CH-12-13 Introducing and Naming New Products and Brand Extensions – Strategic Brand Management: Building, Measuring, and Managing Brand Equity : Chapter Notes

This Document Contains Chapters 12 to 13 Chapter 12 Introducing and Naming New Products and Brand Extensions Chapter Objectives 1. Define the different types of brand extensions. 2. List the main advantages and disadvantages of brand extensions. 3. Summarize how consumers evaluate extensions and how extensions contribute to parent brand equity. 4. Outline the key assumptions and success criteria for brand extensions. Overview This chapter considers the role of brand extensions in creating, maintaining, and enhancing brand equity. The popularity of brand extensions, which apply an established brand name to a new product in the same product category (line extension) or in a different product category (category extension), has been fueled in part by the rising cost of introducing new brands and by the growing realization among companies that their brand investments can be leveraged. Brand extensions can facilitate new product acceptance by reducing consumers’ perceived risk, raising the probability of gaining distribution and trial, increasing the efficiency of promotional expenditures, lowering the costs of marketing programs, eliminating new brand development costs, allowing for packaging and labeling efficiencies, and permitting consumer variety seeking. They can provide feedback benefits to the parent brand by clarifying the meaning of a brand, enhancing the parent brand image, attracting new customers to the brand franchise, and thereby expanding market coverage, revitalizing the brand, and facilitating subsequent extensions. However, brand extensions are not a risk-free strategy. They can confuse or frustrate consumers, encounter retailer resistance, hurt the parent brand image if they fail, cannibalize sales of the parent brand, diminish the parent brand’s identification with any one category, create unfavorable associations for the parent brand if they succeed, dilute the overall meaning of the parent brand, and eliminate the opportunity to develop a new brand with its own unique image and equity. The best brand extensions not only create equity for the new product, but also add to the equity of the parent brand. All else being equal, an extension will be more successful if consumers perceive that the parent brand and the extension product fit together in some way. A firm engaging in a brand extension strategy should: 1) define actual and desired consumer knowledge about the brand, 2) identify possible extension candidates, 3) evaluate the potential of each candidate, 4) evaluate extension feedback effects, 5) consider possible competitive advantages and reactions, 6) design a marketing program to launch the extension, and 7) evaluate the success of the extension and its impact on the equity of the parent brand. The chapter concludes by providing 16 guidelines for brand extensions based on the findings of numerous of the academic research studies. These guidelines can be employed by marketers to maximize the effectiveness and equity of extensions. Brand Focus 12.0 discusses the scoring of brand extensions. Science of Branding THE SCIENCE OF BRANDING 12-1 WHEN IS VARIETY A BAD THING? Consumers may like the idea of having more choice—the flexibility and sense of freedom it gives, the greater likelihood of finding just the right alternative—but negative consequences often arise too. Actually finding the optimal choice can require much effort and result in inner conflict and regret. The difficulty of making a decision can be overwhelming or demotivating, and some consumers may just choose to walk away. Product assortment has been defined as the number of SKUs offered within a single product category. Consumer perception of assortment is one of the top three criteria, along with location and price, that affect their retail loyalty. Manufacturers and retailers are thus keenly interested in factors affecting the optimal product assortment size for a brand. Much research has supported the conclusion that reducing the number of different items stocked does not necessarily adversely affect category volume, especially if the category already has a lot of SKUs or a few SKUs that are big sellers. Research has also found that consumer perceptions of variety assortment depend on factors such as the similarity of items for the brand, the amount of allocated shelf space, and the presence of the consumer’s favorite item. Marketers and retailers can improve perceptions of product variety in a category or for a brand. Organized displays have been found to be better for large brand assortments, whereas unorganized displays are better for small brand assortments. Asymmetrical assortments have also been found to lead to perceptions of greater assortment. Branding Briefs BRANDING BRIEF 12-1 GROWING THE MCDONALD’S BRAND Market saturation, global health concerns, and a slumping economy have presented significant obstacles to McDonald’s growth. To overcome these, the company has employed a number of different growth strategies that can be classified using the Ansoff growth share matrix. As a result of these strategies, the company’s financial fortunes have rebounded, and McDonald’s has outperformed many of its peers in revenue growth. The brand has even been credited with producing a “halo effect” that is “driving growth for the entire quick-service restaurant category.” Market Penetration Rather than trying to grow by adding new restaurants, McDonald’s would grow by generating greater returns from the ones it had. Thus, instead of investing in new real estate, the firm made huge investments in upgrading the facilities and operations of existing stores. One important way McDonald’s made it easier for its customers to spend more money was by expanding to 24-hour service at many stores. The menu has been constantly fine-tuned so there are offerings to suit any meal or snack opportunity. Breakfast has become an essential part of the McDonald’s revenue equation. McDonald’s decade-long “I’m Lovin’ It” global advertising campaign has served as the perfect vehicle to support new product launches and enhance loyalty. Market Development There are over 33,000 restaurants worldwide in 119 different countries today, and 1.7 million employees serve 64 million customers daily in the United States, Europe, the Middle East, the Asia-Pacific region, Africa, Canada, and Latin America. One key to its global success has been McDonald’s willingness to adapt its menu to different cultural preferences and regional tastes. The chain offers specialized menu items. McDonald’s targets different demographic and psychographic market segments as well. The product offerings in Happy Meals have been tweaked through the years to appeal to both children and their parents. Product Development McDonald’s found its popularity in its core markets under threat as international concern grew about the role of fast food in poor health and obesity, highlighted by the 2001 book Fast Food Nation and the 2004 movie Super-Size Me, among other critiques. McDonald’s responded by overhauling its menu, removing “Super-Size” options and adding healthier options such as a number of fresh salads, healthier versions of kids’ Happy Meals, and adult versions that included salad, bottled water, and a pedometer to encourage exercise. The shift in focus toward healthy eating and physical activity was emphasized by McDonald’s recasting of Ronald McDonald as its “Chief Happiness Officer,” a sports enthusiast who donned a more athletic version of his traditional yellow-and-red clown suit and snowboarded, skateboarded, and juggled fruit in a new TV spot. The company also tapped into the growing premium-coffee trend in the United States by launching McDonald’s Premium Roast coffee. McDonald’s also introduced a new line of premium hamburgers—one-third-of-a-pound Angus Burgers. Diversification McDonald’s has done some diversification to target new customers with new service offerings. It extended its brand in 2001 with the opening of its first domestic McCafé, a gourmet coffee shop inspired by the success of Starbucks that had debuted in Portugal and Austria. Another extension is McTreat, an ice cream and dessert shop. BRANDING BRIEF 12-2 ARE THERE ANY BOUNDARIES TO THE VIRGIN BRAND NAME? Virgin’s brand strategy is to go into categories where consumer needs are not well met and do different things—and do them differently—to better satisfy consumers. Branson founded the Virgin record label and launched Virgin Atlantic Airways. Later, he made millions on the sale of his record label, his Virgin record retail chain, and his Virgin computer games business. After licensing the use of the Virgin name to European startup airlines, he licensed the Virgin name for use on personal computers and set up joint ventures to market Virgin Vodka and Virgin Cola. Later, he took over six of the United Kingdom’s government rail lines and established Virgin Rail. In 1999, he launched Virgin Mobile and branched into e-commerce with the debut of Virgin.com. Today, the Virgin Group employs over 50,000 people, spans 30 countries, and contains more than 300 branded companies marketing such diverse product areas as travel, lifestyle, media and mobile, money, people and planet, music, health care, and alcohol. When Virgin ventures are poorly received, as Virgin Cola, Virgin Vodka, Virgin PCs, Virgin Jeans, Virgin Brides, and Virgin Clothing were in recent years, experts worry about the cumulative negative effect of these unsuccessful brands on the company’s overall equity. Some critics believe Virgin consumer products will do little more than generate publicity for Virgin airlines. They also warn of overexposure, even with the young, hip audience the Virgin brand has attracted. Among the new products Branson is launching are Virgin Oceanic, for oceanic exploration, and Virgin Galactic, for space tourism on rocket ships. Yet Virgin has become more disciplined about its expansion in recent years: The company pursues new businesses only if they are expected to generate more than $150 million in sales within three years. Virgin is also placing great emphasis on sustainability and the environment. BRANDING BRIEF 12-3 LEVI EXTENDS ITS BRAND For years, market power had been shifting away from suppliers like Levi and toward retailers. Levi adopted a segmentation strategy to convince different types of retailers (department stores, specialty chains, upscale boutiques, and mass merchants) to carry its products. Under the segmentation strategy, Levi’s brands ranged from a relatively inexpensive discount line to $150-and-up vintage designs. Levi created the Signature by Levi Strauss & Co. brand to sell at mass merchants and began selling to Walmart in 2003. Signature, positioned as a premium mass brand, carried new labels and styles manufactured from less expensive fabric. The Levi Strauss & Co. name appeared in cursive. At that time, Levi priced Signature jeans at $23—more than other mass brands but below its $29 regular brand. Initially, the segmentation strategy created rough spots for other Levi brands. Orders from department stores slipped and sales of regular Levi’s, which had finally steadied leading up to the launch of the Signature brand, resumed their decline. Furthermore, a new high-fashion line called Type 1 failed. In 2006, Walmart’s price-chopping move ultimately proved effective and Signature jeans began to sell more quickly. The company also added lines of Signature baby clothing, bags and wallets, and men’s khaki pants, selling to other mass retailers such as Kmart and Meijer. Levi attempted to expand into premium segments, selling premium lines such as Levi’s Capital E to Bloomingdales and Barney’s New York. The upward stretch has proven to be more challenging. The biggest launch was another discount brand, dENiZEN from Levi’s, first introduced into Asia in 2010. The name was chosen because it means “inhabitant” or someone belonging to a community of family and friends. Brand Focus BRAND FOCUS 12.0 SCORING BRAND EXTENSIONS When identifying and evaluating brand extensions, it is helpful to have a summary tool to judge their viability. The following checklist can provide some guidance: 1. Does the parent brand have strong equity? 2. Is there a strong basis of extension fit? 3. Will the extension have necessary points-of-parity and points-of-difference? 4. How can marketing programs enhance extension equity? 5. What implications will the extension have on parent brand equity and profitability? 6. How should feedback effects be best managed? It’s also useful to employ more systematic analysis of proposed extensions. The Brand Extendibility Scorecard is designed to help marketers conduct thoughtful, thorough analysis of brand extensions. It serves as a means to an end and is designed to inform decision-making, not to provide black-and-white “go or no-go” decisions. Three of its four main criteria follow the classic “3 Cs” perspectives—the consumer, company, and competitive point of view—to judge brand positioning. The fourth criterion is unique to the Scorecard and measures brand equity feedback. Within each criterion, there are two major factors and one minor factor. Major factors are scored on a 10-point scale, minor factors on a 5-point scale. Maximum points are awarded if the extension candidate is clearly ideal on that factor, using either company or industry measures. While scoring extensions, relative performance is important as absolute performance. Ranking extension candidates by their scores can provide a clear sense of priority. By first scoring recent successful and unsuccessful extensions for the brand and even for competitors, the marketing team becomes more familiar with the scorecard. Discussion questions 1. Pick a brand extension. Use the models presented in the chapter to evaluate its ability to achieve its own equity as well as contribute to the equity of a parent brand. If you were the manager of that brand, what would you do differently? Answer: Answers will vary. The class may be divided into groups and each group may be assigned with a brand extension. Brand Extension: Nike Air Max Apparel Evaluation: • Fit: Aligns with Nike’s performance and innovation values. • Consistency: Enhances Nike’s brand experience through quality and design. • Equity Contribution: Strengthens Nike’s brand by broadening its product range and reinforcing brand associations. Managerial Recommendations: • Differentiation: Add unique features to stand out. • Targeted Marketing: Focus on specific customer segments. • Collaborations: Partner with designers or influencers for exclusive releases. 2. Do you think Virgin’s brand is overextended? What are the arguments for or against? Answer: Answers will vary. Students may refer Branding Brief 12-2 to answer the question. Is Virgin's Brand Overextended? Arguments For: • Diverse Ventures: Virgin operates in many unrelated industries (e.g., airlines, telecommunications, health, and space travel), which can dilute the brand’s focus and coherence. • Brand Confusion: The wide range of products and services can lead to confusion among consumers about what Virgin stands for. Arguments Against: • Brand Flexibility: Virgin’s brand is known for its innovative and adventurous spirit, which supports diverse ventures. • Cross-Promotion: The brand’s reputation for quality and disruption in one sector can enhance its credibility and attractiveness in others. In summary, while Virgin’s broad reach may risk brand dilution, its adaptable and innovative image supports its diverse portfolio. 3. How successful do you predict these recently proposed extensions will be? Why? a. Mont-Blanc (famous for pens): fragrances and other accessories (watches, cufflinks, sunglasses and pocket knives) b. Evian (famous for water): high-end spas c. Starbucks (famous for coffee): film production and promotion d. Trump (famous for hotels and casinos): vodka and mortgage services Answer: a. Mont-Blanc (fragrances and accessories): Moderately successful. Leveraging its luxury and craftsmanship reputation can work well for high-end accessories. However, the success of fragrances depends on brand fit and market positioning. b. Evian (high-end spas): Potentially successful. Evian's association with purity and premium quality aligns with the luxury spa concept, appealing to high-end consumers seeking wellness experiences. c. Starbucks (film production and promotion): Less likely successful. Starbucks’ brand is focused on coffee and café culture. Film production is a significant departure from its core business and may dilute its brand identity. d. Trump (vodka and mortgage services): Varied success. Vodka might benefit from Trump’s luxury image, but mortgage services could be less successful due to less obvious brand alignment and potential controversies surrounding the Trump brand. 4. Consider the following brands, and discuss the extendibility of each: a. Harley-Davidson b. Red Bull c. Tommy Hilfiger d. Whole Foods e. Netflix f. U.S. Marines g. Grey Goose Vodka h. Victoria’s Secret i. BlackBerry j. Las Vegas k. Kate Spade Answer: Answers will vary. The class may be divided into ten groups, each being assigned with a brand. a. Harley-Davidson: Limited extendibility. Known for its iconic motorcycles, extending into unrelated categories could dilute its rugged, rebellious brand image. b. Red Bull: High extendibility. Its association with energy and extreme sports supports expansions into related areas like health drinks and sports equipment. c. Tommy Hilfiger: Moderate extendibility. While strong in fashion, it can extend into lifestyle products (e.g., home goods) but may face challenges outside its core apparel market. d. Whole Foods: High extendibility. Known for premium, organic products, it could successfully extend into health-focused and eco-friendly products or services. e. Netflix: High extendibility. Its brand is associated with entertainment and innovation, making expansions into related areas like original content production and tech hardware feasible. f. U.S. Marines: Limited extendibility. The brand’s strong association with military and discipline restricts its expansion into non-military or consumer goods. g. Grey Goose Vodka: Moderate extendibility. Known for luxury vodka, it could extend into premium spirits or related lifestyle products but might struggle with non-beverage categories. h. Victoria’s Secret: Moderate extendibility. Its focus on lingerie and beauty could extend into related areas like lifestyle or wellness, but non-apparel categories might dilute its brand. i. BlackBerry: Low extendibility. Known for its smartphones and security technology, extending into unrelated tech or consumer products may be challenging given its niche reputation. j. Las Vegas: High extendibility. As a brand synonymous with entertainment and tourism, it can extend into new entertainment ventures, resorts, and global tourism promotions. k. Kate Spade: Moderate extendibility. Known for fashion accessories, it can successfully extend into related lifestyle and home goods but might face challenges outside its core fashion categories. 5. There are four fake brand extensions among the following list; the other six were marketed at one point. Can you identify the four fakes? a. Ben-Gay Aspirin: Pain relief that comes with a warm glow b. Burberry Baby Stroller: For discriminating newborns c. Smith & Wesson Mountain Bikes: Ride without fear d. Atlantic City Playing Cards: Talcum-Coated for easy shuffling e. Pond’s Toothpaste: Reduces the appearance of fine wines f. Slim Jim Beef-Flavored Throat Lozenges: For meat lovers who like to sing Karaoke g. Frito-Lay Lemonade: A tangy, crunchy thirst quencher h. Cosmo Yoghurt: Spoon it up, slim down those thighs i. Richard Simmons Sneakers: Shake your cute little booty to the oldies j. Madonna Condoms: For men who are packing The six real brand extensions are: Ben-Gay Aspirin; Smith & Wesson Mountain Bikes; Pond’s Toothpaste; Richard Simmons Sneakers; and Madonna Condoms. The four fake brand extensions are: Burberry Baby Stroller; Atlantic City Playing Cards; Slim Jim Beef-Flavored Throat Lozenges; Frito-Lay Lemonade; and Cosmo Yoghurt. Answer: Fake Brand Extensions: 1. Burberry Baby Stroller 2. Atlantic City Playing Cards 3. Slim Jim Beef-Flavored Throat Lozenges 4. Frito-Lay Lemonade Real Brand Extensions: 1. Ben-Gay Aspirin 2. Smith & Wesson Mountain Bikes 3. Pond’s Toothpaste 4. Richard Simmons Sneakers 5. Madonna Condoms Exercises and assignments 1. Challenge students to identify brands with the greatest number of line extensions. Discuss the implications of such proliferation for the company, consumers, the trade, and the brand’s competitive position. Robitussin cough syrup, Trojan condoms, L’eggs pantyhose, and Pampers diapers are examples of brands with numerous line extensions. Answer: Brands with Numerous Line Extensions: 1. Trojan Condoms 2. L’eggs Pantyhose Implications: • Company: Increased revenue and market share but risk of brand dilution and inventory complexity. • Consumers: More choices but potential confusion. • Trade: Higher sales but more complex inventory management. • Competitive Position: Strengthened market leadership but risk of brand dilution. 2. Do #1 above, but look at category extensions instead. Answer: Brands with Numerous Category Extensions: 1. Nike: Expanded from athletic shoes to apparel, equipment, and accessories. 2. Coca-Cola: Moved from soft drinks to bottled water, energy drinks, and ready-to-drink teas. Implications: • Company: Diversifies revenue streams and enhances market presence but can lead to brand dilution and require extensive resources for managing diverse products. • Consumers: Increased variety and convenience but potential confusion about brand core values. • Trade: Boosts sales and store traffic but complicates inventory and category management. • Competitive Position: Strengthens market dominance but risks brand overextension if extensions are not well-aligned with core brand values. 3. Have students pick two competing brands (preferably two that have not introduced category extensions) and poll consumers regarding possible extensions for each. Analyze the differences and the reasons for them. Answer: Brands to Analyze: Adidas and Puma Consumer Poll Results: • Adidas: Consumers suggest extensions into smart fitness gear and eco-friendly clothing. • Puma: Consumers suggest extensions into casual home furnishings and tech accessories. Analysis of Differences: • Adidas: The preference for smart fitness gear reflects its strong association with sports performance and innovation. • Puma: The interest in casual home furnishings aligns with Puma’s lifestyle and casual wear focus. Reasons: • Brand Positioning: Adidas is seen as more performance-oriented, while Puma is perceived as a lifestyle brand. • Consumer Expectations: Extensions are suggested based on how consumers perceive each brand’s core values and market positioning. 4. Have students pick out brand extensions that they think failed. The students may then assess the reason behind the failures based on the disadvantages of brand extensions the text talks about. Answer: Failed Brand Extensions: 1. Colgate Kitchen Entrees: Colgate, known for oral care, ventured into frozen meals but failed due to mismatched brand associations. 2. Harley-Davidson Perfume: Harley-Davidson's move into fragrance didn't resonate with its core audience, as the brand’s rugged image conflicted with the luxury scent market. Reasons for Failures: • Brand Misalignment: Extensions that don’t align with the core brand image (e.g., Colgate's food products and Harley-Davidson's perfume) can confuse consumers and dilute brand equity. • Lack of Expertise: Entering unrelated categories without established expertise or consumer trust can lead to failure (e.g., Colgate in food). • Consumer Expectations: Extensions that do not meet consumer expectations or fit the brand’s identity are less likely to succeed (e.g., Harley-Davidson in perfumes). Key take-away points 1. A brand extension occurs when a firm uses an established brand name to introduce a new product. 2. Extensions can be either introduced in a product category currently served by the parent brand (i.e., line extension), or a completely different product category (i.e., category extension). 3. Extensions allow firms to reduce the costs of brand-building advertising campaigns and of educating consumers about specific product attributes. 4. The risks of brand extensions include dilution of the brand name and negative feedback effects on existing products. 5. The best extensions are those where the parent brand name helps the new product and the new product helps the parent brand. Chapter 13 Managing Brands Over Time Chapter Objectives 1. Understand the important considerations in brand reinforcement. 2. Describe the range of brand revitalization options to a company. 3. Outline the various strategies to improve brand awareness and brand image. 4. Define the key steps in managing a brand crisis. Overview The health and well-being of a brand can be significantly affected by both external forces (related to consumer behavior, channel structure and power, competitive intensity and strategy, government regulation, and other facets of the marketing environment) and internal forces (related to a company’s commitment to and stewardship of a brand). This chapter examines how best to manage equity over time in the face of external and internal pressures on a brand. The keystones to successful brand management are reinforcement of brand meaning and identification of new sources of equity. Two important factors in reinforcing brand meaning are consistency in the amount and nature of marketing support given to a brand, and a commitment to preserving and protecting existing sources of equity. When identifying potential new sources of equity, it is necessary for a company to recognize the inherent tradeoffs between marketing activities that fortify brand equity and those that leverage it in pursuit of growth and financial gains. If a brand loses its luster, a revitalization strategy may be required to return it to prominence. This entails either taking a brand back to its roots to recapture lost sources of equity, or identifying and establishing new sources of equity. Sometimes a brand’s misfortunes arise from a lack of breadth in consumer awareness levels, caused by a tendency of consumers to think of it in very narrow ways. In such cases, marketers can identify ways to use the brand more frequently, use more of the brand when it is consumed, or use the brand in more ways. When the problem is one of image, not awareness, a new marketing campaign may be required to improve the strength, favorability, and uniqueness of a brand’s associations. This can involve neutralizing negative associations, shoring up or creating positive associations. A company may want to reposition a brand by establishing new points-of-parity or points-of-difference. Companies with more than one brand in a product line should develop migration strategies that rationalize the movement of consumers across franchises as their needs and wants change, or as the features and positions of the brands change. If a brand fails to maintain or build equity over time, a milking strategy to extract maximum profits before “retirement” may be in order. Brand Focus 13.0 discusses the concept of responding to a brand crisis by throwing light on how Tylenol’s product tampering crisis was handled, followed by discussing crisis marketing guidelines. Science of Branding THE SCIENCE OF BRANDING 13-1 BRAND FLASHBACKS Dubbed “retro-branding” or “retro-advertising” by some marketing pundits, the tactic is a means to tie in with past advertising that was, and perhaps could still be, a key source of brand equity. Retro-branding can activate and strengthen brand associations that would be virtually impossible to recreate with new advertising today. Heritage can be a powerful point-of-difference—at least as long as it conveys expertise, longevity, and experience and not just age! Anniversaries and milestones of longevity can be excellent opportunities to launch a campaign to celebrate. Marketers should focus as much on the future of the brand as on its past, of course, perhaps emphasizing how all that the brand has gone through will benefit its customers in the future. L.L. Bean’s 100th anniversary celebration in 2012 was intended to do just that. The main thrust of the campaign was to celebrate exploring the outdoors. Nostalgia can play a valuable role for many brands. Oreo cookies and Keds tennis shoes have run nostalgia-focused campaigns targeting adults who presumably stopped using the product long ago. Research shows that nostalgic advertising can positively influence consumers. One empirical study confirmed that intentionally nostalgic advertisements yielded favorable attitudes toward the advertisement and the brand. Another study identified a potential source of nostalgic purchase behavior, called “intergenerational influence,” or the influence of a parent’s purchase behavior and brand attitudes on a child’s behavior and attitudes. Some brands attempt to make the case that their enduring appeal is still relevant for lapsed users today. Heritage appeals do not necessarily have to use advertising though. Branding Briefs BRANDING BRIEF 13-1 RAZOR-SHARP BRANDING AT GILLETTE Gillette is one of the strongest brands in the world, with roughly two-thirds of the U.S. blade and razor market and even more in Europe and Latin America. Fundamentally, Gillette continually innovates to produce a demonstrably superior product. Gillette’s credo is to “increase spending in R&D, plant and equipment, and advertising”. Gillette backs its products with strong advertising and promotional support. Skillful marketing thus creates both strong performance and imagery associations. When it launched the Mach3 in 1998, Gillette considered it to be the most important new product in its history and invested more than $750 million in research and development and manufacturing expenses, securing 35 patents in the process. As successful as Mach3 was, Gillette’s women’s version of the product was perhaps an even more impressive achievement. Gillette spent $300 million on research and development for Venus, its first razor designed solely for women. Based on extensive consumer research and market testing, Venus was a marked departure from previous women’s razor designs, which had essentially been colored or repackaged versions of men’s razors. In 2004, it upgraded the Mach3 by introducing the M3 Power, the first disposable razor to feature a battery-powered vibration option, which allowed for a closer shave. A Venus version, called Venus Vibrance, soon followed. In its next major launch in 2006, Gillette introduced the six-bladed Fusion and Fusion Power razors. Gillette had spent $1.2 billion on R&D since introducing the Mach3 and then spent more than $1 billion to market the product to the world’s 3.2 billion males. The Fusion ProGlide, Gillette’s most expensive razor ever, followed a few years later. Much of Gillette’s success results from its having relentlessly innovated and stayed relevant. The company has also carefully branded new products. Major introductions receive totally new brand names (Sensor, Mach3, and Fusion), while minor improvements are sub-branded (Sensor Excel, Mach3 Turbo, and Fusion ProGlide). BRANDING BRIEF 13-2 REMAKING BURBERRY’S IMAGE Burberry, founded in 1856 by 21-year-old Thomas Burberry, was a veritable “fashion disaster” in the mid-1990s. Yet within a span of several years, with the help of contemporary designs and updated marketing, the brand shrugged off its staid image and became fashionable again. One of Burberry’s first moves to freshen the brand was to leverage its classic beige-check plaid in a series of accessories that quickly became bestsellers, including handbags, scarves, and headbands. Another was rejuvenating the check itself by using different colors, patterns, sizes, and materials. Burberry was careful to maintain a balance between the contemporary and the traditional. It also sought to leverage other iconic imagery, such as the trench coat and the Prorsum horse insignia. Another key to Burberry’s turnaround was refreshing its advertising. The ads were credited with bringing a “rebellious, streetwise image to the brand.” The company gave its retail stores a makeover as well in order to match the contemporary feel of the new designs. Together, these different efforts turned the company’s fortunes around. After peaking in 2002 with a successful IPO, the brand began to suffer from overexposure and a slew of counterfeit products. Following a holiday sales slump in 2004, the company knew it had to set a different course. A number of marketing changes were implemented. The trademark tan/black/white/red Burberry plaid was dialed down and made more discreet. More emphasis was placed on high-margin accessories—non-apparel accounts for one-third of revenue—and high-end fashions. Benefiting from vibrant emerging markets such as China, a constantly updated new product pipeline, and one of the most advanced digital strategies of any luxury brand, Burberry found itself in 2011 with annual revenues over $2 billion, far exceeding financial forecasts. BRANDING BRIEF 13-3 HARLEY-DAVIDSON MOTOR COMPANY Harley-Davidson has twice narrowly escaped bankruptcy and is today one of the most recognized brands in the world. In recovering from its financial downfalls, Harley-Davidson realized its product needed to better live up to the brand promise. Harley’s back-to-basics approach to revitalization centered on improving factories and production process to achieve higher levels of quality. The company also dialed up marketing efforts to better sell its products. Establishing a broader access point with consumers to make the brand relevant to more people, Harley was able to attract a diverse customer base that went way beyond the traditional biker image. The company also changed the way it went to market. The company established an owners’ club, the Harley Owners Group (HOG), which sponsors bike rallies, charity rides, and other motorcycle events. Every Harley owner becomes a member for free by signing up at the www.hog.com Web site. Harley-Davidson began a licensing program to protect its trademarks and promote the brand. Early efforts primarily supported the riding experience with products like T-shirts, jewelry, small leather goods, and other products appealing to riders. Currently, the primary target for licensed products is existing customers through the Harley dealer network. To attract new customers, though, Harley-Davidson has licensed children’s clothing, toys, games, and many other items aimed at children and sold beyond the dealer network. As business grew, Harley-Davidson created Harley-Davidson Motor Clothes to produce traditional riding gear along with men’s and women’s casual sportswear and accessories to reach an ever-expanding and diverse customer base of riders and non-riders. Harley-Davidson continues to promote its brand with grassroots marketing efforts. Many employees and executives at the company own Harleys and often ride them with customers, making traditional advertising almost unnecessary. For women and smaller riders, Harley offers Sportster motorcycles that are built low to the ground with narrower seats, softer clutches, and adjustable handlebars and windshields. Several times a year Harley dealers hold garage parties for women to help them learn about their bikes. Women now represent about 12 percent of sales. BRANDING BRIEF 13-4 A NEW MORNING FOR MOUNTAIN DEW Mountain Dew hit its stride in the 1990s, experiencing phenomenal double-digit growth. Mountain Dew was the fastest-growing major U.S. soft drink for much of the decade. Growth was fueled by some edgy advertising from PepsiCo’s long-time ad agency BBDO that was funny and fast-paced. The tag line “Do the Dew,” was a strong call to action, and the ads were a high-energy blast of adrenalin. The next decade saw much product expansion, introduction of nontraditional marketing, and a pioneering digital strategy. To better connect with its core teen audience, Mountain Dew increased its sponsorship of the Mix Tape street basketball tour and the Dew Action Sports Tour. The company also launched the Dew U loyalty program, in which drinkers exchanged codes printed under bottle caps for a variety of goods available on the Dew U Internet site. In 2005, Mountain Dew launched another brand extension, a highly caffeinated energy drink called MDX aimed at the estimated 180 million video game players, by introducing it as the official soft drink of the E3 Electronics Entertainment Expo. All these actions helped Mountain Dew remain the number four carbonated U.S. beverage in terms of sales throughout the decade. A logo change on the packaging occurred in 2008, as the company chose the simpler “Mtn Dew.” An even bigger change was a viral marketing experiment in crowdsourcing that put customers into the actual product development process. The initial “Dewmocracy” campaign began in 2007 and included an online game in which players designed a new drink. The follow-up Dewmocracy campaign in 2009 raised the stakes. Mountain Dew marketers put the bulk of their marketing budget online to allow consumers to select three new flavors to be distributed nationwide. Enormous buzz followed—much of it generated by the actual product users, as intended. Brand Focus BRAND FOCUS 13.0 RESPONDING TO A BRAND CRISIS Originally introduced by McNeil Laboratories as a liquid alternative to aspirin for children, Tylenol achieved nonprescription status when McNeil was bought by Johnson & Johnson (J&J) in 1959. J&J’s initial marketing plan promoted a tablet form of the product for physicians to prescribe as a substitute for aspirin when allergic reactions occurred. Tylenol consists of acetaminophen, a drug as effective as aspirin in the relief of pain and fever but without the stomach irritation that often accompanies aspirin use. Backed by this selective physician push, sales for the brand grew slowly but steadily over the course of the next 15 years. Advertising support for the brand was heavy. The Tylenol Product Tampering Crisis All this success came crashing to the ground in the first week of October 1982, with the news that seven people had died in the Chicago area after taking Extra-Strength Tylenol capsules that turned out to contain cyanide poison. Consumer confidence was severely shaken. Most marketing experts believed the damage to the brand’s reputation was irreparable and that Tylenol would never fully recover. The Tylenol Product Tampering Recovery Within the first week of the crisis, J&J issued a worldwide alert to the medical community, set up a 24-hour toll-free telephone number, recalled and analyzed sample batches of the product, briefed the Food and Drug Administration, and offered a $100,000 reward to apprehend the culprit of the tampering. The company began a voluntary withdrawal of the brand by repurchasing 31 million bottles with a retail value of $100 million. It stopped advertising, and all communications with the public were in the form of press releases. To monitor consumer response to the crisis, J&J started to conduct weekly tracking surveys with 1,000 consumer respondents. The company introduced a capsule exchange offer, promoted in half-page press announcements in 150 major markets across the country, that invited the public to mail in bottles of capsules and receive tablets in exchange. Although well intentioned, this offer met with poor consumer response. Later, J&J made its return to TV advertising with the goals of convincing Tylenol users they could continue to trust the safety of Tylenol products and encouraging the use of the tablet form until tamper-resistant packaging was available. Six weeks after the poisonings and after intense behind-the-scenes activity, the chairman of J&J held a live teleconference with 600 news reporters throughout the United States to announce the return of Tylenol capsules to the market in a new, triple-sealed package that was regarded as virtually tamperproof. To get consumers to try the new packaging, the company undertook the largest program of couponing in commercial history. Millions of coupons offering a free Tylenol product (valued up to $2.50) were distributed in Sunday newspapers nationwide. J&J’s ad agency developed three ad executions using the testimony of loyal Tylenol users with the goal of convincing consumers that they could continue to use Tylenol with confidence. By February 1983, sales for Tylenol had almost fully returned to the lofty pretampering sales levels the brand had enjoyed six months earlier. Johnson & Johnson and McNeil Consumer Healthcare’s remarkable recovery from the brink of disaster allowed the company to reap the benefits of market leadership. The tide began to turn in the 1990s, however, as the possibility of liver damage and even death from taking more than the recommended dosage of Tylenol was found. Tylenol’s Quality Control Crises Concerns about dosage were exacerbated by a series of disastrous quality-control scandals and problems. These wounds were self-inflicted, and although no deaths occurred, the care, comfort, and confidence of Tylenol customers was at stake, making Johnson & Johnson’s actions highly troubling. Cost-cutting and a change in oversight procedures let several defective products fall through the cracks, while errors in judgment after the fact only compounded the problems. J&J recalled several hundred batches of Tylenol, Motrin, Benadryl, and St. Joseph’s Aspirin, 20 months after it reportedly first began to receive consumer complaints about moldy-smelling bottles that made some people feel ill. The culprit was the breakdown of a chemical used to treat wood pallets that transported and stored product packaging in a Las Piedras, Puerto Rico facility. J&J also recalled millions of bottles of Tylenol, Benadryl, Zyrtec, and Motrin because excessively high levels of an active drug, metal specks, or ingredients that had failed testing requirements led to possible safety violations. These unprecedented quality-control miscues cost the company $1 billion in sales and, perhaps more importantly, the trust, respect, and admiration of the public it had worked so hard to preserve back in 1982. After much criticism contrasting his handling of the quality control problems with the product tampering crisis, CEO William Weldon stepped down in April 2012. Crisis Marketing Guidelines Another brand sharply criticized for its crisis response was Exxon. Although this company spent millions of dollars advertising its gasoline and crafting its brand image over the years, it essentially ignored the need to market its corporate identity and image. Brands as diverse as Wendy’s restaurants, Firestone tires, Tyco diversified holdings, and Vioxx painkiller have all experienced a potentially crippling brand crisis. Marketing managers must assume that at some point in time, a similar incident will occur. In general, the better they have established brand equity and a strong corporate image—especially credibility and trustworthiness—the more likely their firm can weather the storm. Careful preparation and a well-managed crisis management program are also critical, however. The two keys to effectively managing a crisis are that the firm’s response should be swift and that it should be sincere. Swiftness—The longer it takes a firm to respond to a marketing crisis, the more likely that customers will form negative impressions based on unfavorable media coverage or word-of-mouth. Perhaps worse, they may decide they do not really like the brand after all and permanently switch to alternatives. Sincerity—Swift actions must also come across as sincere. Public acknowledgment of the severity of the impact on consumers and willingness to take whatever steps are necessary and feasible to solve the crisis reduce the chance that consumers will form negative attributions for the firm’s behavior. Brand crises are difficult to manage because, despite a firm’s best efforts, these situations are hard to control. To some extent, the firm is at the mercy of public sentiment and media coverage, which it can attempt to direct and influence but which sometimes take on a life of their own. Swift and sincere words and actions go a long way toward defusing the situation. Discussion Questions 1. Pick a brand. Assess its efforts to manage brand equity in the last five years. What actions has it taken to be innovative and relevant? Can you suggest any changes to the company’s marketing program? Answer: Answers will vary. Students may be divided into groups with each group picking a brand of their choice. Brand: Nike Recent Efforts: 1. Digital Innovation: Expanded digital platforms like Nike+ and Nike Training Club. 2. Sustainability: Launched eco-friendly products and sustainability initiatives. 3. Collaborations: Partnered with designers and celebrities for exclusive releases. 4. Direct-to-Consumer: Enhanced online presence and flagship stores. Suggested Changes: 1. Increase Personalization: Use AI for more tailored recommendations. 2. Boost Community Engagement: Strengthen local sports initiatives. 3. Advance Sustainability: Innovate further in eco-friendly materials. 2. Pick a product category. Examine the histories of the leading brands over the last decade. How would you characterize the company’s efforts to reinforce or revitalize brand equity? Answer: Answers will vary. The class may be divided into groups and each group may be assigned with a product category. Product Category: Smartphones Leading Brands: 1. Apple: • Reinforcement: Continuous innovation (e.g., Face ID, improved cameras). • Revitalization: Expansion into services and ecosystem integration. 2. Samsung: • Reinforcement: Cutting-edge technology (e.g., foldable screens). • Revitalization: Focus on AI, 5G, and diverse product lineup. 3. Huawei: • Reinforcement: Advanced hardware and camera tech. • Revitalization: Development of proprietary tech (e.g., Harmony OS) amid geopolitical challenges. 3. Identify a fading brand. What suggestions can you offer to revitalize its brand equity? Try to apply the different approaches suggested in the chapter. Which strategies would seem to work best? Answer: Excite@Home is a fading brand that still could be revitalized. The company could find new applications for the brand, such as an online media and entertainment provider, a full-service corporate services provider, and a consumer research provider. Excite@Home could also attempt to enter new markets globally in order to increase its market coverage. A new marketing program might improve the image of the company in the minds of consumers. Fading Brand: Blockbuster Suggestions for Revitalizing Brand Equity: 1. Rebranding: Modernize the brand’s image to appeal to younger, tech-savvy consumers. 2. Digital Transformation: Develop a streaming service or partner with existing platforms to capitalize on digital trends. 3. Customer Experience: Create unique, engaging in-store experiences or events to drive foot traffic and brand loyalty. 4. Niche Focus: Target specific markets or genres (e.g., classic films) to differentiate from competitors. Best Strategies: • Digital Transformation would be most effective, leveraging current trends and consumer preferences for streaming services. • Rebranding can refresh the brand’s image and attract a new audience. 4. Try to think of additional examples of brands that adopted either a back-to-basics or reinvention revitalization strategy. How well did they work? Answer: After a slump in the mid-1990s under Quaker Oats management, the Triarc Beverage Group bought the Snapple brand and employed a back-to-basics revitalization strategy to help get the brand back on its feet. Triarc returned to classic ad styles, reinstated the familiar fan favorite “Snapple Lady,” reverted to the former distribution system, and utilized classic packaging. Triarc successfully turned Snapple around before selling it to Cadbury-Schweppes in 2000. Miller High Life employed a reinvention revitalization strategy as it repositioned the brand from “The Champagne of Bottled Beers” to a more earthy, everyday beer with the help of narrative ads that focused on the product and commonplace usage occasions. Miller High Life enjoyed success in the early 2000s using this reinvention strategy. Answer: Back-to-Basics Example: Old Spice • Strategy: Reinvigorated its brand by emphasizing classic scents and rugged masculinity, while launching humorous and memorable advertising campaigns. • Outcome: Successfully revived brand appeal and increased market share, becoming popular among younger audiences. Reinvention Example: Levi’s • Strategy: Modernized its product line with updated fits and styles, while leveraging its heritage through nostalgic marketing and collaborations. • Outcome: Effectively revitalized the brand, boosted sales, and regained relevance in the competitive fashion market. 5. Choose a brand that has recently experienced a marketing crisis. How would you evaluate the marketers’ response? What did they do well? What did they not do well? Answer: Answers will vary. Students must ensure that their answers reflect current brand developments and perhaps the region of the world where the student is located. Brand: Bud Light Marketing Crisis: Controversial partnership with a transgender influencer. Evaluation of Response: What They Did Well: • Addressed the Issue Quickly: Bud Light's parent company, Anheuser-Busch, acted swiftly to address the backlash and communicated directly with consumers. • Focused on Core Values: Reaffirmed commitment to core brand values and adjusted marketing strategies to align with broader customer expectations. What They Did Not Do Well: • Inconsistent Messaging: The initial response was seen as inconsistent and lacked a clear, unified message, which may have confused or alienated both supporters and critics. • Delayed Apology: The apology and corrective measures came too late, missing the opportunity to immediately mitigate the crisis and address consumer concerns more effectively. Exercises and assignments 1. Ask students to pick a classic Disney movie – Snow White, Cinderella, Lady and the Tramp, 101 Dalmatians, etc. – and analyze the company’s strategy for maintaining brand equity in the film over the years. Factors examined might include the theater re-release schedule, limits on the number of video copies made available, and the marketing communications campaign that accompanies a re-release. Answer: Movie: The Lion King Strategy for Maintaining Brand Equity: 1. Theater Re-Releases: Regular re-releases in theaters, including special editions for anniversaries, keep the film in the public eye and attract new generations of viewers. 2. Limited Edition Video Copies: Releases of special editions and collector’s versions with bonus content maintain exclusivity and drive sales. 3. Marketing Campaigns: Strong marketing communications, including nostalgic appeals and new merchandise, leverage the film's classic status and broaden its reach through collaborations and promotions. 2. The growth of the video rental industry has shortened the “shelf lives” of movies at theaters. New releases often are on marquees for less than a month before being made available on video. Tell students to pick a recent successful movie, analyze its marketplace performance, and suggest ways the studio— a) could have extended the film’s theater run and b) can maximize rental sales. Answer: Movie: Barbie (2023) Marketplace Performance: • Successful Box Office: High initial box office revenue and significant cultural impact. Suggestions: a) Extend Theater Run: • Event Screenings: Host special event screenings or director’s cut versions to maintain interest. • Exclusive Content: Offer exclusive behind-the-scenes footage or interviews during the extended run. • Themed Promotions: Partner with brands for themed promotions and cross-promotions to draw in audiences. b) Maximize Rental Sales: • Early Streaming Tie-ins: Offer rental or streaming options shortly after the theater run but with exclusive content. • Enhanced Digital Releases: Provide bonus content and interactive features for digital rentals. • Bundling: Bundle with related merchandise or other popular films for rental promotions. 3. Have students identify brands that have had long, robust lives, analyze the reasons for their continued success, and suggest ways their parent companies might leverage or capitalize on their equity. Possible brands include Wrigley’s, Campbell’s, Crest, and Gillette. Answer: Brand: Crest Reasons for Continued Success: • Consistent Quality: Maintains high standards in oral care and effective product performance. • Strong Brand Trust: Established a long history of reliability and positive consumer perception. • Innovative Marketing: Continually adapts with new products and marketing strategies, such as the introduction of advanced formulations and targeted campaigns. Suggestions to Leverage Equity: • Expand Product Line: Introduce new variations or products, such as eco-friendly or personalized options. • Enhance Digital Engagement: Use digital platforms for interactive content and personalized oral care advice. • Global Expansion: Increase presence in emerging markets with tailored products and localized marketing strategies. 4. Have groups of students pick out a real crisis faced by a brand. The students may then discuss how the crisis could have been handled differently. Answer: Brand: Volkswagen (Dieselgate) Crisis: Emissions cheating scandal involving the manipulation of diesel engine emissions tests. Handling Crisis Differently: • Immediate Transparency: Quickly disclose the issue and provide full transparency about the extent of the problem. • Proactive Communication: Implement a clear, consistent communication strategy to address concerns and outline steps for resolution. • Swift Action: Take prompt corrective measures, including fixing affected vehicles, compensating customers, and investing in sustainable technologies. • Rebuild Trust: Engage in long-term efforts to rebuild brand trust through commitment to ethical practices and environmental responsibility. Key take-away points 1. A brand’s health can be affected by changes in consumer preferences, company commitment, competitive products and programs, and channel support, among other factors. 2. Successful brand management requires reinforcing brand meaning and identifying new sources of equity. 3. Brands on the comeback trail must make more “revolutionary” than “evolutionary” changes to reinforce brand meaning. 4. Building and maintaining customer-based equity requires consistency in the amount and nature of marketing support a brand receives. 5. Effective brand management requires taking a long-term view of marketing decisions. Instructor Manual for Strategic Brand Management: Building, Measuring, and Managing Brand Equity Kevin Lane Keller 9780132664257, 9780273779414