CH-14-15 Managing Brands Over Geographical Boundaries and Market Segments – Strategic Brand Management: Building, Measuring, and Managing Brand Equity : Chapter Notes

This Document Contains Chapters 14 to 15 Chapter 14 Managing Brands Over Geographical Boundaries and Market Segments Chapter Objectives 1. Understand the rationale for developing a global brand. 2. Outline the main advantages and disadvantages of developing a standardized global marketing program. 3. Define the strategic steps in developing a global brand positioning. 4. Describe some of the unique characteristics of brand building in developing markets like India and China. Overview As they search for ways to achieve economies of scale, maximize growth and profit, diversify risk, and satisfy the needs and wants of increasingly mobile consumers, more and more firms are defining the marketplace in global, rather than domestic terms. Global marketing programs are attractive because they allow economies of scale in production and distribution, result in lower marketing costs, convey expertise and credibility, communicate a consistent brand image, permit quick and efficient leverage of good ideas, and enhance the uniformity and control of marketing practices worldwide. Critics of standardizing marketing programs contend that they are based on “lowest common denominator” approaches that ignore differences across countries and cultures. Such differences may be related to consumer tastes and responses to marketing mix elements, product or brand life cycle stages, competitive sets, reactions of country managers, legal requirements and restrictions, and the marketing infrastructure. Development of a global marketing program requires that a firm decide 1) which markets are most attractive in terms of their fit with corporate objectives and marketing capabilities; 2) whether to enter a given market by exporting established brands, acquiring another company’s brands in the local market, or forming a strategic alliance with a local market firm; 3) what the balance between standardization/globalization and adaptation/localization in the marketing effort should be; and 4) whether the marketing organization should be centralized in the headquarters country, decentralized in the local market, or reflect a mix of the two. In order to build global customer-based brand equity, brand awareness and a positive brand image must be created in each country in which the brand is marketed. This entails balancing the degree of standardization/globalization and adaptation/localization in the choice of branding elements, design of the supporting marketing plan, and leverage of secondary brand associations. The chapter uses the concept of the “Ten Commandments of Global Branding” to provide guidelines for marketers looking to take their brands global. The chapter concludes by a discussion on building brand equity across market segments. There a number of different types of market segments that firms can expand into. Companies have employed regional market segmentation strategies in which a larger geographic area, such as a nation, is divided into a number of smaller segments. Other segments include demographic segments, in which a market is divided on the basis of age, gender, or income; and psychographic segments, which divide a market based on consumer ideals, beliefs, or attitudes. Brand Focus 14.0 discusses China’s global brand ambitions, starting with growing local businesses, developing interest in international markets, developing local leaders, and finally going global. Science of Branding THE SCIENCE OF BRANDING 14-1 BRAND RECALL AND LANGUAGE It is not surprising that some brand names are more likely to be recalled in one culture than another. A series of studies addressing this issue found significant differences in the ways Chinese- and English-speaking consumers processed brand names. Mental representations of verbal information are coded mainly visually among Chinese and in a phonological manner among English speakers. Another study showed that more positive brand attributes resulted when peripheral features of a brand name matched the associations or meaning of the brand. A related study investigated perceptions of brand names translated into Chinese. There are three possible types of translation for names; phonetic, semantic, and phono-semantic. The study found that consumers preferred phonetic translations if a hypothetical product emphasized the English name, while they favored phono-semantic and semantic translations equally regardless of which name was emphasized. A different study demonstrated that “classifiers” affected perceived similarity among objects and the way words are clustered upon recall. The study also showed that for Chinese speakers, images in hypothetical advertisements that corresponded with a classifier present in the ad copy were preferable to images that had no correspondence. Branding Briefs BRANDING BRIEF 14-1 MARKETING TO AFRICAN AMERICANS Although much marketing has targeted baby boomers, millennials, Hispanics, and other demographic and psychographic groups, many critics argue that firms have not effectively targeted the African American market. African Americans occupy every income, education, and geographic segment. Because almost all African Americans speak English as their first language and watch much network television, many companies rely on general marketing campaigns to reach them. But unique attitudes and behaviors distinguish this audience. Many observers note the important role of religion, church, and family. As a result of their historical experiences, African Americans are often thought to exhibit a strong togetherness and pride in their heritage. They are also seen as style leaders who set fashion trends, especially among younger people. African Americans spend a disproportionate amount of their income on apparel, footwear, and home electronics. They are more likely to spend money on luxury items such as cruise-ship vacations, new cars, and designer clothes. African American consumers make a disproportionate amount of purchases of menthol cigarettes, certain types of hard liquors—brandy, scotch cognac— and malt liquor beers. Alcohol and tobacco companies were among the first to specifically target this group, although these strategies have been somewhat controversial. Given that African Americans are prone to certain health risks, such as hypertension and cardiovascular disease, food and drug advertising often also specifically target them. The challenge for building brand equity among African Americans is to create relevant marketing programs and communication campaigns that accurately portray brand personality and user and usage imagery and avoid fostering stereotypes, offending sensibilities, or lumping market segments together. BRANDING BRIEF 14-2 COCA-COLA BECOMES THE QUINTESSENTIAL GLOBAL BRAND Coca-Cola pursued aggressive global branding, finding such creative placements for its logo as on dogsleds in Canada and on the walls of bullfighting arenas in Spain. Its popularity throughout the world was fueled by colorful and persuasive advertising that cemented its image as the “All-American” beverage. Despite immense scope, Coca-Cola did not institute a uniform marketing program in each of its global markets. Rather, the company often tailored the flavor, packaging, price, and advertising to match tastes in specific markets. Local managers were assigned responsibility for sales and distribution programs of Coke products, to reflect the marked differences in consumer behavior across countries. Coke essentially keeps the same basic look and packaging of the product everywhere. The company simultaneously stresses that the brand be relevant and well positioned against the competition. To keep it relevant, Coca-Cola uses different advertising agencies in different countries in order to make the brand feel local. The marketing mix is designed in each country to stress that Coke is positioned positively on attributes relative to local competitive products. In 1999, Coca-Cola’s new global marketing mantra became “Think Local. Act Local.” Intended to get Coca-Cola back to the basics, the strategy meant hiring more local staff and allowing field managers to tailor marketing to their regions. The results of this hyperlocal focus were missed sales targets and local advertising that, in some cases, did not fit with the carefully crafted Coke image. Today, Coca-Cola conducts business with more than 400 brands in over 200 countries. About three-quarters of its revenues come from outside the United States. As much as Coke has accomplished globally, many opportunities still remain. Per capita consumption of Coke is much lower in India and China than in the United States, Europe, and Latin America. Africa has even more potential. BRANDING BRIEF 14-3 UPS’S EUROPEAN EXPRESS After first entering the European market in 1976, United Parcel Service of America (UPS) spent $1 billion between 1987 and 1997 to buy 16 delivery businesses, put brown uniforms on 25,000 Europeans, and spray its brown paint on 10,000 delivery trucks in the process of becoming the largest delivery company in Europe. French drivers were outraged that they could not have wine with lunch; British drivers protested when their dogs were banned from delivery trucks; Spaniards were dismayed when they realized the brown UPS trucks resembled the local hearses; and Germans were shocked when brown shirts were required for the first time since 1945. UPS ultimately allowed a degree of local interpretation while standing firm on some issues of company policy, such as brown trucks and uniforms and alcohol-free drivers. UPS faced problems such as truck restrictions on weekends and holidays, low bridges and tunnels, widely varying weight regulations, terrible traffic, and, in some places, limited highway systems, primitive airports, and curfews. Workers resisted part-time work and had stronger employment protection and higher nonwage costs than workers in the United States. To improve its share of European business, UPS spent an estimated $1.1 billion between 1995 and 2000 upgrading its European operations by purchasing vehicles, aircrafts, buildings, and logistics systems. The 2012 acquisition of Dutch-based TNT Express for almost $7 billion increased UPS’s European small-parcel revenue to $60 billion in annual sales and its market share to 20 percent. It also expanded the company’s aircraft and vehicle fleet infrastructure to help it move more deeply into the Asia-Pacific region and better compete with DHL and FedEx. All these investments have paid off. BRANDING BRIEF 14-4 MANAGING GLOBAL NESTLE BRANDS For about 15 years, Nestlé spent more than $30 billion on acquisitions in different countries which yielded valuable economies of scale to Nestlé in developed markets. In less-developed markets, however, the company adopted a different strategy. Its entry strategy there was to manipulate ingredients or processing technology for local conditions and then apply the appropriate brand name. To limit risks and simplify its efforts in new markets, the company attacked with a handful of labels selected from a set of strategic brand groups. Then it concentrated its advertising and marketing money on just two or three brands. Nestlé attempts to balance global and local control in managing its brands. Some decisions, such as branding, follow strict corporate guidelines. The company has six strategic corporate brands—Nestlé, Nescafé, Nestea, Maggi, Buitoni, and Purina. There are 70 different strategic international brands, including Nesquik line of chocolate milk products as well as product brands Kit Kat, Friskies, and Perrier. Eighty-three strategic regional brands include Aquarel and Contrex. Finally, there are a host of local brands that are only important to particular countries. Nestlé had used a decentralized management approach, in which most decisions were primarily decided by the local managers. The company consolidated factory management by region and combined oversight of similar products into strategic business units. Nestlé’s more centralized management approach enabled the company to focus on growing its core brands at each level. Brand Focus BRAND FOCUS 14.0 CHINA GLOBAL BRAND AMBITIONS China has industrialized at a remarkable rate and is now the world’s second-largest economy and a manufacturing giant. China is the world’s largest garment exporter by a large margin, it is also the world’s largest manufacturer of consumer electronics, and it manufactures 80 percent of the clocks sold in the world, 50 percent of all cameras, and 60 percent of all bicycles. The primary reason for China’s manufacturing prowess is its remarkably cheap labor pool. China’s economic boom has created a wealth of opportunity for the country’s citizens and companies, as well as an attractive consumer base for foreign companies seeking growth. A Growing Consumer Class With China’s newfound wealth came an interest in consuming conspicuously, which precipitated a windfall for foreign luxury-goods manufacturers. With a rapidly expanding middle class, China made the country the world’s largest luxury market. Luxury brands have flocked to China to try to cash in. Despite the fortunate wealthy few, vast numbers of urban and especially rural poor have been left behind. Despite the concerns generated by the wealth polarization, China’s consumer class still harbors enough purchasing power to attract foreign brands, as the next section describes. Foreign Interest Ever since China began relaxing its trade policy in 1978, foreign companies have eagerly sought the Chinese consumer’s ‘yuan’. Coca-Cola was one of the first Western brands in China, entering in 1979. China accounts for over a third of international profits for Yum Brands, which owns KFC and Pizza Hut. Some faded foreign brands have managed to remake their images in China. Competition comes not just from international brands. Emerging Local Leaders Many Chinese consumer electronics and consumer packaged goods brands are the market leaders at home. Haier, China’s number-one appliance maker, is a multibillion manufacturing giant based in Qingdao. Gome and Suning are China’s top electronics retailers. Zhangyu and Great Wall are top-10 selling wines worldwide whose sales are based almost entirely in China. The Internet is another area where Chinese brands often rule at home. One reason for their success is that local brands possess superior distribution networks built from the ground up, enabling them to reach millions of consumers not served by the multinationals, which initially targeted only major Chinese cities. Many local brands are outspending their foreign rivals on advertising. Locals Going Global Due to its high-profile acquisition of IBM’s PC unit, Lenovo is likely the best-known Chinese company seeking to build its brand abroad. Observers predict that many other brands will likewise follow in the footsteps of Korea’s Samsung, LG, and Hyundai as Asian brands that rose from obscurity to global prominence in a matter of decades. To better compete in overseas markets, appliance maker Haier increased its R&D spending to 4 percent of revenues. Athletic clothing and equipment maker Li-Ning sought to build its international profile by outfitting many Chinese athletes for the 2004 Athens and 2008 Beijing Olympics, and by acquiring the rights to use NBA players and logos in its marketing. These moves abroad are, in part, simply a function of the pressures facing large firms searching for sources of revenue growth beyond an increasingly competitive domestic market. Another cause is official encouragement from the Chinese government. A related reason is global brand recognition as a source of national pride. Companies that did have an international presence, such as Haier and Lenovo, were priced as entry-level bargains, like their Korean predecessors. To shortcut their way to brand recognition and respect, some Chinese firms began bidding for foreign brands, as Lenovo did with IBM. Others, like Haier, invest more heavily in R&D to bolster their images through innovation. Discussion questions 1. Pick a brand marketed in more than one country. Assess the extent to which the brand is marketed on a standardized vs. customized basis. Answer: Answers will vary. Students may be divided into groups and assess a brand of their choice. Let's consider the brand Coca-Cola, which is marketed in numerous countries. Standardized Marketing: • Global Branding: Coca-Cola uses a consistent brand logo, design, and core brand message worldwide, emphasizing themes like happiness and refreshment. • Product Offering: The classic Coca-Cola beverage maintains a consistent taste and packaging, reinforcing a uniform brand identity. Customized Marketing: • Localized Campaigns: Coca-Cola tailors its advertising and promotional strategies to suit local cultures and consumer preferences. For example, special holiday-themed packaging and localized advertisements reflect regional traditions. • Product Variations: In certain markets, Coca-Cola offers unique product variants, such as Coca-Cola Peach in Japan or Coca-Cola Coffee in select regions, to cater to local tastes and preferences. Conclusion: Coca-Cola employs a blend of standardized and customized marketing strategies, maintaining a strong global brand identity while adapting specific elements to align with local market dynamics. 2. How aware are you of the country of origin of different products you own? Which products do you care about their country of origin? Why? For those imported brands that you view positively, find out and critique how they are marketed in their home country. Answer: Answers will vary. Understanding how consumers actually form their impressions of country of origin and update their brand knowledge can be challenging. Answering this question will provide the students more insight on how they view products in relation to their country of origin. I am aware of the country of origin for products like electronics (e.g., Samsung from South Korea), automobiles (e.g., BMW from Germany), and fashion items (e.g., Italian and French brands), as it often signifies quality and craftsmanship. For example, Samsung is marketed in South Korea with a focus on national pride and innovation, while internationally, the emphasis is on product features and global technology leadership. 3. Pick a product category. Consider the strategies of market leaders in different countries. How are they the same and how are they different? Answer: Answers will vary. The class may be divided into groups with each group choosing different products from the same product category. This will make comparison of market strategies easier. Product Category: Fast Food Market Leaders: • McDonald's (USA): Focuses on consistent global branding, menu staples like the Big Mac, and a uniform dining experience. However, it offers localized menu items (e.g., McArabia in the Middle East) and adapts marketing to local cultures. • Jollibee (Philippines): Emphasizes Filipino flavors and culture, with products like Jolly Spaghetti. Its marketing stresses family values and local heritage, differing from McDonald's more universal appeal. Similarities: • Both companies maintain strong brand identities and offer core menu items that ensure brand consistency. Differences: • McDonald's customizes its offerings slightly to suit local tastes, while Jollibee deeply integrates local culture and flavors into its product and marketing strategies. 4. Pick a product category. How are different leading brands targeting different demographic market segments? Answer: In the beer category, Budweiser is targeting a broad cross-section of age groups with different advertising styles. The “True” ads target the early-20s consumer, the “This Bud’s for You” ads target the mid-20s to early-30s consumer, and the image ads featuring two generations of Busch family members target the 30-and-over consumer. Miller Genuine Draft ads put emphasis on the 21- to 27-year-old consumer, but the brand is also careful not to alienate older consumers with ads geared too young, as was the case with the “Dick” ads for Miller Lite. Coors and Coors Light are currently targeting the young demographic with ads emphasizing the party lifestyle. For the smartphone category, different leading brands target various demographic segments: 1. Apple: Targets affluent consumers, young professionals, and tech-savvy individuals with premium pricing, a focus on innovation, and a luxury brand image. 2. Samsung: Offers a range of models to appeal to different segments, from high-end devices for tech enthusiasts to affordable options for budget-conscious consumers. 3. Xiaomi: Focuses on price-sensitive customers, offering high-quality features at lower price points, appealing to younger demographics and emerging markets. 4. Google: Targets tech-savvy users interested in a pure Android experience and seamless integration with other Google services. Each brand tailors its marketing strategies, product features, and pricing to appeal to specific demographic groups within the smartphone market. 5. Contrast Coca-Cola’s and McDonald’s global branding strategies. How are they similar and how are they different? Why are they so well-respected? Answer: McDonald’s and Coca-Cola are among the world’s most recognizable brands. They present a fundamentally uniform image of quality, fun, and value. The brands are consistent across borders, so that consumers could travel the world and expect similar experiences with the brands. Both Coca-Cola and McDonald’s make efforts to customize their products and their marketing messages based on the preferences of consumers in global markets. McDonald’s customizes its menu to a greater extent than Coca-Cola customizes its formula. Coca-Cola and McDonald's Global Branding Strategies Similarities: • Consistency: Both brands maintain a consistent global identity, ensuring recognizable logos, color schemes, and messaging. • Localization: They adapt to local tastes and cultural preferences, offering region-specific products and flavors. • Brand Loyalty: Both focus on building strong emotional connections with consumers worldwide. Differences: • Product Offering: Coca-Cola primarily markets beverages, while McDonald's offers a wide range of food items. Coca-Cola emphasizes the experience of refreshment, whereas McDonald's focuses on convenience and family-friendly environments. • Marketing Focus: Coca-Cola's marketing often centers around universal themes like happiness and togetherness, while McDonald's frequently highlights affordability, menu variety, and the dining experience. Respect Factors: • Strong Global Presence: Both brands have established extensive global footprints, making them accessible to a broad audience. • Adaptability and Innovation: They continuously innovate and adapt to changing consumer preferences and market conditions. • Corporate Social Responsibility: They are involved in various social and environmental initiatives, enhancing their reputation and consumer trust. Exercises and assignments 1. Ask students to visit the Benetton website (www.benetton.com) to view the company’s advertising. What are the advantages and disadvantages of the type of ads Benetton runs? How are reactions to the ads likely to differ across countries? Answer: Advantages of Benetton's Ads: • Bold and Memorable: Benetton's ads are known for their striking imagery and strong social messages, making them memorable and distinctive. • Brand Differentiation: They set the brand apart from competitors by focusing on social and cultural issues, fostering a unique brand identity. • Global Appeal: The ads often address universal themes, which can resonate with a diverse, global audience. Disadvantages of Benetton's Ads: • Controversial Content: The bold nature of the ads can sometimes be polarizing, leading to controversy or backlash. • Cultural Sensitivity: Some ads may not translate well across different cultures, potentially offending or alienating certain groups. Reactions Across Countries: • Positive Reception: In some countries, audiences may appreciate the ads' focus on social issues and bold messaging, viewing them as progressive and thought-provoking. • Negative Reception: In more conservative cultures, the provocative nature of the ads may be met with criticism or discomfort, potentially harming the brand's image in those markets. The effectiveness of Benetton's advertising strategy largely depends on the cultural context and societal norms of the target audience. 2. Assign students the task of introducing an American brand into a specific country in which it is not sold. What would be the challenges associated with such an introduction? What marketing strategies would be necessary? How would the strategies differ from those used in the United States? Answer: Challenges: 1. Cultural Differences: Understanding and respecting local customs, values, and consumer behavior. 2. Regulatory Environment: Navigating local laws, regulations, and compliance requirements. 3. Brand Awareness: Building brand recognition and trust in a new market. 4. Local Competition: Competing with established local brands and understanding market dynamics. Marketing Strategies: 1. Market Research: Conduct thorough research to understand local consumer preferences and market conditions. 2. Localization: Adapt products, packaging, and messaging to align with local tastes and cultural nuances. 3. Partnerships: Collaborate with local businesses, influencers, and media to enhance credibility and reach. 4. Promotional Campaigns: Tailor promotions and advertising to resonate with local audiences, considering local holidays, events, and cultural symbols. Differences from U.S. Strategies: • Customization: Greater emphasis on localization, whereas U.S. strategies may rely more on standardized approaches. • Communication Channels: Utilize local media and social platforms preferred in the target country, which may differ from those popular in the U.S. • Pricing Strategies: Consider local purchasing power and competitive pricing, which may require adjustments from U.S. pricing models. Introducing an American brand into a new country requires a nuanced approach, balancing brand consistency with local relevance. 3. Tell students to find a brand whose success in the United States is bigger than in its home country. Is the situation the result of differences in marketing or markets? In what other countries might the situation be the same? Answer: One example is Red Bull, originally from Austria but significantly more successful in the United States. Reason for Success in the U.S.: • Marketing Strategy: Red Bull's innovative marketing, including extreme sports sponsorships and viral marketing, resonated well with the U.S. market. They effectively created a new category (energy drinks) and positioned themselves as the leading brand. • Market Dynamics: The U.S. market has a high demand for energy drinks, particularly among younger demographics, which contributed to Red Bull's success. Other Countries with Similar Success: • United Kingdom: Similar marketing strategies focusing on sports and lifestyle branding have led to substantial success. • Australia: A strong presence in extreme sports and events, along with effective local marketing, has driven Red Bull's popularity. The differences in marketing strategies, tailored to local preferences and market conditions, significantly contribute to Red Bull's varying success across countries. 4. Have students pick a brand of their choice and assess its global branding success as against the Ten Commandments of Global Branding provided in Figure 14-5. Answer: Brand Example: Nike 1. Consistency: Maintains a consistent global identity. 2. Adaptation: Adapts messaging to local cultures. 3. Focus: Has a clear global strategy. 4. Relevance: Value proposition is globally relevant. 5. Integration: Partners effectively with local entities. 6. Differentiation: Stands out with innovation and premium positioning. 7. Simplicity: Messaging is clear and understandable. 8. Scalability: Strategy scales well across markets. 9. Visibility: Strong global presence. 10. Sustainability: Committed to social responsibility. Nike aligns well with the Ten Commandments of Global Branding, contributing to its global success. Key take-away points 1. Marketers are interested in regional marketing because mass markets are splintering, computerized sales data from supermarket scanners can reveal regional pockets of sales’ strengths and weaknesses, and marketing communications make possible more focused targeting of consumer groups defined along virtually any lines. 2. Some consumers may not like being targeted on the basis of their being different, since that only reinforces their image as outsiders or a minority. 3. Global marketing programs provide a number of advantages, including economies of scale, lower marketing costs, increased credibility, consistent brand image, and the ability to establish uniformity and control of marketing practices worldwide. 4. The increasing mobility of consumers and reach of media allows – and even dictates – the development of global branding strategies. 5. Building global customer-based brand equity requires creating brand awareness, and a positive brand image in each country in which the brand is marketed. 6. Marketers often plan globally, but implement regionally. Chapter 15 Closing Observations Chapter Objectives 1. Understand the six future brand imperatives. 2. Identify the ten criteria for the brand report card. 3. Outline the seven deadly sins of brand management. Overview The final chapter of the book summarizes the customer-based brand equity framework; reviews guidelines for building, measuring, and managing brand equity described in earlier chapters; then offers a perspective on activities and attitudes that can help or hurt a brand. A brand’s equity can be weakened by a failure to understand the full range of associations consumers have for it, inadequate marketing support, unwillingness to spend the time and/or money required to build brand awareness and image, a lack of appreciation of the brand equity concept within the corporation, or an inability to strike the appropriate balance between maintaining consistency and implementing change in marketing actions. In order to maximize brand equity, firms must develop products that fit with a brand’s meaning and satisfy the needs and wants of consumers; decide on the points of parity and points of difference that will result in the best market position; provide superior delivery of benefits; maintain innovation in design, manufacturing, and marketing; be seen as expert, trustworthy, and likable; communicate with a consistent voice; employ a full range of complementary brand elements and supporting marketing programs; and design and implement a brand hierarchy and brand portfolio that establishes the optimal relationship among the company’s offerings. Brand management issues related to industrial goods, high-technology products, services, retailers, and small businesses are discussed. The brand equity framework is compared to models developed by other authors. The chapter and the book conclude by considering how branding and branding principles might change over time. Branding Brief 15-1 details the Brand Report Card. The Brand Report Card evaluates a company’s brand management based on the following criteria: managers understand what the brand means to consumers; the brand is properly positioned; customers receive superior delivery of the benefits they value most; the brand takes advantage of the full repertoire of branding and marketing activities available to build brand equity; marketing and communications efforts are seamlessly integrated and the brand communicates with one voice; the brand’s pricing strategy is based on consumer’s perceptions of value; the brand uses appropriate imagery to support its personality; the brand is innovative and relevant; for a multi-product, multi-brand company, the brand hierarchy and brand portfolio are strategically sound; the company has in place a system to monitor brand equity and performance. Brand Focus 15.0 considers specific applications of branding in different types of industries. Branding Briefs BRANDING BRIEF 15-1 THE BRAND REPORT CARD The Brand Report Card can reveal how well a brand is being managed. The brand is rated on a scale of 1 to 10 (1 = extremely poor; 10 = extremely good) for each of the characteristics below: Score 1. Managers understand what the brand means to consumers. • Have you created detailed, research-driven mental maps of your target customers? • Have you attempted to define a brand mantra? • Have you outlined customer-driven boundaries for brand extensions and guidelines for marketing programs? 2. The brand is properly positioned. • Have you established category, competitive, and correlational points-of-parity? • Have you established desirable, deliverable, and differentiated points-of-difference? 3. Customers receive superior delivery of the benefits they value most. • Have you attempted to uncover unmet consumer needs and wants? • Do you relentlessly focus on maximizing your customers’ product and service experiences? 4. The brand takes advantage of the full repertoire of branding and marketing activities available to build brand equity. • Have you strategically chosen and designed your brand name, logo, symbol, slogan packaging, signage, and other brand elements to build brand awareness and image? • Have you implemented integrated push and pull strategies that target intermediaries and end customers, respectively? 5. Marketing and communications efforts are seamlessly integrated (or as close to it as humanly possible). The brand communicates with one voice. • Have you considered all the alternative ways to create brand awareness and link brand associations? • Have you ensured that common meaning is contained throughout your marketing communication program? • Have you capitalized on the unique capabilities of each communication option? • Have you been careful to preserve important brand values in your communications over time? 6. The brand’s pricing strategy is based on consumer perceptions of value. • Have you estimated the added value perceived by customers? • Have you optimized price, cost, and quality to meet or exceed consumer expectations? 7. The brand uses appropriate imagery to support its personality. • Have you established credibility by ensuring that the brand and the people behind it are seen as expert, trustworthy, and likable? • Have you established appropriate user and usage imagery? • Have you crafted the right brand personality? 8. The brand is innovative and relevant. • Have you invested in product and marketing improvements that provide improved benefits and better solutions for your customers? • Have you stayed up-to-date and in touch with your customers? 9. For a multiproduct, multibrand company, the brand architecture is strategically sound. • For the brand hierarchy, are associations at the highest levels relevant to as many products as possible at the next lower levels, and are brands well differentiated at any one level? • For the brand portfolio, do the brands maximize market coverage while minimizing their overlap at the same time? 10. The company has in place a system to monitor brand equity and performance. • Have you created a brand charter that defines the meaning and equity of the brand and how it should be treated? • Do you conduct periodic brand audits to assess the health of your brands and to set strategic direction? • Do you conduct routine tracking studies to evaluate current marketing performance? • Do you regularly distribute brand equity reports that summarize all brand-relevant research and information to assist marketing decision making? • Have you assigned people within the organization the responsibility of monitoring and preserving brand equity? BRANDING BRIEF 15-2 REINVIGORATING BRANDING AT PROCTER & GAMBLE Already the world’s largest consumer packaged goods company, P&G became even larger with the $57 billion acquisition of Gillette in 2005. After struggling briefly at the turn of the twenty-first century, the company regained its reputation as the flag-bearer of marketing innovation and excellence. Renewed Emphasis on R&D In the first decade of the twenty-first century, one of the fastest-growing major corporations in revenue and profit was Procter & Gamble. Fueling its growth were successful new products such as Swiffer mop, a battery-powered Crest Spin-Brush toothbrush, Mr. Clean Magic Eraser, and Actonel. Many of these new products reflected innovation in “the core”—core markets, categories, brands, technologies, and capabilities. To reinforce its innovation, P&G also placed a renewed emphasis on design by appointing its first-ever chief design officer in 2001 and installing a top design officer in each of its global business units. To more effectively grow its core, P&G also adopted a “connect and develop” model that emphasized the pursuit of outside innovation. New Communication Approaches P&G has been shifting its ad budget away from TV advertising and toward “media-neutral” advertising, which determines media spending without bias toward any particular medium based on precedent. In place of big television buys, P&G has pioneered the use of less obtrusive marketing techniques such as Vocal point, a word-of-mouth marketing program that enlists 600,000 mothers, among others, to promote its brands by giving positive testimonials, samples, and coupons to friends and neighbors. P&G still values the power of TV ads, but it also taps into the power of the Internet at the same time. New Research Approaches P&G conducts approximately 10,000 consumer research projects each year, spending more than $100 million annually. New Branding Philosophy While it did launch successful new brands such as Swiffer, P&G began pursuing a strategy with less inherent risk—leveraging existing assets by investing in well-known “power brands.” The company now has 22 brands with more than $1 billion in annual sales and 19 with more than $500 million. P&G went as far as resurrecting a brand and turning it into a power brand with innovative new products. P&G often seeks to leverage its power brands with vertical extensions into higher-margin categories. P&G has broadened the meaning of its power brands in more than just a product sense. Brand Focus BRAND FOCUS 15.0 SPECIAL APPLICATIONS Online Creating a brand online brings a special set of challenges. Many of the guidelines for business-to-business, high-tech, retailing, and small businesses identified below will apply. • Don’t forget the brand-building basics. • Create strong brand identity. • Generate strong consumer pull. • Selectively choose brand partnerships. • Maximize relationship marketing. Industrial and Business-to-Business Products Industrial goods and business-to-business marketing sometimes call for different branding practices. • Adopt a corporate or family branding strategy and create a well-defined brand hierarchy. • Link non-product-related imagery associations. • Employ a full range of marketing communication options. • Leverage equity of other companies that are customers. • Segment customers carefully, and develop tailored branding and marketing programs. High-Tech Products The distinguishing feature of high-tech products is that they change rapidly over time because of innovations and R&D breakthroughs. The short product life cycles for high-tech products have several significant branding implications. • Establish brand awareness and a rich brand image. • Create corporate credibility associations. • Leverage secondary associations of quality. • Avoid overbranding products. • Selectively introduce new products as new brands, and clearly identify brand extensions. Services The level of sophistication in service branding has greatly increased in recent years. • Maximize service quality by recognizing the myriad ways to affect consumer service perceptions. • Employ a full range of brand elements to enhance brand recall and signal more tangible aspects of the brand. • Create and communicate strong organizational associations. • Design communication programs that augment consumers’ service encounters and experiences. • Establish a brand hierarchy by creating distinct family brands or individual brands as well as meaningful ingredient brands. Retailers Retailers and other channel intermediaries can affect the brand equity of the products they sell, as well as create their own brand equity, by establishing awareness and associations to their product assortment, pricing and credit policy, and quality of service. • Create a brand hierarchy by branding the store as a whole, as well as individual departments, classes of service, or any other noteworthy aspects of the retail service or shopping experience. • Enhance manufacturer’s brand equity. • Establish brand equity at all levels of the brand hierarchy by offering added value in the selection, purchase, or delivery of product offerings. • Create multichannel shopping experiences. • Avoid overbranding. Small Businesses Building brands is a challenge for small businesses because of their limited resources and budgets. They usually do not have the luxury of making mistakes and must design and implement marketing programs much more carefully. Nevertheless, many entrepreneurs have built their brands into powerhouses essentially from scratch. Because there are usually limited resources behind a small-business brand, marketing focus and consistency are critically important. Creativity is also paramount for finding new ways to market ideas about products to consumers. • Emphasize building one or two strong brands. • Focus the marketing program on one or two key associations. • Employ a well-integrated set of brand elements. • Design creative brand-building push campaigns and consumer-involving pull campaigns that capture attention and generate demand. • Leverage as many secondary associations as possible. Discussion questions 1. What do you think makes a strong brand? Can you add any criteria to the list provided? Answer: Answers will vary. Another potential criterion is the establishment of a brand equity measurement system. A strong brand is characterized by several key elements: 1. Clear Brand Identity: Distinct and recognizable brand elements that convey the brand’s essence. 2. Consistent Messaging: Uniform and coherent communication across all touchpoints. 3. Emotional Connection: Ability to create a meaningful bond with customers. 4. Strong Brand Equity: High levels of brand awareness, perceived quality, and brand loyalty. 5. Differentiation: Unique attributes that set the brand apart from competitors. 6. Adaptability: Ability to evolve with changing market conditions and consumer preferences. Additional criteria could include sustainability, reflecting the brand's commitment to environmental and social responsibility, and customer experience, ensuring positive interactions across all customer touchpoints. 2. Consider the deadly sins of brand management. Do you see anything missing from the list of seven in Figure 15-8? Answer: Answers will vary. Another sin might be the failure to recognize the role of consumers in the creation of brand equity. In Figure 15-8 of "Strategic Brand Management," the seven deadly sins of brand management typically include: 1. Neglecting Brand Equity: Failing to invest in building and maintaining brand value. 2. Inconsistent Brand Messaging: Delivering conflicting or unclear brand communications. 3. Ignoring Customer Insights: Overlooking customer needs and preferences. 4. Overextending the Brand: Expanding the brand beyond its core competencies. 5. Underestimating Competitors: Disregarding the impact of competitive actions. 6. Lack of Brand Differentiation: Failing to distinguish the brand from others in the market. 7. Inadequate Brand Management Resources: Not allocating sufficient resources to brand management activities. One possible addition to this list could be failing to protect brand integrity, which involves not safeguarding the brand from misuse or unauthorized alterations that can damage its reputation and value. 3. Pick one of the special applications and choose a representative brand within that category. How well do the five guidelines apply? Can you think of others not listed? Answer: Answers will vary. The class may be divided into groups with each group choosing one special application of their choice. Let's consider luxury brands as the special application. A representative brand is Louis Vuitton. Applying the five guidelines to Louis Vuitton: 1. Consistency: Louis Vuitton maintains a consistent brand image across all platforms, reinforcing its luxury status and iconic design. 2. Authenticity: The brand emphasizes its heritage and craftsmanship, ensuring it stays true to its roots and values. 3. Differentiation: Louis Vuitton stands out with its distinctive monogram and high-quality materials, setting it apart from competitors. 4. Customer Engagement: The brand engages with customers through exclusive events and personalized experiences, enhancing brand loyalty. 5. Adaptability: Louis Vuitton evolves its product offerings and marketing strategies to stay relevant in a changing market while maintaining its core brand values. Additional guidelines might include sustainability, reflecting growing consumer interest in ethical practices, and innovation, ensuring the brand remains at the forefront of fashion trends and technological advancements. 4. What do you see as the future of branding? How will the roles of brands change? What different strategies might emerge as to how to build, measure, and manage brand equity in the coming years? What do you see as the biggest challenges? Answer: Future of Branding: 1. Personalization: Brands will increasingly focus on hyper-personalized experiences using data and AI to tailor products and communications to individual preferences. 2. Sustainability: There will be a stronger emphasis on environmental and social responsibility, with brands needing to demonstrate genuine commitment to sustainability. 3. Digital Integration: The role of brands will expand in digital and virtual environments, including augmented reality (AR) and virtual reality (VR), requiring innovative ways to engage consumers. 4. Transparency and Trust: Brands will need to be more transparent and authentic to build and maintain consumer trust, especially in the face of misinformation and privacy concerns. 5. Customer-Centric Strategies: Strategies will increasingly center around creating seamless and integrated customer experiences across multiple channels. Challenges: 1. Data Privacy: Navigating regulations and consumer concerns around data privacy while leveraging data for personalized marketing. 2. Brand Differentiation: Standing out in an increasingly crowded and competitive digital marketplace. 3. Managing Brand Equity: Balancing traditional brand values with evolving consumer expectations and technological advancements. 4. Sustainability Expectations: Meeting growing demands for corporate social responsibility and environmental stewardship. 5. Consider the trade-offs involved with achieving marketing balance. Can you identify a company that has excelled in achieving balance on various trade-offs? Answer: Answers will vary. To find the branding sweet spot, managers must reconcile trade-offs in brand management and strike the balance between simplicity and complexity in all brand decision-making and activity. Trade-offs are pervasive in marketing a brand—short-run sales versus long-run brand equity, global control vs. local customization, retaining vs. acquiring customers, to name just a few. Apple Inc. is a notable example of a company that has excelled in achieving balance on various trade-offs: 1. Innovation vs. Stability: Apple consistently introduces innovative products while maintaining a stable and reliable brand reputation. 2. Premium Pricing vs. Accessibility: Apple manages to justify its premium pricing through high-quality design and performance, while also expanding its product range to reach different market segments (e.g., iPhone SE). 3. Design vs. Functionality: Apple balances sleek, aesthetically pleasing designs with robust functionality and user experience. 4. Exclusivity vs. Market Penetration: Apple maintains a sense of exclusivity with its high-end products while achieving broad market penetration through a diverse ecosystem of devices and services. This approach allows Apple to effectively manage brand equity while meeting various consumer needs and market demands. Exercises and assignments Because most students will be involved with a brand audit project that would be nearing completion by the time the material in this chapter is covered, it does not make much sense to include additional exercises and assignments at this point. If students are not doing a brand audit project, however, then it may make sense to have a “mini” version of the project for brands assigned by the instructor or chosen by the students. Key take-away points 1. Brand management is an art and a science, and the purpose of the text was to provide a number of concepts, tools, frameworks, etc., to help with the latter. 2. Strategic brand management includes the design and implementation of marketing programs and activities to build, measure, and manage brand equity. 3. Virtually all the branding concepts, tools, frameworks reviewed in the book were relevant to any particular application. Nevertheless, there are unique characteristics to any application that suggest more specific guidelines. 4. The Brand Report Card or any comprehensive brand evaluation tool is a good way to critique the brand management process. 5. The importance of branding seems unlikely to change for one critical reason: Consumers will continue to value the functions brands provide. Instructor Manual for Strategic Brand Management: Building, Measuring, and Managing Brand Equity Kevin Lane Keller 9780132664257, 9780273779414