity? Why or why not? END-OF-CHAPTER SUPPORT Marketing Debate--What is the Best Way to Position? Marketers have different views on how to position a brand. Some value structured approaches such as the competitive positioning model described in the chapter, which focuses on specific points-of-parity and points-of-difference. Others prefer unstructured approaches that rely more on stories, narratives, and other flowing depictions. Take a position: The best way to position a brand is through a structured approach versus the best way to position a brand is through an unstructured approach. Suggested Answer: Student answers will vary but good students will cite as either for or against this statement that companies must study competitors as well as actual and potential customers; optimal point of parity and points of differentiation; that points of differences are associations and are strongly held and favorably evaluated by consumers; the key to competitive advantage is relevant brand differentiation; emotional branding is becoming a way to create product and brand differentiation: brand stories are growing in importance as are brand journalism, and cultural branding. The best way to position a brand is through a structured approach because it allows for clear differentiation from competitors and ensures alignment with consumer expectations and needs, enhancing strategic effectiveness and brand consistency. Marketing Discussion Identify other negatively correlated attributes and benefits not included in Table 10.3. What strategies do firms use to try to position themselves on the basis of pairs of attributes and benefits? Suggested Response: Some additional negatively correlated attributes and benefits include: Functionality and price: products and/or services with many features but at a low price— computers, automobiles, home appliances. Ease and completeness: products that are easy to use and contain everything the consumer wants in the products—computers, home entertainment products. Fun to drive and good gas mileage: for cars, this is an ongoing challenge along with safe and good gas mileage and “large” and good gas mileage. Safe and scary—amusement rides, movies, television shows, books. Choices and convenience: variety in our shopping but sized for convenience (has the right mix of products but is not too big—convenience stores). Close but not too close—shopping centers and large mega-stores close enough but “not in my backyard.” Simple to use yet not complicated—computer and game programs. A firm may use dual strategies to communicate these negatively correlated attributes and benefits. Although more expensive to use dual marketing strategies, for a product or service consisting of negatively correlated attributes, such strategies will appeal to both sets of consumers for the product. Additionally, the marketer may anchor the PODs and POPs, with other brands or other associations that emulate the desired characteristics or communicate the desired emotional appeals. Other negatively correlated attributes might include high price versus perceived value or exclusivity versus accessibility. Firms often use strategies like differentiating their brand through premium positioning or creating tiered product lines to balance these attributes and appeal to varying consumer segments. Marketing Lesson: BEST BUY What were Best Buy’s points-of-parity and points-of-difference in China? Suggested Answer: Points-of-difference: Value-added services such as an extended warranty; employed its own instore people to offer non-biased service to customers; outstanding service standard, interactive displays that allowed shoppers to try out their products. Points-of-parity: Electronic products, city location and skill staff. In China, Best Buy's points-of-parity likely included competitive pricing and a wide selection of electronics, aligning with local consumer expectations. Points-of-difference may have included superior customer service and expertise, distinguishing it from local competitors in the electronics retail market. Was its differentiation meaningful or relevant to Chinese consumers? Why or why not? Suggested Answer: No it was not. The Chinese electronics marketplace is crowded, highly competitive and extremely price sensitive. As it turned out, Chinese consumers were not bothered about good service as money is still the central issue for any purchase. Yes, Best Buy's differentiation was meaningful to Chinese consumers because superior customer service and expertise provided reassurance and support in a market where trust and reliability are crucial, enhancing its appeal beyond mere product offerings. How would you have positioned Best Buy in China? Suggested Answer: One clear option is to position Best Buy as a one-stop electronic marketplace offering products at competitive prices. I would position Best Buy in China as the trusted expert in electronics, emphasizing personalized customer service, reliable product quality, and a seamless omnichannel experience to cater to tech-savvy consumers seeking both value and expertise. Marketing Lesson: LOUIS VUITTON How does an exclusive brand such as Louis Vuitton grow and stay fresh while retaining its cachet? Suggested Answer: Louis Vuitton’s products are made with state-of-the art materials, and its designers use a combination of art, precision, and craftsmanship to produce only the finest products. LV broke tradition and featured non-traditional celebrities such as Steffi Graf, Mikhail Gorbachev, and Keith Richards in a campaign entitled “Core Values.” LV also launched its first television commercial focused on luxury traveling rather than fashion and has formed new partnerships with international artists, museums, and cultural organizations in hopes of keeping the brand fresh. Louis Vuitton grows and stays fresh by innovating with limited edition collections, collaborations with artists and designers, expanding into new markets with exclusive products, and maintaining stringent brand control to preserve its luxury cachet. What is Louis Vuitton’s brand mantra? Does it have an emotional bonding with consumers? Suggested Answer: LV’s brand mantra is unclear in the case study however its positioning is clearly that of luxury, wealth, and fashion. Yes LV has emotional bonding with its consumers. A study among 1,500 well-heeled Chinese consumers showed that LV is the most sought-after brand. A clear example is how wealthy Chinese consumers arrive in bus loads to shop at LV stores in Paris. Louis Vuitton's brand mantra revolves around luxury, heritage, and craftsmanship, creating emotional bonding with consumers through aspirational storytelling and prestigious associations with high-profile events and celebrities. How can LV preserve its brand equity when there are many Chinese consumers who stand to profit by serving as unofficial middlemen and selling its products online? Suggested Answer: LV has little control over such practices but what it is attempting to do is convince Chinese consumers to buy from its stores in China. By stressing that product availability and selection in China is the same as that of overseas stores, it hopes to reduce the number of online purchases from unofficial middlemen. LV can preserve its brand equity by enforcing strict distribution policies, collaborating with authorized online retailers, and educating consumers about the value of authenticity and purchasing directly from authorized channels to ensure premium quality and customer experience. DETAILED CHAPTER OUTLINE No company can win if its products and offerings resemble every other product and offering. As part of the strategic brand management process, each offering must represent a compelling, distinctive big idea in the mind of the target market. Creating a compelling, well-differentiated brand position requires a keen understanding of consumer needs and wants, customer capabilities, and competitive actions. It also requires disciplined but creative thinking. DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY All marketing strategy is built on STP—Segmentation, Targeting, and Positioning. A company discovers different needs and groups in the marketplace, targets those needs and groups that it can satisfy in a superior way, and then positions its offering so that the target market recognizes the company’s distinctive offering and image. Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market. The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. A good brand positioning helps guide marketing strategy by clarifying the brand’s essence, identifying the goals it helps the consumer achieve, and showing how it does so in a unique way. A good positioning has a “foot in the present” and a “foot in the future.” It needs to be somewhat aspirational so the brand has room to grow and improve. The result of positioning is the successful creation of a customer-focused value proposition, a cogent reason why the target market should buy the product. Table 10.1 shows how two companies—Volvo and Top detergent—defined their value proposition given their target customers, benefits, and prices. Positioning requires that marketers define and communicate similarities and differences between their brand and its competitors. Specifically, deciding on a positioning requires: Determining a frame of reference by identifying the target market and relevant competition Identifying the optimal points-of-parity and points-of-difference brand associations given that frame of reference Creating a brand mantra to summarize the positioning and essence of the brand DETERMINING A COMPETITIVE FRAME OF REFERENCE The competitive frame of reference defines which other brands a brand competes with and therefore which brands should be the focus of competitive analysis. Decisions about the competitive frame of reference are closely linked to target market decisions. Deciding to target a certain type of consumer can define the nature of competition, because certain firms have decided to target that segment in the past (or plan to do so in the future), or because consumers in that segment may already look to certain products or brands in their purchase decisions. Identifying Competitors A good starting point in defining a competitive frame of reference for brand positioning is to determine category membership—the products or sets of products with which a brand competes and which function as close substitutes. The range of a company’s actual and potential competitors, however, can be much broader than the obvious. For a brand with explicit growth intentions to enter new markets, a broader or maybe even more aspirational competitive frame may be necessary to reflect possible future competitors. And a company is more likely to be hurt by emerging competitors or new technologies than by current competitors. An industry is a group of firms offering a product or class of products that are close substitutes for one another. Marketers classify industries according to number of sellers; degree of product differentiation; presence or absence of entry, mobility, and exit barriers; cost structure; degree of vertical integration; and degree of globalization. Using the market approach, we define competitors as companies that satisfy the same customer need. Marketers must overcome “marketing myopia” and stop defining competition in traditional category and industry terms. The market concept of competition reveals a broader set of actual and potential competitors than competition defined in just product category terms. Marketing Insight: High Growth through Value Innovation INSEAD professors W. Chan Kim and Renée Mauborgne believe too many firms engage in “red-ocean thinking”—seeking bloody, head-to-head battles with competitors based largely on incremental improvements in cost, quality, or both. They advocate engaging in “blue-ocean thinking” by creating products and services for which there are no direct competitors (refer to p. 348). Analyzing Competitors A company needs to gather information about each of its competitor’s real and perceived strengths and weaknesses. Table 10.2 shows the results of a company survey that asked customers to rate its three competitors, A, B, and C, on five attributes. Once a company has identified its main competitors and their strategies, it must ask: What is each competitor seeking in the marketplace? What drives each competitor’s behavior? IDENTIFYING OPTIMAL POINTS-OF-DIFFERENCE AND POINTS-OFPARITY Once the competitive frame of reference for positioning has been fixed by defining the customer target market and nature of competition, marketers can define the appropriate PODs and POPs associations. Points-of-Difference (PODs) Are attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find the same extent with a competitive brand. Three key criteria determine whether a brand association can truly function as a point-ofdifference—desirability, deliverability, and differentiability. Some key considerations follow. Desirable to consumer. Consumers must see the brand association as personally relevant to them. Deliverable by the company. The company must have the internal resources and commitment to feasibly and profitably create and maintain the brand association in the minds of consumers. The product design and marketing offering must support the desired association. Differentiating from competitors. Finally, consumers must see the brand association as distinctive and superior to relevant competitors. Any attribute or benefit associated with a product or service can function as a point-ofdifference for a brand as long as it is sufficiently desirable, deliverable, and differentiating. The brand must demonstrate clear superiority on an attribute or benefit, however, for it to function as a true point-of-difference. Points-of-Parity (POPs) POPs on the other hand are attributes or benefits associations that are not necessarily unique to the brand buy may in fact be shared with other brands. A) These types of associations come in two basic forms: category and competitive. Category points-of-parity are associations consumers view as essential to be a legitimate and credible offering within a certain product or service category. They represent necessary conditions but not necessarily sufficient for brand choice. Category points-of-parity may change over time due to technological, legal, or consumer trends. Competitive POPs are associations designed to overcome perceived weaknesses of the brand. If a brand can “break-even” where the competitors are trying to find an advantage and can achieve advantages in other areas, the brand should be in a strong competitive position. Points-of-Parity versus Points-of-Difference To achieve a point-of-parity on a particular attribute or benefit, a sufficient number of consumers must believe that the brand is “good enough” on that dimension. There is a “zone” or “range of tolerance or acceptance” with points-of-parity. The brand does not literally have to be seen as equal to competitors, but consumers must feel that the brand does well enough on that particular attribute or benefit. D) With points-of-differences, the brand must demonstrate clear superiority. Multiple Frames of Reference It is not uncommon for a brand to identify more than one actual or potential competitive frame of reference, if competition widens or the firm plans to expand into new categories. There are two main options with multiple frames of reference. One is to first develop the best possible positioning for each type or class of competitors and then see whether there is a way to create one combined positioning robust enough to effectively address them all. If competition is too diverse, however, it may be necessary to prioritize competitors and then choose the most important set of competitors to serve as the competitive frame. One crucial consideration is not to try to be all things to all people—that leads to lowest-common-denominator positioning which is typically ineffective. Finally, if there are many competitors in different categories or sub-categories, it may be useful to either develop the positioning at the categorical level for all relevant categories. Straddle Positioning Occasionally, a company will be able to straddle two frames of reference with one set of PODs and POPs. BMW’s positioning of luxury and performance is an example (refer to p. 353). Choosing POPs and PODs Marketers typically focus on brand benefits in choosing the points-of-parity and points-of-difference that make up their brand positioning. Brand attributes generally play more of a supporting role by providing “reasons to believe” or “proof points” as to why a brand can credibly claim it offers certain benefits. For choosing specific benefits such as POPs and PODs to position a brand, perceptual maps may be useful. Perceptual maps are visual representations of consumer perceptions and preferences. They provide quantitative portrayals of market situations and the way consumers view different products, services, and brands along various dimensions. By overlaying consumer preferences with brand perceptions, marketers can reveal “holes” or “openings” that suggest unmet consumer needs and marketing opportunities. Figure 10.1(a) shows a hypothetical perceptual map for a beverage category. BRAND MANTRAS To further focus the intent of the brand positioning and the way firms would like consumers to think about the brand, it is often useful to define a brand mantra. A brand mantra is an articulation of the heart and soul of the brand and is closely related to other branding concepts like “brand essence” and “core brand promise.” Brand mantras are short, three- to five-word phrases that capture the irrefutable essence or spirit of the brand positioning. Their purpose is to ensure that all employees within the organization and all external marketing partners understand what the brand is most fundamentally trying to represent with consumers so they can adjust their actions accordingly. Brand mantras are powerful devices. They can provide guidance about what products to introduce under the brand, what ad campaigns to run, and where and how to sell the brand. Their influence, however, can extend beyond these tactical concerns. Brand mantras may even guide the most seemingly unrelated or mundane decisions, such as the look of a reception area and the way phones are answered. In effect, they create a mental filter to screen out brand-inappropriate marketing activities or actions of any type that may have a negative bearing on customers’ impressions of a brand. Brand mantras must economically communicate what the brand is and what it is not. What makes for a good brand mantra? Two high-profile and successful examples—Nike and Disney (refer to p. 355). Designing a Brand Mantra Brand mantras are designed with internal purposes in mind. A brand slogan is an external translation that attempts to creatively engage consumers. Here are the three key criteria for a brand mantra: Communicate: A good brand mantra should define the category (or categories) of business for the brand and set the brand boundaries. It should also clarify what is unique about the brand. Simplify: An effective brand mantra should be memorable. For that, it should be short, crisp, and vivid in meaning. Inspire: Ideally, the brand mantra should also stake out ground that is personally meaningful and relevant to as many employees as possible. Brand mantras are typically designed to capture the brand’s points-of-difference, that is, what is unique about the brand. Other aspects of the brand positioning— especially the brand’s points-of-parity—may also be important and may need to be reinforced in other ways. For brands facing rapid growth, it is helpful to define the product or benefit space in which the brand would like to compete, as Nike did with “athletic performance” and Disney with “family entertainment.” Words that describe the nature of the product or service, or the type of experiences or benefits the brand provides, can be critical to identifying appropriate categories into which to extend. For brands in more stable categories where extensions into more distinct categories are less likely to occur, the brand mantra may focus more exclusively on points-ofdifference. Brand mantras derive their power and usefulness from their collective meaning. Other brands may be strong on one, or perhaps even a few, of the brand associations making up the brand mantra. But for the brand mantra to be effective, no other brand should singularly excel on all dimensions. ESTABLISHING BRAND POSITIONING Once they have determined the brand positioning strategy, marketers should communicate it to everyone in the organization so it guides their words and actions. One helpful schematic to do so is a brand-positioning bullseye. Constructing a bullseye for the brand ensures that no steps are skipped in its development. “Developing Compelling Customer Value Propositions” outlines one way marketers can formally express brand positioning. Establishing the brand positioning in the marketplace requires that consumers understand what the brand offers and what makes it a superior competitive choice. To do so, consumers need to understand in which category or categories it competes and its POPs and PODs with respect to those competitors. Marketing Memo: Developing Compelling Customer Value Propositions A brand bull’s-eye provides content and context to improve everyone’s understanding of the positioning of a brand in the organization (refer to p. 357). Communicating Category Membership There are three main ways to convey a brand’s category membership: Announcing category benefits. To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers frequently use benefits to announce category membership. Comparing to exemplars. Well-known, noteworthy brands in a category can also help a brand specify its category membership. Relying on the product descriptor. The product descriptor that follows the brand name is often a concise means of conveying category origin. Communicating POPs and PODs One common difficulty in creating a strong competitive brand positioning is that many of the attributes or benefits that make up the points-of-parity and points-of-difference are negatively correlated. Some marketers have adopted other approaches to address attribute or benefit tradeoffs: launching two different marketing campaigns, each one devoted to a different brand attribute or benefit; linking themselves to any kind of entity (person, place, or thing) that possesses the right kind of equity as a means to establish an attribute or benefit as a POP or POD; and even attempting to convince consumers that the negative relationship between attributes and benefits, if they consider it differently, is in fact positive. DIFFERENTIATION STRATEGIES To build a strong brand and avoid the commodity trap, marketers must start with the belief that you can differentiate anything. Competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match. Leverageable advantage is one that a company can use as a springboard to new advantages. A company hopes to continuously invent new advantages. Customers must see any competitive advantage as a customer advantage. Means of Differentiation The obvious means of differentiation, and often the ones most compelling to consumers, relate to aspects of the product and service (reviewed in Chapters 12 and 13). Personnel differentiation. Companies can have better-trained employees who provide superior customer service. Channel differentiation. Companies can more effectively and efficiently design their distribution channels’ coverage, expertise, and performance to make buying the product easier and more enjoyable and rewarding. Image differentiation. Companies can craft powerful, compelling images that appeal to consumers’ social and psychological needs. Service differentiation. A service company can differentiate itself by designing a better and faster delivery system that provides more effective and efficient solutions to consumers. There are three levels of differentiation. The first is reliability. Some suppliers are more reliable in their on-time delivery, order completeness, and order-cycle time. The second is resilience. Some suppliers are better at handling emergencies, product recalls, and inquiries. The third is innovativeness. Some suppliers create better information systems, introduce bar coding and mixed pallets, and help the customer in other ways. Emotional Branding Many marketing experts believe a brand positioning should have both rational and emotional components. In other words, a good positioning should contain points-ofdifference and points-of-parity that appeal both to the head and to the heart. To do this, strong brands often seek to build on their performance advantages to strike an emotional chord with their customers. A person’s emotional response to a brand and its marketing will depend on many factors. One increasingly important factor is a brand’s authenticity. Brand consultant Marc Gobe believes emotional brands share three specific traits: strong people-focused corporate culture; a distinctive communication style and philosophy; and a compelling emotional hook. CEO of Saatchi & Saatchi Kevin Roberts advocates that brands strive to become lovemarks. Brands that are lovemarks, according to Roberts, command both respect and love and result from a brand’s ability to achieve mystery, sensuality, and intimacy. Mystery draws together stories, metaphors, dreams, and symbols. Mystery adds to the complexity of relationships and experiences because people are naturally drawn to what they don’t know. Sensuality keeps the five senses of sight, hearing, smell, touch, taste on constant alert for new textures, intriguing scents and tastes, wonderful music, and other sensory stimuli. Intimacy means empathy, commitment and passion. The close connections that win intense loyalty as well as the small perfect gesture. In general, the firm should monitor three variables when analyzing potential threats posed by competitors: Share of market—The competitor’s share of the target market. Share of mind—The percentage of customers who named the competitor in responding to the statement, “Name the first company that comes to mind in this industry.” Share of heart—The percentage of customers who named the competitor in responding to the statement, “Name the company from which you would prefer to buy the product.” Table 10.3 shows them as recorded for three hypothetical competitors. Companies that make steady gains in mind share and heart share will inevitably make gains in market share and profitability. ALTERNATIVE APPROACHES TO POSITIONING The competitive brand positioning model we’ve reviewed in this chapter is a structured way to approach positioning based on in-depth consumer, company, and competitive analysis. Some marketers have proposed other, less-structured approaches in recent years that offer provocative ideas on how to position a brand. We highlight a few of those here. Brand Narratives and Storytelling Rather than outlining specific attributes or benefits, some marketing experts describe positioning a brand as telling a narrative or story. Randall Ringer and Michael Thibodeau see narrative branding as based on deep metaphors that connect to people’s memories, associations, and stories. They identify five elements of narrative branding: the brand story in terms of words and metaphors; the consumer journey in terms of how consumers engage with the brand over time and touch points where they come into contact with it; the visual language or expression of the brand; the manner in which the narrative is expressed experientially in terms of how the brand engages the senses; and the role/relationship the brand plays in the lives of consumers. Based on literary convention and brand experience, they also offer the following framework for a brand story: Setting: The time, place and context Cast: The brand as a character, including its role in the life of the audience, its relationships and responsibilities, and its history or creation myth Narrative Arc: The way the narrative logic unfolds over time, including actions, desired experiences, defining events, and the moment of epiphany Language: The authenticating voice, metaphors, symbols, themes and leitmotifs Patrick Hanlon developed the related concept of “primal branding” that views brands as complex belief systems. According to Hanlon, diverse brands such as Google, Starbucks and Apple have a “primal code” or DNA that resonates with their customers and generates their passion and fervor. He outlines seven assets that make up this belief system or primal code: a creation story, creed, icon, rituals, sacred words, a way of dealing with nonbelievers, and a good leader. Brand Journalism When he was CMO at McDonald’s, Larry Light advocated an approach to brand positioning that he called “brand journalism.” Just as editors and writers for newspapers and magazines tell many facets of a story to capture the interests of diverse groups of people, Light believes marketers should communicate different messages to different market segments, as long as they at least broadly fit within the basic broad image of the brand. Cultural Branding Oxford University’s Douglas Holt believes for companies to build iconic, leadership brands, they must assemble cultural knowledge, strategize according to cultural branding principles, and hire and train cultural experts. Even Procter & Gamble, a company that has long orchestrated how shoppers perceive its products, has started what is called “a learning journey” with the consumer. It is learning to let go and allow consumers to participate in its brand creation. Experts who see consumers actively co-creating brand meaning and positioning refer to this as “Brand Wikification,” given that wikis are written by contributors from all walks of life and all points of view. POSITIONING AND BRANDING A SMALL BUSINESS Building brands for a small business is a challenge because these firms have limited resources and budgets. In general, with limited resources behind the brand, both focus and consistency in marketing programs are critically important. Creativity is also paramount—finding new ways to market new ideas about products to consumers. Some specific branding guidelines for small businesses are as follows. Creatively conduct low-cost marketing research. There are a variety of low-cost marketing research methods that help small businesses connect with customers and study competitors. Focus on building one or two strong brands based on one or two key associations. Small businesses often must rely on only one or two brands and key associations as points of difference for those brands. Employ a well-integrated set of brand elements. Tactically, it is important for small businesses to maximize the contribution of each of the three main sets of brand equity drivers. Create buzz and a loyal brand community. Because small businesses often must rely on word of mouth to establish their positioning, public relations, social networking, and low-cost promotions and sponsorship can be inexpensive alternatives. Leverage as many secondary associations as possible. Secondary associations — any persons, places, or things with potentially relevant associations — are often a cost effective, shortcut means to build brand equity, especially those that help to signal quality or credibility. Unlike major brands that often have more resources at their disposal, small businesses usually do not have the luxury to make mistakes and must design and implement marketing programs much more carefully. Instructor Manual for Marketing Management: A South Asian Perspective Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha 9789810687977, 9780132102926