Brand Management

Brand Management
MBA Second Year (General)
School of Distance Education
Bharathiar University, Coimbatore - 641 046
Author: R Banila Copyright 2008, Bharathiar University All Rights Reserved Produced and Printed by EXCEL BOOKS PRIVATE LIMITED A-45, Naraina, Phase-I, New Delhi-110028 for SCHOOL OF DISTANCE EDUCATION Bharathiar University Coimbatore-641046
CONTENTS
Page No. UNIT I Lesson 1 Lesson 2 Lesson 3 Brands and Branding Concept Brand Names Brand Elements UNIT II Lesson 4 Lesson 5 Lesson 6 Brand Positioning Customer based Brand Equity Building a Strong Brand UNIT III Lesson 7 Lesson 8 Lesson 9 Lesson 10 Brand Image Brand Identity Brand Equity Brand Loyalty UNIT IV Lesson 11 Lesson 12 Brand Extensions Managing Brands over Time UNIT V Lesson 13 Lesson 14 Lesson 15 Brand Valuation Co-branding Online Branding 99 109 123 129 79 88 51 56 65 72 29 35 42 7 13 19
Model Question Paper
BRAND MANAGEMENT SYLLABUS UNIT I Concept of a Brand-Evolution-perspectives, anatomy, types of brand names, brand name associations, brands vs products, advantages of brands to consumers and firms, brand elements: components and choosing brand elements, branding challenges and opportunities. UNIT II Brand positioning-basic concepts-alternatives-risks-brands and consumers-strategies for positioning the brand for competitive advantage-points of parity-points of differencebuying decisions, perspectives on consumer behaviour, building a strong brand-method and implications UNIT III Brand image - dimensions-brand associations and image, brand identity-perspective levels and prism. Managing brand image-stages-functional, symbolic and experiential brands. Brand equity - sources of equity-brand equity models, brand audits, brand loyalty and cult brands. UNIT IV Leveraging brands - brand extensions, extendibility, merits and demerits, line extensions, line trap-co branding and licensing brands. Reinforcing and revitalization of brands-need, methods, brand architecture-product, line, range, umbrella and source endorsed brands. Brand portfolio management. UNIT V Brand valuation-methods of valuation, implications for buying and selling brands, applications-branding industrial products, services and retailers-building brands online. Indianisation of foreign brands and taking Indian brands global-issues and challenges.
5 Brands and Branding Concept
UNIT I
6 Brand Management
LESSON
1
BRANDS AND BRANDING CONCEPT
CONTENTS 1.0 1.1 1.2 1.3 Aims and Objectives Introduction What is a Brand? Evolution of Brands 1.3.1 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 Evolution of Brands-Summary
Concept of a Brand Characteristics of Brands Branding Today Let us Sum up Lesson End Activities Keywords Questions for Discussion Suggested Readings
1.0 AIMS AND OBJECTIVES

After studying this lesson, you should be able to understand: The concept of brand and characteristics of brand The evolution of brands Todays branding scenario
1.1 INTRODUCTION
More and more firms and other organizations have come to the realization that one of their most valuable assets is the brand name associated with their products or services. When a marketer creates a new name, logo or symbol for a new product he or she has created a brand. It is a truth now universally acknowledged that a company with powerful brands succeeds in the market place. Branding has been around for centuries as a means to distinguish the goods of one producer from those of another.
1.2 WHAT IS A BRAND?

According to American Marketing Association (AMA) a brand is a name, term, sign, symbol or design or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.
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A brand in short is an identifier of the seller or the maker. A brand name consists of words, letters and/or numbers that can be vocalized. A brand mark is the visual representation of the brand like a symbol, design, distinctive colouring or lettering. Mercedes Benz is a brand name and the star with it is a brand mark. Essentially, a brand is a promise of the seller to deliver a specific set of benefits or attributes or services to the buyer. Each brand represents a level of quality. Irrespective of the fact from whom the brand is purchased, this level of quality can be expected of the brand. A brand is much more complex. Apart from attributes and benefits, it also reflects values.
1.3 EVOLUTION OF BRANDS

Brands start off as products made out of certain ingredients. Over a period of time, brands are built through marketing activities and communications. They keep on acquiring attributes, core values and extended values. Branding makes it easier for consumers to identify products and services. Brands ensure a comparable quality when products are repurchased. Brands simplify a consumers shopping. Choosing a commodity is far more complex than choosing a brand. The firms find that brands can be advertised. The firms also get the advantage of recognition when brands are on the shelves of the retailers. There is no confusion between branded products amongst consumers. Branding makes price comparisons difficult. Good brands help build a corporate image. Branding gives added prestige to the marketer. Branding also gives legal protection to the seller. Brand loyalty protects a firm against competition. Branding enables a seller to segment the market. The distributors prefer branding as an identification tool for vendors, as a convenient tool to handle the products. These are some of the factors which encourage the sellers to brand their products.
Extended value Core value
Attributes Category Association Products Ingredients
Time
Figure 1.1: Brand Evolution
1.3.1 Evolution of Brands-Summary

Brand evolution has interesting history. In ancient Roman and Greek society, shopkeepers hung pictures above their shops of the products they sold. There was a high degree of illiteracy in those days, the pictorial representation did help the buyers. Each retailer then started developing symbols to represent his speciality. This led to the development of brand logos. Logos are short-hand devices indicating capability of a brand. The trend is continuous even now. In medieval times, craftsmen put their marks on products to indicate the skills which went in to making them. Branding based on the reputations of craftsmen has existed over the centuries. Thus suppliers started distinguishing themselves. Branding was used as a guarantee of the source of the product. Later it came to be used for legal
protection against copying and imitation. Trademarks now include works, symbols and package design, and are registerable. Branding was associated with the mark put on cattle by red hot iron as a proof of ownership, and this must have influenced Oxford English Dictionarys lexical meaning of a brand as an indelible mark as proof of ownership, as a sign of quality or for any other purpose. Ranchers in the old west used brands to identify their cattle. As fencing was not invented, this was the only way to mark their valuable property. Brands thus became differentiating devices, and remain so even today. They identify the products of one seller or group and competitors. Brands can be a name, term, sign, symbol or design or any combination of them. Classical brand management developed in the retail grocery stores. Manufacturer retailer relationship underwent transformation in the wake of the Industrial Revolution. Wholesalers were a dominant force then. Manufacturers sold unbranded products to the wholesalers and had little contact with the retailers. But technological advances enabled manufacturer to mass produce goods in anticipation of demand. They questioned their reliance on wholesalers. They tried to protect their investment by branding their products, and by patenting them. They tried to bypass the wholesalers by advertising these brands directly to the consumers. Advertising then focused on creating awareness of a brand, emphasising its reliability, and guaranteeing that branded goods were of a consistent quality. Manufacturers also began to appoint their own salesmen to deal directly with the retailers. All this happened by the second half of the 19th century. The power shifted from the wholesalers to the manufacturers thanks to the branding process. Manufacturers took efforts to create brand awareness, and to make their brands different from those of the competitors. They also strove to maintain a consistent quality level. Brands came to have three dimensions- differentiation, legal protection and functional communication. After the World War II, the consumers hankered after the goods which were short since resources were diverted to the war efforts. People started life afresh and wanted security. Family provisions were a desirable objective. It augured well for the manufacturers. Many of todays great brands emerged in this period. Brand management became a respectable subject. In the last century, brands came to acquire an emotional dimension also. They made personality statements and represented buyer moods. Check Your Progress 1 1. What do you understand by the term brand? 2. What are the benefits of branding?
1.4 CONCEPT OF A BRAND

A successful brand is a conglomerate of the marketing resources, and represents valuable marketing assets. It provides an income stream in future. The buyer or the user decides the ultimate value of a brand. We may communicate the added values to our target audience, but their perception is such that it fits their prior beliefs.
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Marketers start the branding process. Buyers develop the mental image of a brand. It may or may not tally with the marketing thrust. Brand by definition identifies a product in its broad sense, and the product being branded is augmented so as to receive unique added values which are perceivably relevant to the buyer or user. Brands offer a bundle of benefits, which are conveniently classified in to those satisfying buyers rational and emotional needs.
1.5 CHARACTERISTICS OF BRANDS
Generic
Expected
Augmented
Potential
Figure 1.2: Characteristics of Brands
Brand can be considered in terms of four levels: Generic: It is the commodity level which satisfies the basic needs such as transportation. It is so easy to imitate a generic product. A brand continues to add values so as to reach the expected level. Expected: A generic is modified to satisfying some minimum buying conditions such as functional performance, pricing, availability etc. Augmented: Brand is refined further by adding non-functional values along with the functional ones. We may direct advertising to the social prestige, the possessor of the brand is likely to enjoy. Potential: As brands evolve, we become more critical. Creativity plays an important role to grow up the brand to its full potential. If no creative effort is taken, there is danger of the brand relapsing to its augmented or expected level.
Check Your Progress 2 Fill in the blanks: 1. A brand is intended to identify the __________________. 2. Good brands help to build __________________. 3. Characteristics of brand can be given in __________________ levels. 4. __________________ is one of the characteristics of brand.
1.6 BRANDING TODAY

We have already examined the evolution of brands. Brands have a very large scope. Branding only for visibility is not a correct approach. Brands have been classified into several categories depending on their role in advertising. At one extreme we have simple brands associated with advertisement slogans. At the other extreme, we have structured branding in which certain objects represent a product. Brands, according to Langmaid and Gordon, move from simple verbal to aural to visual association to branding devices to symbols, to analogies, to metaphors, to tone of voice and ultimately to structure.
Brands are treated as perceptions in the consumers mind. In the purchase process, consumers seek values of the brands capability. They evaluate a brand perceptually against criteria such as reliability, feel-good factor, superiority to other competitive brands etc. A brand once marketed is the domain of the consumer. A well branded product adopts a personality of its own.
1.7 LET US SUM UP

A brand is a name, term, sign, symbol or design or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition. The characteristics of a brand can be given in four levels and they are generic level, expected level, augmented level and potential level. Brands are treated as perceptions in the consumers mind. In the purchase process, consumers seek values of the brands capability. They evaluate a brand perceptually against criteria such as reliability, feel-good factor, superiority to other competitive brands etc.
1.8 LESSON END ACTIVITIES

1. Collect logo, brand mark, and slogans for 10 selected brands. 2. Identify the association of the given characteristics of brands to the brands selected by you for the exercise.
1.9 KEYWORDS
Brand: A brand is a name, term, sign, symbol or design or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition. Creativity: It plays an important role to grow up the brand to its full potential. If no creative effort is taken, there is danger of the brand relapsing to its augmented or expected level Brand Evolution: It has an interesting history. In ancient Roman and Greek society, shopkeepers hung pictures above their shops of the products they sold. There was a high degree of illiteracy in those days, the pictorial representation did help the buyers. Each retailer then started developing symbols to represent his speciality. Brand Logo: Logos are short-hand devices indicating capability of a brand.
1.10 QUESTIONS FOR DISCUSSION

1. Discuss the evolution of brands. 2. What is a brand? 3. State the characteristics of a brand.
Check Your Progress: Model Answers

CYP 1 1. A brand in short is an identifier of the seller or the maker. A brand name consists of words, letters and/or numbers that can be vocalized. A brand mark is the visual representation of the brand like a symbol, design, distinctive colouring or lettering.
Contd
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2.
Branding makes it easier for consumers to identify products and services. Brands ensure a comparable quality when products are repurchased. Brands simplify a consumers shopping. Choosing a commodity is far more complex than choosing a brand. The firms find that brands can be advertised. The firms also get the advantage of recognition when brands are on the shelves of the retailers. There is no confusion between branded products amongst consumers. Branding makes price comparisons difficult. Good brands help build a corporate image. Branding gives added prestige to the marketer. Branding also gives legal protection to the seller.
CYP 2 1. Goods and Services 2. Corporate Image 3. Four 4. Generic
1.11 SUGGESTED READINGS

U. C. Mathur, Product and Brand Management, Excel Books, New Delhi. Harsh V. Verma, Brand Management, Excel Books, New Delhi. Tapan K Panda, Building Brands in the Indian Market, Excel Books, New Delhi. Kapferer, Strategic Brand Management, Kogan Page, New Delhi. Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.
LESSON
13 Brand Names
2
BRAND NAMES
CONTENTS 2.0 2.1 2.2 Aims and Objectives Introduction Brand Name 2.2.1 2.3 Characteristics of a Good Brand Name
Brands versus Products 2.3.1 2.3.2 Five Levels of a Product Brand
2.4
Advantages of Brands 2.4.1 2.4.2 Consumers Firms
2.5 2.6 2.7 2.8 2.9
Let us Sum up Lesson End Activity Keywords Questions for Discussion Suggested Readings

After studying this lesson, you should be able to understand: The types of brand names and its association to the products The concept of brands versus products The advantages of brands
2.1 INTRODUCTION
Buying is a complex process involving search for information. An appropriate brand name reinforces the brands desired positioning, by associating it with the relevant attributes which influence the buying decision. This lesson explains about the brand name association and the advantages of brands.
2.2 BRAND NAME

Brand name is the name given to the products in order to identify them. There are lots of choices for brand name.
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Brand names are based on
Life style
Ex: Fleet footers, Exxon
Product meaning
Ex: Fruity, Aqua fresh, Medimix
Other objects
Ex: Apple computers, Shell gasoline
Figure 2.1: Types of Brand Names
There are really few good brand names. Some times brand names are based on a persons name. Ex: Ford, Khaitan, Bajaj, Colgate, Aswini Hair oil etc. Some times brand names are based on locations. Ex: Indian Air lines, Kentucky fried chicken, Bombay dying Brand names can be based on animals or birds. Ex: Dove soap, Lion Dates, Tiger Biscuits, Kiwi shoe polish Brand names can suggest a life style Ex: Fleet footers, Exxon, Passion Brand names express product meaning Ex: Fruity, Aqua fresh, It can be based on the names of other objects. Ex: Shell gasoline, Little Hearts, Apple computers.
2.2.1 Characteristics of a Good Brand Name

A good brand name should possess as many of the following characteristics as possible: 1. Distinctive: The market is filled with over-worked names and over used symbols. A unique and distinctive symbol is not only easy to remember but also is a distinguishing feature. Adidas shoes and Kodak films are distinctive names. 2. Simple: It is desirable to have short names which are easy to read and understand. It should be easy to pronounce and spell. Tide and Surf are examples of such names. 3. Meaningful: Brand names should be suggestive of quality, superiority or personality or such other attributes. They should communicate consumer benefits. Creativity should be encouraged. Ex: Promise is suggestive of an assurance of tooth health, Medimix is suggestive of the mixture of Ayurvedic medicines in the soap.
4. Compatible with the product: The brand name should be compatible with the product. Timex is appropriate for watches. Pulpy orange suits to the product of orange juice. 5. Registerable: It should be protectable under the Indian laws of Trade Marks and Copy right. There should be a search to confirm whether the chosen name is available.
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2.3 BRANDS VERSUS PRODUCTS

It is important to contrast a brand and a product. According to Philip Kotler, a product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. Thus a product may be a physical good (e.g. Cereal or automobile), service (e.g. an air line, bank or insurance company), retail store (e.g. a department store, super market), person (e.g. a political figure, entertainer or professional athlete), organization (e.g. a non-profit organization, trade organization or arts groups), place (e.g. a city, state or country)
2.3.1 Five Levels of a Product

Kotler defines five levels to a product: 1. The core benefit level is the fundamental need or want that consumers satisfy by consuming the product or service. 2. The generic product level is a basic version of the product containing only those attributes or characteristics absolutely necessary for its functioning but with no distinguishing features. 3. The expected product level is a set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. 4. The augmented product level includes additional product attributes, benefits or related services that distinguish the product from competitors. 5. The potential product level includes all of the augmentations and transformations that a product might ultimately undergo in the future.
Level 1. Core benefit 2. Generic product 3. Expected product Air conditioner Cooling and comfort Sufficient cooling capacity, an acceptable energy efficiency rating. Consumer reports states that for a typical large air conditioner, consumers should expect at least two cooling speeds, expandable plastic side panels, adjustable louvers, removable air filter, vent for exhausting air, power cord at least 60 inches long, one-year parts-and-labour warranty on the refrigeration system. Optional features might include electric touchpad controls, a display to show indoor and out door temperatures and the thermostat setting. Silent running, completely balanced throughout the room, and energy self sufficient.
4. Augmented product
5. Potential product
Figure 2.2: Examples of Different Product Levels
2.3.2 Brand
A brand is therefore a product, but one that adds other dimensions that differentiate it in some way from other products designed to satisfy the same need. These differences
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may be rational and tangible, related to product performance of the brand-or more symbolic, emotional and intangible-related to what the brand represents.
2.4 ADVANTAGES OF BRANDS

Brands provide benefits for both consumers and firms themselves. Provides an overview of the different roles that brands play for these two parties. Consumers Identification of source of product Manufacturers Means of identification to simplify handling or tracing
Assignment of responsibility to product Means of legally protecting unique maker features Search cost reducer Signal of quality level to satisfied customers
Promise, bond, or pact with maker of Means of endowing products with product device unique symbolic associations Signal of Quality Source of competitive advantage Source of financial returns
2.4.1 Consumers
To consumers brands provide important functions. 1. Identification of source of product: Brands identify the source or maker of a product. 2. Assignment of responsibility to product maker: It allows consumers to assign responsibility to a particular manufacturer or distributor. 3. Risk reducer: Brands take on special meaning to consumers. Because of past experience with the product and its marketing program over the years, consumers learn about brands. They find out which brand satisfies their needs and which brand does not. As a result brands provide a means of simplification for their product decisions. 4. Search cost reducer: If consumers recognize a brand and have some knowledge about it, then they do not need to search for additional information to make a product decision. Thus brands reduce the search cost. 5. Promise, bond, or pact with maker of product: Consumers offer their trust and loyalty with the understanding that that the brand will provide them utility through consistent product performance and appropriate pricing, promotion and distribution programs and actions 6. Symbolic device: Brands can serve as symbolic devices, allowing consumers to project their self-image. 7. Signal of quality: Brands can also play a significant role in signaling certain product characteristics to consumers.
Check Your Progress Fill in the blanks: 1. Brand name reinforces the brands desired positioning, by associating it with the _____________ which influence the buying decision. 2. Give a brand name which is based on locations. 3. ____________ is a set of attributes or characteristics that buyers normally expect and agree to when they purchase a product.
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2.4.2 Firms
Brands also provide a number of valuable functions to firms. 1. Means of identification to simplify handling or tracing: Brands serve an identification purpose to simplify product handling or tracing for the firm. 2. Means of legally protecting unique features: A brand also offers the firm legal protection for unique features or aspects of the product. A brand can retain intellectual property rights, giving legal title to the brand owner. The brand name can be protected through copyrights and designs. 3. Signal of quality level to satisfied customers: Brands can signal a certain level of quality so that satisfied buyers can easily choose the product again. 4. Means of endowing products with unique symbolic associations: Investments in the brand can endow a product with unique associations and meanings that differentiate it from other products. 5. Source of competitive advantage: The brand loyalty provides predictability and security of demand for the firm. It creates barriers of entry of other firms to enter the market. Thus branding can be seen as a powerful means of securing a competitive advantage. 6. Source of financial returns: Large earning multiples have been paid for brands in mergers and acquisitions.
2.5 LET US SUM UP

Brand name is the name given to the products in order to identify them. There are lots of choices for brand name. The brand names can be based on a persons name, locations name, animal or birds name, life style product meaning and other objects. A good brand name should be distinctive, simple, meaningful, registerable, and flexible.
2.6 LESSON END ACTIVITY

The origin of some famous brand names is given below. After reading it you try to find out the origin of any other five brands. 1. Lux: Lux was inaugurated in 1899. To begin with it was called Sunlight Flakes. A year later , it was renamed Lux. It suggests light. It also suggests luxury. Nokia: In 1865, a mining engineer named Fredrik Idle Stam set up a wood pulp mill to manufacture paper, and named it after the river on which it stoodNokia. In time, this enterprise diversified in to chemicals and rubber. Now it becomes a worldwide known brand.
2.
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2.7 KEYWORDS
Brand Name: Brand name is the name given to the products in order to identify them Core Benefit Level: It is the fundamental need or want that consumers satisfy by consuming the product or service. Generic Product Level: It is a basic version of the product containing only those attributes or characteristics absolutely necessary for its functioning but with no distinguishing features. Expected Product Level: It is a set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. Augmented Product Level: This includes additional product attributes, benefits or related services that distinguish the product from competitors. Potential Product Level: This includes all of the augmentations and transformations that a product might ultimately undergo in the future.

1. 2. Describe the types of brand name. State the characteristics of a good brand name.

1. Relevant attributes 2. Indian airlines 3. Expected product level

LESSON
19 Brand Elements
3
BRAND ELEMENTS
CONTENTS 3.0 3.1 3.2 Aims and Objectives Introduction Brand Elements 3.2.1 3.2.2 3.2.3 3.2.4 3.3 3.4 Brand Name Logos and Symbols Slogans Packaging
Criteria for Choosing Brand Elements Branding Challenges and Opportunities 3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 3.4.6 Savvy Customers Brand Proliferation Media Fragmentation Increased Competition Increased Costs Greater Accountability
3.5 3.6 3.7 3.8 3.9

After studying this lesson, you should be able to understand: The brand elements The criteria of choosing the brand elements The branding challenges and opportunities
3.1 INTRODUCTION
Many practicing managers refer to a brand in terms of certain amount of awareness, reputation, prominence and so on in the market place. The key to creating a brand is to be able to choose a name, logo, symbol, package, design or other attribute that identifies a product and distinguishes it from others. The different components of a brand that identifies and differentiate a product can be called brand elements. Brand
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elements can be chosen in a manner to build as much brand equity as possible. This lesson considers how different brand elements can be chosen to build brand equity.
3.2 BRAND ELEMENTS

The different components of a brand that identifies and differentiate a product can be called brand elements. The brand elements are: 1. Name 2. Logo 3. Symbol 4. Package 5. Design 6. Other attribute that identifies a product and distinguishes it from others.
3.2.1 Brand Name

The brand name is a fundamentally important choice because it often captures the central theme or key associations of a product in a very compact and economical fashion. Brand names can be an extremely effective shorthand means of communication. Naming Guidelines Selecting a brand name for a new product is certainly an art and a science. This section provides some general guidelines for choosing a name. It focuses on developing a completely new brand name for the product. Brand names must be chosen with the six general criteria as given below.
Naming Guidelines
Descriptive
Suggestive
Compounds
Classical
Arbitrary
Fanciful
I.
Descriptive: Describes function literally. Ex: Indian Airlines, Professional Courier
II. Suggestive: Suggestive of a benefit or function. Ex: Memory vita, Memory plus, Glucovita III. Compounds: Combination of two or more often-unexpected words. Ex: Redhat IV. Classical: Based on Latin, Greek or Sanskrit. Ex: Meritor V. Arbitrary: Real words with no obvious tie-in to company. Ex: Apple VI. Fanciful: Coined words with no obvious meaning.
3.2.2 Logos and Symbols

Although the brand name typically is the central element of the brand, visual brand elements play a critical role in building brand equity, especially in terms of brand awareness. Logos have a long history as a means to indicate origin, ownership or
association. There are many types of logos, ranging from corporate names or trade marks written in a distinctive form to entirely abstract logos, which may be completely unrelated to the work mark, corporate name, or corporate activities. Often logos are devised as symbols to reinforce the brand meaning in some way. Logos can be quite concrete or pictorial in nature. (TVS-Horse, Ponds Talcum powder- flower) Benefits of Logos 1. Because of their visual nature, logos and symbols are often easily recognized and can be a valuable way to identify products. 2. Another branding advantage of logos is their versatility: Because logos are often nonverbal, they can be updated as needed over time and generally transfer well across cultures. 3. Because logos are often abstract, without much product meaning, they can be relevant and appropriate in a range of product categories. For example, corporate brands often develop logos because their identity may be needed on a wide range of products. 4. Logos and symbols can be particularly important in services because of their intangible, abstract nature. For example, many insurance firms use symbols of strength, security. (e.g., logo of Life Insurance Corporation) 5. Unlike brand names, logos can be easily changed over time to achieve a more contemporary look.
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3.2.3 Slogans
Slogans are short phrases that communicate descriptive or persuasive information about the brand. Slogans often appear in advertising but can play an important role on packaging and in other aspects of the marketing program. For example: Britannia Milk Bikies slogan, Eat healthy Think Better appears in ads and on the wrapper. Benefits of Slogans Slogans can be devised in a number of ways to help build brand equity. Some slogans help to build brand awareness by playing of the brand name in some way (Thumps up, Taste the Thunder, Mango Fruity, Fresh and Juicy etc.). Other slogans build brand awareness even more explicitly by making strong links between the brand and the corresponding product category by combining both entities in the slogan (e.g., If Youre Not Wearing Dockers. Youre Just Wearing Pants). Slogans can help to reinforce the brand positioning and desired point of difference. Slogans often closely tied to advertising campaigns and can be used as tag lines to summarize the descriptive or persuasive information conveyed in the advertisements. For example: DeBeers diamonds A Diamond is forever tag line communicates the intended advertisement message that diamonds bring eternal love and romance and never lose value.
3.2.4 Packaging
Packaging involves the activities of designing and producing containers or wrappers for a product. The objectives of packaging are to:
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i)
Identify the brand
ii) Convey descriptive and persuasive information iii) Facilitate product transportation and protection iv) Assist at home storage v) Aid product consumption Benefits of Packaging Packaging can have important brand equity benefits for a company. Often, one of the strongest associations that consumers have with a brand relates to the look of its packaging. Structural packaging innovations can build or reinforce valuable brand associations. New packages can also expand a market and capture new market segments. Check Your Progress 1 1. What are the elements of a good brand? 2. What do you understand by slogans?
3.3 CRITERIA FOR CHOOSING BRAND ELEMENTS

In general, there are six criteria in choosing brand elements: 1. Memorability 2. Meaningfulness 3. Likeability 4. Transferability 5. Adaptability 6. Protectability The first three criteria memorability, meaningfulness and likeability can be characterized as brand building in nature and concern how the brand equity can be built through the judicious choice of a brand element. The latter three, however, are more defensive in nature and are concerned with how the brand equity contained in a brand element can be leveraged and preserved in the face of different opportunities and constraints. 1. Memorability: A necessary condition for building brand equity is achieving a high level of brand awareness. Brand elements can be chosen that are inherently memorable and therefore facilitate recall or recognition in purchase or consumption. The intrinsic nature of certain manes, symbols, logos and so on may make tem more attention getting and easy to remember. Ex: Surf, Fanta. 2. Meaningfulness: The inherent meaning of the brand elements can enhance the formation of brand associations. Brand elements may take on all kinds of meaning, varying in descriptive, as well as persuasive, content.
Brand names could be based on people, places, animals or birds or other things or objects. Two important dimensions of the meaning of brand elements are the extent to which it conveys the general information about the nature of the product category and the specific information about particular attributes and benefits of the brand. Ex: Boost, Sunlight soap, Medimix 3. Likeability: The brand elements can be chosen that are rich in visual and verbal imagery and inherently fun and interesting. 4. Transferability: The fourth criteria concern the transferability of the brand element in both a product category and geographic sense. First, to what extent the brand elements are useful for line or category extensions? Second, to what extent does the brand element add to brand equity across geographical content and linguistic qualities of the brand element. For example, one of the main advantages of non-meaningful names (e.g. Exxon) is that they translate well in to other languages since they have no inherent meaning. 5. Adaptability: The fifth consideration concerns the adaptability of the brand element over time. Because of changes in consumer values and options, or of a need to remain contemporary, brand elements often must be updated over time. For example, logos and characters can be given a new look or a new design to make them appear more modern and relevant. 6. Protectability: The sixth consideration concerns the extent to which the brand element is protectable both in a legal and competitive sense. In terms of legal considerations, it is important to (1) choose brand elements that can be legally protected on an international basis, (2) formally register them with the appropriate legal bodies, and (3) vigorously defend trademarks from unauthorized competitive infringement. Check Your Progress 2 1. What are the criteria for choosing brand elements? .. .. 2. Explain memorability. .. ..
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3.4 BRANDING CHALLENGES AND OPPORTUNITIES

Although brands may be important as ever to consumers, brand management may be more difficult than ever. The challenges for brand managers are discussed below:
3.4.1 Savvy Customers

Increasingly, consumers and business have become more experienced with marketing and more knowledgeable about how it works. A well-developed media market has resulted in increased attention paid to the marketing actions and motivations of companies. Many believe that it is more difficult to persuade consumers with traditional communications than it was in years gone by. Other marketers believe that what consumers want from products and services and brands has changed. For example, Kevin Roberts of Saatchi and Saatchi argues that
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companies must transcend brands to create trust marks- a name or symbol that emotionally binds a company with the desires and aspirations of its customers.
3.4.2 Brand Proliferation

Another important change in the branding environment is the proliferation of new brands and products, by the rise in line and brand extensions. As a result, a brand name may now be identified with a number of different products of varying degrees of similarity. Procter & Gambles original Crest toothpaste, has been joined by a series of line extensions such as Crest Mint, Crest for kids, Crest Baking Soda, Crest Multi care Advanced Cleaning.
3.4.3 Media Fragmentation

An important change in the marketing environment is the fragmentation of traditional advertising media and the emergence of interactive and non traditional media, promotion and other communication alternatives. The commercial breaks on network TV have become more cluttered as advertisers increasingly have decided to advertise with 15 second spots rather than the traditional 30 or 60 second spots. Marketers are spending more on non traditional forms of communication and new emerging forms of communication such as interactive, electronic media, sports and events sponsorship, in store advertising, mini bill boards in transit vehicles and in other locations. Check Your Progress 3 Fill in the blanks: 1. The different components of a brand that identifies and differentiates a product can be called __________________. 2. ___________ can be an extremely effective shorthand means of communication. 3. Give an example for a brand which is the suggestive of a benefit or function ____________________. 4. Two important dimensions of the meaning of brand elements are the extent to which it conveys the general information about the nature of the product category and the specific information about _______________. 5. ______________ characteristic of brand element is essential to add to brand equity across geographical content and linguistic qualities.
3.4.4 Increased Competition

Both demand side and supply side factors have contributed to the increase in competitive intensity. On the demand side, consumption for many products and services has fattened and hit the maturity stage, or even the decline stage of the product life cycle. As a result, sales growth for brands can only be achieved at the expense of competing brands by taking away some of their market share.
3.4.5 Increased Costs

As the competition is increasing, the cost of introducing a new product has also increased. It makes it difficult to match the investment and level of support that brands were able to receive in previous years.
3.4.6 Greater Accountability

Stock analysts value strong and consistent earnings reports as an indication of the long-term financial health of a firm. As a result, marketing managers may find themselves in the dilemma of having to make decisions with short-term benefits but long-term costs. Moreover, many of these same managers have experienced rapid job turn over and promotions and may not anticipate being in their current positions for very long. These different organizational pressures may encourage quick-fix solutions with perhaps adverse long-run consequences.
25 Brand Elements
3.5 LET US SUM UP

The different components of a brand that identifies and differentiate a product can be called brand elements. The brand elements are name, logo, symbol, package design and other attribute that identifies a product and distinguishes it from others. Brand elements can be chosen in a manner to build as much brand equity as possible. Brand names can be an extremely effective shorthand means of communication. Logos are devised as symbols to reinforce the brand meaning in some way. Logos can be quite concrete or pictorial in nature. Slogans are short phrases that communicate descriptive or persuasive information about the brand. Packaging involves the activities of designing and producing containers or wrappers for a product. The brand elements should be selected by considering the six criteria of memorability, meaningfulness, likeability, transferability, adaptability and protect ability. Savvy customers, Brand proliferation, Media fragmentation, Increased competition, increased costs, greater accountability are the challenges of branding.

Select five brands. Write their brand elements. Match the six essential characteristics of the brand elements to that of the selected brands.
3.7 KEYWORDS
Brand Name: The brand name is a fundamentally important choice because it often captures the central theme or key associations of a product in a very compact and economical fashion. Logos and Symbols: Logos are devised as symbols to reinforce the brand meaning in some way. Slogans: Slogans are short phrases that communicate descriptive or persuasive information about the brand. Memorability: A necessary condition for building brand equity is achieving a high level of brand awareness. Meaningfulness: The inherent meaning of the brand elements can enhance the formation of brand associations.

1. What do you mean by brand elements? 2. Describe the brand elements 3. Explain the criteria for choosing the brand elements. 4. Comment on the challenges of branding.
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CYP 1 1. The brand elements are: a) Name b) Logo c) Symbol d) Package e) Design Other attribute that identifies a product and distinguishes it from others. 2. Slogans are short phrases that communicate descriptive or persuasive information about the brand. Slogans often appear in advertising but can play an important role on packaging and in other aspects of the marketing program. CYP 2 1. In general, there are six criteria in choosing brand elements: a) Memorability b) Meaningfulness c) Likeability d) Transferability e) Adaptability f) Protectability 2. A necessary condition for building brand equity is achieving a high level of brand awareness. Brand elements can be chosen that are inherently memorable and therefore facilitate recall or recognition in purchase or consumption. CYP 3 1. Brand elements 2. Brand name 3. Memory vita 4. Attributes of brand 5. Transferability

27 Brand Positioning
UNIT II
28 Brand Management
LESSON
4
BRAND POSITIONING
CONTENTS 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 Aims and Objectives Introduction Positioning Meaning of Brand Positioning Brand Positioning How to Develop a Positioning Statement? Positioning in Action Advertising and Positioning Positioning Slots Let us Sum up
4.10 Lesson End Activity 4.11 Keywords 4.12 Questions for Discussion 4.13 Suggested Readings

After studying this lesson, you should be able to understand: The meaning of brand positioning The development of brand positioning
4.1 INTRODUCTION
The first three lessons have provided some perspective on branding and described the concept of brand name. The first step in the strategic brand management process is to identify and establish brand positioning. The concept of brand identity is implemented through brand positioning, promotional and marketing support and tracking of brand position and other elements.
4.2 POSITIONING
Suppose we are asked, who makes the best instant coffee? Next, we are asked, who makes the next best? There can be a number of brands which are next best, but only one brand that is the best. In a number of product categories like TVs, cars, personal computers, paints, razor blades, soaps and so on we have our favourite brands or marketer. The top slot achieved by the brand in our mind is called its positioning. It entered our mind on account of communication through advertising, word of mouth, product performance and other factors.
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Positioning is an outcome of our perceptions about the brand relating to the competing brands.
4.3 MEANING OF BRAND POSITIONING

Brand positioning is the heart of marketing strategy. Kotler defines brand positioning as the act of designing the companys offer so that it occupies a distinct and valued place in the mind of the target customers. Bovee et al. define positioning as the process of prompting buyers to form a particular mental impression of our product relative to our competitors.
4.4 BRAND POSITIONING

Positioning may lead to cosmetic changes in the products name, price and packaging but far more important is the psychological positioning of potential products. Also repositioning of existing products is equally important. Product positioning does something to the product, as well as something to the mind. The consumers mentally rank the products in their mind: along one or more than one dimensions. The marketers task is to be successful in getting his product ranked first along some significant dimension of purchase. The consumers tend to remember number one.
4.5 HOW TO DEVELOP A POSITIONING STATEMENT?

It is essential to have complete brand identity and value proposition. Positioning statement is derived from it for communication. Being just a part of brand identity, it is a concise statement. In some cases, brand identity and positioning statement can both be compact. Positioning statement is a declaration of the position our product will occupy in the mind of our target customers. While developing a positioning statement we have to assess first where our and our competitors brand stand today. We call this market exploration. Secondly, we consider our target market segments. We then identify what is core identity or the essence of our brand, and what our value proposition is. It is better to know what criteria potential buyers use to choose one product over another. A concise positioning statement first describes what is important to the customers, and then what problem our product will solve for them, and how. Positioning statements are used to develop new products, to plan and advertising campaign, train sales force or perform any other marketing activity.
4.6 POSITIONING IN ACTION

Here are some examples of positioning statements developed by various companies and advertising agencies. BPL Excel Alkaline batteries. They are the longest lasting alkaline battery in the world. It is an application-oriented positioning. Complan is the complete food for growing children. This positioning is targeted to a specific segment. Dove is a soap with th moisturizer. It distinguishes Dove from other soaps. It is a functional value proposition. HDFC sanctions the housing loan prior to property selection, and reduces the anxiety and helps to plan for your dream house. The loan is targeted at first time buyers, who are apprehensive of the whole process.
4.7 ADVERTISING AND POSITIONING

According to George A. Miller, Harvard psychologist, the average person can rarely name more than seven brands. This is where positioning comes in. Advertising has to establish the brand in a commanding position in the mind-sets of consumers. The image and appeals must be related to the way consumers possibly think about a brand and thus position it in their minds. In order to develop a clear position, the communicator must somehow put together all aspects of product, consumer, trade, competition and communication situation in a distinctive way for that brand. Good positions are difficult to maintain, and a company must be prepared to defend its position sometimes at a greater cost. Positioning in the consumers mind is the end product of the process of filtering information about the product attributes the packaging, the pricing, and the image of the product created by advertising. The unique Selling Proposition is a specific consumer benefit offered by a brand. It is a fusion of product class, target consumer, brand proposition and distance from competing brands. Check Your Progress 1 1. Define brand positioning. . . 2. What is Unique Selling Proposition? . .
4.8 POSITIONING SLOTS

We can try several permutations and combinations to position the brands. Some positioning concepts are given below: 1. Technology Slot: The brand can take advantage of the pioneer lead, e.g. first in no frost technology, first to issue photo credit cards, first to issue credit cards with chips, first to market soft drinks through vending machines, first to introduce camera in cell phones etc. 2. Experiential Slot: There are sensorial perceptions about the brand which cannot be quantified and measured, e.g. freshness of a soap, luster to hair given by a shampoo, fairness given by a cream or soap etc. 3. User Slot: A brand can be slotted for specific users as Johnsons Baby Shampoo or Vicks Vapo Rub for children. Later more users can be included. 4. Trendiness Slot: Charms is the spirit of freedom. This cigarette slot started a trend. It is consistent with the life style of the users. 5. Repositioning a Rival Brand: In comparative advertising, Savlon was pitted against Dettol antiseptic which gave a burning sensation, where as Savlon did not. Such repositioning worked in favour of Savlon. 6. New Product Category Slot: Unfixed deposit is a slot against the usual fixed deposits. This creates a new products category in the mind of the consumers.
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7. Attribute Slot: One or a combination of attributes can be used to position the brand. e.g. Toothpastes such as Colgate, Promise, Pepsodent etc, Head and Shoulder, Anti Drandruff Shampoo. Check Your Progress 2 Fill in the blanks: 1. _____________ is the act of designing the companys offer so that it occupies a distinct and valued place in the mind of the target customers. 2. ______________is a declaration of the position our product will occupy in the mind of our target customers. 3. In which slot there are sensorial perceptions about the brand which cannot be quantified and measured? 4. _________ slot uses one or more combination of attributes to position the brand
4.9 LET US SUM UP

Positioning is the process of prompting buyers to form a particular mental impression of the product relative to the competitors product. Positioning statement is a declaration of the position our product will occupy in the mind of our target customers. Advertising has to establish the brand in a commanding position in the mind-sets of consumers. Technology slot, experiential slot, user slot, trendiness slot, repositioning a rival brand, new product category slot, attribute slot are the different types of positioning slots used.

Changing Brand Images and Positioning
Todays markets are fragmented. The positioning stance taken by the brands a few years ago may be too diffused today. Ceat tyres rhino denoted toughness for decades together. But others have slowly encroached upon the toughness territory. What reason, therefore, is left for the customers to buy Ceat? Too general a promise may not work. However, even the reverse is true. Too focused a stance may spell disaster if the new rivals have a general appeal. To illustrate Maricos Saffola refined oil rich in poly-unsaturated fatty acid content reduces the risk of heart attacks. Later, ITC Sundrop and Liptons Flora chose the same health platform but with a slight variation. The new brands promised all round good health, rather than harping on the heart attack alone. Safola got reduced to a small niche-oil only for those with the heart trouble. It is therefore, not desirable to take a too general or too focused a stance. Sometimes, brands have a too old and dreary image, e.g. Daburs Chawanprash- a 100 year old brand meant for ageing generation of 40 plus. The youngsters took it as a brand for the grandmas. To reflect the consumer sentiments, we must resort to research. Ceat came out with a functional benefit of extra rubber and extra life, but MRF appropriated it. It then chose non-functional attributes. It got latched to the safety plank, which is being made the brand property of Ceat. Daburs Chawanprash concentrated on hinting at other benefits. It has to change its image so that it becomes a product for the young people. New communication must highlight the new focus, with out sacrificing the old appeal. Marico found a creative solution. It launched Sweekar on general health-care positioning, keeping Saffola a niche brand. Sweekar is now its main brand.
The Battle for the mind

Trouble spots 1. What is wrong with the old position of the brand? 2. May be it is too diffused. Each competitor has the same thing to offer. 3. What new promise is to be made? Is it unique? Is it likely to remain so far quite some time?
4.11 KEYWORDS
Product Differentiation: It is the differentiation that the marketer creates in a tangible attribute form in relation to competitors offers. Product Positioning: This is the act of developing a product offer and selecting an image to occupy a distinctive place in the minds of the target market. Gray Market: Consumer and industrial products sold outside a manufacturers authorised distribution channels. Features: Features refer to objective physical characteristics and are often used to differentiate products. This positioning is more common with industrial products. Benefits: Benefits are directly related to product, such as Volvos emphasis on safety and durability Usage: Usage includes end use, demographic, psychographic, or behavioural segments for whom the product is meant. It also includes product popularity. Parentage: Parentage means the lineage denoting who makes the product. Buying a car is like getting married. Manufacturing Process: It is often used to position the product. Some expensive watches claim to be hand crafted. Ingredients: Ingredients are sometimes highlighted to create a position. Endorsements: These are made either by experts or a common person with whom the target customers are likely to identify. Comparison: Comparison with a competitors product is a fairly common positioning approach. . Pro-environment approach to Positioning: This approach to positioning aims to show that the company is a good citizen. Product Class: Its one example is freeze-dried coffee shown as a different product than instant or regular coffee. Price/ Quality: Price and quality is a powerful positioning technique. Alfa computers say Multinational quality, Indian price.

1. What is brand positioning? How are particular brands positioned in the Indian market? 2. Distinguish between product segmentation, product positioning, product adoption and product standardisation. 3. Define preference analysis. How it is useful in product positioning and segmentation?
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4. What part do market research and product positioning play in the success of a product in the market? 5. How does the concept of shared characteristics relate to market segmentation?

CYP 1 1. Kotler defines brand positioning as the act of designing the companys offer so that it occupies a distinct and valued place in the mind of the target customers. The unique Selling Proposition is a specific consumer benefit offered by a brand.
2.
CYP 2 1. Brand positioning 2. Positioning statement 3. Experiential slot 4. Attribute slot

LESSON
35 Customer based Brand Equity
5
CUSTOMER BASED BRAND EQUITY
CONTENTS 5.0 5.1 5.2 Aims and Objectives Introduction Customer Based Brand Equity 5.2.1 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 Target Market
Nature of Competition Points of Parity and Points of Difference The Consumer Decision Process Let us Sum up Lesson End Activity Keywords Questions for Discussion Suggested Readings

After studying this lesson, you should be able to understand: What is Customer based brand equity model How the customer based brand equity model is applied in brand positioning The role of competitive advantage, point of parity and point of difference association in brand positioning The consumer decision making process
5.1 INTRODUCTION
The Customer Based Brand Equity model provides a blueprint for the steps involved in building a strong brand. To better operationalize the model, several strategic decisions must be made about the specific nature of the brand building blocks involved.
5.2 CUSTOMER BASED BRAND EQUITY

Customerbased brand equity (CBBE) model incorporates recent theoretical advances and managerial practices in understanding and influencing consumer behaviour. The basic premise of the CBBE model is that the power of a brand lies in what customers have learned, felt, seen and heard about the brand as a result of their experiences over time. In other words, the power of a brand lies in what resides in the minds of customers. Customer based brand equity is formally defined as the
36 Brand Management
differential effect that brand knowledge has on consumer response to the marketing of that brand. Determining the desired brand knowledge structures involves positioning a brand. According to the CBBE model, deciding on a positioning requires determining a frame of reference. It is necessary to decide (1) who the target consumer is, (2) who the main competitors are, (3) how the brand is similar to these competitors, and (4) how the brand is different from these competitors.
5.2.1 Target Market

Different consumers may have different brand knowledge. The perceptions and preferences for the brand differ from one consumer to other consumer. So it is important to identify the consumer target. Without this understanding, it may be difficult to be able to state which brand associations should be strongly held, favourable and unique. A market consists of all consumers with sufficient motivation, ability and opportunity to buy a product. Market segmentation involves dividing the market in to distinct groups of homogeneous consumers who have similar needs and consumer behaviour. Segmentation Bases In general, the bases for segmentation can be classified as descriptive or customeroriented versus behavioural or product oriented. 1. Behavioural: User status, Usage rate, Usage occasion, Brand loyalty, Benefits sought 2. Demographic: Income, Age, Sex, Race and family 3. Psychographic: Values, opinions and attitudes, activities and life style 4. Geographic: International, Regional Often, the underlying concept for descriptive segmentation bases involves behavioural considerations. For example, marketers may choose to segment a market on the basis of age and target a certain age group because that particular age group people may be the heavy users of the product. Behavioural segmentation bases are often most valuable in understanding branding issues because they have clearer strategic implications. Defining a benefit segment makes it clear what should be the desired benefit with which to establish the positioning. For example take the toothpaste market. One research study reveals four main segments. 1. The Sensory Segment: Seeking flavor and product appearance 2. The Sociables: Seeking brightness of teeth 3. The Worriers: Seeking decay prevention 4. The Independent Segment: Seeking low price. Criteria A number of criteria have been offered to guide segmentation and target market decisions, such as the following: 1. Identifiability: Can segment identification be easily determined? 2. Size: Is there adequate sales potential in the segment? 3. Accessibility: Are specialized distribution outlets and communication media available to reach the segment?
4. Responsiveness: How favourably will the segment respond to a tailored marketing program? Check Your Progress 1 1. What is the basic premise of the CBBE model? .. .. 2. What are the criteria to guide segmentation? .. ..
5.3 NATURE OF COMPETITION

Deciding to target a certain type of consumer often, defines the nature of competition because certain firms have also decided to target that segment in the past or plan to do so in the future. The nature of competition may depend on the channels of distribution chosen. Competitive analysis considers a whole host of factors including the resources, capabilities, and likely intentions of various other firms-to choose markets where consumers can be profitably serviced.
5.4 POINTS OF PARITY AND POINTS OF DIFFERENCE

The basis of the positioning is defined by fixing the appropriate competitive frame of reference by defining the customer target market and nature of competition. A proper positioning requires establishing the correct points-of-difference and points-of-parity associations. Points-of-Difference Associations Points of difference (PODs) are strong, favourable and unique brand associations for a brand. They may be based on virtually any type of attribute or benefit association. PODs are attributes or benefits that consumers strongly associate with a brand, positively evaluate and believe that they could not find to the same extent with a competitive brand. The concept of POD is similar to the notion of Unique Selling Proposition (USP). Points of Difference may involve performance attributes (e.g. the fact that Medimix soap has ayurvedic medicinal mix) or performance benefits (e.g. the charging capacity of Nokia cell phones). Points of Parity Associations Points of parity (POPs), on the other hand are those associations that are not necessarily unique to the brand but may infact be shared with other brands. These types of associations come in two basic forms: Category and competitive. Category points of parity are those associations that consumers view as being necessary to be a legitimate and credible offering within a certain product or service category. Competitive points of parity associations are those associations designed to negate competitors points of difference.
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Check Your Progress 2 Define the following: 1. Points of Parity .. .. 2. Points of Difference .. ..
5.5 THE CONSUMER DECISION PROCESS

Consumer behaviour does not consist of discrete acts, but is a process. A woman who joins a slimming center first recognizes the need to reduce her obesity. She then seeks information about various methods of slimming down, and chooses a slimming center as the best alternative for her. She then decides in favour of a particular center, considering the cost of the total slimming plan, its credibility and the track record. After choosing the center, she may or may not be satisfied with the results. All this is a part of the purchase decision process. The following diagram shows a simplified model of consumer purchase decision process.
Problem recognition Information seeking Evaluation of Alternatives Buying Decision Post Purchase Evaluation
The five stages in the buying decision process are: 1. Problem recognition 2. Information seeking 3. Evaluation of alternatives 4. Buying decision 5. Post-purchase evaluation. 1. Problem Recognition: Problem recognition is the beginning of the buying process. It is a matter of perception. We realize what we should ideally have and what we have at present. The decision to buy a two-in-one music system is triggered by the gift amount received on the occasion of the birthday. Mrs.Y may go in for a fridge because Mrs. X has already got it. A perfume bottle may be purchased when one sees it in the window of a shop. Problem recognition is generally a slow process, but can occur fast when purchase are made impulsively. 2. Information seeking: This follows the problem recognition stage. The search is mostly directed towards the products that are consistent with our needs. A housewife buying a mixed might start visiting the shops selling appliances and might start discussing the need with her friends. She is interested in knowing which brands are on offer and their features. Information seeking starts with cognitive internal search-recalling information stored in memory. This may lead to further stages of buying decision process.
Alternatively, the consumer may start external search: seeking information from sources other than memory. The major external sources are peers, friends, colleagues, and relatives. 3. Evaluation of Alternatives: When, the consumer sees information, he realizes the alternative choices available to him and gets the background against, which these choices can be judged. The brands, which a consumer considers while making a purchase, decision, form an evoked set, which is a small proportion of the total available brands. Each brand in the evoked set is evaluated against some chosen criteria. For example a consumer buying a mixie considers the following criteria: 1. Brand name 2. Price 3. Functions performed 4. Appearance 5. Attachments like a juicer 6. Reputation of the company marketing it 7. Warranty 8. Technical specifications 9. After-sales service available. 4. Buying Decision: After the alternative choices are evaluated the brands are ranked and the top-ranking brand may be purchased. The ultimate buying decision may undergo a change, if the preferred brand is not available. In such a situation, the second-ranked brand may be bought. 5. Post-purchase Evaluation: In this stage the product has been bought and consumed. It is the stage for post-purchase evaluation. The consumers may either be satisfied or dissatisfied. A satisfied consumer stores the product information in his memory and uses it next time at the time of problem recognition stage. A dissatisfied consumer may go in for another brand next time he is out to buy. Check Your Progress 3 Fill in the blanks: 1. _______________ involves dividing the market in to distinct groups of homogeneous consumers who have similar needs and consumer behaviour. 2. Competitive analysis considers whole hosts of factors including the resources, ________ and ________ of various other firms-to choose markets. 3. ________ is the second stage in consumer decision process.
5.6 LET US SUM UP

Determining the desired brand knowledge structures involves positioning a brand. Customer based brand equity is formally defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. Customer based brand equity model expresses that deciding on a positioning requires determining a frame of reference. It is necessary to decide (1) who the target consumer is, (2) who the main competitors are, (3) how the brand is similar to these competitors, and (4) how the brand is different from these competitors.
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The five stages in the buying decision process are problem recognition, information seeking, evaluation of alternatives, buying decision and post-purchase evaluation.

Conduct a survey among the consumers to study the factors involved in their purchasing decision.
5.8 KEYWORDS
Brand: A brand is a name and/or mark intended to identify the product of one seller and differentiate the product from competing products. Brand Equity: Brand equity is the value a brand adds to the product. Brand Name: A brand name consists of words, letters, and/or numbers that can be vocalized. Generics: Generics are unbranded products. Market: A market is an aggregate of people who, as individuals or organizations, have needs for products in a product class and who have the ability, willingness and authority to purchase such products. Behavioural Segmentation: It is a market segmentation based on consumers product related behaviour. It is based on the prospective profit out of the sale of a particular product segment. Target Market: A group of customers for whom a seller designs a particular marketing mix

1. What do you understand by customer based brand equity? 2. What do you understand by target market? 3. Write different segmentation bases for target market. 4. Write a note on the Customer Decision Process.

CYP 1 1. The basic premise of the CBBE model is that the power of a brand lies in what customers have learned, felt, seen and heard about the brand as a result of their experiences over time. A number of criteria have been offered to guide segmentation and target market decisions, such as the following: a) c) Identifiability: Can segment identification be easily determined? Accessibility: Are specialized distribution outlets communication media available to reach the segment? and b) Size: Is there adequate sales potential in the segment?
2.
d) Responsiveness: How favourably will the segment respond to a tailored marketing program?
Contd
CYP 2 1. Points of difference (PODs) are strong, favourable and unique brand associations for a brand. They may be based on virtually any type of attribute or benefit association. Points of parity (POPs), on the other hand are those associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in two basic forms: Category and competitive.
2.
CYP 3 1. Market segmentation 2. Capabilities, likely intentions 3. Information seeking

42 Brand Management
LESSON
6
BUILDING A STRONG BRAND
CONTENTS 6.0 6.1 6.2 6.3 Aims and Objectives Introduction Steps in Brand Building Brand Building Blocks 6.3.1 6.3.2 6.3.3 6.3.4 6.3.5 6.3.6 6.4 Brand Salience Brand Performance Brand Imagery Brand Judgements Brand Feelings Brand Resonance
Brand-Building Implications 6.4.1 6.4.2 Customers Own Brands Brands should have a Duality
6.5 6.6 6.7 6.8 6.9

After studying this lesson, you should be able to understand: The steps in brand building The building blocks of a brand The Advantages of Brand Building
6.1 INTRODUCTION
Brands are developed over a period of time. They are not made in a day. The process of brand building is continuous. This section considers in more detail about building a strong brand. There are four steps involved in building a brand.
6.2 STEPS IN BRAND BUILDING

1. Ensure identification of the brand with customers and an association of the brand in customers minds with a specific product class or customer need.
2. Firmly establish the totality of brand meaning in the minds of customers by strategically linking a cost of tangible and intangible brand associations with certain properties. 3. Elicit the proper customer responses to this brand identification and brand meaning. 4. Convert brand response to create an intense, active loyalty relationship between customers and the brand.
43 Building a Strong Brand
6.3 BRAND BUILDING BLOCKS

The four steps involved in brand building can be depicted as six brand building blocks as shown below.
Resonance
Judgements
Feelings
Performance
Imagery
Salience
Figure 6.1: Brand Building Blocks
6.3.1 Brand Salience

The right brand identity can be made by creating brand salience with customers. Brand salience relates to the aspects of the awareness of the brand, i.e. it relates to what extent the brand is evoked under various situations, to what extent is the brand easily recalled or recognized? What types of reminders are necessary? How pervasive is this brand awareness? Brand awareness refers to customers ability to recall and recognize the brand, as reflected by their ability to identify the brand under different conditions. Breadth and Depth of Awareness Creating brand awareness involves giving the product an identity by linking brand elements to a product category and associated purchase and usage situations. The depth of brand awareness concerns the likelihood that a brand element will come to mind. The breadth of brand awareness concerns the range of purchase and usage situations in which the brand element comes to mind.
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Product Category Structure To fully understand brand recall, it is important to appreciate product category structure, or how product categories are organized in memory. In consumers minds a product hierarchy often exists, with product class information at the highest level, product category information at the second-highest level, product type information at the next level, and brand information at the lowest level. The organization of the product category hierarchy will play an important role in consumer decision making.
6.3.2 Brand Performance

Brand performance relates to the ways in which the product or service attempts to meet customers more functional needs. It refers to the intrinsic properties of the brand in terms of inherent product or service characteristics. The product is the primary influence of consumers experience with a brand. Designing and delivering a product that fully satisfies consumer needs and wants is a prerequisite for successful marketing.
6.3.3 Brand Imagery

The other main type of brand meaning involves brand imagery. Brand imagery deals with the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers psychological or social needs. Brand imagery is how people think about a brand abstractly, rather than what they think the brand actually does. Thus, imagery refers to more intangible aspects of the brand.
6.3.4 Brand Judgements

Brand judgements focus on customers personal opinions and evaluations with regard to the brand. Brand judgements involve how customers put together all the different performance and imagery associations of the brand to form different kinds of opinions.
6.3.5 Brand Feelings

Brand feelings are customers emotional responses and reactions with respect to the brand. Brand feelings relate to how the brand affects customers feelings about themselves and their relationship with others. The following are the six important types of brand-building feelings: 1. Warmth: The brands make consumers feel a sense of calm or peacefulness. Consumers may feel sentimental, warmhearted, or affectionate about the brand. 2. Fun: Upbeat type of feelings; the brand makes consumers feel amused, lighthearted, joyous, playful, cheerful and so on. 3. Excitement: A different form of upbeat feeling: the brand makes consumers feel energized and feel that they are experiencing something special. 4. Security: The brand produces a feeling of safety, comfort, and self assurance. As a result of the brand, consumers do not experience worry or concerns that they might have otherwise felt. 5. Social approval: The brand results in consumers having positive feelings about the reactions of others; that is, consumers fell that others look favourably on their appearance, behaviour, and so on. 6. Self-respect: The brand makes consumers feel better about themselves: consumers feel a sense of pride, accomplishment or fulfillment.
6.3.6 Brand Resonance

The final step of the model focuses on the ultimate relationship and level of identification that the customer has with the brand. Brand resonance refers to the nature of this relationship and the extent to which customers feel that they are in sync with the brand. Check Your Progress 1 Define the following: 1. Brand Salience . . 2. Brand Performance . .
6.4 BRAND-BUILDING IMPLICATIONS

Brands can assess their progress in their brand-building efforts as well as a guide for marketing research initiatives. The Customer based brand equity model reinforces a number of important branding tenets. They are discussed below:
6.4.1 Customers own Brands

The strongest brands will be those brands for which consumers become so attached and passionate. The key point to recognize is that the power of the brand and its ultimate value to the firm resides with customers. The customers learn about the brand and experience the benefits of a brand. So the success of the marketing efforts depends on the consumers response.
6.4.2 Brands should have a Duality

A strong brand has a duality. There are two different ways to build loyalty in terms of product-related performance associations and in terms of non-product related imagery associations. Strong brands do product performance and imagery to create a rich, varied, but complementary set of consumer responses to the brand. Check Your Progress 2 Fill in the blanks: 1. _____________refers to customers ability to recall and recognize the brand, as reflected by their ability to identify the brand under different conditions. 2. ___________ refers to the intrinsic properties of the brand in terms of inherent product or service characteristics. 3. _____________are customers emotional responses and reactions with respect to the brand.
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6.5 LET US SUM UP

Brand judgements focus on customers personal opinions and evaluations with regard to the brand. Brands should use brand resonance as a goal and a means to interpret their brand related marketing activities. Ensuring the identification of the brand with customers, establishing the totality of brand meaning in the minds of customers, eliciting the proper customer responses to this brand identification and brand meaning, converting brand response to create an intense, active loyalty relationship between customers and the brand are the four important steps in building a brand. Brand salience, brand performance, brand imagery, brand judgements, brand feelings, and brand resonance are the six main building blocks of a brand.

Write a note on the concept of building a brand.
6.7 KEYWORDS
National Product: A national product is also called a local product and in the context of a particular Company, it is offered in a single national market. An International Product: An international product is that product of a company which it sells outside the frontiers of its national boundaries, i.e., exports to foreign countries. Brand Performance: The ways in which the product or service attempts to meet customers more functional needs. Brand Imagery: How people think about a brand abstractly. Product Management: A Product Management is an activity of product ownership from conception to de-standarisation. Product Management Function: A The Product Management function promotes efficiency, effectiveness and team harmony throughout the organization. New Product Development: A new product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. Product Branding: Product Branding is the process of building and maintaining a brand at the product level. Brand is an identity, made of symbols and ideas, which portray a specific offering from a known source. Product branding is executed concurrently with one or more of the principal methods in product marketing.

1. What are the steps involved in building a brand? 2. Discuss the six building blocks of a brand.

CYP 1 1. Brand salience relates to the aspects of the awareness of the brand, i.e. it relates to what extent the brand is evoked under various situations, to what extent is the brand easily recalled or recognized? 2. Brand performance relates to the ways in which the product or service attempts to meet customers more functional needs. It refers to the intrinsic properties of the brand in terms of inherent product or service characteristics. CYP 2 1. Brand awareness 2. Brand performance 3. Brand feelings

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49 Brand Image
UNIT III
50 Brand Management
LESSON
51 Brand Image
7
BRAND IMAGE
CONTENTS 7.0 Aims and Objectives 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 Introduction Brand Image Brand Associations Brand Beliefs and Brand Image Organisational Association Brand Image and Brand Identity Image Discrimination Brand Image: A Matter of Perception Brand Image: Associations in Memory Let us Sum up Lesson End Activity Keywords Questions for Discussion Suggested Readings

After studying this lesson, you should be able to understand: What is brand image Brand image associations
7.1 INTRODUCTION
Most of the consumers buying decisions are influenced by the image they have of the product. Consumers buy the functional, psychological and aspirational values delivered by a product. The product image is the sum total of all the information the consumer has about it, and the impressions he has formed about it. In this competitive world, most products are identical. So the consumer preference is developed through brand image. A brand is invested with a set of associations, favourable connotations and psychological over tones. The brand that closely matches the consumers desired image can get the favour from those consumers.
7.2 BRAND IMAGE

Brand image is the collective perceptions the consumers have towards a brand. These collective perceptions are mostly uncontrollable; consisting of strength, weaknesses,
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plus and minus points, formed over a period of time through direct or indirect experiences of a brand.
7.3 BRAND ASSOCIATIONS

Brand image evokes a set of associations. Aaker states that a brand association is anything that is linked in memory to a brand. He lists eleven types of associations: 1. Product attributes 2. Life-style/personality 3. Intangibles 4. Customer benefits 5. Relative price 6. Use/application 7. Celebrity/person 8. Product class 9. Competitors 10. Country/geographic area Brand Managers study the associations of product categories first, and then of the brand. For example the associations of product category Shampoo are, removal of dust and oil, and shining of the hair. Clinic All Clear shampoo is positioned as the anti dandruff shampoo. Thus the correlation between product category association and brand association provides clues to brand management. Check Your Progress 1 1. Define brand image. .. .. 2. What do you understand by brand association? .. ..
7.4 BRAND BELIEFS AND BRAND IMAGE

There are associations for each product category. A camera brings sharpness and automatic operation to mind. Restaurants bring ambience, cost, and cleanliness to our mind. Each brand is positioned on these associations. It is called a brand belief. Brand beliefs together make up a brand image. The consumers brand beliefs are a matter of perception, and will vary with experience, and the nature of perception.
7.5 ORGANISATIONAL ASSOCIATION

One important association of any brand is the organistion that markets it. A strong corporate image can help establish the bonafides of the product offering. This is specially valuable to high risk product categories. Creation of corporate image involves so many parts of the organization. It is, therefore more challenging than creating just a brand image. Corporate image can be leveraged. In those cases where
corporate brand name is used as umbrella brand, the existing awareness and brand values of the corporate image are leveraged, e.g. BPL, Videocon, Wipro. Formerly, it was sellers market where the demand far exceeded the supply. There was no need for companies to have an image. In buyers market where the supply exceeds the demand, peoples perception of a company does make a difference. How to build a corporate image? Corporate image is based up on the discovery of the special quality that sets one company apart from all others. This difference must then be communicated aptly. A corporate brand exists in the consumers mind. It is built through a combination of overall corporate behaviour and communications. Corporate brands generally provide credibility by endorsing a product brand. Credibility is a function of expertise, trustworthiness and likeability of an organization. An innovative corporate image gives a leverage in extending the brand name further. An innovative corporate image provides respectability to the brand.
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7.6 BRAND IMAGE AND BRAND IDENTITY

Brand identity covers the perceptions, which a brand manager would like to be associated with the brand. It means a brand manager would like a brand image to travel to brand identity, which is the goal. Brand identity is built on reorganizing what the current brand image is. We have three distinct concepts of brand image leading to brand identity. It is diagrammatically shown below.
Brand
Brand Image Current Perception
Brand Identity
Brand Position Part of brand identity and value proposition chosen for communication
7.7 IMAGE DISCRIMINATION

Images are built on the functional values of the brand and the intangible elements which emerge from these. But as most of the products are functionally similar, we have to resort to non-functional discriminators of emotion and symbolism. With proliferation of brands, it becomes increasingly difficult to create differentiators. Emotional appeals are a slippery area. True differentiation should be real and deep enough, rather than superficial packaging changes and communication modifications. Brand values are a continuum for a certain set of brands; at one extreme we have image-driven brands and at the other end functional brands. It is difficult to distinguish between Ariel and Surf Ultra, though advertising tries hard to do so.
7.8 BRAND IMAGE: A MATTER OF PERCEPTION

As image of the brand is a matter of perception, it can change if the perceptions of the consumers change. There should be concept marketing on introducing a brand, e.g. concept of using a hair-cream. The frequency of usage can be increased, and there should be more number of occasions for its use, e.g. a thermos flask which formerly was used just to carry beverages to hospitals is now being used for picnics, outdoors, sports events, on beaches. As life style changes, the target market changes its profile. As a result, image also may change. An organization can make a brand contemporary by suitably changing the content of communication.
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Check Your Progress 2 1. __________ is one of the brand associations 2. __________ is the collective perceptions the consumers have towards a brand. 3. ___________ is based upon the discovery of the special quality that sets one company apart from all others.
7.9 BRAND IMAGE: ASSOCIATIONS IN MEMORY

Brand image is a matter of perceptions which is reflected by the associations stored in consumer memory. A brand name is a device to connect to these associations. A brand image may not always be an outcome of the marketing effort. It is manifestation of a brand in consumer mind. It is a subjective concept. A consumer keeps on stacking attributes or benefits and forms a set of beliefs. Such an image may not be uniform amongst all consumers. A consumer uses is own perceptual filter, and therefore the image formed may not be clear, and may be hazy. It may be strong or weak. But whatever it is, it is an important criterion for the consumer to decide whether this brand is for me or not.
7.10 LET US SUM UP

Brand image is the collective perceptions the consumers have towards a brand. These collective perceptions are mostly uncontrollable; consisting of strength, weaknesses, plus and minus points, formed over a period of time through direct or indirect experiences of a brand. Brand image is the evoked set of brand associations such as product attributes, life-style/personality intangibles, customer benefits, relative price, application, celebrity, product class, competitors country. Organisations image also has associated with brand image. Brand image leads to brand identity. A consumer keeps on stacking attributes or benefits and forms a set of beliefs. Such an image may not be uniform amongst all consumers.

Case Study: Brand Launches A launch of a brand is a festive occasion. A brand is launched by holding a launch conference. Formerly, brand launches were a laid-back affair. These days the launches have become spectacular and memorable occasions. A soap with fresh time in it is launched with limes all over the venue. There were limes garlands too. Even the welcome drink was nimboo-pani. The approach is to use all these activities synergistically. Some launches are called fine cracker launches. Here the product is launched by blasting fire crackers to open up the pack with accompanying lights, music. Yes, there is a thin line that divides an innovative launch and gimmicky. Issues: A non-cola beverage is to be launched. How would you go about it?
7.12 KEYWORDS
Brand Personality: Brand personality is viewed as a main driver of consumer preference and usage in many product categories. Multiple Earning Method: It is normally calculated on the basis of recent net profit. Net profit is multiplied 10 to 20 times. This gives the value of brand equity. For an example, if the net profit is 2mn the brand equity value will be 2 x 10 = 20mn.
Multiples are decided on factors like volume sales, market size, market share etc, which can improve brand equity. Brand Equity Index: Under this technique the first step is to find out the index value by determining the factors, which can affect brand equity. This has been discussed earlier. Brand Image: Brand image is a broader term than brand personality and includes consumers impressions about the brands physical attributes, its performance, the functional benefits, the kind of people who use it, the emotions and associations it develops, and the imagery or the symbolic meanings it generates.
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1. What is brand image? 2. What are brand associations creating brand image? 3. How brand belief and brand image are related? 4. Discuss the role of brand image in brand identity. 5. Explain the concept of brand image.

CYP 1 1. Brand image is the collective perceptions the consumers have towards a brand. These collective perceptions are mostly uncontrollable; consisting of strength, weaknesses, plus and minus points, formed over a period of time through direct or indirect experiences of a brand. 2. Brand image evokes a set of associations. Aaker states that a brand association is anything that is linked in memory to a brand. CYP 2 1. Product attributes 2. Brand image 3. Corporate image

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LESSON
8
BRAND IDENTITY
CONTENTS 8.0 Aims and Objectives 8.1 8.2 8.3 8.4 8.5 Introduction Brand Identity Brand vs. Product Brand Identity Elements Two Dimensions of Brand Identity 8.5.1 8.5.2 8.6 Core Identity Extended Identity
Brand Identity Prism 8.6.1 Dimensions of Brand Prism
8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14
Factors Influencing Identity Identity Management vs. Brand Management Identity Management Let us Sum up Lesson End Activity Keywords Questions for Discussion Suggested Readings

After studying this lesson, you should be able to understand: What is brand identity The dimensions of brand identity The concept of brand identity Prism The factors influencing brand identity
8.1 INTRODUCTION
An individual in this world has his own identity. Likewise a brand also has its identity. It consists of brand associations. Brand identity creates a bond between the customer and the brand. The bond is based on value creation.
8.2 BRAND IDENTITY

A brand is associated with a product. It has also an organizational association. Brand has a personality. Brand is also a symbol. Collectively, they constitute the brand identity. Brand identity has two dimensions structurally an inner core identity and extended identity. Though brand image is a matter of perception on the part of consumers and do so help in creating brand identity, the brand identity goes much further. Brand is not just consumers viewpoint identity. It reflects essence of a brand and its futurity. It has strategic intent. Brand identity is much more comprehensive than brand positioning which communicates to the consumer relevant values of the brand so as to distinguish it from competing brands.
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8.3 BRAND VS PRODUCT

A product is anything that may satisfy a want or need. It includes physical objects, services, persons, places, organizations and ideas. Consider a cell phone. It is a product. It has physical attributes of sound clarity, dialing system, name and number storing capacity, charging capacity and other extra features. Consider Nokia mobile. It is all these physical attributes plus the feeling of comfortableness and worthiness. A brand is much more than a product. It includes not only the characteristics of products but also 1. Country of origin 2. Corporate association 3. Brand users 4. Brand-customer relationship 5. Emotional benefits 6. Self expressive benefits 7. Symbols 8. Brand personality
8.4 BRAND IDENTITY ELEMENTS

Brand identity can be anchored to four elements. These are: 1. Brand as a product 2. Brand as an organization 3. Brand as a person 4. Brand as a symbol.
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These have been tabulated here.

Perspective Brand as product Dimension Product class Association Remarks Brand name evokes the name of product class, e.g. Kwality and ice-cream. Extra or additional benefits are emphasized, e.g. Gillette Sensor which glides smoothly over the contours of the face. Quality-price relationship is kept in mind. Quality can be made a core identity element. Value is what we get at a price. High quality products at reasonable prices increase the value of the product. Use occasion Users Country or region Face creams for oily skin and dry skin. Johnson and Johnson products for babies. It lends credibility to the brand. from Switzerland is accepted. Tata stands for quality. It enriches a brand and makes it more exciting. A brand can be friendly, funny, youthful, casual, formal, active, competent and intellectual. (e.g. Boomer, Passion) Vehicle to express the personality of the user. Basis for the relationship between the brand and the customer. Contributes to functional benefits. MRF muscle man suggests MRF tyres are strong. Symbol Visual imagery Metaphor Coca-colas classic bottle, red cap for pet bottles. Cupped hands in LIC logo show security. Wrist watch
Attributes
Quality
Organisation Brand as Personality
Organisational attributes Brand as a person
Check Your Progress 1 1. What is brand identity? 2. What are the elements of brand identity?
8.5 TWO DIMENSIONS OF BRAND IDENTITY

Brand identity has two dimensions-core identity and extended identity. Both of these have product, organizational, personality and symbolic perspectives. It does not mean that a brand should reflect all these perspectives.
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8.5.1 Core Identity

It is the essence of a brand. Lux is a soap for complexion-a beauty soap. It is its core identity. Core identity represents the soul of the brand and the fundamental values and beliefs that back it up. Core identity may draw its sustenance from an organization that stands for certain values.
8.5.2 Extended Identity

Core identity is not enough to describe a brand. Elements of extended identity make for complete description. Elements of marketing programme which have a bearing on brand identity are included in extended identity. The concept of brand identity is illustrated by taking two examples. Brand Identity for close-up Toothpaste Core Identity: Oral freshness which allows young people to come closer to each other. Extended Identity: Quality product from Lever. Mouth wash is combined with a gel paste. Value Proposition: Functionally, it is a sweet gel: having bright colours. It not only cleanses but freshens the mouth. A product that makes you confident in social interactions. Brand Identity for Maruti Car Marutis core identity is that it is small, economical, fuel efficient car with proven technology. Its extended identity includes its largest market share and availability of cars for everyone. Its proven Japanese technology adapted to Indian conditions is also an important element of extended identity. Check Your Progress 2 Describe the following: 1. Core identity 2. Extended identity
8.6 BRAND IDENTITY PRISM

Brand identity has six key elements. The first two elements are brand physique and brand personality. Next comes brand relationship. The fourth element is projection of the target audience of what it wants to be. The fifth is the self image which tries to be consistent with that of the target audience. The sixth is brand culture which decides the communication package and the kind of the products which constitute a brand portfolio.
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Brand culture
Brand Physique Brand personality Brand Identity Brand Relationship
Self image
Image of audience
Figure 8.1: Concept of Brand Identity Prism
Jean Noel Kapferer has put forward a hexagonal theory of brand identity which he calls a PRISM consisting of physique, personality, culture, relationship, reflection and self image. There are internalization and externalistion elements and the picture of sender and picture of recipient. The three internalization elements are personality, culture, and self image. The three externalization elements are physique, relationship and reflection. A product becomes a brand not by just putting a name on it. Nike was not born as a brand. It was just a name put on a pair of shoes. When these shoes were used, people realized that they make a fashion statement, and are fun to wear. Nike then becomes a brand by acquiring an identity. As the customer needs keep on changing, the change must be assessed. The prism should always remain consistent with the changing market. The change looks like a growth cylinder for a single brand company. Brand Identity Prism for Nokia Cellular Phone

Approachable Social Practical Charming Global citizen Sense of humour

Personality
culture
Culture
Professionalism Competence Innovation Likes to explore Curious
n Reflection
Physical
Self image
Relationship
Does things efficiently Likes to interact Human touch Empathises
Figure 8.2
8.6.1 Dimensions of Brand Prism

The following table illustrates the dimensions of brand prism:
Dimension Physique Personality Remarks Physical attributes Human traits attributed to a brand. E.g. a friendly car Rites, ritual, values Bonding created by a brand. A product does not create a bond. Image of its buyers. Reflected image of its target audience in communications. It is outward faade of the target audience How a customer perceives himself in relation to the brand? It is inward faade of the target audience.
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Culture Relationship Reflection
Self-image
After establishing a brand identity, a brand can be built up through marketing activities such as sales promotion activities, advertising and public relation. All these lead to consolidation of brand identity ahead of the brand building makes it more effective and focused.
8.7 FACTORS INFLUENCING IDENTITY

1. Loyalty of customers: Loyalty of customers is an indication of how good the identity is. Low loyalty points to the need for developing an attractive identity. 2. Updation: Outdated identity not match with the present times calls for updation of identity. 3. Consistency: The brand identity should be consistent all over the world. If it is not consistent all over the world a proper brand identity management is needed. 4. New products: If the company introduces new products or services in addition to the existing one it requires identity management. 5. Competitors Identity: Competitors identity does affect our own identity. 6. Customer profile: If there is any change in the need, behaviour, and life style of consumers the brand identity should also to be updated according to the consumers expectation. 7. New markets: When a company enters new markets, it must review its existing identity.
8.8 IDENTITY MANAGEMENT VS BRAND MANAGEMENT

Brand management is concerned about taking tactical decision for individual brands such as pricing, promotion and advertising. It is less concerned with long-term decisions on strategic aspects of a brands survival such as brand identity and brand image. Brand management totally leaves aside inter-brand identities and corporate identities. Because of the narrow focus of brand management companies have moved to category management.
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Check Your Progress 3 1. _________ and _________ are the two dimensions of brand identity. 2. _________ represents the soul of the brand and the fundamental values and beliefs that back it up. 3. _________ which have a bearing on brand identity are included in extended identity 4. Brand identity has _________ key elements. 5. _________ is one of the factors which influence brand identity.
8.9 IDENTITY MANAGEMENT

According to Schmitt and Simonson, the following tasks are performed while managing identity. 1. Managing Expressions: An organization plans its expressions in such a way that produces the desired customer impressions. The key expressions consist of levels of analysis (properties, products, presentation and publications), structure of the organization, internal characteristics of the firm, breadth of image management and the choice between consistency and variety. An organization may have monolithic identities often of divisions of closely related business. Branded identities have noticeable brand identities, e.g. packaged goods industry. Endorsed identities are combinations of monolithic and branded identities. An organization has to express its mission. Similarly a brand has to express its character. The private self of the brand is its character. There should be harmonization between the private face of the brand and the public face of the organization. 2. Managing Style: A style is a manner of expression. It has a distinct quality or form. Style gives distinction. It creates brand awareness. It encourages associations. It enables categorization of products. Primary elements of style are sight, sound, touch and taste. The various element are combined to make aesthetic style of the brand. 3. Theme Management: Themes refer to the content, the meaning and projected image of an identity. Themes can be expressed through prototypical images of real and un real people, e.g., the Pillsbury Dough Boy. Themes are repeated to get embedded in consumers mind. Of course, themes must be adapted to keep them contemporary. Always Coca-Cola can be adapted to any number of occasions. Themes can be used as a cluster of inter-related ideas. For example, Diwali celebrations. Themes can be sourced through organisations mission, its core capabilities, its legacy, its corporate and brand personality and values. In creating themes, customers are considered in firms of demography and psychography. Themes are also set keeping in mind the competition. The surrounding culture helps to identify the themes. Themes are to be conveyed as corporate names or brand names, symbols, narratives, slogans and jingles, concepts and any combination of these. Poison is a brand name that is magical and represents the dark side of human nature. Though alluring, it is dangerous at the same time. Singapore girl of Singapore Airlines is symbolic representation of a theme. Disneylands characters tell a story. It is a narrative theme. Music may be used as narrative content. E.g. Starbucks Maruti is a brand name built around concepts of strength, ability, manoeurability associated with
Hanuman. It is an apt them for a car. Each thematic expression has its merits and demerits. All these are considered before setting for a theme. An organization can use a single theme or multiple themes. A company can vary themes for different target markets.
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8.10 LET US SUM UP

Brand identity has two dimensions structurally namely an inner core identity and extended identity. Core identity represents the soul of the brand and the fundamental values and beliefs that back it up. Elements of extended identity make for complete description. Elements of marketing programme which have a bearing on brand identity are included in extended identity. Brand identity has six key elements. The first two elements are brand physique and brand personality. Next comes brand relationship. The fourth element is projection of the target audience of what it wants to be. The fifth is the self image which tries to be consistent with that of the target audience. The sixth is brand culture which decides the communication package and the kind of the products which constitute a brand portfolio.

Prepare brand identity prism for any two popular brands.
8.12 KEYWORDS
Brand Identity: Brand identity is much more comprehensive than brand positioning which communicates to the consumer relevant values of the brand so as to distinguish it from competing brands. Brand Identity Prism: Jean Noel Kapferer has put forward a hexagonal theory of brand identity which he calls a PRISM consisting of physique, personality, culture, relationship, reflection and self image.

1. Explain the two dimensions of brand identity. 2. Explain about brand identity prism.

CYP 1 1. A brand is associated with a product. It has also an organizational association. Brand has a personality. Brand is also a symbol. Collectively, they constitute the brand identity. 2. Brand identity can be anchored to four elements. These are: a) Brand as a product b) Brand as an organization c) Brand as a person d) Brand as a symbol CYP 2 1. Core identity represents the soul of the brand and the fundamental values and beliefs that back it up. Core identity may draw its sustenance from an organization that stands for certain values.
Contd
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2. Core identity is not enough to describe a brand. Elements of extended identity make for complete description. Elements of marketing programme which have a bearing on brand identity are included in extended identity. CYP 3 1. Core identity, extended identity 2. Core identity 3. Elements of marketing programme 4. Six 5. Loyalty of customers.

LESSON
65 Brand Equity
9
BRAND EQUITY
CONTENTS 9.0 9.1 9.2 9.3 Aims and Objectives Introduction Brand Equity Assets of Brand Equity 9.3.1 9.3.2 9.3.3 9.3.4 9.4 9.5 9.6 9.7 9.8 9.9 Brand Awareness Brand Image Brand Associations Perceived Quality
Kellers Approach to Brand Equity Let us Sum up Lesson End Activity Keywords Questions for Discussion Suggested Readings

After studying this lesson, you should be able to understand: What is brand equity About the assets of brand equity
9.1 INTRODUCTION
A brand is considered as an asset for a company. Fundamentally, branding is about endowing products and services with the power of brand equity. The brand equity concept stresses the importance of the role of the brand in marketing strategies. The concept of brand equity clearly builds on many previously identified principles about brand management.
9.2 BRAND EQUITY

Brand equity represents the total accumulated value or worth of a brand. Konapp (2000) considers brand equity as totality of brands perception. He includes the feelings of consumers, employees and all stakeholders while measuring the brand equity. Keller (1993) defines brand equity in terms of marketing effects whereby certain outcomes occur as a result of brand name.
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Aaker calls brand equity a set of assets associated with a brand, and which add to the value provided by the product/service to its customers. Brand equity relates to the fact that different outcomes result from the marketing of a product or service because of its brand than if the same product or service had not been identified by that brand. Branding is all about creating differences. Most marketing observers also agree with the following basic principles of branding and brand equity: Differences in outcomes arise from the added value endowed to a product as a result of past marketing activity for the brand. This value can be created for a brand in many different ways. Brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand. There are many different ways in which the value of a brand can be manifested or exploited to benefit the firm. Diagrammatically, brand equity can be presented as
Brand (Product+Associations) Brand Identity Brand Image (Perception) Revenue + or (Equity)
9.3 ASSETS OF BRAND EQUITY

Brand equity is a set of assets associated with the brand. Brand awareness, perceived quality of the brand and brand associations are assets which brand managers create and enhance to build brand equity.
9.3.1 Brand Awareness

Brand awareness consists of brand recognition and brand recall performance. Brand recognition relates to consumers ability to confirm prior exposure to the brand when given the brand as a cue. Or other wise we can say that the brands are recognized when the consumers can correctly discriminate the brand as having been previously seen or heard. For example, when we think of detergents the brands like Ariel, Surf, and Henko come in our mind. Brand recall relates to consumers ability to retrieve the brand from memory when given the product category, the needs fulfilled by the category, or a purchase or usage situation as a cue. In other words, brand recall requires that consumers correctly generate the brand from memory when given a relevant cue. For example, recall of Nescafe Sunrise will depend on consumers ability to retrieve the brand when they think of to purchase coffee powder. With most information in memory, it is generally easier to recognize a brand than it is to recall it from memory. The relative importance of brand recall and recognition will depend on the extent to which consumers make product-related. Decisions with the brand present or not. Consequences of Brand Awareness Brand awareness plays an important role in consumer decision making for three main reasons. 1. Learning Advantages: The first way that brand awareness affects consumer decision making by influencing the formation and strength of the brand associations that make up the brand image. A necessary condition for the creation
of a brand image is that a brand node has been established in memory. The first step in building brand equity is to register the brands in the minds of consumers. 2. Consideration Advantages: It is important that consumers think of and consider the brand whenever they are consuming a product whose needs the brand could potentially satisfy. The set of brands that receive serious consideration for purchase are called consideration set. Raising brand awareness increases the likelihood that the brand will be a member of the consideration set. 3. Choice Advantages: The third advantage of creating a high level of brand awareness is that brand awareness can affect choices among brands in the consideration set, even if there are essentially no other associations to those brands. For example, consumers have been shown to adopt a decision rule to buy only more familiar, well-established brands in some cases. Thus, in lowinvolvement decision settings, a minimum level of brand awareness may be sufficient for product choice, even in the absence of a well formed attitude. Consumers may make choices based on brand awareness considerations when they have low involvement. Establishing Brand Awareness The level of awareness can range from mere recognition to recall to top-of-mind to dominant. One can recognize a brand on account of past experience. Recognition by itself leads to positive feelings. Familiarity also means that a company is spending money to keep it in the consumers memory. Though recognition is a positive sign, it does not necessarily indicate the brands strength. The weak brands may also be recognized. Brand awareness is created by increasing the familiarity of the brand through repeated exposure. That is, the more a consumer experiences the brand by seeing it, hearing it, or thinking about it, the brand will become strongly registered in memory. Thus anything the brand elements such as brand name, logo, character, packaging or slogan can potentially increase familiarity and awareness of that brand. While creating awareness, the businessmen make use of advertising, promotion, public relation, sponsorship and event marketing. Moreover, it is important to visually and verbally reinforce the brand name with a full complement of brand elements. To build awareness, it is often desirable to develop a slogan or jingle that creatively link the brand and the appropriate product category or purchase or consumption cues. Additional use can be made of the other brand elements-logos, symbols, characters and packaging. Thus brand awareness is created by increasing the familiarity of the brand through repeated exposure and strong associations with the appropriate product category or other relevant purchase or consumption cues. Some brands have small life, and so it will be uneconomical to incur heavy promotional expenses for them. It is economical to use corporate brand names in such cases. As promotion is expensive, a policy must be formulated regarding the number of brands selected for brand building. Awareness ultimately enhances brand equity. Some brands should have a different kind of awareness as they are strategic brands. A brand that is promoted over a period of time retains cumulative level of name recognition.
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9.3.2 Brand Image

A positive brand image is created by marketing programmes that link strong, favourable, and unique associations to the brand in memory. Besides these marketing programmes, brand associations can also be created in a variety of other ways; by direct experience, from information communicated about the brand from the firm or
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other commercial or non-partisan sources (e.g. Consumer Reports or other media vehicles) and word of mouth; and by assumptions or inferences from the brand itself or from the identification of the brand with a company, country, channel of distribution or some particular person, place or event.
9.3.3 Brand Associations

Consumers associate the brand with certain tangible and intangible attributes, a celebrity endorser or a visual symbol. Most of these associations are derived from brand identity and brand image. Consumer beliefs about brand attributes and benefits can be formed in different ways. Brand attributes are those descriptive features that characterize a product or service. Brand benefits are the personal value and meaning that consumers attach to the product or service attributes. In general the source of information creating the strongest brand attribute and benefit associations is direct experience. This type of information can be particularly influential in consumerss product decisions. The next strongest associations are likely to be formed on the basis of word of mouth. Word of mouth is particularly important for restaurants, entertainment, banking and personal services. Favourability of Brand Associations Favourable brand associations are created by convincing consumers that the brand possesses relevant attributes and benefits that satisfy their needs and wants, such that they form positive overall brand judgements. Thus, favourable associations for a brand are those associations that are desirable to consumers and are successfully delivered by the product and conveyed by the supporting marketing program for the brand. Uniqueness of Brand Associations Brand associations may or may not be shared with other competing brands. The essence of brand positioning is that the brand has a sustainable competitive advantage or Unique Selling Proposition that gives consumers a compelling reason why they should buy that particular brand. These differences may be highlighted implicitly with out stating a competitive point of reference. Further they may be based on product related or non-product related attributes or benefits.
9.3.4 Perceived Quality

Perceived quality becomes an important asset for a brand as it is a major thrust area of a business. It affects all other elements of a brand identity. Perceived quality is a result of an understanding of the requirements of customer segments. Perceived quality leads to financial performance. It is a key positioning dimension, and often a part of companys mission statement. Perceived quality is based on judgements of quality. It is necessary to understand the cues associated with quality. Perceived quality is not the same as actual quality. Suppose the physical quality of the product improves, but the consumers still carry a poor image the product had, the perceived quality will be low.
Check Your Progress 1 1. Define brand equity. . . 2. What do you understand by brand assets? . . 3. What is perceived quality of a brand? . .
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9.4 KELLERS APPROACH TO BRAND EQUITY

Keller has focused on the relationship of a brand with the consumers. According to him, brand equity is related to a consumers familiarity with the brand, and his favourable associations with it. These associations are strong, congruent, unique and leverageable. Both these lead to greater consumer preference. Kellers approach is diagrammatically represented in the following figure:
Brand Knowledge
Brand Awareness
Brand Image
Brand Associations
Attributes
Favourability of Brand Associations
Strength of Brand Associations
Uniqueness of Brand Associations
Non-product related
Benefits
Attitudes
Functional Price Packaging User imagery Usage imagery
Experiential
Figure 9.1: Brand Knowledge of a Consumer
It can be seen from the above figure that brand associations relate to the attributes of the brand, or benefits or attitudes towards it. Brand associations generally contribute to brand image. A brand is just not a physical entity. It is what the consumer thinks and feels it is or visualizes it to be when he comes across the brand name or its symbol. Keller has focused on the relationship of a brand with the consumers. Consumers brand knowledge results from brand awareness and brand image. Brand knowledge
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evaluates the consumers interpretation of the values linked to a brand. Brand image reflects consumers perception of the brands characteristics. Thus these two are core components at the bottom of brand attributes. Brand awareness reflects the salience of the brand and helps consumers identify the brand with a specific product category. It can be measured through brand recognition. Brand associations relate to the attributes of the brand or benefits or attitude towards it. These generally contribute to the brand image. Strong brands are brands with a substance they evoke more favourable associations. Check Your Progress 2 1. __________ is a set of assets associated with a brand, and which add to the value provided by the product/service to its customers. 2. Brand awareness consists of and _________ and ________ performance. 3. __________ relates to consumers ability to confirm prior exposure to the brand when given the brand as a cue. 4. Brand awareness is created by increasing the __________ through repeated exposure. 5. Brand attributes are __________ that characterize a product or service.
9.5 LET US SUM UP

Brand equity represents the total accumulated value or worth of a brand. Konapp (2000) considers brand equity as totality of brands perception. He includes the feelings of consumers, employees and all stakeholders while measuring the brand equity. Brand equity is a set of assets associated with the brand. Brand awareness, perceived quality of the brand and brand associations are assets which brand managers create and enhance to build brand equity.

A brand name with a high level of awareness will be recognized under less than ideal conditions. Consider the following list of incomplete names. Which ones do you recognize? Compare your answers to the answer key in the footnote to see how well you did. 1. D N E 2. K O K 3. D U A C 4. D L T 5. H L L R K Answers 1. Disney 2. Kodak 3. Duracell 4. Delta 5. Hallmark
9.7 KEYWORDS
Brand Equity: Brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand. Positive Brand Image: A positive brand image is created by marketing programmes that link strong, favourable, and unique associations to the brand in memory.
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1. Explain Kellers Approach to Brand equity. 2. Give an account on Brand equity.

CYP 1 1. Brand equity represents the total accumulated value or worth of a brand. Konapp (2000) considers brand equity as totality of brands perception. He includes the feelings of consumers, employees and all stakeholders while measuring the brand equity. 2. Brand equity is a set of assets associated with the brand. Brand awareness, perceived quality of the brand and brand associations are assets which brand managers create and enhance to build brand equity. 3. Perceived quality becomes an important asset for a brand as it is a major thrust area of a business. It affects all other elements of a brand identity. Perceived quality is a result of an understanding of the requirements of customer segments. Perceived quality leads to financial performance. It is a key positioning dimension, and often a part of companys mission statement. CYP 2 1. Brand equity 2. Brand recognition and brand recall 3. Brand recognition 4. Familiarity of the brand 5. Descriptive features

72 Brand Management
LESSON
10
BRAND LOYALTY
CONTENTS 10.0 10.1 10.2 10.3 Aims and Objectives Introduction Brand Loyalty Behavioural Mechanism and Brand Loyalty 10.3.1 10.4 Types of Drives
Brand Audit 10.4.1 10.4.2 What is Brand Audit? Steps in Brand Audit
10.5 10.6 10.7 10.8 10.9

After studying this lesson, you should be able to understand: The concept of brand loyalty The concept of Brand Audit
10.1 INTRODUCTION
When a customer thinks of a product category he is familiar with (like soaps, tooth pastes, cigarettes, coffee, tea-especially non-durables) he/she is able to spontaneously remember a few brand names. These consumers have been conditioned by brand loyalty. When the customers are satisfied with any product or service, they tend buy the same brand product or service in the next time also and they become loyal to that brand product or service. Most consumer products succeed in the market based on this loyalty. Brand loyalty has been cashed in by marketers who create successful brand extension.
10.2 BRAND LOYALTY

Brand loyalty means to retain the existing customers on a continuous basis. Brand loyalty can be defined in terms of consumer behaviour or consumer attitudes. Frequency of purchase is a behavioural indication. Attitude towards a brand is an attitudinal indication. The customers who are satisfied with a particular brand product
or service tend to become loyal to that brand. Brand loyalty is strongly associated with the learning process which is involved inherently in the human behaviour. An organization can put its customers into loyalty segments those who are really committed to the brand and those who buy brands possibly due to habits formed. The two categories of customers need marketing support to retain their loyalty. Brand loyalty develops quite early in family life cycle. Marketers should not play around with brands having loyal following with out considering all the factors. The loyal customers to Ponds dream flower talc feel it difficult to change to talc with new fragrant. Brand loyalty is enhanced by improving perceived quality and establishing a clear identity. To enhance brand loyalty, there can be incentives for frequent buyers, benefits of a customer club and data based direct marketing. Sales promotion also helps in improving brand loyalty. Sometimes the customers may switch over to other brands. It happens because of price of product, new products with distinct benefits. Brand loyalty is closely related to brand associations and imagery evoked.
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10.3 BEHAVIOURAL MECHANISM AND BRAND LOYALTY

An individual is basically motivated by some forms of drives. These drives could be hunger, the need for prestige, the need for affiliation, the need for power etc. There are also stimuli from the outside marketing world. An individual with a specific drive is constantly on the lookout for a cue from the external marketing world which would satisfy him. When he finds an appropriate cue, he responds by buying a product. A consumer who has a need for a quick and tasty lunch may prefer a brand of fast food. When he finds the food to be satisfying on a number of counts he starts a period of time, his response to the need results in brand loyalty.
Target segment Brand loyalty Identification of drives
Choosing appropriate cues Reinforcement of benefits Product promise and delivery of benefit
Figure 10.1: Achieving Brand Loyalty
Marketers may be interested in finding out the various aspects by which the consumer responds. For instance, in the product category of credit cards, there may be consumers wanting value for money which could be used as a cue in positioning inputs. Drives from an individual may be of different kinds in varying degrees. Some of the drives which may be associated with most product categories are classified as follows.
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10.3.1 Types of Drives

1. Hedonistic: These are drives which are sensual in nature. Consumers buy these products because of the internal gratification they derive from the use of these products. The feel, taste, smell or usage provides the consumers a pleasurable experience. The products like soaps, cigarettes, shaving products, coffee, tea, shampoo etc. are associated with these kinds of drives. 2. Economy: This drive has the value for money orientation. It has the scope in almost all product categories depending on the target market. Ariels Super soaker, Bajajs FE economy model, economy sizes in soft drinks and toothpastes are examples of this type of drive. Check Your Progress 1 1. What do you understand by brand loyalty? . . 2. What are hedonistic drives? . .
10.4 BRAND AUDIT

The company can make strategic positioning decisions, by learning what consumers know about brands. So the marketers should first conduct a brand audit to profile consumers knowledge about their brands.
10.4.1 What is Brand Audit?

A brand audit is a comprehensive examination of a brand in terms of its sources of brand equity. In accounting, an audit involves a systematic inspection of accounting records involving analyses, tests, and confirmations. The accounting audit assesses the financial health of the firm. Similarly, a marketing audit has been defined as a comprehensive, systematic, independent, and periodic examination of a companys marketing environment, objectives, strategies and activities with a view of determining problem areas and opportunities. A brand audit is a more externally, consumer-focused exercise that involves a series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggests ways to improve and leverage its equity.
10.4.2 Steps in Brand Audit

Brand audit consists of two steps: the brand inventory and the brand exploratory. 1. Brand Inventory: The purpose of the brand inventory is to provide a current, comprehensive profile of how all the products and services require that all associated brand elements be identified as well as the supporting marketing program. In other words it is necessary to catalogue the following for each product or service sold: the names, logos, symbols, characters, packaging, slogans or other trademarks used; and the inherent product attributes or characteristics of the brand and the pricing, communications, distribution policies and any other
relevant marketing activity related to the brand. This information should be summarized in both visual and verbal form. 2. Brand Exploratory: The second step of the brand audit is to provide detailed information as to what consumers think of the brand by means of the brand exploratory, particularly in terms of brand awareness and the strength, favourability, and uniqueness of brand associations. The brand exploratory is research activity directed to understanding what consumers think and feel about the brand and its corresponding product category in order to identify sources of brand equity. Check Your Progress 2 Fill in the blanks: 1. Brand loyalty is strongly associated with the _____________ which is involved inherently in the human behaviour. 2. __________ are drives which are sensual in nature. 3. ___________ is a comprehensive examination of a brand in terms of its sources of brand equity
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10.5 LET US SUM UP

Brand loyalty means to retain the existing customers on a continuous basis. Brand loyalty can be defined in terms of consumer behaviour or consumer attitudes. Frequency of purchase is a behavioural indication. Hedonistic drive and economy drive are the two types of drives present in the humans mind. A brand audit is a comprehensive examination of a brand in terms of its sources of brand equity . Brand audit consists of two steps: the brand inventory and the brand exploratory.

Tips to Make Brands Successful John Williamson, director and partner: Wolff Olins, is a well-known brand strategist who gives some tips to make the brands successful. 1. Think global 2. Futuristic 3. Off-beat 4. Big Idea 5. Invest in the Big Idea 6. Express the idea powerfully 7. Focus on details 8. Track the competitors Issues: Can you outline some factors to make a brand successful?
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10.7 KEYWORDS
Product Line: Product line is the offer of ready products for sale. Product Lining: Product lining is the marketing strategy of offering for sale several related products. Unlike product bundling, where several products are combined into one, lining involves offering several related products individually. Line: A line can comprise related products of various sizes, types, colors, qualities, or prices. Line Depth: Line depth refers to the number of product variants in a line. Line Consistency: Line consistency refers to how closely relate the products that make up the line are.

1. Discuss the concept of Brand loyalty. 2. What is brand audit? 3. Explain the steps in brand audit.

CYP 1 1. Brand loyalty means to retain the existing customers on a continuous basis. Brand loyalty can be defined in terms of consumer behaviour or consumer attitudes. Frequency of purchase is a behavioural indication. Attitude towards a brand is an attitudinal indication. The customers who are satisfied with a particular brand product or service tend to become loyal to that brand. Brand loyalty is strongly associated with the learning process which is involved inherently in the human behaviour. These are drives which are sensual in nature. Consumers buy these products because of the internal gratification they derive from the use of these products. The feel, taste, smell or usage provides the consumers a pleasurable experience.
2.
CYP 2 1. Learning process 2. Hedonistic drives 3. Brand audit

77 Brand Extensions
UNIT IV
78 Brand Management
LESSON
79 Brand Extensions
11
BRAND EXTENSIONS
CONTENTS 11.0 11.1 11.2 11.3 Aims and Objectives Introduction Brand Extensions Types of Brand Extension 11.3.1 11.3.2 11.4 11.5 11.6 11.7 11.8 Horizontal Extensions Vertical Extensions
Another Classification of Brand Extension Strategies for Establishing Category Extension Push Factors for Brand Extension Pull Factors Advantages of Extensions 11.8.1 11.8.2 Facilitate New Product Acceptance Provide Feedback Benefits to the Parent Brand
11.9
Disadvantages of Brand Extensions
11.10 Brand Extendability 11.11 Let us Sum up 11.12 Lesson End Activity 11.13 Keywords 11.14 Questions for Discussion 11.15 Suggested Readings

After studying this lesson, you should be able to understand: The concept of Brand Extension The types of Brand Extension The push and pull factors in brand extension The advantages and disadvantages of brand extension
11.1 INTRODUCTION
Brand extensions are a familiar phenomenon for most marketers. Organizations see them as the easiest way of entering new markets or segments. Establishing a new consumer brand costs high. Thus brand extensions are seen as an easy and possibly
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inexpensive way of entering new business lines or strengthening old ones if done with caution. When an existing brand name is extended to a product of different category, it is called brand extension. For example Ponds, a brand name for talcum powder is extended to toilet soaps. Brand extensions are of various types. Generally, product form variations are called line extensions, but when the form is perceived to be a different category altogether, it can be treated as brand extension.
11.2 BRAND EXTENSIONS

Brand extension is defined as attaching an existing brand name to a new product introduced in different product category. In a typical brand extension situation, an established brand name is applied to a new product in a category either related or unrelated in order to capitalize on the equity of the core brand name. When a new brand is combined with an existing brand, the brand extension can also be called a sub-brand. An existing brand that gives birth to a brand extension is referred to as the parent brand. If the parent brand is already associated with multiple products through brand extensions, then it may also be called a family brand. Brand extensions occur when firms enter markets they had not previously been present under the name of one of their existing brands. The extended products qualities should not go against the consumer perception of the original brand name, e.g., Camlins effort to extend the stationery and art material brand name to cosmetics has not proved successful. Similarly Dettol antiseptics extension to Dettol beauty soap could not succeed, though after repositioning, there is some amount of success. Many companies in India have opted for line/brand extensions, e.g., Amul, Maggi, Lux, Clinicplus, Lakme, Bata, Milkmaid etc. By themselves, brand extensions do not spell out success of a product which also depends upon other factors like quality, price, market characteristics, consumer perceptions and promotional efforts. Wrong extensions damage not only the extended brand but also the original brand. Ponds toothpaste is a very glaring example of an extended brand failing in India. Lakme shaving cream failed to work as brand extension due to Lakmes strong feminine connotation. Similarly, Vicks Hot Sip did not work. Each brand has certain core values. When brand extension is for dissimilar products, the brand has to draw more on its core values to be successful. Besides, brand extensions creating new products must be symbiotic- the new brand puts something back in to the mother brand and mother brand rubbing off its values to the new brand. Check Your Progress 1 1. What is brand extension? ... ... 2. Mention some examples of brand extensions that could not succeed. ... ...
11.3 TYPES OF BRAND EXTENSION

Brand extensions can be broadly classified in to two general categories as horizontal extensions and vertical extensions.
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11.3.1 Horizontal Extensions

In a horizontal brand extension, an existing brand name is applied to a newly introduced product in either a related product category or in a product class completely new to the company. These horizontal extensions can be further differentiated in terms of their focus termed as line extensions and franchise extensions. Line extension occurs when a current brand name is used to enter a new market segment in the current product category. (HLL has tried to counter attack the growing popularity of the Fairever brand of Cavin Care by extending Fair & Lovely brand to Fair & Lovely Saanwali). In contrast to this, a franchise extension uses a current brand name to enter a new product category. (Like Nestle has used Maggie brand name to make a foray into the market of soups and sauces.)
11.3.2 Vertical Extensions

A vertical brand extension uses the core brand name to launch products in the same product category but at a different price point and quality level. In a vertical brand extension, a brand name is usually introduced alongside the core brand name, in order to establish the relation between the brand extension and the core brand. Example: Sunsilk launched Sunsilk Fruitamins, Sunsilk Black and Sunsilk Nutracare. Vertical extensions can be viewed as the quickest way to leverage a core brands equity as the new product is in the same category as the parent; aims at a similar market segment as the parent; and may enjoy the same acceptance as the parent. As a strategy, vertical brand extension is widely practiced in many industries, of which most commonly noticeable are automobiles. In automobiles brands, various models are launched to offer distinct price-quality bundles to attract a variety of market segments. (For example, Maruti Alto is available in LX and VX models at different price points and different quality levels). Vertical extensions can be made in two ways depending on the direction of the extension. Step-up extension is one involving a new product with higher price and quality characteristics than the original (Lifebuoy Gold after the rocking success of Lifebuoy). Step down extension is a brand extension that is introduced at a lower price and lower quality level than the core brand. (Videocon Bazooka was launched to make inroads into the middle end of the market).
11.4 ANOTHER CLASSIFICATION OF BRAND EXTENSION

Brand extensions are also classified into three types-product related extensions, image-related extensions and unrelated extensions. Product related extension is more popularly called line extensions. A line extension is typically a product or flavour or fragrance variant. It is used by the companies to upgrade their customers. Ex HLL upgrades Lux users to Lux International and Lifebuoy to Lifebuoy plus. Image-related extensions are those where the brand extension bears some logical or emotional relationship with the parent brand. Such a fit exists when companion products are introduced for instance, Pepsodent tooth paste and Pepsodent tooth brush, Prestige pressure cooker and Prestige pressure pans, Dettol antiseptic liquid and Dettol soap.
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Unrelated extensions are those where the parent and the brand extensions have little common but for the brand name. A classic case of this is the brand name Godrej appearing on soaps, safety locks, almirahs, typesetters, hair-dyes, refrigerators and other products. In unrelated extensions also, the match making principles hold good. Sometimes unrelated extensions happen along the route as the organization evolves, e.g. Tata started from steel and textiles but extended to diverse areas like power, cosmetics, automobiles, medicines, telecommunications, consumer electronics, computer consultancy and software etc. Check Your Progress 2 1. What do you understand by horizontal brand extension? ... ... 2. What is unrelated brand extension? Give example. ... ...
11.5 STRATEGIES FOR ESTABLISHING CATEGORY EXTENSION

Extensions become successful if the organizations show commitment, there is matching of the brand and extension or organization and extension, and proper attention to the marketing mix of the extended brand. Brand extensions can come in all forms. There are seven general strategies for establishing a category extension. 1. Introduce the same product in a different form. Examples: Ponds Dream flower Talc in new designed pack, New Surf excel washing soap. 2. Introduce products that contain the brands distinctive taste, ingredient, or component. Examples: New Horlicks with extra minerals. 3. Introduce companion products for the brand. Examples: Coleman camping equipment and Duracell Durabeam flashlights. 4. Introduce products relevant to the customer franchise of the brand. Examples: Gerber insurance and Visa travelers cheques 5. Introduce products that capitalize on the firms perceived expertise. Examples: Honda lawn mowers and Canon photocopy machines. 6. Introduce products that reflect the brands distinctive benefit, attribute or feature. Examples: Pepsodent toothpastes germi check formula, Hamam soap. 7. Introduce products that capitalize on the distinctive image or prestige of the brand. Example: Raymond shirtings and suitings, Porsche sunglasses.
11.6 PUSH FACTORS FOR BRAND EXTENSION

In the recent years, industries have opted for brand extension due to any one or more of the following reasons:
1. Government regime in their existing industry: A typical example could be the case of ITC. Wills has come out with clothing extensions and God Flake has come out with greeting cards. 2. Market dynamics: The changing faces of market and consumers have forced many corporate to enter into new ventures. The Arumuga Group that was a leader in the Textile division in the South India has recently entered in to the spices segment with many pure and processed spice varieties. 3. Customer requests: This though may seem to be a welcoming sign on the part of the company, is a very serious issue that has to be very carefully handled.
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11.7 PULL FACTORS

The current trend in management is no more reactive but is proactive. One needs to be prepared to face rather than think after sudden attack. There are many factors that have been identified by authors as pull factors that have aided many organizations to get to brand building and extensions. 1. Already established brands: Bajaj has a hold in the two-wheeler industry and also in electric appliances. 2. Increase Customer base: Brand extension can add up to increase the existing customer base by entering in to new segments, and converting the users there to the brand. 3. Diverse portfolio: This helps in spreading the risk. 4. Building corporate image. 5. Extension of the USP to similar or diverse areas and, hence, maintaining unique product features. 6. Leverage on the existing loyalty of customers. 7. Positioning is done more easily than that of a new brand. 8. Advertising and promotional measures done with ease. 9. Leveraging on core competency values, cultures and systems.
11.8 ADVANTAGES OF EXTENSIONS

Well-planned and well-implemented extensions offer a number of advantages to marketers. These advantages can be broadly categorized as those that facilitate new product acceptance and those that provide feedback benefits to the parent brand or company as whole.
11.8.1 Facilitate New Product Acceptance

1. Improve Brand Image: One of the advantages of a well-known and well-liked brand is that consumers form expectations over time concerning its performance. Similarly with a brand extension, consumers can make inferences and form expectations as to the likely composition and performance of a new product based on what they already know about the brand itself and the extent to which they feel this information is relevant to the new product. These inferences may improve the strength, favourability, and uniqueness of the extensions brand associations. For example, when Sony introduced a new personal computer tailored for multimedia applications 2. Reduce Risk perceived by customers: One research study, examining factors affecting new product acceptance, found that the most important factor for predicting initial trial of a new product was the extent to which a known family
84 Brand Management
brand was involved. Extensions from well-known corporate brands such as General Electric, Hewlett-Packard, Motorola or others may communicate longevity and sustainability. 3. Increase the Probability of Gaining Distribution and Trial: Because of the potentially increased consumer demand resulting from introducing a new product as an extension, it may be easier to convince retailers to stock and promote a brand extension. 4. Increase Efficiency of Promotional Expenditures: From a marketing communications perspective, one obvious advantage of introducing a new product as a brand extension is that the introductory campaign does not have to create awareness of both the brand and the new product. In general it is easier to add a link from a brand already existing in memory to a new product than it is to first establish the brand in memory and then also link the new product to it. 5. Reduce costs of Introductory and Follow-Up Marketing Programs: When a brand becomes associated with multiple products, advertising can become more cost-effective for the family bran as a whole. 6. Avoid cost of Developing a New Brand: To conduct the necessary consumer research and employ skilled personnel to design high-quality brand names, logos, symbols, packages, characters and slogans can be quite expensive, and there is no assurance of success. 7. Allow for Packaging and Labelling Efficiencies: Similar or virtually identical packages and labels for extensions can result in lower production costs. If they are coordinated properly, it will result in more prominence in the retail store by creating a billboard effect. 8. Permit Consumer Variety Seeking: Consumers may need change in the product with out having to leave the brand family. So the line extensions can encourage the customers to use the brand to a greater extent or in different ways.
11.8.2 Provide Feedback Benefits to the Parent Brand

Besides facilitating acceptance of new products, brand extensions can also provide positive feedback to the parent brand in a number of ways: 1. Clarify Brand Meaning: Extensions can help to clarify the meaning of a brand to consumers and define the kinds of markets in which it competes. Example: Johnson & Johnson extend its brand for the products for babies. 2. Enhance the Parent Brand Image: According to the customer-based brand equity model, one desirable outcome of a successful brand extension is that it may enhance the parent brand image by strengthening an existing brand association, improving the favourability of an existing brand association, adding a new brand association, or a combination of these. Brand extension helps to clarify the core brand values and association and affects the parent brand image. 3. Bring New Customers into the Brand Franchise and Increase Market Coverage: Line extensions can benefit the parent brand by expanding market coverage. By bringing attention to the parent brand, the new products sales may also increase. Example: The introduction of Vim Liquid dish wash bar helps to expand the market coverage for Vim. 4. Revitalize the Brand: Brand extensions can help to renew interest and liking for the brand. 5. Permit Subsequent Extensions: One benefit of a successful extension is that it may serve as the basis for subsequent extensions For example, Goodyears
successful introduction of its Aquatred tires sub-brand led to the introduction of Eagle Aquatred for performance vehicles with either wider wheels or a luxury image.
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11.9 DISADVANTAGES OF BRAND EXTENSIONS

Despite these potential advantages, brand extensions have a number of disadvantages. 1. Can Confuse or Frustrate Consumers: Different varieties of line extensions may confuse and frustrate consumers as to which version of the product is the right one for them. As a result they may reject new extensions for tried and true favourites. Moreover, because of the large number of new products and brands continually being introduced, many retailers do not have enough shelf or display space to stock them all. 2. Can Encounter Retailer Resistance: It is impossible for a grocery store or supermarket to offer all the different varieties available across all the different brands in any one product category. Moreover, retailers often feel that many line extensions are merely me-too products that duplicate existing brands in a product category. They feel that it should not be stocked even there were space. 3. Can Fail and Hurt Parent Brand Image: If the brand extension fails it also harms the parent brand image. Unfortunately, these negative feedback effects may sometimes happen. 4. Can Succeed but Hurt the Image of the Parent Brand: If the brand extension has benefit association which are conflicting with those of parent brand, it will change the consumers perception towards the parent brand. 5. Can Cause the Company to Forgo the Chance to Develop a New Brand: One of the disadvantages of brand extension is that by introducing a new product as a brand extension, the company forgoes the chance to create a new brand with its own unique image and equity. Check Your Progress 3 Fill in the blanks: 1. __________ is defined as attaching an existing brand name to a new product introduced in different product category. 2. Horizontal extensions can be further differentiated in terms of their focus termed as __________ and franchise extensions. 3. __________ is one involving a new product with higher price and quality characteristics than the original. 4. __________ is a brand extension that is introduced at a lower price and lower quality level than the core brand. 5. Image-related extensions are those where the brand extension bears some logical or __________ with the parent brand.
11.10 BRAND EXTENDABILITY

The aim behind the brand extension is to transfer a set of associations accompanying the parent brand to the extended brand. Any extension therefore becomes successful depending upon the nature of the parent brand. All brands do not have the same degree of extendability.
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Brands are just names put on the products. When consumers want to buy baby products they remember Johnson & Johnson brand. This name at the most identifies the product or its manufacturer. Such brands have scope for extension. Brand associations may be product-oriented. Some brands, however, serve such product oriented associations and start reflecting the aspirations of their customers. Cartier reflects high fashion and trendy style. It can be extended to spectacles, shoes, clothes, perfumes, furniture and a host of other products. Here the brand acquires more intangible character. These brands can be extended to dissimilar categories. They connect to the inner urges of the customers. Some Successful Brand Extensions in Indian Market
TTK Prestige Cookers, MTR TITAN AMUL MAGGI DABUR DETTOL Gas stoves , Mixer Grinders, Handy Mix , Juicers, Fizz drink maker Ice creams, Masala Powders Watches, Writing Instruments, Wallets, Bags Cheese, Chocolates, Ice creams Noodles, Ketchup, Tastemakers, Coconut milk flakes Chyavanaprash, Honey, Ginger-garlic pastes Anticeptic lotion, soaps, Handwash
11.11 LET US SUM UP

This lesson outlined the advantages and disadvantages of brand extension. Brand extension is defined as attaching an existing brand name to a new product introduced in different product category. In a typical brand extension situation, an established brand name is applied to a new product in a category either related or unrelated in order to capitalize on the equity of the core brand name. Horizontal extension and Vertical extension are the two types of brand extension.

Pick a brand extension. Use the models presented in the lesson 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?
11.13 KEYWORDS
Brand Extension: Brand extension is defined as attaching an existing brand name to a new product introduced in different product category. Vertical Brand Extension: A vertical brand extension uses the core brand name to launch products in the same product category but at a different price point and quality level. Types of Brand Extension: Horizontal extension and Vertical extension are the two types of brand extension.

1. What do you mean by Brand Extension? 2. Explain the types of Brand extensions. 3. Discuss the advantages and disadvantages of brand extension.

CYP 1 1. Brand extension is defined as attaching an existing brand name to a new product introduced in different product category. In a typical brand extension situation, an established brand name is applied to a new product in a category either related or unrelated in order to capitalize on the equity of the core brand name. Ponds toothpaste is a very glaring example of an extended brand failing in India. Lakme shaving cream failed to work as brand extension due to Lakmes strong feminine connotation. Similarly, Vicks Hot Sip did not work.
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2.
CYP 2 1. In a horizontal brand extension, an existing brand name is applied to a newly introduced product in either a related product category or in a product class completely new to the company. 2. Unrelated extensions are those where the parent and the brand extensions have little common but for the brand name. A classic case of this is the brand name Godrej appearing on soaps, safety locks, almirahs, typesetters, hair-dyes, refrigerators and other products. CYP 3 1. Brand extension 2. Line extension 3. Step-up extension 4. Step-down extension 5. Emotional relationship

88 Brand Management
LESSON
12
MANAGING BRANDS OVER TIME
CONTENTS 12.0 12.1 12.2 Aims and Objectives Introduction Reinforcing Brands 12.2.1 12.2.2 12.2.3 12.2.4 12.3 Maintaining Brand Consistency Protecting Sources of Brand Equity Fortifying versus Leveraging Fine-Tuning the Supporting Marketing Programme
Revitalizing Brands 12.3.1 12.3.2 12.3.3 Expanding Brand Awareness Improving Brand Image Entering New Markets
12.4
Adjustments to the Brand Portfolio 12.4.1 12.4.2 12.4.3 Migration Strategies Acquiring New Customers Retiring Brands
12.5 12.6 12.7 12.8 12.9

After studying this lesson, you should be able to understand: The ways to reinforce the brands and The revitalization of brands
12.1 INTRODUCTION
In recent years many changes have occurred in the marketing environment. These changes create challenges for managing brands. Change in consumer behaviour, competitive strategies, government regulations, or other aspects of the marketing environment can profoundly affect the fortunes of a brand. Besides these external forces, the firm itself may engage in a variety of activities and changes in strategic focus or direction that may necessitate minor or major adjustments in the way that its
brands are being marketed. So brand management needs proactive strategies to maintain the brand equity. Effective brand management requires taking a long-term view of marketing decisions. The brands can be managed over time by reinforcing the brand meaning, by making adjustments to the marketing program to identify new sources of brand equity.
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12.2 REINFORCING BRANDS

Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to consumers in terms of brand awareness and brand image. The important considerations concerning brand reinforcement are as follows:
12.2.1 Maintaining Brand Consistency

The most important consideration in reinforcing brands is the consistency of the marketing support that the brand receives, both in terms of the amount and nature of that support. Brand consistency is critical to maintaining the strength and favourability of brand associations. Brands that receive inadequate support in terms of shrinking research and development and marketing communication budgets run the risk of becoming technologically disadvantaged.
12.2.2 Protecting Sources of Brand Equity

Although brands should always look for potentially powerful new sources of brand equity, a top priority should be given to preserve and defend those sources of existing brand equity. For example, Procter & Gamble made a minor change in the formulation of its Cascade automatic dishwashing detergent, primarily for cost-saving reasons. As a result, the product was not quite as effective as it previously ad been under certain, water conditions. After discovering the fact, one of P&Gs chief competitors, Lever Brothers, began running comparative advertisements for its Sunlight brand featuring side-by-side glasses that claimed, Sunlight Fights Spots Better than Cascade. Since the consumer benefit of virtually spotless is a key brand association and source of brand equity for Cascade, P&G reacted swiftly. It immediately returned Cascade to its original formula and contacted Lever Brothers to inform that company of the change, effectively forcing it to stop running the new Sunlight ads on legal grounds. This episode clearly demonstrates that Procter & Gamble fiercely defends the equity of its brands.
12.2.3 Fortifying versus Leveraging

There are a number of different ways to raise brand awareness and create strong, favourable and unique brand associations in consumer memory to build customerbased brand equity. The advantage of creating a brand with a high level of awareness and a positive brand image is that many benefits may accrue to the firm in terms of cost savings and revenue opportunities. Marketing actions that attempt to leverage the equity of a brand in different ways may help to fortify the brand by enhancing its awareness and image.
12.2.4 Fine-Tuning the Supporting Marketing Programme

Reinforcing brand meaning may depend on the nature of brand associations involved. Several specific considerations play an important role in reinforcing brand meaning in terms of product-related performance and non-product related imagery associations, as follows: 1. Product-Related Performance Associations: The core associations of a brand are primarily product-relate performance attributes or benefits, innovation in product design, manufacturing, and merchandising is especially critical to enhancing
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brand equity. For example, after Timex watched brands such as Casio and Swatch gain significant market share by emphasizing digital technology and fashion in their watches, it made a number of innovative marketing changes. Within a short period of time, Timex introduced Indigo glow-in the dark technology, showcased popular new models such as the Iron man in mass media advertising, and launched new Timex stores to showcase its products. These innovations in product design and merchandising have significantly revived the brands fortunes. 2. Non-Product-Related Imagery Associations: For brands whose core associations are primarily non-product-related attributes and symbolic or experiential benefits, relevance in user and usage imagery is critical. Because of their intangible nature, non-product-related associations may be potentially easier to change. In categories in which advertising plays a key role in building brand equity, imagery may be an important means of differentiation. Check Your Progress 1 1. What is the importance of maintaining brand consistency? .. .. 2. What do you understand by product-related performance associations? .. ..
12.3 REVITALIZING BRANDS

The changes in consumer tastes and preferences, the emergence of new competitors or new technology, or any new development in the marketing environment can potentially affect the fortunes of a brand. In virtually every product category, there are examples of once prominent and admired brands that have fallen on hard times or, in some cases, even completely disappeared. A number of these brands are managed to make impressive comebacks in recent years as marketers have given a new life in to their customer franchises. Examples: Brands such as Readers Digest, Boston Market. Thus brands sometimes have had to return to their roots to recapture lost sources of equity. Reversing a fading brands fortunes requires either lost sources of brand equity to be recaptured or new sources of brand equity to be identified and established. Revitalization strategies obviously involve a continuum, with pure back to basics at one end and pure reinvention at the other end. Many revitalizations combine elements of both strategies. Customer-based brand equity framework provides guidance to refresh old sources of brand equity or create new sources of brand equity to achieve the expected positioning. According to the model, two such approaches are possible: 1. Expand the depth or breadth of brand awareness, or both, by improving consumer recall and recognition of the brand during purchase or consumption settings. 2. Improve the strength, favourability, and uniqueness of brand associations making up the brand image. This approach may involve programmes directed at existing or new brand associations.
12.3.1 Expanding Brand Awareness

One of the powerful ways to build brand equity is to increase the breadth of brand awareness. The company has to make it sure that the consumers will think of
purchasing a brand in the situation in which the brand can satisfy consumers needs and wants. The starting point fro creating new sources of brand equity is with ways that increase usage. Either increasing the level of consumption or increasing the frequency of consumption can increase usage. In general, it is probably easier to increase the number of times a consumer uses the product than it is to actually change the amount used at any one time. Consumption amount is more likely to be a function of the particular beliefs that the consumer holds as to how the product is best consumed. Increasing frequency of use, on the other hand, involves either identifying additional or new opportunities to use the brand in the same basic way or identifying completely new and different ways to use the brand. Increasing frequency of use is a particularly attractive option for brands with large market share that are leaders in their product category. Both of these approaches are shown below: 1. Identifying Additional or New Usage Opportunities: In some cases, the brand may be seen as useful only in certain places and at certain times, especially if it has strong brand associations to particular usage situations or user types. In general, to identify additional or new opportunities for consumers to use the brand more. A marketing program should be designed to include both of the following: (a) (b) Communications to consumers as to the appropriateness and advantages of using the brand more frequently in existing situations or in new situations. Reminders to consumers to actually use the brand as close as possible to those situations.
For many brands, increasing usage may be as simple as improving top of mind awareness through reminder advertising. Some brands are seen as only appropriate for special occasions. An effective strategy for those brands may be to redefine what it means for something to be special. Another potential opportunity to increase frequency of use is when consumers perceptions of their usage differ from the reality of their usage. For many products with relatively short life spans, consumers may fail to replace the product in a timely manner because of a tendency to under estimate the length of productive usage. One strategy to speed up product replacement is to tie the act of replacing the product to a certain holiday, event, or time of year. 2. Identifying New and Completely Different Ways to use the brand: The second approach for increasing frequency of use for a brand is to identify completely new and different usage applications. For example, food product companies have long advertised new recipes that use their branded products in entirely different ways.
12.3.2 Improving Brand Image

A new marketing program may be necessary to improve the strength, favourability and uniqueness of brand associations making up the brand image. Repositioning the Brand Repositioning the brand requires establishing more compelling points of difference. It requires reminding consumers of the virtues of a brand that they have begun to take for granted. Other times a brand needs to be repositioned to establish a point of parity on some key image dimension. A common problem for established, mature brands is that they must be made more contemporary by creating relevant usage situations. Updating a brand may involve some combination of new products, new advertising, new promotions, new packaging and so forth.
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Changing Brand Elements Often one or more brand elements must be changed to either convey new information or to signal that the brand has taken on new meaning because the product or some other aspect of the marketing programme has changed.
12.3.3 Entering New Markets

Positioning decisions require a specification of the target market and the nature of competition to set the competitive frame of reference. The target market or markets for a brand typically do not constitute all possible segments that make up the entire market. In some cases, the firm may have other brands that target these remaining market segments. In other cases, however, these market segments represent potential growth targets for the brand. Effectively targeting these other segments requires some changes in the marketing programme, especially in advertising and other communications. To grow the brand franchise, many firms have reached out to new customer groups to build brand equity. Example: Procter & Gamble promote its ivory soap for adults instead of just for babies. Segmenting on the basis of demographic variables and identifying neglected segments is thus one viable brand revitalization option. In some cases, just retaining the existing customers who might move away from the brand or recapturing lost customers who no longer use the brand can be a means to increase sales. Brands such as Kelloggs Frosted Flakes cereal, New Wheel detergent powder run ad campaigns to make the consumers to use them. Attracting a new market segment is a difficult task. Nike, Gillete, and other marketers have struggled for years to find the right blend of products and advertising to make their brands- which have more masculine oriented images- appear relevant and appealing to women. Creating marketing programmes to appeal to women has become a priority of manufacturers of products from cars to computers. Marketers have also introduced new marketing programs targeted to different racial groups, age groups, and income groups. Attracting emerging new market segments based on cultural dimensions may require different messages, creative strategies and media. Check Your Progress 2 1. What are the elements of brands revitalizing? .. .. 2. What is the need of repositioning of the brand? .. ..
12.4 ADJUSTMENTS TO THE BRAND PORTFOLIO

Managing brand equity and the brand portfolio requires taking a long-term view of the brand. As part of this long-term perspective, it is necessary to carefully consider the role of different brands and the relationships among different brands in the portfolio over time. In particular, a brand migration strategy needs to be designed and implemented so that consumers understand how various brands in the portfolio can satisfy their needs as they potentially change over time. Managing brand transitions is especially important in rapidly changing, technologically intensive markets.
12.4.1 Migration Strategies

Brands can play special roles that facilitate the migration of customers within the brand portfolio. For example, entry level brands are often critical in bringing in new customers and introducing them to the brand offerings. Ideally, brands would be organized in consumers minds so that they at least implicitly know how they can switch among brands within the portfolio as their needs or desires change. For example, a corporate or family branding strategy in which brands are ordered in a logical manner could provide the hierarchical structure in consumers minds to facilitate brand migration.
12.4.2 Acquiring New Customers

All firms face tradeoffs in their marketing efforts between attracting new customers and retaining existing ones. Firms proactively develop strategies to attract new customers, especially younger ones. The marketing challenge in acquiring new customers lies in making a brand seem relevant to customers from potentially vastly different generations and life styles. Some alternative approaches that attempt to broaden the marketing programme and attract new customers as well as retain existing ones are discussed as follows: 1. Multiple Marketing Communication Programmes: One approach to attract a new market segment for a brand and satisfy current segments is to create separate advertising campaigns and communication programmes for each segment. The increased effectivenss of targeted media makes multiple targets more and more feasible. The drawbacks of this approach is the expense involved and too much of media overlap among target groups. 2. Brand Extension and Sub-brands: Another approach to attract new customers to a brand and keep the brand modern and up-to-date is to introduce a line extension or establish a new sub-brand. These new product offerings for the brand can incorporate new technology, features, and other attributes to satisfy the needs of new customers as well as satisfy the changing desires of existing customers. For example: Lifebuoy introduced Lifebuoy plus young men and Lifebuoy gold for young women. 3. New Distribution Outlets: Attracting a new market segment become simple when we make the product more available to that group. For example, the sale of Nescafe Sunrise is increased by making that product more available to the target group. Check Your Progress 3 Fill in the blanks: 1. ___________ is one of the important considerations concerning brand reinforcement. 2. The first step in retrenching a fading brand is to ________ the number of its product types. 3. Effective brand management requires taking a ________ view of marketing decisions.
12.4.3 Retiring Brands

The adverse changes in the marketing environment may make some brands not worth saving. Their sources of brand equity may have essentially dried up or even worse, damaging and difficult to change new associations may have been created. In such a situation, decisive management actions are necessary to properly retire the brand.
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Several options are possible to deal with a fading brand. The first step in retrenching a fading brand is to reduce the number of its product types. Such actions reduce the cost of supporting the brand and allow the brand to put its best foot forward. In some cases, the brand is beyond repair and more drastic measures have to be taken. One possible option for fading brands is to consolidate them into a stronger brand. Finally, a more permanent solution may be to discontinue the product altogether.
12.5 LET US SUM UP

Effective brand management requires taking a long-term view of marketing decisions. A long-term perspective of brand management recognizes that any change in the supporting marketing program for a brand may, by changing consumer knowledge, affect the success of future marketing programs. Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to consumers in terms of what products the brand represents, what core benefits it supplies and what needs it satisfies and in terms of how the brand makes those products superior and which strong, favourable and unique brand associations should exist in the minds of consumers. Consistency of the marketing support is the most important consideration in reinforcing brands. Revitalizing a brand requires either the lost sources of brand equity be recaptured or the new sources of brand equity be identified and established.

Pick a product category. Examine the histories of the leading brands in that category over the last decade. How would you characterize their efforts to reinforce or revitalize brand equity?
12.7 KEYWORDS
Effective Brand Management: Effective brand management requires taking a longterm view of marketing decisions. Brand Consistency: Brand consistency is critical to maintaining the strength and favourability of brand associations. Reinforcing Brands: Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to consumers in terms of brand awareness and brand image. Brand Equity: Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to consumers in terms of what products the brand represents.

1. How can one reinforce the brand? 2. Discuss the ways of revitalizing a brand. 3. Comment on the concept of effective brand management.

CYP 1 1. The most important consideration in reinforcing brands is the consistency of the marketing support that the brand receives, both in terms of the amount and nature of that support. Brand consistency is critical to maintaining the strength and favourability of brand associations. Brands that receive inadequate support in terms of shrinking research and development and marketing communication budgets run the risk of becoming technologically disadvantaged. 2. Product-Related Performance Associations: The core associations of a brand are primarily product-relate performance attributes or benefits, innovation in product design, manufacturing, and merchandising is especially critical to enhancing brand equity. CYP 2 1. Revitalization strategies obviously involve a continuum, with pure back to basics at one end and pure reinvention at the other end. Many revitalizations combine elements of both strategies. 2. Repositioning the brand requires establishing more compelling points of difference. It requires reminding consumers of the virtues of a brand that they have begun to take for granted. Other times a brand needs to be repositioned to establish a point of parity on some key image dimension. A common problem for established, mature brands is that they must be made more contemporary by creating relevant usage situations. Updating a brand may involve some combination of new products, new advertising, new promotions, new packaging and so forth. CYP 3 1. Maintaining brand consistency 2. Reduce 3. Long-term

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97 Brand Valuation
UNIT V
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LESSON
99 Brand Valuation
13
BRAND VALUATION
CONTENTS 13.0 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 Aims and Objectives Introduction Brand Valuations Context for Brand Valuation Corporate Reputation Mergers and Brand Value Brands and Wealth Creation How Valuable are Brands? Brand Valuation Methods 13.8.1 13.8.2 13.8.3 13.8.4 13.8.5 13.8.6 13.8.7 13.8.8 13.8.9 13.9 Historical Cost Replacement Cost Market Value Premium Price Royalty Relief Economic use Method Economic Use/Historical Earnings Approach Economic Use/Future Earnings Approach Brand Value
Discussion of Brand Valuation
13.10 Let us Sum up 13.11 Lesson End Activity 13.12 Keywords 13.13 Questions for Discussion 13.14 Suggested Readings

After studying this lesson, you should be able to understand: The meaning of brand valuation What is the difference between brand valuation and the value of corporate reputation The methods used to value a brand.
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13.1 INTRODUCTION
Fundamentally, wealth can be defined as the value of all kinds of goods and services that people produce from the assets available to them and asset defined as any possession having any useful impact on creating wealth. All businesses are engaged in the activity of bringing together an array of resources, or assets would attempt to ensure the quality of earnings and the stability of these earnings in to the future. Brands represent an ongoing relationship between consumers and businesses and as such ensure both a level of demand and a security of demand that the business would not otherwise enjoy without the brand. The brand value could be seen in the huge gap between the tangible assets and the market capitalization of many brand-based companies. This lesson looks at brand valuations. We begin by discussing their significance in the context of company accounts and valuations, and then consider how brand valuations are carried out in practice. We include some sample calculations based on different methodologies and highlight the key assumptions that have to be made in these calculations. The lesson ends with a brief discussion of the alternatives to brand valuation and a means of brand health monitoring, budget setting and brand development.
13.2 BRAND VALUATIONS

Brand valuation was introduced in the 1980s, initially as a response to the vulnerability of sound but financially sleepy businesses to the attentions of acquisitive conglomerates. Valuing brands necessitates the disaggregation of the company into its component brands, and the application of valuation methods to each component brand. Brand valuation was controversial when it was introduced, and remains so today. Its advocates argue that it is perfectly natural to recognise the financial value of a companys brands on the balance sheet, given that these are durable assets that deliver real financial benefits to the business in terms of a higher price or market share than would otherwise be the case. Its critics, in equal measure, maintain that, whatever the theory, brand valuations are arbitrary, subjective and opaque and consequently of limited use. The final difficulty for brand valuation is that brands are sold infrequently. Businesses or business units are sold regularly, so company valuation theory can be tested against many cases. Brand valuation theory has been subjected to much less rigorous testing, because there are relatively few test cases.
13.3 CONTEXT FOR BRAND VALUATION

Valuation: A method of estimating the monetary worth of an entity. Its main applications concern how companies and shares are valued. Value Based Marketing: A disciplined process of evaluating marketing decisions, based on robust financial valuation principles and market response analysis. The result: optimal marketing decisions, strategy and implementation Economic Value: the monetary worth of an entity, established by a valuation method. Valuation Method: the rules and calculations used in the valuation process. Different methods are available, so it is important when reviewing somethings value to know the method used.
Customer Value: the perceived worth of something to a customer, expressed as a set of evaluative statements. Not necessarily connected or correlated with economic value, despite what the pundits say. Profit: Revenues minus costs measured over a specified period. There are several accounting definitions of profit, probably the most useful for general marketing use being EBITDA or Earnings Before Interest, Tax, Depreciation and Amortisation. Profit Stream: A series of profits over a period of time. Investment analysts often look at profit streams over 3, 5, and 10 years or more. Net Present Value: A single value that represents the profit stream (or other financial flow), summarised using a method such as Discounted Cash Flow (DCF). Profit Maximisation: Making brand management decisions in order to maximise profit over a specified period. Share Price: the price at which company shares are traded on a Stock Market. Market Capitalisation: The overall value assigned to a company by a stock market (equal to the share price multiplied by the number of shares). It may seem paradoxical to many marketing people that most finance people spend little or none of their careers thinking about economic value. On the other hand, economic value is something that investment analysts, concerned with trading shares, think about a good deal. Understanding this conceptual gap is a good starting point for our thinking.
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13.4 CORPORATE REPUTATION

The concept of assigning a value to a brand naturally leads to the question of whether the valuations assigned by the market to companies depend in part on the good or poor corporate reputation of the company. The main determinants of company valuations will naturally be the current and expected future financial performance. But are the perceived strengths in areas such as marketing skill, financial management and the ability to recruit and retain staff also a factor, over and above their direct effect on the financials? A detailed statistical analysis reported by Bryan Finn (2004) shows that corporate reputation is a statistically significant explanatory factor in both market capitalisation and credit risk ratings. However, as brand valuation and corporate reputation are clearly related (especially when the brand is synonymous with the company), it is relevant to note the following important differences: 1. Unlike brands, quoted companies have freely-available market values and credit risk rating scores every day. 2. Working at the company level avoids the approximations involved in trying to dissect a companys accounts to attribute costs and revenues across a portfolio of brands. The assessment of the impact of corporate reputation on the market value of a company is therefore a more rigorous and statistically robust process than brand valuations although, of course, it does not provide information on the individual brands in a multi-brand company.
13.5 MERGERS AND BRAND VALUE

In the 1980s, there was a considerable rise in the number of business mergers and acquisitions. What was even more interesting was the type of assets that were the focus of these mergers.
A study of acquisitions in the 1980s showed that whereas in 1981 net tangible assets represented 82 percent of the amount bid for companies, by 1987 this had fallen to just 30 percent. It became clear that companies were being acquired less for their tangible assets and more for their intangible assets. This raised the whole issue of accounting for goodwill the gap left between the amount paid for a business and the value of its identifiable assets. Many branded good companies were acquiring or being acquired in the 1980s and because the brands of these companies, though genuine intangible assets, were usually unrecognized, the impact of these acquisitions on their financial reporting was significant.
13.6 BRANDS AND WEALTH CREATION

Brands create wealth. Maximising brand value is simply a part of maximizing shareholder value. Companies have increasingly come to be reorganized around brands. A number of accounting standards around the world have made it mandatory for companies to declare to their shareholders how valuable their brands are. More recently, a large Australian brewery found an increasingly depleted balance sheet due to high levels of prescribed depreciation on brewery equipment. Putting their brand properties on their balance sheet provided a much fairer picture of the kind of value creation that share holders were deriving. Simply because, in fact these were their primary value creators.
13.7 HOW VALUABLE ARE BRANDS?

Before looking in detail at brand valuation, it is worth defining the minimum requirements for a brand to be worthy of consideration for a brand valuation analysis (Haigh 1996). At least the following criteria need to be satisfied: 1. The brand must be clearly identifiable. 2. The title to the brand must be unambiguous. 3. The brand must be capable of being sold separately from the business (otherwise the brand valuation becomes identical to the valuation of the business). 4. There must be a premium value over the equivalent commodity product. If these criteria are met, there seems little doubt that such brands are valuable analysis from brand consultancy Interbrand. Check Your Progress 1 1. Distinguish between brand valuation and corporate reputation. 2. What are the criteria to evaluate brands?
13.8 BRAND VALUATION METHODS

Brand valuation was pioneered by Interbrand who developed and refined the economic use method of brand valuation. Some of the approaches about brand valuation are discussed below:
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13.8.1 Historical Cost

This approach values the brand as the sum of the costs incurred in bringing the brand to its current state. The main disadvantages are: 1. The historical costs of creating a brand appear to bear little relation to the current value of the brand, based on the other approaches to brand valuation (and are often considerably lower). 2. In practice, it is difficult to identify the costs involved in creating a brand and, in particular, to separate out that part of marketing expenditure responsible for brand building.
13.8.2 Replacement Cost

This approach values the brand at the cost of creating a new but similar brand. The main disadvantage is: 1. The difficulty in estimating how much it would cost to create a new equivalent brand now. It would be a questionable assumption to base the estimate on the cost of creating the original brand as the existence of the original brand will often have changed the marketplace. However, even if this assumption were to be justifiable, then the approach suffers from the same disadvantages as the historical cost approach.
13.8.3 Market Value

The market value of the brand is what it might be sold for in the open market, assuming a willing buyer and willing seller. The main disadvantages are that: 1. There is scant information available about sales of brands and, 2. Even where such information is available, it is difficult to extrapolate from one brand to another.
13.8.4 Premium Price

This approach values the brand in terms of the premium price that it commands over an unbranded or generic equivalent. A premium price can be used to calculate the additional profits earned by the brand (after allowing for any additional production or marketing costs), and these can be used in a Net Present Value calculation to arrive at the value to the business now of the profit stream attributable to the premium price. The main disadvantages are: 1. It is not always easy to find an equivalent unbranded or generic product 2. The effect of the brand is not always or entirely reflected in a premium price. It may also be reflected in sales volumes or, equivalently, market share. Indeed, the profit maximising optimum for a brand will normally be to use the brand strength to gain some combination of a premium price and market share.
13.8.5 Royalty Relief

The royalty relief approach values a brand at the Net Present Value of the royalty payments that the business would have to pay to license the brand if it did not own the brand. In other words, the brand is valued at the amount by which ownership of the brand relieves the company from the need to pay license fees or royalties. Where royalty data are readily available, this approach is workable. However, royalty data are generally applicable only to specific sectors and markets, and are not easily extrapolated beyond these boundaries.
13.8.6 Economic use Method

This method of assessing brand value attempts to calculate the value of the brand to its owner in terms of the Net Present Value of the profit stream attributable to the brand. This is the approach of choice for brand valuation companies such as Interbrand Ltd and Brand Finance Ltd, and will be described in more detail below. The economic use method of brand valuation has been implemented in a number of ways and various proprietary techniques have been developed to estimate some of the key factors. Here we present a simplified form of the approach, broadly following the methodology of Brand Finance Ltd, as described in the excellent review by David Haigh (1996). All economic use methods start with an analysis of the profitability of the brand to the business. It should be emphasised that all of the analysis that follows is based on separating the finances of the brand of interest from other brands that may be produced by the company, and also from any unbranded products that may be produced in parallel by the company.
13.8.7 Economic Use/Historical Earnings Approach

The simplest economic use method is the historical earnings approach, the main steps for which are as follows: 1. Starting with the revenue attributable to the brand, multiply by the profit margin for the brand to get the operating profit for the brand (or, equivalently, deduct from the revenue the operating costs associated with the brand). 2. Estimate the capital employed by the brand, including both fixed assets and working capital. Multiply this by an appropriate capital charge to obtain the charge for capital employed by the brand. 3. Subtract the charge for capital employed by the brand from the operating profit for the brand to get the earnings after capital charge. 4. Not all of these earnings are attributable to the strength of the brand itself there could well be some earnings after capital charge even if the brand were weak. Therefore multiply the earnings after capital charge by the proportion of the earnings that are attributable to the strength of the brand to obtain the brand earnings. 5. Multiply the brand earnings by the tax rate to get the tax payable on the brand earnings. Then subtract the tax payable from the brand earnings to get the brand earnings after tax. 6. Finally, multiply the brand earnings after tax by the multiple to obtain the brand valuation.
13.8.8 Economic Use/Future Earnings Approach

In theory, the multiple used in the historical earnings approach should reflect both the growth prospects for the brand and the uncertainty attached to future earnings from the brand. Although the calculation method could be improved by calculating a weighted average of earnings over recent years, the preferred and most widely-used approach for brand valuation is to estimate the brand value as the Net Present Value of the future brand earnings after tax. For this method of brand valuation, the procedure is as follows: 1. Calculate the brand earnings after tax as per steps 1 to 12 in the table above, but do this not only for the current year (Year 0), but also for the next 5 years. 2. Discount the brand earnings after tax for Years 0 to 5 back to the current year. 3. Estimate the terminal value of the brand (representing the Net Present value of after tax brand earnings from year 6 through to infinity). This is usually calculated by assuming no further growth beyond year 5. 4. Estimate the brand value as the discounted brand earnings after tax for Years 0 to 5 plus the terminal value.
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13.8.9 Brand Value

This approach has two important advantages in that it provides: 1. A more rigorous methodology for taking into account the future growth of the brand, and 2. A mechanism for taking into account the effect of brand strength on the level of risk associated with future earnings. However, the advantages of this approach come at a cost: i. It requires that a forecasting model for the brand is developed. The forecasting model has to include estimates for the next 5 years of revenues, margins (or costs), and total capital employed attributable to the brand.
ii. It introduces another key factor that has to be estimated, namely the discount rate to be used in the Net Present value calculation. iii. It introduces a further arbitrary factor in the choice of a 5 year period for the forecasting model. iv. It frequently exhibits the behaviour (exemplified in the table) that the terminal value is of comparable importance to the Net Present Value of the brand earnings after tax for the initial period of 5 years, emphasising the importance of the assumptions made for the period more than 5 years into the future. The general principle behind future earnings systems of brand valuation is that strong brands benefit not only from a favourable combination of a premium price and a high market share, but are also more resilient in adverse market or economic conditions. This means that they have a lower risk profile and therefore that a lower discount rate should be used in calculating the present value of future earnings. Both Interbrand Ltd. and Brand Finance Ltd. have developed proprietary methodologies based on ranking and rating systems to assess brand strength and to map this parameter onto the discount rate to be used in the Net present Value calculation.
Check Your Progress 2 Fill in the blanks: 1. Asset is defined as _________ having any useful impact on creating wealth. 2. Valuing brands necessitates the _________ of the company into its component brands. 3. Maximising _____________ is simply a part of maximizing shareholder value. 4. _________ values the brand at the cost of creating a new but similar brand. 5. Economic use method of assessing brand value attempts to calculate the value of the brand to its owner in terms of the _________ of the profit stream attributable to the brand.
13.9 DISCUSSION OF BRAND VALUATION

The principal advantage of brand valuation is that it reduces the complexity of assessing the worth and attributes of a brand to a single financial number. Difficult and imprecise though this process is, in some situations it is essential. For example, in mergers and acquisitions or legal and tax cases, this is exactly what is required. What is more debatable is whether brand valuation is a useful tool as a means of brand health monitoring and as a way of informing decisions on budget setting and brand development processes. Although it can be used in this role, the balance of opinion currently seems to weigh significantly in favour of more direct and transparent measures for these purposes, based mainly on two approaches: 1. Forecasting models of brand revenues, costs and profitability but without the additional calculations and assumptions necessary to extend the forecasts to produce a brand valuation. 2. Metrics derived from market research on customer opinions and attitudes towards the brand.
13.10 LET US SUM UP

There needs to be co-operation between marketing and finance to solve the problems of calculating financial results from branding expenditure. Brand valuation as a topic is an off-shoot of company valuations, and has evolved in order to explain the sometimes large discrepancies between a companys market valuation and the value of its tangible assets. To carry out credible brand valuations, certain criteria need to be met for example, it must be possible for a brand to be sold, as an entity, separately from its parent company. There are different methods of calculating brand value, all of which have various advantages and disadvantages.

Conduct a review of the Unilever brand portfolio. How successful has the company been at reducing the number of brands? What lessons are to be learned from its strategies?
13.12 KEYWORDS
Valuation: A method of estimating the monetary worth of an entity. Its main applications concern how companies and shares are valued. Value Based Marketing: A disciplined process of evaluating marketing decisions, based on robust financial valuation principles and market response analysis. Economic Value: The monetary worth of an entity, established by a valuation method. Valuation Method: The rules and calculations used in the valuation process. Customer Value: The perceived worth of something to a customer, expressed as a set of evaluative statements. Profit: Revenues minus costs measured over a specified period. Net Present Value: A single value that represents the profit stream (or other financial flow), summarised using a method such as Discounted Cash Flow (DCF). Profit Maximisation: Making brand management decisions in order to maximise profit over a specified period. Maximising Brand Value: It is simply a part of maximizing shareholder value. Share Price: The price at which company shares are traded on a Stock Market. Market Capitalisation: The overall value assigned to a company by a stock market (equal to the share price multiplied by the number of shares).
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1. Write the context of brand valuation. 2. Explain the methods of brand valuation

CYP 1 1. However, as brand valuation and corporate reputation are clearly related (especially when the brand is synonymous with the company), it is relevant to note the following important differences: a) Unlike brands, quoted companies have freely-available market values and credit risk rating scores every day.
b) Working at the company level avoids the approximations involved in trying to dissect a companys accounts to attribute costs and revenues across a portfolio of brands. 2. At least the following criteria need to be satisfied: a) b) c) The brand must be clearly identifiable. The title to the brand must be unambiguous. The brand must be capable of being sold separately from the business (otherwise the brand valuation becomes identical to the valuation of the business). There must be a premium value over the equivalent commodity product.
Contd
d)
CYP 2 1. Any Possession 2. Disaggregation 3. Brand Value 4. Replacement Cost 5. Net Present Value

LESSON
109 Co-branding
14
CO-BRANDING
CONTENTS 14.0 14.1 14.2 14.3 14.4 14.5 Aims and Objectives Introduction Co-branding Definition of Co-branding Aim of Co-branding Forms of Co-branding 14.5 .1 14.5.2 14.5.3 14.5.4 14.5.5 14.5.6 14.5.7 14.6 14.7 Ingredient Co-branding Same-company Co-branding Joint Venture Co-branding Multiple Sponsor Co-branding Reach and Awareness Co-branding Value Endorsement Co-branding Complementary Competence Co-branding
Benefits of Co-branding Global Co-branding 14.7.1 Constraints in Global Co-branding
14. 8 Successful Co-branding 14.8.1 14.9 Examples
Retail Co-branding 14.9.1 14.9.2 Need for Co-branding in Retail Sector in Coming Future SWOT Analysis for Co-branding in Retail
14.10 Need for a Strategic Fit 14.10.1 Prerequisites for a Successful Co-branding Strategy 14.11 Let us Sum up 14.12 Lesson End Activity 14.13 Keywords 14.14 Questions for Discussion 14.15 Suggested Readings

After studying this lesson, you should be able to understand: The meaning of co-branding Understand the different forms of co-branding The strategies required for successful co-branding The benefits of co-branding
14.1 INTRODUCTION
There are various strategic options available to a marketer for building a strong brand in the market place. Brand image building is a long term process and three key issues need attention to make a brand distinct from other products or brands in the same product categories. It is difficult to develop a long term one way strategy for a brand and make it a success in the market place today due to sameness in the market. The market is flooded with products or brands with similar physical features and value promises and to make the condition worse for the modern marketer, there is a very high level of media clutter and advertising is fast loosing its effect over the customers. The high cost of media and complexity of consumer response to interactive media makes the marketer to look for new alternatives for brand management. The three distinct propositions have remained same for building brands but the approach to build a successful brand is undergoing a change in the current context. The three macro strategic issues relates to building a strong brand include a distinct value offer with a high level of sustainable competitive advantage, a differentiated positioning statement and a consistent positioning strategy. In the attempt to build up a strong brand image marketers are using co-branding as a strategic option. Co-branding, co-partnering or dual branding is the act of using two established brand names of different companies on the same product. It has made inroads into nearly every industry, from automotive and high-tech Internet companies to banking and fast food. Many well-known firms chose this marketing strategy in order to draw new customers, to increase the brand awareness, to support the customer loyalty or to win some other individual advantages offered by the partnership.
14.2 CO-BRANDING
Co-branding is when two companies form an alliance to work together, creating marketing synergy. A co branded extension is a composite brand concept that contains the characteristics of two underlying concepts (Cohen and Murphy 1984; Park, Jun, and Shocker 1996). Each of the two participating concepts is associated with a set of attributes that are combined according to a set of rules to form the composite concept. In other words, a co branded extension does not involve the transfer of the entire brand concept from a parent category to an extension category. Rather, it merely involves the transfer of a subset of attributes from the two parent brands, and their recombination into a coherent composite concept that could become a member of the extension category to which new brand belongs. Earlier the marketers were just bothered about how to promote their brand. But now they have graduated to a more "defining their customer" approach. This approach though tedious makes branding and eventually co-branding easier for them.
14.3 DEFINITION OF CO-BRANDING

Co-branding involves combining two or more well-known brands into a single product. Used properly, it is an effective way to leverage strong brands and has the
potential to achieve 'best of all worlds' synergy that capitalizes on the unique strengths of each contributing brand. To put in the words of inter-brand definition, "Co-branding is a form of co-operation, in which all the participants' brand names are retained." And Kotler defines co-branding as, "two or more well-known brands combined in an offer" and each brand sponsors expect that the other brand name will strengthen the brand preference or purchase intention and hope to reach a new audience.
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14.4 AIM OF CO-BRANDING

Most companies have explored co-branding at one time or another. But few have realized its full potential. While there are many forms of co-branding; before a company can decide which option makes the most sense for its situation, it must fully explore four main types of co-branding. Each is differentiated by its level of customer value creation, by its expected duration, and perhaps most important, by the risks it poses to the company. These risks include the loss of investment, the diminution of brand equity and the value lost by failing to focus on a more rewarding strategy. According to Chang, from the Journal of American Academy of Business, Cambridge, states there are three levels of co-branding. Level 1: Market Share Level 2: Brand Extension Level 3: Global Branding Level 1 includes joining with another company to penetrate the market. Level 2 is working to extend the brand based on the company's current market share. Level 3 tries to achieve a global strategy by combining the two brands.
14.5 FORMS OF CO-BRANDING

There are many different sub-sections of co-branding. Companies can work with other companies to combine resources and leverage individual core competencies, or they can use current resources within one company to promote multiple products at once. The forms of co-branding include: 1. Ingredient co-branding 2. Same-company co-branding 3. Joint venture co-branding 4. Multiple sponsor co-branding 5. Reach and Awareness Co-branding 6. Value Endorsement Co-branding 7. Complementary Competence Co-branding
Check Your Progress 1 1. What do you understand by co-branding? . . 2. What are the different types of co-branding? . .
14.5.1 Ingredient Co-branding

This involves creating brand equity for materials, components or parts that are contained within other products. Intel Inside on a Compaq Personal Computer explains the basis of ingredient co-branding. In this form, there is a physical identifiable ingredient brand which has a high brand value for the customer and with it the value of the final product greatly increases. Here, one of the strong brands is an ingredient to another strong brand adding value to the final product. The potential of value created in this cooperation is tremendous and without it the value of the product will be diminished significantly. Another example here can be of Nutrasweet as an ingredient in Diet Coke. Examples: 1. Betty Crockers brownie mix includes Hersheys chocolate syrup 2. Pillsbury Brownies with Nestle Chocolate 3. Dell Computers with Intel Processors 4. Kellogg Pop-tarts with Smuckers fruit
14.5.2 Same-company Co-branding

This is when a company with more than one product promotes their own brands together simultaneously. Examples: 1. General Mills promotes Trix cereal and Yoplait yogurt 2. Kraft Lunchables and Oscar Mayer meats
14.5.3 Joint Venture Co-branding

Joint venture co-branding is another form of co-branding defined as two or more companies going for a strategic alliance to present a product to the target audience. Example: British Airways and Citibank formed a partnership offering a credit card where the card owner will automatically become a member of the British Airways Executive club
14.5.4 Multiple Sponsor Co-branding

This form of co-branding involves two or more companies working together to form a strategic alliance in technology, promotions, sales, etc.
Example: Citibank/American Airlines/Visa credit card partnership
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14.5.5 Reach and Awareness Co-branding

This is the lowest level of shared cooperation in a co-branding exercise and its objective is to rapidly increase the awareness of the sharing brands through each other's strength in the respective domains. The example for this type of co-branding is found in the credit cards. In fact co-branding of this type finds the maximum utility of co-branding. In the Indian context, we have already observed a spate of co-branded credit cards between Citibank and Jet Airways, Standard Chartered Bank and Indian Railways, Indian Oil and Citibank, and Citibank and The Times of India. The benefit of co-branded cards to the cardholder is that he gets points whenever he uses it and he can get these points redeemed for additional products or services for free. Thus, it builds loyalty to the brand or service in use by the customer. This is a sort of affiliate marketing between three brands, viz., a payment service franchiser (Mastercard, VISA), a bank and a product or service.
14.5.6 Value Endorsement Co-branding

This is the second level in the co-branding hierarchy wherein the shared value creation and the strength of relationship is such as to have endorsement of one brand values to the other with a strong affinity towards the other. The most appropriate example here would be of the companies getting involved with a cause with some non-government organization, e.g., the co branding exercise between P&G and National Association for Blind in the form of Project Drishti where one rupee per pack of Whisper purchased by the customer was diverted towards the cause of a blind female child. Thus, here one of the brands gives a small proportion of its transaction revenue to charity and the brand comes to be associated in the public mind with a worthy cause and with a good citizen brand values. The essence of this type of branding is that the two participants cooperate because they have, or want to achieve an alignment of their brand values in the customer's mind. Some of the other examples of two commercial brands coming together would include endorsement of Ariel by Vimal.
14.5.7 Complementary Competence Co-branding

This is the highest layer in the hierarchy of co-branding. In terms of value creation, it is just next to the Joint Ventures. Here, the two powerful and complementary brands come together and combine for a product or service that is more than sum of its parts, and it relies on each partner committing a selection of its core skills and competencies to a product.
14.6 BENEFITS OF CO-BRANDING

1. It is inexpensive. 2. It's a form of marketing that can generate business even when rates climb. 3. Many line extensions capitalize on a partner's brand equity. 4. Brand extension success rates are maximized in the new market when co-branded with the reputed brand that has established in that market. 5. Co-branding may help usage extension. 6. Image reinforcement may take place due to co-branding.
7. Loyalty programs increasingly include co-branding arrangements. The corporations are sharing the cost of loyalty programs; hence, the promotional costs to the companies are coming down. 8. Co-branding signals a trade marketing operation. 9. Capitalizing on the synergies among a number of brands is yet another advantage of co-branding.
14.7 GLOBAL CO-BRANDING

Co-branding between an Indian major and a global firm in the Indian markets is beneficial as the Indian company would be having already established existing distribution network and a brand image in the market. The MNC in turn will provide the Indian partner with the technical know-how and an international brand attachment.
14.7.1 Constraints in Global Co-branding

When it comes to co-branding between two global companies in Indian markets, the main constraints faced are: 1. May not have any existing distribution network of any note. 2. May lead to brand dilution of one or both the brands if the perceived image of both the brands is not similar in the Indian market. 3. The two companies may be in different fields altogether and the consumers may find it very difficult to identify the co-branded product with either of the two parent companies. 4. No two brands have exactly the same impact on the consumer. Therefore, one partner in every co-branding partnership will receive more attention than its counterpart. If that risk is accurately assessed and accepted by the junior partner and it's still a net gain for its brand identity, then the partnership is sound. For example, computer-manufacturing companies like HP do co-branding with Intel. But Intel's Pentium Processor campaign has been so successful that many computer buyers don't bother about the computer manufacturers as long as it has Intel Inside.
14.8 SUCCESSFUL CO-BRANDING

Over 90% of co-branding ventures fail. This is because they did not follow the basic or ground rules of co-branding. Successful co-branding must achieve equal value for all parties in any relationship; partner brands' values need to match each other; and consumers must easily understand the resulting strategy.
14.8.1 Examples
A successful example of co-branding is the Senseo coffeemaker, which associates the Philips made appliances with specific coffee brand of Douwe Egberts. Other examples include the alliance of the Beer Tender in-home draft system, sold by Krups with the specific brand of Heineken, and the marketing of Gillette M3 Power shaving equipment (which require batteries) with Duracell batteries (both brands owned by Procter & Gamble). Co-branding can be between an organization and a product also. An example of cobranding between a charity and a manufacturer is the association of Sephora and Operation Smile: Sephora markets a product carrying the logo of the charity, the consumer is encouraged to associate the two brands, and a portion of the proceeds benefit the charity.
Check Your Progress 2 1. What are the constraints in global co-branding in India? . . 2. Give some examples of successful co-branding. . .
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14.9 RETAIL CO-BRANDING

In India, retail is poised to be the next big thing. Apart from the growth prospects, it gives retailers a lot of opportunities to create alliances to strengthen their marketing offers. With a lot of companies entering the retail scenario, it becomes imperative they resort to co-branding and/or strategic alliances in order to strengthen their consumer base, e.g. when a giant like Walmart enters India, for the Indian retailers to fight back, they will have to go the co-branding way to increase or maintain their customers.
14.9.1 Need for Co-branding in Retail Sector in Coming Future

Modern consumer's will be discerning and will demand their needs be met all of the time and at the right price. Information about consumer shopping habits has never before been better and technology is improving all of the time to increase marketer's knowledge. The traditional retailers will find consolidation in buying habits and will find it tough. For example consumers will find it easier to buy fresh vegetables from a food retailer on Sunday rather than going to traditional vegetable seller in a mandi. The market shares of traditional retailers will be gobbled up once the majors like WalMart enter into Indian retail space. The superstores of the supermarket chains provide a perfect host environment for a plethora of co-branding opportunities. But the question that arises here is.
14.9.2 SWOT Analysis for Co-branding in Retail

Strengths 1. Ability to adapt to the change in markets 2. Provide one service in exchange of the other 3. Benefit by association 4. Building of two in house brands. Weaknesses 1. Long term association with poor performer or weaker brand 2. Dropping of standard because of the inability of the poor franchisees. Opportunities 1. Outsource to experts 2. Introduce a new culture change through a new organization 3. Learn a new trade 4. Improve consumer trust 5. Increase market penetration.
Threats 1. Changing Consumer 2. New entrants from overseas or different market sectors 3. Consumer confusion 4. Safety scares and product recalls. Disney worldwide has an agreement with McDonalds whereby the characters from its new films are distributed as toys with McDonalds "Happy Meals". This is a win -win situation for both parties as it ensures publicity for Disney within its relevant target audience and an increase in sales for McDonalds. With the McDonald's partnership, Disney also uses the extraordinary reach of the chain to promote and advertise new movies both in stores and through ads the fast-food company funds. That's especially valuable to a studio at a time when the costs to make and sell films are soaring. Check Your Progress 3 Fill in the blanks: 1. ________ involves combining two or more well-known brands into a single product. 2. Gillete M3 Power shaving equipment is marketed allied with ________ batteries Brand extension success rates are maximized in the new market. 3. In ________ co-branding the shared value creation and the strength of relationship is such as to have endorsement of one brand values to the other with a strong affinity towards the other. 4. Kellogg Pop-tarts is co-branded with Smuckers fruit-This belongs to which form of co-branding? 5. _____________ form of co-branding involves two or more companies working together to form a strategic alliance in technology, promotions, sales, etc.
14.10 NEED FOR A STRATEGIC FIT

Whenever brands go in for co-branding, they must ensure that there is a strategic fit, especially in the consumer's mind. Successful co-branding occurs when both brands add value to a partnership. The value-added potential should be assessed by examining both the complementarily between the two brands and the potential customer base for the co-brand. A great deal of attention has been given to the potential for interbrand effects in co-branding, that is, the potential for enhancement or diminishment of the brand equity of either partner. Much of this attention has been directed to effects on brand attitudes. In general, research suggests that consumers tend to respond favourably to co-brands in which each partner appears to have a legitimate fit with the product category, and the attitudes towards the parent brands will be reinforced, or at least maintained, as a result of the partnership. E.g. consider an alliance between brand Amitabh and Dabur. After they get together, it is important for the manufacturer to realise whether the perceived brand value of either of the two brands has increased. In case there is a genuine fit between the two, it will be accepted by the consumers.
14.10.1 Prerequisites for a Successful Co-branding Strategy

A product is identified with a company by its brand, and usually consists of some type of identifier. The concept of co-branding consists of taking a product developed for one company, and changing the look and feel to match that of another company. The detailed co-branding process results in a product that is fully customized to meet the particular needs of a specific company with minimal change to the underlying technology, processes and modular functionality. 1. Work of designers and developers: Co-branding customization requires the work of both designers and developers. Designers modify the look and feel in order match the new company's value offer. Developers add and remove product functionality modules in order to meet specific needs of the customer segments. 2. Brand association phenomenon: The very base of co-branding marketing strategy is related with brand association phenomenon. To understand the process of co-branding fully, the principles of classical conditioning may be used. Although classical conditioning is only one method for creating associations and advertisers do not follow strictly all the aspects of this theory, many classical conditioning principles can be applied to co-branding in advertising. Therefore it makes sense to examine co-branding from a classical conditioning perspective. Originally classical conditioning was discovered as a method for creating physiological responses on animals. Pavlovs classical experiment, in which a metronome is paired with the presence of meat paste on a dogs tongue to elicit the salivation responses and where in the absence of the meat paste the dog salivates to the sound of the metronome, proved the theory of association. Research suggests that humans develop physiological responses to such stimuli as well. Humans can even be conditioned to develop favorable or unfavorable attitudes towards brands/images (stimuli) or to develop understandings of the meanings of various stimuli, including products and brands. Similarly one goal in co-branding is to create favorable attitudes toward a new product by creating an alliance with a favorable existing product. Further, the advertiser may intend to associate a certain meaning with a new product by pairing it with an existing brand. Understanding the mechanism behind association formulation is very helpful in developing successful co-branding strategies. One can explain the process of creating positive stimuli by co-branding strategy through classical conditioning. It can be described as follows: a stimuli that does not naturally produce a response, a conditioned stimulus (CS) is paired with a favorable stimulus, an unconditioned stimulus (US). 3. Consumers attitudes toward a particular brand alliance: Despite the growing use of co-branding in practice, little empirical research has been conducted on the topic. Most of the literature on co-branding simply describes the strategy or discusses the advantages and disadvantages of co-branding arrangements. There are however two empirical studies dealing with this topic. In the first study by Simonin and Ruth (1998) consumer attitudes towards brand alliances are examined. The focus in this work is on spillover effects of brand alliance evaluations on the later evaluation of partners and on the role of brand familiarity in these relationships. The result of this study is that consumers attitudes toward a particular brand alliance influenced their subsequent attitudes toward the individual brands that comprise that alliance. The second study by Park et al. (1996) deals with a Composite Brand Extension (CBE), combination of existing brand names, analogous to co-brand. It examines how consumers form the concept of the CBE based on their concept of their constituent brands, the roles of each constituent brand in forming this concept and the effectiveness of the CBE strategy. According to the study a
117 Co-branding
composite brand name can favorably influence subjects perception of the CBE and those complementarities between the primary and secondary constituent brands is a more important factor in the success of the CBE strategy than a positive evaluation of the secondary brand. 4. Different forms of co-branding: There are several approaches in trying to define different forms of co-branding. The first of its kind is by the process of differentiation in co-branding forms. There are four different forms of cobranding. The first form is ingredient co-branding. A representative example could be recognized when Maruti advertises that it uses MRF tires. Another form of co-branding is same-company co-branding. A Titan watch from the house of TATAs is an example of the second kind. Joint venture co-branding is yet another form of dual branding. The case of Godrej and Procter and Gamble is example of this kind. We are going to experience more number of joint venture branding in near future. Finally, there is multiple-sponsor form of co-brands as in the case of HCL computers with hardware alliance of HP, processor alliance of Intel and software alliance of Microsoft. The second approach to co-branding forms defines approach of mixed markets, the umbrella approach and the cyber branding. The approach of mixed markets allows two firms to benefit from joint marketing and broaden customer base. The penetration of the market increases for both the organizations creating a classical win-win situation. The umbrella approach takes co-branding to its outer limits. As an example the organization HDFC can be used. It operates as the umbrella company for separate firms focusing on forcing effective marketing operations to serve the financial industry. The individual companies focus on securities, banking operations and housing loans and other needs of financial services firms. According to leading marketers, co-branding helps the partnering companies to differentiate themselves in the financial industry, which experiences competition from nontraditional sources. Cyber branding is very well represented by the high-tech world of Internet banking. An example of the ICICI Bank can be presented. It co-brands with other high-tech companies in order to establish special products and services for those firms employees. As natural with every marketing strategy, even with co-branding it is difficult to expect only positive results. There are far too many factors, which can influence either success or dismal failures. Co-branding has been successful in the credit card industry and is believed to have helped Citibank to improve its position by co-partnering with Indian Oil in India to offer specialized cards. On the contrary, however, though the Sony Mini Disk CD player held a prominent role in the film Last Action Hero, sales did not improved. Though many firms try to co-brand in expectation of benefit, caution is recommended when using this strategies and common sense suggests that theoretical research on association formulation may help marketers gain the maximum amount of benefit from such arrangements. Co-branding should be beneficial to both parties and the products or services offered must provide a worthwhile benefit to both participants. The partner chosen for the co-branding strategy should be reliable and responsible. Both companies should represent the partnering company without any possible scandals and public relations problem. The acting of each single partner influences the customer bases very easily. Every business needs capital and also in creating partnership of two companies, the financial strength is very important. This is especially important for the future possibility of problems or slow sales periods. 5. Consideration of existing brand: To be more precise, before choosing a branding partner, it is necessary to consider that the existing brand usually awoke some association in the past. In some cases a problem can occur, and hence that a prior brand association may limit co-branding possibilities.
In order to mange the co-branding strategy successfully, it is important to identify the original associations tight to the brands, which are to create an alliance. There is a wide range of associations, which may be awoken among customers. Most common are the attributes of the product or benefits from it, but quite often are brands also associated with the celebrities, events that have been linked to it or even geographical location. The best example of a brand with a wide network of associations is Pepsi in Indian market. The brand is already associated with the celebrities that have endorsed it ( both Amitabh and Sachin), the Cricket series, which Pepsi sponsors, the concept of refreshment, certain music that has been used in the advertisements, the color blue and even some Catch line (yeh dil maange more). Because of the high number of associations, difficulties could occur in trying to tie another brand to Pepsi in Indian market. It is also very important to remember that positive and also negative associations can be created. An example could be the Wills sponsorship for Indian cricket team where the brand is associated with cigarettes. There is no guaranty that the audience watching cricket belongs to the smoking part of population and in todays world full of healthy ways of life some people may connect negative associations with cigarettes. 6. Familiar brands: The basic proposition of co-branding strategy implies that at least one of the stimuli is a familiar brand with which people have developed favorable associations. Marketing practitioners use popular stimuli that are well known to consumers. This strategy may however have its negative sides, when people are familiar with stimuli, it is more difficult to attach new associations to the product that awoke this associations. One way to avoid this problem is to try to show the familiar brand in a different context. Using this technique the stagiest can present a familiar brand in a different context and people will be more likely to pay attention. It is advisable to choose a brand that has a reasonable number of associations and that will also well connect with the target brand. 7. Similar buying situations: Finally, research on the bundling of products suggests that products that have similar buying situations and bundled together are more favorable to consumers and consumers will pay more for them than products that do not belong together. To combine two completely different partners could cause into failure. For instance, if a banking industry tries to associate itself with a cartoon character might not be successful at all. The explanation of these results could be the fact that financial products are just not funny and humor is not an appropriate fit. For instance, the Daewoo Matiz, introduced in 1999, is positioned in the marketplace as a technologically advanced automobile. To introduce the image of a family car, Matiz made a very clear advertising that the product was for families, had interior room and had a nice ride, and customers began to perceive the Matiz as a family car. There are also other potential benefits connected to co-branding. Once a response is conditioned to a particular stimulus, individuals may respond in a similar manner to similar additional stimuli. It is possible that when you create an association between a target brand and a familiar positive brand, other brands, either your own similar brand or competitors brand, will also be associated with the stimuli. As an example we could use the Nike trade mark, which produces high quality sporting gears. This brand has become very popular among sportsmen across the world. The association which Nike awakes among the customers is high performance through the Just Do It caption. When another brand of such similar sportswear tries to introduce this image, the association of Nike is reinforced. In order to increase the effect it is recommended to repeat the co-branding connection several times by using co-branding in advertising. Advertisers using co-branding should be aware also of special aspects of this strategy like timing of the co-branding presentation and ordering of the images in order to achieve
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maximum association formulation. The optimal ordering of the images is supposed to be the presentation of the target product before familiar positive brand rather than after the familiar positive brand. This is known as forwarding conditioning. Although it is wise to consider the length of the relationship between the two branding partners, advertisers should also be aware that associations are fairly resistant to extinction.
14.11 LET US SUM UP

There are various strategic options available to a marketer for building a strong brand in the market place. The three macro strategic issues related to building a strong brand that includes a distinct value offer with a high level of sustainable competitive advantage, a differentiated positioning statement and a consistent positioning strategy. Co-branding is one of the strategic options to build up a strong brand image. Co-branding involves combining two or more well-known brands into a single product. Used properly, it is an effective way to leverage strong brands and has the potential to achieve 'best of all worlds' synergy that capitalizes on the unique strengths of each contributing brand. Kotler defines co-branding as, "two or more well-known brands combined in an offer" and each brand sponsors expect that the other brand name will strengthen the brand preference or purchase intention and hope to reach a new audience. The different forms of co-branding are - Ingredient co-branding, Samecompany co-branding, Joint venture co-branding, multiple sponsor co-branding, Reach & Awareness Co-branding, Value Endorsement Co-branding, and Complementary Competence Co-branding.

Write five examples for co-branding.
14.13 KEYWORDS
Same-company Co-branding: This is when a company with more than one product promotes their own brands together simultaneously. Joint Venture Co-branding: It is another form of co-branding defined as two or more companies going for a strategic alliance to present a product to the target audience. Multiple Sponsor Co-branding: This form of co-branding involves two or more companies working together to form a strategic alliance in technology, promotions, sales, etc. Reach & Awareness Co-branding: This is the lowest level of shared cooperation in a co branding exercise and its objective is to rapidly increase the awareness of the sharing brands through each other's strength in the respective domains.

1. Define co-branding and give five examples of co-branding. 2. Explain the types of co-branding forms. 3. Discuss the advantages of co-branding 4. What are strategies required for a successful co-branding? Explain.

CYP 1 1. Co-branding involves combining two or more well-known brands into a single product. Used properly, it is an effective way to leverage strong brands and has the potential to achieve 'best of all worlds' synergy that capitalizes on the unique strengths of each contributing brand. 2. The forms of co-branding include: a) Ingredient co-branding b) Same-company co-branding c) Joint venture co-branding d) Multiple sponsor co-branding e) Reach and Awareness Co-branding f) Value Endorsement Co-branding g) Complementary Competence Co-branding CYP 2 1. When it comes to co-branding between two global companies in Indian markets, the main constraints faced are: a) May not have any existing distribution network of any note.
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b) May lead to brand dilution of one or both the brands if the perceived image of both the brands is not similar in the Indian market. c) The two companies may be in different fields altogether and the consumers may find it very difficult to identify the co-branded product with either of the two parent companies.
d) No two brands have exactly the same impact on the consumer. 2. A successful example of co-branding is the Senseo coffeemaker, which associates the Philips made appliances with specific coffee brand of Douwe Egberts. Other examples include the alliance of the Beer Tender in-home draft system, sold by Krups with the specific brand of Heineken, and the marketing of Gillette M3 Power shaving equipment (which require batteries) with Duracell batteries (both brands owned by Procter & Gamble). CYP 3 1. Co-branding 2. Duracell 3. Value endorsement co-branding 4. Ingredient co-branding 5. Multiple sponsor co-branding

LESSON
123 Online Branding
15
ONLINE BRANDING
CONTENTS 15.0 15.1 15.2 15.3 15.4 Aims and Objectives Introduction Key Factors of Online Branding Process of Online Branding Online Branding Strategy 15.4.1 15.5 15.6 15.7 15.8 15.9 Five Strategies for Effective Online Branding

After studying this lesson, you should be able to understand: The key factors of online branding The process of online branding Strategies for effective online branding
15.1 INTRODUCTION
Creating a brand experience for its target group is possibly the most crucial and valuable exercise a corporate can envisage while it contemplates using the internet to advertise its products and services. Using the webs interactive abilities, effective marketing is essentially about providing the right message at right time to generate action. Unlike other media, which asks little of the consumer beyond passive attention, the Web invites users to be involved with the brand, learn about products, sign up for services, be a key source for information on almost any topic, play an active role in the marketing experience, thus closely bonding with the brand. Brands may be even more important on the Internet, particularly for pure online players, who are essentially intangible, and therefore, customers have little go on other than a recognized brand name. Furthermore, given the tremendous clutter in todays ecommerce marketplace, and the high cost of acquiring online customers, the most successful sites will be those that use Internet marketing effectively to attract customers and build brand loyalty and enthusiasm that extends the brand-customer relationship beyond a single transaction. Branding has been a business buzzword for many years. But the term has implications far beyond corporate logos, mission
statements and theme songs. Effective branding is all about telling customers who you are, what you do and how you do it.
15.2 KEY FACTORS OF ONLINE BRANDING

1. Define your brand up front: When visitors arrive at your web site, let them know immediately what you do and why they should care. Far too many web sites shroud their identity in flashy graphics and ambiguous slogans without telling people what the company or person actually does. View your Web site through the eyes of a new visitor. Does it spell out exactly what your brand stands for? If not, redesign it so your purpose and identity are unmistakable. For example, Terri Lonier's Working Solo site does a good job of establishing her as a resource for freelancers. The opening paragraph lets visitors know exactly who the site is for. 2. Lead with what you do, not who you are: It may defy logic, but making your company name the most visible element on your home page may not be the most effective way to reinforce your brand. A Web-based or e-mail marketing message should state a benefit right off the bat. Which of these paints a clearer identity: The business name "Dog Owner Central" displayed in large letters or the more specific description "Training tips for busy dog owners"? 3. Use a real person as a figure head: The online world can be a cold, mechanical place. Your branding efforts are more effective when you add a recognizable, consistent human element. Think of the way Dave Thomas promoted Wendy's. If your company has a CEO or spokesperson who is closely identified with the company offline, make sure that connection carries to the cyber world. If you run a business by yourself, by all means, put your name, photo and personal message on your web site. Nothing creates mystery and distrusts more than a site that is void of a human contact and asks visitors to send e-mail to the "webmaster." 4. Develop a fan-club mentality: Most online marketers try to generate readers, visitors or users. I encourage you to switch gears and create fans. "Users" are people who visit your web site, subscribe to your newsletter or buy your products and services. "Fans," on the other hand, cheer you on, rave about you to their friends and eagerly follow everything you do. Which would you rather have? 5. Make good use of words: Verbal content is not only king, it's the entire kingdom. Even though designers try to squeeze as much graphic impact as they can out of limited bandwidths, what matters most online are the words you use. I don't buy into the less-is-more, bullet-point mentality of writing for the web. To create fans online, you must deliver useful brand-related information and speak to readers in a conversational tone. If it takes more than one or two scrolling screens to do that, so be it. As an example, illustrator Bob Staake has designed a web site that uses his personality effectively at www.bobstaake.com. Check Your Progress 1 1. What is the importance of online branding? .. .. 2. What are the key factors of online branding? .. ..
15.3 PROCESS OF ONLINE BRANDING

Figure 15.1 outlines the online customer choice pipeline, which represents the customer purchase process as a series of distinct resources, each representing a different stage and relationship to the brand.
125 Online Branding
Browser
Aware Refuser Unaware
User
Loyal
Figure 15.1
1. Unaware: These are the potential customers who have not heard of the brand. The number of people at this stage changes as people become aware of the brand or as the brand expands into new markets, increasing the potential customer base. 2. Aware: These are potential customers that are aware of the brand, but have not accessed the website or purchased a product. 3. Browsers: These are people that are interested and access the site. They can click of to return again some other time, or purchase a product in which case they become customers, or discard the offering and become refusers. Online companies usually track the level of browsers in terms of the number of unique visitors per day. 4. Loyals: These are repeat customers who return to purchase items from the website. These customers can be an important source of positive word-of-mouth is a particularly powerful medium, as it carries the implied endorsement from a friend. 5. Refusers: These are consumers that have accessed the site or bought a product, but are dissatisfied with the experience and will not purchase again, and may actually spread negative word-of-mouth. The accumulation of refusers depends on the brands ability to fulfill expectations. Check Your Progress 2 Fill in the blanks: 1. Players selling goods online are ______. 2. Effective online branding does not require ______ budgets. 3. By making every Web transaction brand-relevant and providing your customers with brand-based value, you will ______ the depth and stickiness of your customer relationships.
15.4 ONLINE BRANDING STRATEGY

Tips for designing an online branding strategy are given below: 1. Be Consistent: Branding on the web would require targeting your visitor through multiple channels. You should be consistent in terms of your approach, your message and your treatment given to a viewer through all these channels. 2. Appeal to the Target Market: Entire branding efforts should be focused on a section of a large consumer segment. Communicate your message clearly and precisely. Your message should appeal to your customer and make them realize the benefit of visiting your store. 3. Be Innovative: Branding is all about being innovative. Understand the likes and dislikes of your target audience before you begin the work of branding your store on the web.
15.4.1 Five Strategies for Effective Online Branding

Your Web site can be the most effective brand-building device in your business arsenal. That's because a Web site can do a much better job of building relationships than any other form of marketing communication with your customers. But what's effective on the Web? After three years of watching the "worldwide" Web branding experiment, I've developed some guidelines that can take your customer relationships to new levels. 1. Be True to your brand: Many companies use "gimmick appeal" to attract site visitors. This includes such things as games, contests, and screen savers that have no connection to what the company does or its style of doing business. These gimmicks are similar to offering coupons or discounts? They can cause a brief spike in traffic but don't deepen customer loyalty. 2. Be relevant and engaging: In general, visitors to your home page are not very interested in reading about your company structure or why you are No. 1 in the market. Instead, by identifying and clearly presenting the information they are looking for, you can provide visitors with an experience that rewards them for the time they spend on your site. They also would like to experience the unique business style or personality of your company. Does your Web site reflect your tone and manner, your point of view, and what makes you unique? 3. Provide branded interactive value: A relevant and engaging Web site falls under the larger concept of "branded interactive value." Site visitors want to know how you are going to add value to their professional or personal lives. For instance, several companies have affiliate logo graphics placed at the bottom of their home pages that click through to the affiliate's Web page. By affiliating with other services, companies create a customer bonding opportunity. Unfortunately, most logos click to information that has little relevance to building the value of a company's brand. A great example of an affiliation that builds a brand relationship between a company and an affiliate can be seen on the Dell Computer home page. When parents click on the GetNetWise logo at the bottom of the page, they go to useful and compelling information on safe Internet practices for kids, which include a safety guide, how to report trouble, and sections on Web sites for kids. The "branded" in branded interactive value means that whatever you provide on your site for visitors is in alignment with your brand strengths. 4. Add brand-relevant sponsored content: "Sponsored content" offers something of value that is not directly related to your product or service. Here's how Web marketers use sponsored content to raise awareness about their brands. Miller
Brewing Company turned its long-term Super Bowl sponsorship into a sponsoredcontent win by creating a linked site in conjunction with ESPN Internet, called Superbowl.com. While the site is about the Super Bowl, it is chock-full of Miller's brand imagery. The result was 8 million unique visitors in a single month vs. the fewer than 250,000 visitors Miller received at its own Web site. Because of Miller's long-term brand association with professional sports, this site helped to reinforce the connection and encourage consumption of its product during sporting events. 5. Use the real world to enhance your on-site brand: "Off-site/on-site branding" uses the real world to build Web brands. Recreational equipment retailer REI recently reported that it is selling more through its Web site than in all its stores combined. But a major source of online sales was through its in-store kiosks. www.healthshop.com used runners dressed in healthshop.com outfits to hand out packages of vitamin C drinks to San Francisco customers. The packages were printed with details on how customers could enter an online contest for a sweepstakes drawing. Customers could also send their friends to the same site so they could have a chance to enter too. Thirty runners delivered 125,000 packages over several days, which resulted in a response rate that far exceeded the typical 3-in-1,000 banner ad click-through rate and also helped the company build brand awareness. Off-site/on-site branding does not require a huge ad budget. Consider trading banner ad space on your site for kiosk space in your store, walking though a favorite park or busy city street with sandwich boards, or using other low-cost guerrilla advertising tactics to point people to your site and enhance their understanding of your brand. Effective online branding does not require big budgets, just an understanding of what brand attributes you are trying to build. By making every Web transaction brandrelevant and providing your customers with brand-based value, you will increase the depth and stickiness of your customer relationships.
127 Online Branding
15.5 LET US SUM UP

Branding has been a business buzzword for many years. But the term has implications far beyond corporate logos, mission statements and theme songs. Unlike other media, which asks little of the consumer beyond passive attention, the Web invites users to be involved with the brand, learn about products, sign up for services, be a key source for information on almost any topic, play an active role in the marketing experience, thus closely bonding with the brand.

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 its marketing program?
15.7 KEYWORDS
Sponsored Content: "Sponsored content" offers something of value that is not directly related to your product or service. Fan-club Mentality: Most online marketers try to generate readers, visitors or users. Branded Interactive Value: A relevant and engaging Web site falls under the larger concept of "Brand interactive value.

1. What do you understand by the concept of online branding? 2. Write an analysis of the term Sponsored Content.

CYP 1 1. Creating a brand experience for its target group is possibly the most crucial and valuable exercise a corporate can envisage while it contemplates using the internet to advertise its products and services. Using the webs interactive abilities, effective marketing is essentially about providing the right message at right time to generate action. Unlike other media, which asks little of the consumer beyond passive attention, the Web invites users to be involved with the brand, learn about products, sign up for services, be a key source for information on almost any topic, play an active role in the marketing experience, thus closely bonding with the brand. 2. Key factors of online branding: a) Define your upfront b) Use a real person as a figure head c) Develop a fan-club mentality d) Make good use of words CYP 2 1. Intangible 2. Big 3. Increase

MODEL QUESTION PAPER

MBA Second Year (General) Sub: Brand Management Time: 3 hours Total Marks: 100 Direction: There are total eight questions, each carrying 20 marks. You have to attempt any five questions. 1. What are the objectives of brand management? What are the various aspects of developing a new brand? In what ways can brand evolution be made effective to benefits? 2. What are the administrative and strategic steps in brand positioning? What are the different strategies for positioning the brand for competitive advantage? 3. Distinguish between the following: a) Points of Parity and Points of Difference b) Brand identity and brand image c) Brand equity and brand audits d) Branding and online brand building 4. What is the concept of managing brand image? What are the functional, symbolic and experimental brands? 5. What is brand licensing? Also, explain the concepts of brand leveraging and brand extensions. 6. Give the merits and demerits of branding. Also, give methods of reinforcing and revitalization of brand need methods. 7. What do you understand by the term brand valuation? Give various methods of brand valuation. 8. Write short notes on any two of the following: a) Indianisation of foreign brands b) Brand extensions c) Building a strong brand-method and implications d) Building brands online.
129 Model Question Paper

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Brand Management

MBA Second Year (General)

School of Distance Education

Bharathiar University, Coimbatore - 641 046

Model Question Paper

5 Brands and Branding Concept

7 Brands and Branding Concept

1.0 AIMS AND OBJECTIVES

1.2 WHAT IS A BRAND?

1.3 EVOLUTION OF BRANDS

Extended value Core value

Attributes Category Association Products Ingredients

Figure 1.1: Brand Evolution

1.3.1 Evolution of Brands-Summary

9 Brands and Branding Concept

1.4 CONCEPT OF A BRAND

1.5 CHARACTERISTICS OF BRANDS

Figure 1.2: Characteristics of Brands

1.6 BRANDING TODAY

11 Brands and Branding Concept

1.7 LET US SUM UP

1.8 LESSON END ACTIVITIES

1.10 QUESTIONS FOR DISCUSSION

Check Your Progress: Model Answers

CYP 2 1. Goods and Services 2. Corporate Image 3. Four 4. Generic

1.11 SUGGESTED READINGS

Brands versus Products 2.3.1 2.3.2 Five Levels of a Product Brand

Advantages of Brands 2.4.1 2.4.2 Consumers Firms

2.5 2.6 2.7 2.8 2.9

2.0 AIMS AND OBJECTIVES

2.2 BRAND NAME

Brand names are based on

Ex: Fleet footers, Exxon

Ex: Fruity, Aqua fresh, Medimix

Ex: Apple computers, Shell gasoline

Figure 2.1: Types of Brand Names

2.2.1 Characteristics of a Good Brand Name

2.3 BRANDS VERSUS PRODUCTS

2.3.1 Five Levels of a Product

Figure 2.2: Examples of Different Product Levels

2.4 ADVANTAGES OF BRANDS

2.5 LET US SUM UP

2.6 LESSON END ACTIVITY

2.8 QUESTIONS FOR DISCUSSION

Check Your Progress: Model Answers

2.9 SUGGESTED READINGS

3.5 3.6 3.7 3.8 3.9

3.0 AIMS AND OBJECTIVES

3.2 BRAND ELEMENTS

3.2.1 Brand Name

Descriptive: Describes function literally. Ex: Indian Airlines, Professional Courier

3.2.2 Logos and Symbols

Identify the brand

3.3 CRITERIA FOR CHOOSING BRAND ELEMENTS

3.4 BRANDING CHALLENGES AND OPPORTUNITIES

3.4.1 Savvy Customers

3.4.2 Brand Proliferation

3.4.3 Media Fragmentation

3.4.4 Increased Competition

3.4.5 Increased Costs

3.4.6 Greater Accountability

3.5 LET US SUM UP

3.6 LESSON END ACTIVITY